“Made in Malaysia” Fraud Is Now a Bigger Risk to Genuine Exporters Than the Transshipment Report Itself

If you export from Malaysia, don’t wait for enforcement action to catch up: tighten your documentation, review your contracts with forwarders and agents, and start monitoring for misuse now. A second, distinct risk has emerged since our earlier analysis of the White House transshipment report – we understand that genuine Malaysian manufacturers are increasingly finding their brands and “Made in Malaysia” status misused by third parties, such as errant traders or freight intermediaries, who fraudulently relabel goods that never involved genuine Malaysian production. A free practical checklist is available at the end of this article.

Why this is a different problem from transshipment scrutiny

Our earlier piece dealt with Malaysia’s exposure to scrutiny as a possible transshipment point, where the concern is that genuine Malaysian goods could be caught up in allegations directed at the broader supply chain. This is a separate and, in some ways, more troubling problem: manufacturers who have done nothing wrong at all are finding their name and reputation used by someone else entirely, without their knowledge or consent.

The mechanism is straightforward. A trader or freight forwarder relabels goods of non-Malaysian origin as “Made in Malaysia,” or forges a non-preferential certificate of origin, so the goods clear more favourably or attract less scrutiny in the destination market. The genuine manufacturer whose name is used has no visibility into this until their brand turns up in a market they never sold into, or until a buyer starts asking questions they cannot answer.

Why “these are fraudsters, not us” is not a complete answer

It is tempting for genuine manufacturers, and for Malaysia’s institutions more broadly, to treat this purely as a criminal problem caused by bad actors elsewhere in the supply chain. That framing is true as far as it goes, but it understates the exposure.

Under US customs procedure in particular, the practical burden in these cases typically falls on the exporter or importer of record to disprove an allegation, not on US authorities to prove it. A Malaysian manufacturer whose name has been fraudulently used does not get to simply point at the fraudster and walk away from the conversation. They need to be able to demonstrate, quickly and convincingly, what they actually did and did not export, and to whom.

Malaysia’s own legal framework has already been updated to address this. The 2019 amendment to the Customs Act 1967, in force since 2020, introduced a dedicated chapter on origin of goods and created a specific offence for incorrect declaration of origin. In practice, however, enforcement of these provisions has been slow to activate, partly due to an unresolved question of which authority is responsible for verifying origin claims. Until that resolves, affected manufacturers are largely left to protect themselves through their own documentation, contracts, and vigilance, rather than through the statutory mechanism designed for this exact problem.

What manufacturers should do now: a practical checklist

1. Documentation – protect yourself before a problem arises

• Do keep export invoices, bills of lading, production records and certificate of origin (COO) applications on file and cross-referenced, so you can demonstrate your actual export footprint quickly if your name surfaces somewhere it shouldn’t.
• Do record which markets you actually export to and through which buyers, so a discrepancy is easy to spot and easy to prove.
• Don’t rely on your own memory or informal records. If your name is challenged, the burden will be on you to show the allegation is wrong, not on the accuser to prove it.

2. Contracts with forwarders, agents and distributors

• Do review contracts with freight forwarders, shipping agents and distributors and add representations and warranties on correct labelling and proper use of your COO, backed by indemnities.
• Do consider requiring forwarders/agents to notify you of any relabelling, consolidation or transhipment involving your goods.
• Don’t assume a standard clause will fully solve this. Contractual protection meaningfully reduces but does not eliminate the risk, since it depends on the counterparty being identifiable and worth pursuing. It is a real improvement, not a complete fix.

Note: This requires careful drafting – do not simply copy and paste from an earlier contract, but make sure that your clauses specifically fit the contract at hand.

3. Monitoring for misuse

• Do periodically check online marketplaces, trade fairs and, where accessible, import records for your brand or products appearing in markets you do not sell into.
• Do pay particular attention if you supply products in categories currently under heightened US scrutiny.

Note: if you wait for a complaint or enforcement action to find out, this likely comes too late. Early detection significantly improves your options.

4. If you discover misuse

• Do notify your genuine buyers and distributors proactively. Under US customs law, exposure for a false COO claim typically falls on the importer of record, not the foreign manufacturer, so your genuine buyers have a direct incentive to help and may be a faster route to a correction than Malaysian authorities.
• Do preserve evidence of the misuse (screenshots, listings, shipping documents) as soon as you find it. Make sure that you capture the dates, where you found the evidence, etc.
• Do consider whether the party responsible can be identified. If so, this may support a passing-off or trademark infringement claim under Malaysian law, which does not depend on customs enforcement being resolved first.
• Don’t assume that filing a report alone will resolve this. Enforcement authority over COO verification is currently unsettled and criminal routes have in practice met jurisdictional obstacles.

5. When to involve legal advisers

• As soon as you have identified a specific party misusing your name, brand or COO.
• Before making any public statement, since publicising enforcement action can help deter fraudsters, but timing and wording need care.
• If you are uncertain whether a contract clause, buyer notification or evidence-gathering step is being done correctly for your situation.

If you believe your business has already been affected, or you want help reviewing your forwarder and distributor contracts, we are happy to assist.

Author

Prof. Dr. Harald Sippel, MBA is an Austrian-qualified attorney (Rechtsanwalt) and Senior Foreign Advisor at Aqran Vijandran in Kuala Lumpur, supporting foreign companies, with particular depth in Europe and Korean client work, on Malaysian matters across all practice areas. His recent work includes analysing Malaysia’s exposure under the US transshipment report and advising on the legal gaps that allow fraudulent country-of-origin claims to go unaddressed.

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