KUALA LUMPUR (May 8): Exporters are said to be unsure if the criteria for getting a non-preferential certificate of origin (NPCO) have changed after the Ministry of Investment, Trade and Industry (Miti) took over as the sole issuer on Tuesday, May 6, replacing chambers of commerce.
An NPCO is a document in international trade that confirms the country where goods come from but doesn't provide benefits like reduced tariffs or exemptions.
Previously, the rules included 100% local materials, a change in tariff code, or at least 25% local content. Now, Miti bilateral economic and trade relations division director Raveendran Nair said the ministry is looking at at least 40% local content, but the full details are still being worked out.
“As of now, we say [it's] 40%, but the government will be looking into the details so that we can enforce [it],” he said at a forum on Thursday.
Miti's decision to become the sole issuer was sudden, with the announcement made just one day before it took effect on Tuesday.
Business representatives at the forum also voiced concerns about whether “local content” truly means local involvement in the production process.
Samenta's chairman of international trade, Eugene Tan, questioned if the 40% local content requirement actually benefits local businesses.
"If a Chinese firm comes to set up a company in Malaysia and they bring in Chinese workers and they bring in Chinese raw materials and they do the process in Malaysia, does that really benefit Malaysians?" said Tan.
Miti’s move to become the sole issuer of NPCOs followed concerns raised by US officials during a recent visit to Washington DC.
Raveendran said US officials raised concerns that Malaysia might be used as a transhipment hub for Chinese goods. He added that the US has its own data on Malaysia's production levels and can spot discrepancies in exports.
"If your production capacity is 100, how can you export 500 units to the US? Where does the extra 400 come from? That’s something we won’t be able to justify," Raveendran said, referencing last year’s increase in drone exports from Asia to the US, which raised concerns among US authorities.