• US tariffs on China are pressuring Malaysian manufacturers.
• They face rising costs, outdated systems, and tougher rules while shifting supply chains.

US tariffs on Chinese goods are forcing Malaysian manufacturers to rethink how they manage their supply chains. With more restrictions on trade, companies in Malaysia are seeing both new chances and new problems. Some are getting a boost from foreign investment, while others are struggling with higher costs and parts that are harder to get, especially when their supply chains are linked to China.

In an interview, Ben Lim, Senior Country Manager for Malaysia at Epicor, said, “Malaysia is in a unique position. Our manufacturers are definitely feeling the ripple effects of these trade barriers.”

One big issue is visibility. Many manufacturers don’t have a clear picture of where their parts come from or how exposed they are to tariffs. Lim said, “It’s hard for them to trace where components come from or understand how exposed they are to new tariffs.” This is especially true for companies using old systems that can’t handle fast changes. “Legacy systems don’t offer the flexibility to simulate tariff impacts or help businesses adjust quickly,” he added.

Costs are also rising. When tariffs hit materials at the start of the supply chain, those extra charges flow through production and hurt profit margins. At the same time, manufacturers are being asked to meet stricter rules. They need to keep more records and track things like carbon emissions across the entire supply chain. This adds even more work and requires better systems.

Trying to beat future tariffs, some companies are rushing orders, which is clogging up logistics and delaying shipments. Lim said regional trade deals like RCEP and CPTPP may help businesses cut down their reliance on a single country. These deals can open up access to other markets and give more options when routes get blocked.

He also pointed out that new tools can help manufacturers stay ahead. Supply chain systems and ERP platforms with real-time features let companies plan around problems and keep things moving. Government tax breaks and grants are also available, but Lim said many businesses don’t make full use of them.

Not all the changes happening are short term. While some of the moves are just reactions to new tariffs, others are part of a longer shift. “If you take a broader or bird’s-eye view, I believe this moment is actually transformative for many Malaysian manufacturers,” Lim said. Companies are rethinking where they build and how they ship, and Malaysia is starting to show up more often in those long-term plans. Its central location in Southeast Asia and skilled labor base are part of the reason.

Lim also said the government has set a goal to grow manufacturing’s role in the economy. One estimate puts GDP growth from this sector at 61% by 2030. “There is real momentum, but it’s also exposing a lack of transparency and slow reaction times,” he said.

When demand jumps, so do the problems. Manufacturers can’t just increase output overnight. Lim said, “We’re seeing bottlenecks in logistics, compliance overload, and shortages of skilled workers.” He pointed to past examples during COVID, when similar issues popped up. Now they’re back, and this time the rules are even tighter.

“We’re seeing more rules around ESG, sustainability, documentation, and certifications. These come on top of customs paperwork and other local laws,” he said. Many manufacturers don’t have the people or the systems in place to manage all of it.

He also warned about how companies are using data. Many still work with disconnected systems. Different departments might track things in their own Excel sheets, which causes delays and mistakes. “When data isn’t current, it doesn’t help you make good decisions. It just creates more problems,” Lim said.

One way out of this is to use cloud-based systems. These allow businesses to share real-time updates, work across countries, and stay secure. Cloud platforms also shift costs from upfront spending to regular payments, which is easier to manage. Lim gave the example of a customer using Epicor ERP in both Malaysia and the US. The two teams operate in different time zones but share the same system. This makes better use of resources.

Cloud platforms can also roll out updates faster. Security tools and new features reach users sooner, which matters when threats and rules change fast. “Cybersecurity is a growing concern,” Lim said. “It’s not just about having a good system. You need one that protects your data and keeps your operations going when something hits.”

Another growing challenge is sustainability. Lim said this isn’t just a trend—it’s becoming a requirement. European customers, for example, want proof of how much carbon was used to make a product. One Malaysian firm that makes plastic stretch film is tracking carbon data from start to finish. “Every roll they produce is made to order. They track carbon emissions from the raw materials all the way to shipment. That data is printed on a QR code attached to the product,” Lim said. This helps meet customer and legal demands.

Lim added that working in the cloud helps with sustainability reporting too. The systems can store and sort the data in one place, which makes it easier to prepare reports when needed.

The conversation also turned to the Johor-Singapore Special Economic Zone. Lim said manufacturers should think about how to benefit from it, not just be included in it. Johor could be used for high-volume production, while Singapore could host R&D or regional HQ functions. That mix makes the most of both locations.

“Companies should also look at the tax incentives,” he said. Malaysia offers a corporate tax rate as low as 5% for up to 15 years for high-value manufacturing. But again, many businesses overlook these benefits.

Training is another key area. Johor plans to create 20,000 skilled jobs and attract 50 major projects in the next five years. Local programs from groups like the Johor Talent Development Council are already running. “Upskilling is not just nice to have anymore. It’s necessary,” Lim said.

He summed it up by saying manufacturers that align their operations with new policies, invest in useful tech, and focus on building skills are more likely to benefit in the long run. “Change is constant,” Lim said. “It’s tariffs today, but something else could come tomorrow. Being prepared is what matters.”

For manufacturers in Malaysia, staying competitive now means planning for what’s next, not just fixing what’s urgent.