The Asean way to mitigate the Trump impact

Malaysia can mitigate Donald Trump’s trade policies by working with its Asean partners, said Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCIM) president Datuk Ng Yih Pyng.

He called on the government to work closely with Asean to continue diversifying its economy, strengthening regional cooperation and expanding trade ties through agreements like Asean–China Free Trade Area (ACFTA), Regional Comprehensive Economic Partnership (RCEP), and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

As for Malaysian businesses, they should focus on cost competitiveness, process efficiency, product quality, and diversifying supply chains and markets to mitigate impacts due to trade conflicts.

“Businesses need to stay up to speed with changes in global trade flows caused by these conflicts.

“They should continuously adjust their supply chains, seek suppliers from other regions, and diversify into different sectors and markets to avoid relying on any single one,” he said.

In all likelihood there would be increased tariffs under the incoming US President and his economic and investment plans on immigration, energy and tax, along with incentives to encourage US companies to return, could cause significant changes in the global economy, affecting capital flows and financial markets.

“These protective policies are expected to disrupt trade and investment flows into emerging markets including Asean,” he said, The Star reported.

What can be done via Asean?

Asean is the fourth-largest trading partner of the United States.

The regional organisation exports various raw materials and assembled goods like electronic components, apparel, footwear and tyres and import products such as electrical machinery, petroleum oils, soybeans and aircraft.

A raise in tariff would make Asean products less marketable.

Ng also suggested several measures to mitigate the Trump impact.

He called for further integration through RCEP and ACFTA, focusing on trade liberalisation and investment facilitation.

He also suggested that more support to be given to the SME through export credit schemes, reducing import duties on raw materials, and helping businesses explore new markets and diversify supply chains.

Ng also called for more incentives to be given to multinational companies that establish regional hubs in Malaysia.

Expanding trade with the Middle East, Africa and Asia Pacific, as well as strengthening ties with the European Union, is crucial, he added.