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Showing posts with label Emerging markets. Show all posts
Showing posts with label Emerging markets. Show all posts

Saturday, 2 August 2025

US revises tariff rate to 19%

 

 However, nation must urgently diversify its export destinations

PETALING JAYA: Malaysia’s revised tariff rate of 19% on exports to the United States offers a temporary competitive edge in the region but underscores the urgency for export diversification amid signs of growing US protectionism, economists warn.

Prof Emeritus Dr Barjoyai Bardai said the revised rate, down from 25% previously, positions Malaysia on par with neighbou­ring countries such as Thailand, Indonesia, Cambodia and the Philippines.

ALSO READ: Malaysian industries can breathe easier now

He said the rate is still more favourable than those imposed on Myanmar (40%), Vietnam (20%) and Taiwan (20%).

“We seem to be able to compete with our neighbouring countries. But we are far behind Singapore at 10%, as well as Japan and South Korea at 15%.

“With India at 25%, we are in a better position,” he said when contacted. What we really want to see is that the tariff imposed on Malaysia is as low or better than that of countries that are our competitors because we are exporting to the United States.

“So, if those countries have equal or higher tariffs than us, then our ability to compete remains intact,” he added.

However, he said that certain Malaysian exports may be vulnerable, especially low-­margin products such as solar panels, and electrical and electronic goods.

On the trade balance with the US, he said it depends on whether Malaysian imports from the US increase significantly, especially luxury goods, following the government’s decision to scrap the luxury tax.

“Although the luxury tax has been included in the expanded SST, the rate is still low,” he added.

He said Malaysia must urgently diversify its export destinations, as the US moves towards a more self-sufficient economy.

Barjoyai said semiconductors should be directed to countries with growing demand, such as China, India and Europe.

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For other items like solar panels, he said Malaysia should consider Latin America, Canada and Europe.

“There are still many untapped markets. In the long run, the United States will become a domestic-driven economy where they will seek to reduce imports.

“Today, they are already about 80% self-sustaining,” he added.

Echoing similar concerns, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the tariff adjustment signals that the United States remains open to dialogue, but the economic implications for Malaysia remain.

“As a result of recent discussions, the previously imposed retaliatory tariffs of 25% have now been reduced to 19%.

“Consequently, the negative impact on Malaysia’s economy is expected to be slightly mitigated.

“In this regard, Bank Negara has revised its GDP forecast for 2025 to a range of 4.0% to 4.8%, down from the earlier projection of 4.5% to 5.5%,” he said.

Afzanizam also highlighted the potential global impact of US ta­riffs.

“The 19% import tariff is expected to impact American consumers’ purchasing power.

“This may, in turn, dampen economic momentum in the US, which is the world’s largest econo­my. It poses a potential risk to glo­bal economic growth in the coming years,” Afzanizam said.

He also called for a balanced approach to foreign relations and economic strategy.

“It is crucial to preserve strong bilateral ties with the United States, while simultaneously exploring new opportunities with countries in Europe, the BRICS bloc, and strengthening economic and diplomatic cooperation within Asean.

“At the same time, efforts to boost productivity, build capacity and enhance economic resilience must be intensified to safeguard Malaysia’s economic sovereignty.

“These measures will reinforce investor and business confidence, underpinned by pragmatic policies and the government’s proactive response to emerging challenges,” he added.

Centre for Market Education chief executive officer Carmelo Ferlito, meanwhile, said the tariff revision reflects a political strategy rather than a pure economic measure.

“The reciprocal tariff on Malay­sia to 19% is the proof of what I have mentioned earlier,” he said, adding that US President Donald Trump was not interested in ta­riffs per se, but to reopen negotiating tables.

He said this is to show that the United States is the biggest consumer in the world and force countries to get closer to the United States as well as grant commercial facilitations.

Ferlito criticised the use of ta­riffs as a policy tool, arguing that they hurt both consumers and workers.

“Tariffs are bad, not just for Malaysia, but for the world,” he said, adding that ultimately, ta­riffs reduce trade opportunities.

“This means less choice for consumers, but also job losses, on both sides,” he added.

Wednesday, 14 August 2013

Malaysian Ringgit drops to three-year low !

 
The ringgit tends to move more significantly lately because of domestic factors such as the fiscal situation, Says Saktiandi Supaat of Maybank in Singapore

KUALA LUMPUR: The ringgit dropped to a three-year low ahead of data that may signal the US recovery is gaining traction, bolstering the case for policymakers to pare stimulus that has fuelled inflows to emerging market assets.

