Malaysia should stand together with Canada, Mexico and China against newly inaugurated US President Donald Trump’s destructive tariff policies that endanger sustainable economic growth and spike soaring inflation globally. A global trade war with retaliatory tariffs may have the same adverse impact on escalating inflation and arresting economic growth as the COVID-19 pandemic.
For this reason the global community must unite against Trump’s tariffs. Even though the 25% tariffs on Canada and Mexico as well as an additional 10% on existing tariffs already imposed on China does not directly involve Malaysia as yet, Malaysia will still be indirectly impacted. China is by far Malaysia’s largest trading partner for the last 15 years and any negative impact on China’s economy, would also adversely affect Malaysia.
China supplies materials and components needed in the most efficient and cost-effective manner for our country’s electronic hub. Increasing the cost would definitely disrupt the supply chain and may result in shortages. Further, for an important electronics hub like Malaysia, the supply chains reach as far as Mexico and Canada due to its proximity to the United States, and as the final destination of most of our exports.
Trump’s protectionist tariff policies pose the greatest threat to containing inflation and generating sustainable economic growth for Malaysia. Reducing business costs is necessary as a tariff shield against inflation and to preserve our gains in building a sustainable growing economy.
Domestically, the following financial and tax adjustments to reduce business costs should be adopted by the government, especially for small and medium enterprises (SME):-
1. Raising the chargeable income threshold for the 15% tax rate from the current RM150,000 to RM300,000 and increasing the subsequent chargeable income threshold for the 17% tax rate from the current RM600,000 to RM700,000 thus allowing SMEs to enjoy annual tax savings of RM10,000;
2. Increasing the threshold of e-invoicing to be implemented in July 2025 from a yearly revenue of RM 150,000 to RM 500,000, to exempt small businesses;
3. Requiring only foreign workers to make EPF contributions and exempting employers from doing so;
4. 2% tax on dividend income exceeding RM 100,000 should be limited to publicly listed companies and not private companies;
5. Defer the imposition of a luxury tax to encourage tourism; and
6. Defer the withdrawal of RON 95 fuel subsidies and not float RON95 to market price, which will only cause inflation and rising transport costs.
LIM GUAN ENG
MP FOR BAGAN
DAP NATIONAL CHAIRMAN
