KUALA LUMPUR, Aug 15 — The Port Klang Free Zone (PKFZ) today rejected any suggestion that the presence of Chinese-linked businesses or cargo at its facility is evidence of tariff evasion, following a new US report that places Malaysia among economies facing elevated risks of illegal transshipment.

PKFZ chairman Lim Lip Eng said the free zone operated within a regulated customs and trade compliance framework and did not facilitate or endorse false declarations, misrepresentation of origin or circumvention of international trade measures.

“Therefore, the presence of Chinese-linked businesses or international cargo within a Malaysian free zone should not, in itself, be interpreted as evidence of tariff evasion or illegal transshipment,” he said in a statement.

Lim said all investors, manufacturers, traders and logistics operators seeking to establish operations at PKFZ were subject to screening, due diligence and regulatory requirements under Malaysian law and free-zone regulations.

He said matters involving the origin of goods and export certification were handled by the relevant national authorities rather than PKFZ.

For US-bound exports, the Ministry of Investment, Trade and Industry (Miti) has been the sole issuer of Non-Preferential Certificates of Origin since May 6 last year with the certification process requiring supporting documents including cost analyses, statutory declarations, manufacturing information and raw-material records.

“PKFZ also welcomes greater scrutiny and stronger enforcement against genuine cases of trade fraud,” Lim said.

He added that a transparent and properly regulated trading environment would protect legitimate investors and strengthen Malaysia’s position as a regional logistics and manufacturing hub.

He said PKFZ would cooperate with Miti, Customs and other relevant authorities if there were regulatory concerns or indications of non-compliance.

Lim’s remarks come after a US report, titled The Great Transshipment Scam, examines the rerouting of goods through third countries to avoid higher US tariffs, particularly involving Chinese-origin goods, and outlines measures Washington is taking to detect and penalise such practices.

The report by the US Office of Trade and Manufacturing Policy identified more than 40 economies as being associated with elevated illegal transshipment risk, with Malaysia placed in its second tier alongside Brazil, Indonesia, Thailand, Türkiye and Vietnam.

The report said Tier 2 economies had significant trade volumes involving China-linked goods and deeper integration with Chinese supply chains, manufacturing platforms and logistics networks, while stressing that the trade flows also included legitimate activity.

It said the US had seen a shift in import sourcing since tariffs on Chinese goods were introduced in 2018, with China’s direct share of US goods imports declining while the combined share supplied by the identified transshipment-risk economies increased.

However, the report acknowledged that the shift did not establish that all displaced Chinese trade had been illegally transshipped, noting that some reflected legitimate changes in production, investment and sourcing.

The report estimated a central annual illegal transshipment flow of about US$75 billion (RM306.44 billion), with associated US federal revenue losses estimated at US$19 billion to US$26 billion (RM77.63 billion to RM106.23 billion), although it stressed that the figures were model-based estimates rather than observed losses.

The US administration said it was developing an AI-enabled “Detective Border” system to help Customs and Border Protection analyse shipment data, routing histories, product classifications, ownership links and other indicators to identify high-risk shipments and distinguish legitimate foreign investment from illegal pass-through trade.