Thenesh Kannaa, Pengarah Eksekutif TraTax, membincangkan kesan tarif Trump terhadap pengeksport Malaysia dan strategi untuk mengurangkan impak negatif.
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05:01So, what I'm saying is, with the proper documentation, when your invoice is for 100, you could get 10% on 90 or 80, rather than 10% on the entire 100.
05:13So, that preparation, documentation must be there.
05:19So, that's one example.
05:20Another example, still on the valuation point, is a lot of time what happens is, as a manufacturer in Malaysia, the manufacturer doesn't export directly to US.
05:29We use a trading company in the US.
05:31Sorry, in Malaysia.
05:32So, let's say, X and Jan Berhad sell to Y and Jan Berhad, Y and Jan Berhad export to US.
05:38X could sell to Y at 80, and Y could be exporting to US at 100.
05:43So, US adopts this first rule approach, whereby, with right documentation, they allow the 10% to be imposed on the 80, rather than 100.
05:51But, for all this, the Malaysian exporter must do correct preparation, documentation, and liars with the shipping and aircraft, you know, the shipping agent, to make sure that's translated into real savings.
06:05One more thing on your point, just now you mentioned is, it's a very interesting point, right?
06:09A lot of US exports, a lot of it may not be Malaysian headquartered companies.
06:15It can be Malaysian companies, but they could be investors of MNCs, particularly investors of US, which is a lot.
06:22So, then you have a situation where goods are imported from the US into Malaysia as raw material, and then further processing is done, and finished goods is sent back to the US.
06:33So, in this case, the tariff, Liberal Day announcement, there's a full executive order that comes with it.
06:40That executive order allows the tariff to be only on the Malaysian Value Act, excluding the value of the raw material imported from the US.
06:51So, again, documentation, tracing, software preparation, all that is needed to enjoy that.
06:57So, with all this, right, 10% could effectively mean far less than 10%.
07:01Because your invoice value and the value on which the tariff is imposed may be different, could be lower when we follow all these techniques, which are given by the US, but we must have proper documentation to capitalise on these benefits.
07:17That's number one.
07:18Number two, as we know, certain sectors are excluded from this tariff, reciprocal tariff.
07:25So, that is at a broad level, but to actually enjoy the benefit, you must use the correct tariff code.
07:32So, again, the tariff code, there's a lot of chapter notes, section notes, and all those things to be followed.
07:37The same product sometimes can have different tariff code, depending on whether it's used for A or B and all that.
07:43So, that's a very technical area.
07:44Again, trade and customs specialists, tax accountants can come in to advise on that, and that can bring down the tariff to 0% for certain goods.
07:55Okay, that sounds good, basically.
07:58Basically, Tinesh, one more issue that concerns, especially among industrial players, is about dumping of goods from China.
08:09Could China manufacturers simply reroute goods through Malaysia to benefit from the lower tariffs compared to other countries,
08:20or there will be a big issue on goods dumping all products from China that cannot enter to U.S., then they divert it to Malaysia, for example.
08:33Okay, I think that's a very interesting question.
08:35Maybe I've split that question into two aspects, final product and intermediate product.
08:39Okay, so final product is consumer goods.
08:42So, of course, at the end of the day, U.S. consumer market, if you look at it, the population is over 300 million.
08:50The world population is about just below 5% of the world population.
08:56But, of course, their spending power is higher, right?
08:58Yeah, spending power is higher.
08:59So, when you factor it in, it's there.
09:01So, then, for finished goods, if you don't export to U.S., question is, what does China do with excess capacity, right?
09:09Of course, they want to boost domestic consumption.
09:11We saw this announcement from the Chinese government earlier this week.
09:15They want to boost domestic consumption.
09:16But, in addition to that, it's widely expected that they may flood the other markets.
09:22And, of course, ASEAN, China, we have a free trade agreement.
09:25So, we also don't impose import duty on those imported goods there.
09:30So, that concern is there.
09:33It's valid.
09:33And that is where even Malaysian SME that is not involved in export will have to monitor the situation
09:42because it affects the imported products there, right?
09:47And, of course, not just that.
09:48Even if you're a Malaysian company and you're exporting, but you're exporting only to Europe, for example,
09:53you still have to factor in this because China's excess capacity will affect the third country market.
10:00It kind of changes the dynamics.
10:02Also, the currency dynamic changes.
10:04So, a lot of things to monitor there.
10:06Then, the other aspect is intermediary goods.
10:08So, should we expect a lot more intermediary goods, which means not finished goods,
10:13but semi-processed goods from China to Malaysia,
10:16to be further processed in Malaysia, to be sent to US,
10:20because our tariffs are lower than what has been imposed on China.
10:25I pun, you know, once it's over 100%, we don't need to monitor already.
10:29It's very high already.
10:30So, then, in those kind of things, we have to see,
10:35in order to be regarded as originate from Malaysia,
10:40generally, some amount of manufacture must happen in Malaysia.
10:42Certain value add must be in Malaysia.
10:45And there's also a process to obtain the origin certificate from MITI.
10:50and we must also bear in mind the origin rule in the US is a bit unique
10:55as compared to the rest of the world.
10:57So, those things have to be factored in for Malaysian companies
11:00who are part of an M&E group
11:02or even an SME who's working closely with a Chinese exporter
11:06to tap into this kind of options.
11:10With current uncertainties and, yeah, based on your experience,
11:17how long does it take typically for, like, exporters to adjust,
11:23do some adjustment, maybe in terms of, yeah, their supply chains
11:28and also their operational and also financial way of doing business
11:34with these uncertainties and with adjustment on policies,
11:38typically, like, how long does it take for the industrial player,
11:44especially exporters who are really involved
11:47in this very dynamic ecosystem right now?
11:51Well, if you really want to put it into the software,
11:56it takes months, right?
11:57But as I always say, for matters like this,
11:59you have to look at it step by step.
12:01So, first of all, a lot of orders have been front-loaded.
12:04A lot of exports have already been front-loaded
12:07and sent before the Liberal Day announcement.
12:10So, volumes, as I gather from my clients now,
12:12are not at the peak.
12:14Okay.
12:14You know, because as far as they can,
12:16they've done that already.
12:20Of course, there are also some that are peaking now
12:24because they want to maximize the 90-days period,
12:27taking into account the logistics lead time.
12:29But what I'm saying is you have to look at the techniques
12:35that I mentioned quite a few,
12:36which one is the most relevant
12:37and what is the most essential thing to do that
12:40and then put in the process for that first.
12:42At least you go for the big saving first
12:44and then from there, it is step by step,
12:48we maximize and also we incorporate it into the system
12:51because we can't straightaway say that,
12:53okay, get the IT system ready,
12:54then only we want to go for the...
12:56No, you go for the low-hanging fruits,
12:58the most important ones
12:59and then once the process is standardized,
13:02then we put into the system.