KUALA LUMPUR (April 10): The Federation of Malaysian Manufacturers (FMM) is urging the government to seize the 90-day suspension of the US reciprocal tariff to implement decisive measures aimed at safeguarding Malaysia’s industrial foundation and its long-term competitive edge.

FMM warned that the deferral of the 24% tariff, initially scheduled to take effect on April 9, must not be mistaken as a resolution.

"While the 90-day pause offers short-term relief and some tactical space for businesses to undertake contract renegotiations, pricing recalibrations, supplier diversification and review of shipping routes, the absence of clarity on the final outcome continues to weigh heavily on business confidence, particularly for sectors with significant exposure to the US market," said FMM president Tan Sri Soh Thian Lai in a statement.

"As a result, FMM members are not treating this pause as a reprieve from action, but rather as a critical window to accelerate, not delay, contingency planning," he said.

Citing preliminary findings from an ongoing FMM survey, he said there is widespread unease among manufacturers over both the direct and indirect impact of the US reciprocal tariffs. "Many anticipate export costs rising by 10-30% or more, alongside rowing pressure from international buyers to lower prices or renegotiate terms."

Survey respondents are calling for urgent support from the government, including targeted assistance and policies that strengthen regional supply chain resilience, besides enhanced engagement with the US. "There is rising concern that Malaysia may face an influx of redirected exports from markets experiencing steep tariff escalations, which could undermine the competitiveness of local industries," he said.

FMM is recommending that the government pursue targeted, sector-specific relief, particularly for sectors like rubber products, industrial machinery, non-semiconductor electrical and electronic components, furniture, paint, medical devices, garments and electronics manufacturing services (EMS).

In the meantime, it has sent a letter to the Ministry of Finance on April 8 to request for a deferment of the expansion of the sales and service tax scope, scheduled to take effect on May 1, as it reiterates its call for the government to bolster the manufacturing sector by reviewing and putting on hold policies that could further raise operating costs this year.

It also asked the government to conduct a comprehensive impact study on the implications of the SST expansion on inflation, business sustainability and consumer affordability.

At the same time, it is pushing for the immediate establishment of a National Supply Chain Council to coordinate cross-ministerial and public-private action on trade resilience, logistics continuity and industrial security to better support manufacturers during disruptions.

It also recommended that the government leverage Malaysia's Asean chairmanship this year to propose an Asean Supply Chain Coordination Council to institutionalise regional cooperation on trade facilitation, digitalisation and regional sourcing. "Such measures will be critical in preserving Asean's role as a trusted and agile global production hub," Soh said.

And in view of the risk of Malaysia becoming a destination for redirected exports from markets still subject to steep US tariffs, FMM called on the government to enhance surveillance and enforcement to detect and prevent fraudulent declarations of origin and transshipment abuses. "Trade remedy provisions including anti-dumping and safeguard measures, should be ready to activate where warranted," Soh said, to ensure the domestic market remains competitive and protected from unfair trade practices.