Malaysia to Tighten Domestic Oversight of US Chip Movements

Move to enforce trade permit requirement aimed at lowering tariffs set for Aug 1

- Lu Wei Hoong

KUALA LUMPUR - Malaysia has moved to tighten oversight of the movement of high-end chips from the United States by imposing a strategic trade permit requirement, in the hope of lowering the tariffs imposed by US President Donald Trump from Aug 1.

Mr Trump sent a letter to Malaysia's King, Sultan Ibrahim Iskandar, and Prime Minister Anwar Ibrahim, formally notifying them of a 25 per cent tariff on Malaysian exports - a percentage point higher than the 24 per cent announced in April.

Industry players and analysts view Kuala Lumpur's plan on the domestic movements of the high-end chips as a concession to Washington, aimed at preserving its trade ties with the US - Malaysia's second-largest trading partner after China, and its top export destination, especially for semiconductors and electronic goods.

Malaysia recorded a trade surplus of US$24.8 billion (S$31.8 billion) with the US in 2024.

Malaysia's Ministry of Investment, Trade and Industry on July 14 invoked the Strategic Trade Act (STA) 2010 - regulating the export, transit, trans-shipment and brokering of sensitive goods to prevent their use in weapons of mass destruction (WMDs) - to compel individuals or companies to notify the authorities at least 30 days before the cross-border movement of these chips if there is a possibility that they may be used for a restricted activity.