KUALA LUMPUR (Oct 2): American manufacturers operating in Malaysia are reducing their reliance on Chinese inputs and turning to local suppliers as they adapt to pressure from US tariffs, according to a survey.

The American Malaysian Chamber of Commerce’s (AMCHAM) latest Economic Impact Survey found that companies responded to tariff pressure by reorganising their procurement, repricing products and reshaping their workforce, rather than simply absorbing higher costs or pulling out of Malaysia.

Of the 21 manufacturers that source inputs from China, none increased their reliance on Chinese suppliers after the tariffs took effect. 

Meanwhile, nine companies, or 43% of the 21, reduced their reliance on China. These companies are concentrated in electronics manufacturing services and high-technology hardware, sectors with historically deep supplier linkages to China.

Separately, AMCHAM said 15 of the 44 manufacturers surveyed, or 34%, increased the share of their inputs sourced from Malaysia in response to tariff pressure.

The survey drew responses from 84 AMCHAM member companies, comprising 44 manufacturers, 40 services companies and four companies in agribusiness, extraction and energy, spanning 23 industry categories. The data covers 2024 and 2025, with responses collected between March and May this year.

“Despite all that disruption, 86% of manufacturers said their underlying business model didn’t change significantly. That is the part I would focus on. Because the story is not simply that companies were affected by trade policy. Of course they were. The story is how they responded.

“They changed sourcing. They changed pricing. They changed production. But they fundamentally did not change their commitment. They adapted rather than retreated,” said AMCHAM Malaysia chief executive officer Datuk Siobhan Das.

“And some of that adaptation is creating opportunities here in Malaysia,” she added.

Across the manufacturing base, 7,087 local suppliers received RM19.32 billion in payments from manufacturers in 2024 and 2025, according to the survey.

The 35 American manufacturing companies surveyed accounted for 91% of those suppliers and 96% of total payments. 

The survey also found that manufacturing respondents had RM42.86 billion in total project costs embedded in their Malaysian operations, almost 51% higher than the amount recorded in AMCHAM’s previous survey.

The total project cost includes land, plants, machinery and infrastructure — assets that cannot be easily relocated or withdrawn at short notice.

Meanwhile, 87% of manufacturing respondents expect their revenue to grow over the next two years, while 94% intend to maintain or expand their Malaysian footprint over the next five years.

Six manufacturers that recorded revenue declines in 2024/2025 nonetheless expect growth ahead. Collectively, these companies have RM6.3 billion in total project costs, suggesting they view the recent contraction as cyclical rather than structural.

In addition, none of the services-sector respondents indicated any intention to divest from Malaysia.