FMM In The News: THE EDGE MALAYSIA, May 5, 2025

KUALA LUMPUR (May 5): The Federation of Malaysian Manufacturing (FMM) has recommended that the government implement various policy refinements as well as regional and domestic initiatives to spur export diversification and bolster supply chain resilience.  

In a statement showing its support for the government’s strategic response to the US’ impending tariff actions, the organisation representing 13,000 manufacturers lauded the RM50 million additional funds allocated to Matrade to support new and emerging markets.

However, FMM called for enhancements to Matrade’s market development grant (MDG) — a support initiative aimed at assisting exporters in promoting Malaysian-made goods and services globally — to maximise the additional funding.

“In addition to better supporting SMEs [small and medium enterprises], the MDG framework should also empower trade associations such as FMM to organise targeted export missions and activities tailored to industry needs.

“This includes raising funding caps for association-led missions, waiving the RM25,000 collaboration fee for partnering with Matrade, and expanding eligible activities to include product adaptation, certification, digital marketing, and market research,” it said. 

FMM said enabling associations to play a more proactive role in export promotion will significantly strengthen the reach and help businesses capitalise on new opportunities in non-traditional markets.

Meanwhile, in its position as chair of the Asean Manufacturing Network (AMN), FMM reiterated the proposal to the government to establish an Asean Supply Chain Coordination Council (ASCCC) as a key Asean deliverable this year.

The ASCCC is envisioned as a dedicated regional coordinating body that will bring together relevant Asean sectoral bodies to align policies, identify gaps and overlaps, and oversee the implementation of Asean’s framework on supply chain efficiency and resilience, according to the federation.  

“Unlike existing platforms, the ASCCC will operate at an operational and technical level to drive tangible outcomes such as the digitalisation of supply chain processes, joint crisis response protocols, intra-Asean sourcing networks and supplier matchmaking.

“Its establishment would address the current fragmentation in regional supply chain initiatives and position Asean to respond more cohesively to geopolitical and economic shocks, including trade restrictions from major economies,” it added.

On the domestic front, FMM said it supports the Ministry of Investment, Trade and Industry’s (Miti) initiative to establish a National Supply Chain Council (NSCC) to address systematic vulnerabilities and strengthen national coordination across key sectors.

FMM also welcomed the government’s efforts to strengthen domestic market resilience by enhancing SMEs’ access to government procurement (GP), but noted a “credible, transparent and inclusive” GP system — anchored by a ‘Buy Made in Malaysia’ first mandate — is vital to stimulating domestic demand and enhancing national production capabilities.

However, central to this is streamlining and expediting the GP Act’s implementation, according to the association.

“The Act must be operationalised without delay, with a clear enforcement framework that ensures compliance and supports meaningful SME participation. To maximise its impact, the GP framework must be effectively enforced and implemented across all levels of government as provided for under the Act.

“Furthermore, FMM recommends that government-linked companies, given their significant role in supporting national industrial development, should be subject to a clear mandate or strong policy encouragement to increase their procurement from local manufacturers,” it added.

Lastly, to safeguard against unfair and fraudulent trade practices, FMM said the government must take firm action in addressing fraudulent certificates of origin (COOs), which is critical in preventing Malaysia from being misused as a transhipment hub.

With regard to this final point, Miti announced on Monday that starting Tuesday, the ministry will be the sole issuer of non-priority COOs for exports to the US.