KUALA LUMPUR: Malaysia may be less affected than Cambodia, Thailand and Vietnam as the four countries brace for steep new tariffs by the US on solar panel imports from Southeast Asia.
Hence, Malaysia should maintain its key role in the regional solar supply chain, industry observers said.
On Monday, the US Department of Commerce announced plans to slap up to 3,521 per cent tariffs on solar products from the region.
The proposed duties are part of an effort to counter alleged Chinese subsidies and dumping practices in the solar sector.
The tariffs, which target companies operating in Cambodia, Thailand, Malaysia, and Vietnam, are still subject to approval by the US International Trade Commission with a final decision expected by June 2.
Tradeview Capital fund manager Neoh Jia Man noted that if the duties are approved, Malaysia may fare better than its regional peers.
He said this is primarily because the combined US anti-dumping and countervailing duties on Malaysian solar photovoltaic (PV) producers, excluding six named firms, stand at 34.41 per cent.
This is significantly lower than the general rates of 651.85 per cent for Cambodia, 375.19 per cent for Thailand and 395.85 per cent for Vietnam.
"As such, Malaysia is likely to maintain a meaningful role in the regional solar supply chain," he told Business Times.
"However, we do not rule out the possibility that some producers may consider relocating operations to jurisdictions not affected by these duties."
Nevertheless, Neoh said there remains a possibility that some producers may consider relocating their operations to jurisdictions not impacted by the proposed duties.
This, he added, could very well be the underlying intention of the US government.
"The imposition of such high duties appears to be aimed at incentivising domestic solar PV production in the US.
"Given the scale of these duties, they could prove effective in gradually redirecting solar sourcing away from Southeast Asia," he said.
Neoh also expects expect foreign direct investment (FDI) into the region's solar PV manufacturing sector to be adversely affected, at least in the near term.
However, he does not foresee a major impact on broader regional stock markets, as many key solar PV manufacturers operating in Southeast Asia are mainland Chinese companies.
UniKL Business School economic analyst associate professor Dr Aimi Zulhazmi Abdul Rashid said Malaysia's tariff rate is the lowest among Southeast Asian countries.
This helps position the country at the most favourable end of the spectrum and helping to maintain its competitiveness.
He said this is especially beneficial for Malaysia, as the country is no longer an ideal destination for low-cost manufacturing and is ready to transition into high value-added industries.
"In terms of production costs, we are not as competitive as Vietnam and Cambodia.
"This upward shift aligns with the objectives of the New Industrial Master Plan 2030 (NIMP), which aims to increase the manufacturing sector's value-added by 61 percent to RM587.5 billion by 2030, while also creating more jobs and raising median salaries," he added.
Aimi also acknowledged that despite these advantages, the region's role as a key global solar manufacturer has come under significant pressure.
He said this could potentially divert solar investments to countries outside Southeast Asia and result in the loss of potential foreign direct investment.
However, he emphasised that Southeast Asia remains an attractive region, both as a manufacturing base and as a consumer market.
"Asean has a growing population of 660 million and a gross domestic product of US$4 trillion, with an average annual growth rate of four percent. It is the third-largest economy in Asia and the fifth-largest in the world.
"The rising size of the middle-income segment and increasing purchasing power over the years certainly make Asean irresistible to investors.
"The solar tariff imposed by the US is a minor setback for the region if it is implemented. However, other industries continue to attract investors on a large scale," he added.
Source: https://www.nst.com.my/business/economy/2025/04/1205972/malaysia-seen-weathering-us-solar-tariffs-better-peers