Malaysia's Anti-Dumping Duties on PET Imports: A Strategic Shift in Regional Trade Dynamics

Malaysia’s recent imposition of anti-dumping duties on polyethylene terephthalate (PET) imports from China and Indonesia marks a significant escalation in its trade protectionism, aimed at shielding domestic producers from what officials call “unfair pricing practices.” Effective May 7, 2025, the duties—ranging from 2.29% to 37.44%—will remain in place for five years, reshaping regional supply chains and challenging both exporters and local industries to adapt.

Background and Rationale

The decision follows a 9-month investigation by Malaysia’s Ministry of Investment, Trade, and Industry (MITI), which concluded that PET imports from China and Indonesia were sold below their normal values in their home markets, causing “material injury” to Malaysia’s domestic producers. The catalyst was a petition from Recron (M) Sdn. Bhd., a local PET manufacturer, alleging that dumped imports had suppressed prices and eroded its profit margins. MITI’s findings underscored a 15% decline in Malaysia’s PET industry’s operating margins between 2020 and 2024, a key driver for the punitive measures.

Duty Rates and Structural Implications

The duties vary sharply by country and exporter:
- Indonesia: A uniform 37.44% tariff applies to all exports.
- China: A tiered system targets specific companies.
- Firms like Far Eastern Industries (Shanghai) Ltd face 4.58%, while smaller players such as Jiangsu Hailun Petrochemical Co Ltd are taxed at 2.29%.
- Unlisted Chinese exporters are hit with a 11.74% rate, nearly double the average for listed firms.

This differentiation suggests Malaysia’s attempt to balance protectionism with trade pragmatism. Lower rates for some Chinese exporters reflect mitigating factors, such as limited dumping margins or voluntary price adjustments, while higher tariffs on non-cooperative firms signal a tougher stance.

Impact on Stakeholders

Local Producers: Recron and other Malaysian PET manufacturers stand to benefit immediately. With reduced competition, they may reclaim market share and stabilize prices. Historical data shows that Malaysian PET producers’ capacity utilization dropped from 85% in 2020 to 68% in 2024—a gap that tariffs could help close.

Exporters: Indonesian PET exporters, burdened by the highest rate, face a stark choice: absorb costs, reduce export volumes, or seek alternative markets. Chinese firms with lower duties may adjust pricing to remain competitive, but those at the higher end—like the 11.74% tier—could see exports to Malaysia shrink by 30–40%, according to industry estimates.

Downstream Industries: PET is a cornerstone of Malaysia’s packaging, textiles, and automotive sectors. While tariffs may protect local PET producers, downstream firms could face higher input costs. could reveal whether this strain impacts broader manufacturing competitiveness.

Market Dynamics and Retaliation Risks

The duties are likely to redirect trade flows. For instance, Indonesian exporters might pivot to markets like Vietnam or the Philippines, where PET demand is rising. Meanwhile, Chinese firms with lower tariffs may dominate Malaysia’s market, potentially consolidating their regional influence.

However, retaliation remains a risk. China and Indonesia could challenge the measures through the World Trade Organization (WTO), or retaliate with their own anti-dumping duties on Malaysian exports.

Conclusion: A Balancing Act Between Protection and Globalization

Malaysia’s move underscores its strategy to prioritize domestic industries amid global trade volatility. The 37.44% tariff on Indonesian PET and the 2.29%–11.74% range for China reflect a nuanced approach, balancing economic nationalism with practical trade realities.

Over the next five years, the policy’s success will hinge on whether local producers can capitalize on reduced competition without triggering retaliatory measures or stifling downstream sectors. For investors, the duties create opportunities in Malaysia’s PET manufacturing but pose risks for exporters and consumers. As MITI’s final report notes, the measures aim to “restore a level playing field”—a goal that will require careful monitoring of trade data and regional market shifts.

In the end, Malaysia’s decision exemplifies the delicate calculus of modern trade policy: shielding domestic industries while avoiding the collateral damage of protectionism. The next five years will test whether this strategy achieves its aims.