Friday 29 Mar 2024
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KUALA LUMPUR (April 18): A new US probe has cast a shadow over the growth run of Southeast Asia’s role as the country’s top solar supplier.

In March, the US Department of Commerce (Commerce) opened an investigation into solar modules imported from four countries in Southeast Asia, including Malaysia.

The International Trade Administration, the Commerce agency responsible for protecting US businesses from unfair pricing, had said the body will investigate whether solar products completed in and exported from Cambodia, Malaysia, Thailand and Vietnam are circumventing US solar duties.

In a report last Friday (April 15), The Wall Street Journal (WSJ) said that for the past five years, Southeast Asia had ranked as America’s top source of solar panels from abroad, driven in large part by Chinese manufacturers who expanded into the region after the US in 2012 imposed duties on exports from China.

The report said Washington wants to know how much China-made material is used in solar panels shipped from Malaysia, Vietnam, Thailand and Cambodia — countries that accounted for 85% of American imports last year.

It said the American agency is investigating whether producers do small-time processing in these countries to skirt tariffs while reaching back into China-based supply chains for critical components.

The scrutiny came as Southeast Asia was poised for new investments to meet growing clean-energy demand in the US, which doesn’t make anywhere near enough solar panels to support the surge.

Many of those expansion plans will now slow down as the industry awaits a ruling.

If heavy tariffs are imposed, the region would become far less attractive as a US-focused manufacturing base, said the WSJ.

Factories pumping out solar products are spread across Southeast Asia — from Penang and Sarawak to the coastal city of Rayong in Thailand.

The WSJ said the petition that led to the US probe says Chinese companies built globally dominant supply chains, thanks to government subsidies and other backing that enabled them to cut prices and squeeze out competitors.

The US argues that the companies rely on those supply chains for critical portions of the manufacturing process and finish up the goods in Malaysia, Vietnam, Thailand and Cambodia so that they can export to the US without paying the decade-old US duties.

The report said the Malaysian government had said that making solar cells and panels is capital-intensive and complex.

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