US tariff threat puts Malaysia’s solar exports at risk

Industry experts warn of significant decline in export earnings, stressing need for market diversification

KUALA LUMPUR, Malaysia (MNTV) – Malaysia’s solar industry is bracing itself for a potential blow as the United States considers imposing tariffs on solar panel imports from the country, reports MalayMail. 

According to industry observers, up to 4% of the export value of Malaysia’s solar panels could be at risk if the tariffs are implemented. 

The US International Trade Commission (US ITC) has determined that US domestic solar panel makers have been materially harmed or threatened by cheap solar panel imports from Malaysia, Thailand, Cambodia, and Vietnam. 

The commission’s decision paves the way for the Commerce Department to issue orders enforcing countervailing and anti-dumping tariffs on solar products imported from these countries. 

The potential impact on Malaysia’s solar industry is significant. Sedek Jantan, a major Malaysian bank’s head of investment research, estimates that the tariffs could lead to a loss of billions in export revenue. “Assuming a 30% demand reduction, Malaysia could see a significant decline in export earnings, severely affecting the solar sector,” he said.

To mitigate the impact, Sedek suggests that Malaysia adopt a Geoeconomic Hedge Strategy by diversifying its export markets to regions such as Europe, India, and Latin America. “Over-reliance on a single major market, especially one prone to protectionist trade policies, creates significant vulnerability for Malaysian manufacturers,” he pointed out.

The solar industry is a significant contributor to Malaysia’s economy. As such, Sedek emphasizes the importance of diversifying the country’s solar panel export markets beyond the US.

Industry player Itramas Corporation is also concerned about the potential impact of the tariffs. Managing director Lee Choo Boo notes that while the company could be significantly affected, the effect could be cushioned by revenue from its renewable energy (RE) projects in Malaysia.

However, Lee also emphasizes the importance of reducing Malaysia’s dependence on imported technologies. “In the RE sector, we must be steadfast and stay the course of local supply chain development and not just focus on constructing power plants based on the purchase of foreign technology components,” he said.

Furthermore, Lee highlights the potential risks associated with a weakening ringgit. “If Bank Negara Malaysia (country’s central bank) lowers interest rates due to recessionary stresses or shocks, the ringgit will weaken against the US dollar, which would affect us negatively as our technology components are purchased in US currency.”