The Vibes.com
5 May 2025
Sirens sound as trade war sets in: Govt unveils coordinated Madani strategy against U.S. tariffs
An additional RM1 billion in loan guarantees approved to assist export-oriented SMEs affected by reciprocal tariffs, among a host of initiatives
“Globalisation is not a monologue. It must be a conversation among equals,” Anwar says - May 5, 2025
MALAYSIA has launched a comprehensive national and regional response to safeguard its economy and reinforce international trade ties following the United States' announcement of import tariffs on 2 April 2025.
The measures include diplomatic engagement, regional cooperation, and economic resilience strategies under the government’s MADANI framework.
In a decisive move, the government established the National Geoeconomic Coordination Centre (NGCC) on 4 April.
Chaired by the Prime Minister and led by the Ministry of Investment, Trade, and Industry (MITI), the centre brings together multiple ministries and agencies to monitor, assess, and coordinate policy responses to global trade disruptions, tariff shocks, and non-tariff barriers. NGCC has met three times since its formation.
The government has also approved an additional RM1 billion in loan guarantees under the Skim Jaminan Pembiayaan Perniagaan Scheme (SJPP) to assist export-oriented small and medium enterprises (SMEs) affected by the United States’ newly announced reciprocal tariffs.
Prime Minister Datuk Seri Anwar Ibrahim said the government has also agreed to increase the Soft Financing Fund by RM500 million through Development Financial Institutions (DFIs), specifically aimed at SMEs impacted by the tariff shock.
“The government will continue to monitor the situation and is prepared to offer targeted assistance to SMEs directly affected,” he told a special sitting of the Dewan Rakyat today.
He warned that the US tariffs were already having negative consequences across global supply chains and trade, disproportionately affecting SMEs and threatening economic stability across the ASEAN region.
The measures come in response to US President Donald Trump's announcement on 2 April of a 24 per cent tariff on Malaysian imports. While implementation has been temporarily delayed for 90 days, a baseline rate of 10 per cent remains in place.
Anwar, who is also Finance Minister, said the global economic uncertainty underscores the need for Malaysia to intensify domestic economic activities, particularly in infrastructure and investment-linked projects.
To this end, the government will prioritise fast-tracking the implementation of already approved development initiatives, especially those involving flood mitigation, repairs to dilapidated schools, and construction of rural health clinics.
“In order to expedite implementation, the government will improve procurement procedures, especially for small-scale contractors in the G1 to G4 categories,” he said.
To shorten the pre-implementation timeline of development projects, the government would boost the capacity of technical agencies and allow federal projects to be carried out on state-owned land using a new implementation approach.
“These enhancements are crucial for sustaining domestic momentum in the face of global headwinds,” he added.
Malaysia also hosted a Special Meeting of ASEAN Economic Ministers on 10 April, resulting in a united regional stance on the US tariff measures. ASEAN ministers agreed that the tariffs have adverse effects on global trade and supply chains, particularly on small and medium enterprises, and threaten economic stability across Southeast Asia.
Despite this, the bloc affirmed its commitment to strong ties with the US, its largest source of foreign direct investment and second-largest trading partner.
ASEAN ministers agreed to refrain from retaliatory actions and instead pursue dialogue, continuing their support for a multilateral rules-based trade system as outlined by the World Trade Organization. An ASEAN Geoeconomic Task Force has also been established to support regional policy coordination.
The ASEAN Trade Ministers are scheduled to meet with their Chinese counterparts on 19 May, continuing the bloc’s coordinated diplomatic response. On the same day as the economic ministers’ meeting, ASEAN Finance Ministers and central bank governors also convened to reinforce financial cooperation and economic integration.
From 22 to 24 April, Malaysia sent a delegation to Washington, D.C., led by the MITI Minister, becoming one of only 18 countries to secure bilateral talks with the US government. During the visit, Malaysia sought potential exemptions from the new tariffs and offered to address non-tariff barriers outlined in the 2025 US National Trade Estimates Report.
Meetings with United States Trade Representative Ambassador Jamieson Greer and US Secretary of Commerce Howard Lutnick yielded a “positive response,” according to MITI, and the Cabinet has now directed MITI to begin formal negotiations.
As Chair of ASEAN in 2025, the Prime Minister has also been engaging fellow ASEAN leaders since 28 April to strengthen regional solidarity in discussions with the US. “ASEAN encompasses an economic strength of four trillion dollars as of 2024, with a population exceeding 640 million.
Any position on US tariffs must be taken collectively, demonstrating ASEAN’s strategic maturity,” he said. Quoting economist Amartya Sen, the Prime Minister added, “Globalisation is not a monologue. It must be a conversation among equals.”
