KUALA LUMPUR, Feb 1 ― US President Donald Trump’s plan to prioritise his country’s trade could hurt Malaysia, but observers believe geopolitical developments that result could end up benefitting the southeast Asian nation.
Oh Ei Sun, adjunct senior fellow at Singapore’s Nanyang Technological University’s S. Rajaratnam School of International Studies, said China will likely play a more key role in the future due to existing good ties with Malaysia.
“Europe is wallowing in their own economic doldrums and is thus in no position to talk about transfer of trade. So it is highly likely that more China money is coming our way,” he told Malay Mail Online.
Oh said that the main risk of Trump’s shift in trade policies could be the closure of US factories in Malaysia, but added that the effects would be minimal as there were not many of these still operating here.
Another analyst, Ooi Kee Beng says that although there will be some uncertainties due the Trump’s reversal of predecessor Barack Obama’s policies, the world economy will eventually adapt.
Obama had pushed for closer trade cooperation with Asean as a part of his “pivot” to make the region an ally against China, a policy Trump is unlikely to extend.
“The world is already highly globalised in terms of supply chains and divisions of goods production and skills. Any area experiencing a pullback from the Americans will probably see another player, be this China or some other power, trying to fill the spot,” the deputy director of Singapore’s ISEAS-Yusof Ishak Institute told Malay Mail Online when contacted.
“The big loser will probably be the US as a nation,” Ooi added.
The Association of Chinese Chamber of Commerce Malaysia’s (ACCCIM) Lee Heng Guie said that while the US’ withdrawal from the Trans-Pacific Partnership is a loss for Malaysia, there will be other ways for local companies to increase their export opportunities globally.
“If Trump actually provides a good tax incentive, some US companies might be tempted to go back to the US,” Lee, who is executive director of ACCCIM’s Socio-Economic Research Centre said.
“Malaysia has received a good share of US foreign direct investment in the past, but I don’t think these companies would just close down in Malaysia. They would probably change some strategies.”.
Lee said the biggest concern was over the US’ policy on China, which he said would have repercussions for trade partners.
“We hope Trump’s actions are not too punitive towards China. Because when that happens, there will be a trade war between the two biggest economies in the world, and in that scenario, nobody will gain.”
According to the US State Department’s website, US-Malaysia bilateral trade in goods and services was approximately US$50 billion in 2015 and in 2014; Malaysia was the US’ 19th largest trading partner and the second-largest trading partner among the 10 Asean members in Southeast Asia.
The US is Malaysia’s fourth-largest trading partner.
Malaysia has been China’s top trading partner within Asean since 2008. Bilateral trade between Malaysia and China from January to October 2016 hit RM191.65 billion, an increase of 1.2 per cent from the same period last year.
Parliament had last January given its nod for the TPP and committed to ratify it by 2018, while the 12 nations had signed the TPPA last February 4 after finally concluding negotiations on October 5, 2015.
The 12 nations are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, the US, Vietnam and Malaysia.
Last week, US president Trump signed an executive order to formally remove the US from the TPP, which his predecessor Barack Obama had pushed for.
The move came with Trump’s emphasis on protecting jobs of American workers amid widespread fears of trade unions that the TPP, like the North American Free Trade Agreement (Nafta), which comprised the US, Canada and Mexico, will wipe out American jobs as reliance on foreign suppliers for goods and services would grow.