Malaysia’s halal import restrictions and requirements for bumiputera equity in foreign-owned companies have been flagged by the United States as key trade barriers cited among the reasons behind the 24 percent reciprocal tariff on Malaysian exports.
At the press conference, Tengku Zafrul also said he had assured Washington that Malaysia would maintain an open and neutral trade policy, which would include good ties with partners such as China, the European Union and Gulf Cooperation Council countries.
The minister also said the US has made four demands, calling on Malaysia to address non-tariff barriers, reduce the trade deficit, safeguard US technology, and increase investment in American industries.
Malaysia’s halal import restrictions and Bumiputera equity requirements have been listed as non-tariff barriers in the Office of the United States Trade Representative’s 2025 National Trade Estimate Report.
Olson said he was uncertain whether Malaysia’s US$45 billion investment in US markets, highlighted by Tengku Zafrul, gave Putrajaya any meaningful bargaining power.
He said that would largely depend on how much Trump cared about the constituencies or business interests that would be adversely affected if Malaysia pulled these investments.
Olson also said Zafrul’s pledge of trade neutrality was unlikely to win much favour with Washington.
“The Trump administration seems to be looking for something much more than neutrality in these negotiations – it wants countries to join US efforts to isolate China,” he said.
On April 2, U.S. President Donald Trump announced a baseline 10% tariff on all imports into the U.S., but Malaysian exports were subjected to a 24% tariff. Trump then announced a 90-day pause on tariffs for most countries to allow negotiations. Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz led the three-day mission to Washington that began on April 24.
After a preliminary negotiation, the U.S. has made four demands to Malaysia. Hiding details, Zafrul has merely summarized the demands – non-tariff barriers, trade deficit, safeguarding U.S. technology and investing in American industries. The focus should be on the “non-tariff barriers”, which Zafrul played down as halal certification process that takes longer than other types of certification.
Had Malaysian ethnic Chinese or Indian raised displeasure about halal certification, all hell will break loose. The minority race would be condemned as anti-Malay, anti-Muslim and anti-Islam. Racist Malay politicians would have made thousands of police reports, organized mega rallies, and police would be mobilised to arrest and charge those who dare to touch the sensitive issue.
But halal import restrictions was not the only issue raised by the Trump’s team. Bumiputra equity in foreign-owned companies was another issue flagged by the U.S. As we had published (read here), the U.S. was upset with Malaysian government procurement, where foreign companies are required by law to take on a local – Bumiputera (indigenous ethnic Malay) – qualified partner before tenders will be considered.
Likewise, the country has procurement preference for locally manufactured pharmaceutical products, which discourage the use of imported pharmaceutical (sector which Trump will hit next). Additionally, there are “unfair high tariffs” disguised as excise duty, import tax and sales tax that the U.S. has long complained – import restrictions on automobiles under the Malaysian National Automotive Policy to protect “national car” Proton.
Limiting foreign banks to eight physical branches, restrictions on foreign business of reinsurance, foreign ownership requirements through a 70-30 equity split between foreign investors (limited to 70% ownership) and ethnic Malaysians (must have a 30% stake) are just some trade barriers which Trump deemed unfair practises that Malaysia must fix.
For decades, minority Chinese and Indians have been bullied, threatened, intimidated and suppressed into surrendering at least 30% stake in their business to enrich the Malays, most of whom have political connections. While the minorities cannot do anything to resist, the government is now panicked when Trump administration has unleashed its powerful weapon – tariffs – to fight the discrimination and unfair pro-Bumiputra policies.
Source : Finance Twitter
Source : Malaysiakini
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