Solar Panel Manufacturers to Cease Operations in Malaysia
PETALING JAYA: Multiple China-based solar panel companies have reportedly halted or cut back on their operations in Malaysia as they brace for tariff hikes by the incoming Donald Trump administration in the US.
Impact of Tariff Hikes
Tariffs imposed by the US in 2024 have already affected the profit margins of these companies, and further hikes are expected with Trump taking office. The affected companies include Jinko Solar Co – the largest solar panel producer globally – Risen Energy Co, and JA Solar Technology Co. These three companies contribute to 40% of Malaysia’s total capacity for solar production.
Rise of Chinese Solar Panel Manufacturers
Risen Energy is said to have reduced its operations over the past six months, after initially planning to invest more than RM42 billion over 15 years in its factory in Kulim, Kedah. The company began production in Malaysia in 2021. Another Chinese firm, Longi Green Energy Technology Co, has scrapped plans to expand its operations in Malaysia after establishing three solar panel factories in Selangor and Sarawak.
Malaysian Photovoltaic Industry Association’s Analysis
Malaysian Photovoltaic Industry Association adviser Chin Soo Mau said more Chinese companies were expected to cease operations in Malaysia, as many had set up shop here purely to target the US market. "With higher scrutiny over the ownership of companies exporting solar panels to the US, and potential higher tariffs by Trump, their products will no longer be competitive in the US market," he was quoted as saying.
Contribution of Chinese Firms to Malaysia’s Solar Production
Consultancy firm Wood Mackenzie reported that nearly 80% of Malaysia’s solar production capacity in 2024 were contributed by Chinese firms, with the remaining from US’s First Solar, and Korea’s Hanwha Qcells. These solar panels are mostly exported to the US.
Impact on Local Supply Chain and Workforce
A source at a local bank told The Straits Times that the move by major Chinese firms to scale down or cease operations had a ripple effect on smaller companies in the supply chain that were also from China. "They are unable to supply their products to the major solar panel manufacturers that have shut operations," said the banker, whose clients included some of these smaller China companies.
Job Losses and Revenue Downturn
With more Chinese solar panel manufacturers anticipated to leave the Malaysian market this year, Wood Mackenzie’s head of solar supply chain research, Yana Hryshko, said more than 5,000 workers stand to lose their jobs while revenue from the sector would dwindle.
Government’s Efforts to Attract Local Investment
However, a government source said Putrajaya’s agencies were trying to get some of these companies to help in Malaysia’s transition to renewable energy. "The manufacturing facilities are already built, so we are exploring whether they can be used to supply solar panels to local power producers," said the senior government official, who did not want to be named.
Conclusion
The move by Chinese solar panel manufacturers to cease operations in Malaysia is expected to have a significant impact on the local industry, with potential job losses and revenue downturn. However, the government is exploring ways to attract local investment and utilize the existing manufacturing facilities to support Malaysia’s transition to renewable energy.
Frequently Asked Questions
Q: What is the reason for the decline of Chinese solar panel manufacturers in Malaysia?
A: The decline is attributed to the expected tariff hikes by the incoming Donald Trump administration in the US, which will make their products uncompetitive in the US market.
Q: Which Chinese companies are affected by this decline?
A: Jinko Solar Co, Risen Energy Co, and JA Solar Technology Co are among the affected companies.
Q: What is the impact on the local supply chain and workforce?
A: The decline of Chinese solar panel manufacturers is expected to have a ripple effect on smaller companies in the supply chain and result in job losses.
Q: What is the government’s plan to address this issue?
A: The government is exploring ways to attract local investment and utilize the existing manufacturing facilities to support Malaysia’s transition to renewable energy.