Reports this week may show retail sales, manufacturing and housing starts increased last month in the world’s largest economy, according to Bloomberg surveys. Four Federal Reserve officials indicated greater willingness last week to begin tapering the central bank’s bond-buying programme.

Fitch Ratings cut Malaysia’s credit outlook in July, citing concerns over the country’s public finances.

“The general expectation is that these US numbers are going to be quite strong,” said Saktiandi Supaat, head of foreign exchange research at Malayan Banking Bhd in Singapore. “The ringgit tends to move more significantly lately because of domestic factors such as the fiscal situation.”

The ringgit depreciated 0.3% to 3.2595 per dollar as of 4.27pm in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.2613, the weakest level since July 1, 2010.

The one-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed six basis points to 7.89%, halting an eight-day losing streak.

Malaysia’s five-year government bonds were little-changed.

The yield on the 3.26% notes due March 2018 held at 3.50%, according to data compiled by Bloomberg.
The rate on 10-year securities fell by two basis points to 3.86%, the lowest level this month. — Bloomberg

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Tuesday, 13 August 2013

Malaysian currency weaken as foreign capital outflow

Foreign capital outflow a trend in emerging markets these days

The ringgit, which has been described as being in a tight spot, has fallen 6.6% since May 22, when the Fed first raised the spectre of an early stimulus withdrawal, reports the Singapore Business Times.

THE outflow of foreign capital from emerging markets is the trend these days.

The ringgit, which has been described as being in a tight spot, has fallen 6.6% since May 22, when the Fed first raised the spectre of an early stimulus withdrawal, reports the Singapore Business Times.

The ringgit has been trading at three-year lows against the US dollar, and month-long selling has pushed 10-year Malaysian government bond yields to their highest in 2½ years, says the report.

The reason is “an exodus of foreign capital, as investors reassess emerging markets most at risk from a withdrawal of US easy money policy,” it adds.

The Indian rupee has dropped more severely by 8.5% since May 22.

India has been described as being “caught in the middle”, as the United States ponders tapering off its quantitative easing policy, causing volatility in emerging markets, as investors pull money out.

India was enjoying a growth rate of 9% just two years ago. Now, the Reserve Bank of India is forecasting growth at 5.5% for the fiscal year ending next March, says the SBT.

Reliance on foreign capital has always been a dangerous game, and the authorities are well aware of that.

In some quarters, it is a known fact that foreign capital is not really welcome, as it wreaks havoc with its large movements.

Economies in South-East Asia, especially, have to be very cautious of foreign capital, as the impact can be severe once they withdraw their funds.

Fund flows are usually tracked by central banks, which will have an indication of the inflows and outflows.
The economy itself should be fundamentlly strong and able to withstand the shock of any outflow.

High economic growth is not really the objective in this case, but rather steady, resilient and broad-based growth.

Investors in emerging markets should be prepared for such a phenomenon and get ready with their asset allocation strategies.

Mark Mobius, the executive chairman of Templeton EM Group, was quoted by The Economic Times of India as saying that funds were expected to flow back into emerging markets.

“We think there will be a bounce-back because there has been too much negativity and that has pushed prices down to levels where there is a chance of an upsurge again,” he is quoted as saying.

The Australian central bank has cut rates for the eighth time in less than two years in a bid to improve sluggish growth, as a boom in mining investment over the past decade comes to an end, says the International Herald Tribune (IHT).

The Reserve Bank of Australia lowered its benchmark cash rate by a quarter of a percentage point to a record low of 2.5%, bringing the total cuts since November 2011 to 2.25 percentage points.

The Australian currency, which is closely watched by investors and parents with children studying in that country, has fallen about 15% against the US dollar since mid-April.

However, the currency remains well above where it has been for much of the past two decades, says the IHT.

The Australian dollar has rallied lately on positive economic data from China.

As new resource investments peter out, the Australian government is seeking to rebalance its economy, with strength in sectors such as tourism and manufacturing.

There are diverging trends in the Australian economy, where unemployment has edged up, with “signs of increased demand for finance by households”.

However, the pace of borrowing has remained “relatively subdued”.

It will be interesting to watch how the Australian dollar performs over the next few months and assess whether it is timely to invest in it.

Plain Speaking By Yap Leng Kuen contributed to this post.
Columnist Yap Leng Kuen sees a lot of investment opportunities in emerging markets.

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