US-China trade spat good for Malaysia
Country may see higher foreign investments, particularly from the US
KUALA LUMPUR: Malaysia may see an increased amount of foreign investments, particularly from the United States, if the brewing trade war between the US and China escalates further, according to the American Malaysian Chamber of Commerce (Amcham) executive director Siobhan Das.
Businesses from the US and other countries could make Malaysia an alternative regional production hub for several goods instead of China to avoid the additional tariffs imposed by the US on products imported from China.
Observers have pointed out earlier that the industry that is set to benefit the most from this spat would be electrical and electronics (E&E), which could see a lift in foreign investments and exports if the trade spat between the world’s two economic giants worsens.
The additional 25% tariff levied on the imports from China would likely make Chinese goods pricier. Under such circumstances, global manufacturers may opt to establish their operations in Malaysia or outsource their production to a domestic company.
Das said more business opportu- nities could arise in Malaysia, moving forward, amid the uncertainties in recent times.
“Given the uncertainties revolving around the Sino-US trade spat, I think opportunities will arise for the companies which operate outside China and particularly Malaysia.
“The bigger question now is whether we are smart enough to be able to capture the arising opportunities. In my opinion, Malaysia has a lot of legs to cater to any demand that may come its way,” she said at a briefing during the 2018 AsiaPacific Council of American Chambers of Commerce Summit.
Meanwhile, Amcham’s Malaysian American Electronics Industry (MAEI) chairman Datuk Wong Siew Hai said Malaysia is well-positioned to handle the possible implications from the impending Sino-US trade war.
“If the companies manage to take advantage of the arising opportunities from the trade spat, the likelihood to grow is even greater. That said, it is too early to tell how additional tariffs from both countries would affect Malaysia and the global trade.
“We will have to wait and see whether the trade spat will escalate, or cool down due to negotiations from both sides,” said Wong.
At the summit, Amcham also released its Economic Impact Survey 2018, which polled US companies operating in Malaysia’s E&E sector. The survey was launched by International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
Mustapa remains positive on the trade relationship between the US and Malaysia, amid concerns stoked by the Sino-US trade spat. However, he expects a slight moderation in US-Malaysia trade growth in 2018.
“The trade war between the US and China will have an impact on Malaysia, as China is our biggest trading partner while the US ranks third. We view the recent developments with some concern, given our position as an open economy.
“The ministry is in talks with the US government on tariffs imposed on the solar panels from Malaysia. As for aluminium and steel, we are not as adversely affected.
“Last year, US-Malaysia trade grew by 16.3%, with over half of the trade driven by the E&E sector. For 2018, we may not see a similar robust growth but the US-Malaysia trade will continue to grow at a good rate,” said Mustapa.
The Economic Impact Survey 2018 showed that about 78% of the respondents expect to increase their level of trade and investment in Malaysia over the coming years.
According to Das, total investments by the US’ E&E companies to date have exceeded RM42bil. These investments are largely concentrated in Penang but also with a significant presence in Greater Kuala Lumpur.
“Total trade-in-goods surplus of at least RM19.5bil, contributing at least 20% of Malaysia’s total international trade surplus for 2017.
“Our industry group conducted this survey to show that American investment in Malaysia’s E&E sector is not only strong and ongoing but also of high-value that has important economic benefits for the country beyond the immediate foreign direct investments and job creation,” she said.
Meanwhile, Wong said US companies in Malaysia’s E&E sector are well integrated into the local economy. In 2017 alone, US companies sourced RM12bil worth of goods and services from Malaysian companies.
“While our survey identifies 80,000 high-skilled jobs created by MAEI members, the real number of people who derive their livelihoods from our members’ investments in Malaysia is considerably higher,” he said.