Kuala lumpur: Malaysia should focus on enhancing intra-ASEAN trade relations and pursue multilateral partnerships to reduce reliance on any single country, thereby minimizing trade barriers such as tariffs and facilitating smoother movement of goods across borders.
According to BERNAMA News Agency, the current geopolitical shifts and the rise of unilateral trade measures necessitate Malaysia’s diplomatic response aligned with its national interests. Economist Dr. Nungsari Ahmad Radhi suggested that Malaysia maintain its strategy of engaging with the United States while fortifying alliances and trade relations within ASEAN.
Dr. Nungsari emphasized the importance of supporting multilateral institutions over the long term. He advocated for greater integration of ASEAN economies, even if this means starting on a bilateral level with countries like Singapore, Thailand, and Indonesia. He proposed exploring customs unions and free movement of goods between these nations to strengthen economic ties.
Dr. Ahmed Razman Abdul Latiff, Associate Professor at Putra Business School, concurred, noting the potential for successful tariff negotiations as seen with countries like the Philippines and Vietnam. Ahmed Razman urged Malaysia to continue negotiations and seek new markets while diversifying its industrial base to mitigate the impact of potential tariffs.
Malaysia has been in talks with Washington since April to reduce US-imposed tariffs, with the latest discussions held on June 18. However, Ahmed Razman highlighted that Malaysia must not depend solely on these negotiations but should also bolster intra-ASEAN trade to tap into untapped potential and reduce supply chain disruptions.
Participation in regional agreements such as the Regional Comprehensive Economic Partnership and BRICS could help lower costs and facilitate trade among member countries, Ahmed Razman added.
The US has imposed a 25% tariff on all Malaysian imports effective August 1, an increase from the 24% announced in April. In a letter to Prime Minister Datuk Seri Anwar Ibrahim, US President Donald Trump indicated that no tariffs would apply if manufacturing shifted to the US, promising expedited approval processes.
Muhammad Ridhuan Bos Abdullah from Universiti Utara Malaysia highlighted the need for a national stabilisation policy to manage the disruptions caused by these tariffs. He pointed out the necessity of robust monetary and fiscal policies by Bank Negara Malaysia to absorb the impact and maintain competitiveness.
Muhammad Ridhuan also noted the role of rising labor costs in the US, driven by wage increases and a competitive market, affecting various industries and shaping trade dynamics.