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Tariff tensions spur Malaysia to rethink role in global solar supply chain. (Photo: iStock)
In response to the U.S. government's reciprocal tariff measures under the Trump administration, Malaysia is urging its solar industry to pivot and expand the domestic market. The goal is to clearly distance itself from Chinese transshipment practices and reduce reliance on exports.
Although Chinese solar manufacturers have been gradually retreating from production in Malaysia, some local players remain cautious.
Government pushes domestic market expansion
Malaysia aims to increase the share of clean energy in its power mix to 50% within five years. However, solar, the country’s key renewable energy source, continues to face headwinds from U.S. tariffs. Washington’s efforts to curb Chinese firms from bypassing duties via third countries like Malaysia have tightened pressure across the entire local supply chain.
According to The New York Times, the Anwar administration, caught between geopolitical tensions with the U.S. and China, is now betting on domestic demand to ease inventory pressures and spur growth. The government also hopes to leverage Chinese expertise and manufacturing capabilities to strengthen local players' competitiveness.
Maybank Investment Bank remains optimistic about Malaysia’s solar prospects. It cited large-scale solar program rollouts, the potential inclusion of energy storage in future development plans, and incentives encouraging corporate renewable power consumption as supportive factors.
Liew Chin Tong, Malaysia’s Deputy Minister of Investment, Trade and Industry, said the country is striving to become a technology creator rather than just an investment recipient. He also pointed to Malaysia’s large middle class as a source of growing domestic energy demand.
Liew Chin Tong, Malaysia’s Deputy Minister of Investment, Trade and Industry, pointed to the large middle class as a source of growing domestic energy demand. (Photo: Liew Chin Tong's Facebook)
Industry players divided over next steps
Justin Sim, President of the Malaysian Photovoltaic and Sustainable Energy Industry Association, echoed similar sentiments. He believes Malaysia can learn from major Chinese manufacturers like Longi to rebuild its domestic solar sector.
"All the Chinese companies came here when there was not really any capacity or interest in building the local market," Sim noted.
Under Beijing’s industrial policy, Chinese solar manufacturers have been exporting large volumes of low-cost panels, which now account for roughly 75% of the panels used in Malaysia. While recent cuts to China’s solar subsidies may open up more room for local production, many Malaysian firms remain hesitant to act.
Malaysian Solar Resources, a company primarily focused on project development, shut down its panel manufacturing operations 12 years ago. CEO Lisa Ong said restarting production is under consideration, but intense competition from Chinese firms continues to raise concerns.
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