SMEs Should Diversify Export Markets As US Tariff Takes Effect - SAMENTA
KUALA LUMPUR, July 24 (Bernama) -- The Small and Medium Enterprises Association (SAMENTA) has urged small and medium enterprises (SMEs) to reduce their over-reliance on any single Western export market following the implementation of the United States’ latest 10 per cent import tariff.
SAMENTA national president Datuk William Ng said SME exporters should aggressively leverage Malaysia's existing regional trade agreements, particularly the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), to expand into high-growth markets across East Asia, Australasia and West Asia.
"At the same time, SMEs must focus on upgrading product value chains toward high-specification and customised manufacturing where buyers face higher switching costs," he said following the implementation of the United States Trade Representative’s (USTR) 10 per cent import tariff under Section 301 of the US Trade Act of 1974, which took effect today.
Ng said that the Section 301 tariff is an import-gap regulatory penalty levied at the sovereign level regarding national enforcement mechanisms, rather than a reflection of operational non-compliance by individual Malaysian exporters.
"However, because the tariff applies broadly across national export categories, fully compliant SMEs that have consistently invested in meeting international labour, environmental and social and governance (ESG) standards are now unfairly caught in the crossfire," he said.
Ng also said that a blanket 10 per cent tariff forces these smaller businesses into a difficult position of either absorbing the additional duty at the expense of critical cash flow or raising export prices and risking the loss of US buyers to competing markets.
Meanwhile, SAMENTA called on the Ministry of Investment, Trade and Industry (MITI) and the Malaysia External Trade Development Corporation (MATRADE) to introduce targeted intervention measures to support local exporters.
These include establishing dedicated export diversification matching grants through the existing Market Development Grant (MDG) or a supplementary scheme to help SMEs cover market entry and regulatory certification costs in alternative regional markets.
Ng said SMEs would also require financial assistance in the form of co-funding for audits to maintain rigorous labour compliance documentation.
At the same time, SAMENTA hopes that together with the government, it could promote the nationwide adoption of the Circular Economy Certification (CEC), the first-in-ASEAN certification scheme of its kind.
“By adopting circular economy practices, SMEs can effectively reduce their resource dependency, lower energy costs, enhance their environmental and ESG credentials, and protect themselves against increasingly stringent global compliance requirements,” he said.
Ng also urged the government to expedite the national legislative framework governing third-country import prohibitions related to forced labour, describing it as the most crucial step towards securing Malaysia's permanent removal from the USTR Section 301 list.
-- BERNAMA