Although discussions remain in the early stages, the US has agreed to further negotiations with Malaysia. “This process is still in its early stages, and no agreement has yet been finalised,” the Prime Minister clarified.
To safeguard Malaysia’s economy in the short and medium term, the MADANI government has outlined several key strategies.
These include close monitoring of economic indicators—such as manufacturing orders, exports, retail performance, job losses and loan growth—to inform data-driven policy decisions. Engagements with industry, academia, and international institutions will be intensified to support policy development.
In a bid to improve bilateral economic ties, Malaysia is also offering strategic trade incentives. These include the purchase of 30 Boeing aircraft by Malaysia Aviation Group (MAG), with an option for an additional 30 aircraft, a deal expected to boost the country’s tourism sector.
Other initiatives include streamlining trade and investment processes in sectors such as agriculture, finance and digital technology, particularly through cloud service frameworks involving major providers like Google, Amazon and Microsoft. Policies will also be implemented to strengthen intellectual property rights protection, especially in the semiconductor sector.
Support mechanisms will be introduced for exporters impacted by the tariffs. At the same time, Malaysia is intensifying efforts to diversify trade through new markets in Europe, the Middle East, Central Asia, and South America, while also enhancing intra-ASEAN trade cooperation.
Several regional integration projects are already underway. These include the ASEAN Power Grid and key border development zones:
- The Johor-Singapore Special Economic Zone (JS-SEZ), supported by targeted incentives.
- The Second Friendship Bridge connecting Rantau Panjang and Sungai Golok in Thailand.
- New road links between Bukit Kayu Hitam and Sadao, Thailand, to increase cross-border trade.
- Projects under the Northern Corridor Economic Region (NCER), including the Perlis Inland Port to boost high-value logistics, the Chuping Valley Industrial Area for green manufacturing and renewable energy, and tourism infrastructure in Wang Kelian and Bukit Kayu Hitam due for completion by year-end.
An allocation of RM1 billion has also been made to improve border infrastructure between Sabah, Sarawak, and Kalimantan in Indonesia.
At the ASEAN+3 level, financial cooperation is advancing, particularly in regional liquidity support and trade settlement in local currencies, notably with Indonesia and Thailand. Malaysia is also pursuing new trade and investment agreements, including with the European Union.
Progress includes the recent tariff-free export of sustainable palm oil to the UK under the CPTPP and the conclusion of negotiations on the Malaysia-EFTA partnership agreement, expected to be signed next month. Negotiations with South Korea and the EU are also resuming.
Closer ASEAN-Gulf Cooperation Council (GCC) ties are being prioritised, particularly in Islamic finance and halal trade. To accelerate market expansion efforts, the government will allocate an additional RM50 million to the Malaysia External Trade Development Corporation (MATRADE) to support SMEs in accessing new markets through international expos and business matching initiatives.
The government is also encouraging global talent and investment in strategic areas such as artificial intelligence. “We have already begun receiving interest from renowned figures in science and other professional fields,” the Prime Minister said.
The government is equally committed to pushing ahead with MADANI’s broader economic reform agenda, which has already begun yielding early results.
“Despite facing current global challenges, the MADANI economic reform agenda is even more critical to strengthen Malaysia’s domestic resilience and competitiveness,” he added.
Anwar explained that a central pillar of this effort is the New Industrial Master Plan (NIMP) 2030, which prioritises high-value investments, particularly in the electrical and electronics (E&E) sector, while deepening domestic value chains.
Through the Gear-UP initiative, government-linked investment companies (GLICs) have pledged RM120 billion in direct domestic investments over five years, with RM25 billion allocated for 2025.
As of April, RM8.5 billion has been channelled into projects including venture capital and semiconductor investments.
The National Energy Transition Roadmap (NETR) is also being advanced, with renewable energy, especially solar, at the forefront. The government has awarded 2,000MW of solar capacity under the LSS5 programme, representing RM6 billion in investments. A further 2,000MW will soon be tendered under LSS5+. The use of rooftop solar panels will also be expanded across government buildings, including schools.
Digital transformation remains a top priority in Malaysia’s push for economic modernisation. The government has established an artificial intelligence faculty at Universiti Teknologi Malaysia (UTM) and a technology hub at Universiti Putra Malaysia (UPM) focused on post-quantum cryptography.
Other emerging technologies under review include blockchain, which is being considered for integration into the public sector to drive digital culture.
“The government will continue to accelerate implementation of the MADANI Economic Reform agenda as set out in policies such as NIMP, NETR, and the national digital strategy. This is essential not only to spur short-term investment activity but also to build long-term competitiveness amid a volatile global economy,” the Prime Minister said. - May 5, 2025