KUALA LUMPUR: Malaysia has proposed a technology safeguard agreement to the United States in an effort to reinforce investor confidence and protect the stability of global supply chains amid increasing trade tensions and tariff uncertainties.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the proposal aims to reassure both the US government and American companies operating in Malaysia, particularly those involved in semiconductor and electrical and electronics (E&E) manufacturing.
“Many of the companies operating in Malaysia and exporting to the US are American-owned. We are working closely with these stakeholders, especially as semiconductors could potentially be impacted by upcoming tariff policies,” Zafrul said in an interview with CNBC on Friday.
Semiconductors currently account for approximately 30% of Malaysia’s exports to the US, with another 30% comprising broader E&E products — sectors that are particularly vulnerable to shifts in global trade policies.
Zafrul acknowledged that Malaysia’s open economy could face repercussions from the broader global tariff environment, particularly if the US implements new duties on Chinese imports or if there is further decoupling in critical technology sectors such as artificial intelligence and chip manufacturing.
“We are studying the potential impact closely. Any tariff escalation, whether involving the US or China, affects not only direct trade but also multinational firms, including Malaysian companies integrated within global supply chains,” he said.
He added that a forced decoupling between the US and China in high-tech industries would likely result in higher operational costs and supply chain disruptions — trends that are already becoming apparent.
“With tariffs imposed on China and other parts of the world, we foresee further cost escalation. This, in turn, could dampen demand and impact global supply flows,” he noted.
Malaysia’s pitch for a technology safeguard agreement comes at a time when governments and corporations are racing to mitigate geopolitical risks in the technology sector, particularly around semiconductors, which are central to everything from smartphones to advanced defence systems.
Zafrul reiterated Malaysia’s commitment to fostering a stable, predictable investment environment and said such agreements could serve as a model for greater US-Malaysia collaboration in high-value industries.
The country is also aligning its industrial policies, including the recently launched New Industrial Master Plan 2030, to build long-term resilience and competitiveness in advanced manufacturing and digital technologies.
