Exempt tax, duty for returned exports, manufacturers urge govt

2026-03-27 - 05:01

The Federation of Malaysian Manufacturing said returned exports are merely goods being turned back to manufacturers because of theIr inability to access ports, carrier diversions, or buyer suspensions. PETALING JAYA: The Federation of Malaysian Manufacturing (FMM) has urged the government to exempt sales tax and import duties for exports returned to Malaysia amid the Middle East conflict. FMM president Jacob Lee said manufacturers are facing rising costs and supply delays because of the conflict, on top of higher fuel prices and freight charges. He said this required immediate duty and tax reliefs, among others, to support industry players, including the exemptions for returned exports. Lee said returned exports were merely goods being turned back to manufacturers because of their inability to access ports, carrier diversions, or buyer suspensions. However, manufacturers have to pay both the sales tax and import duty to “reimport” what they had initially exported. “These are not commercial imports. The goods were manufactured in Malaysia, exported, and are being returned to the same production facility through no fault of the manufacturer. “Furthermore, these goods meant for the export market are not sold or consumed here, nor do they enter the domestic supply chain. “Treating them as taxable imports places an additional financial burden on firms already absorbing unplanned logistics costs from the conflict,” he said in a statement. Lee also called for additional tax reliefs for 2026 and 2027 for all logistics expenditures resulting from the Middle East crisis. He said manufacturers are absorbing these unplanned logistics costs, including war risk surcharges, excess freight charges for rerouted shipments, and higher marine cargo insurance premiums. He urged Putrajaya to extend diesel subsidies to fuel-intensive industries and to halt port tariff increases planned for the year. He also suggested that the government order energy producers to prioritise supplying petroluem-based feedstock to domestic players throughout the crisis while giving duty exemptions to firms that import from alternative sources. “The impact of this crisis spans energy costs, logistics, raw material supply, tax treatment and port operations simultaneously. It demands a coordinated whole-of-government response, not individual ministries managing their respective areas in isolation. “FMM stands ready to work with the government as an active partner in that response,” he said. Multiple trade groups have urged Putrajaya to intervene with relief measures due to the conflict’s economic effects, from sectors like construction to rubber gloves and tourism.