Important to maintain international business ties
18 Mar 2024
While geopolitical tensions between China and the United States and the European Union (EU) offer Malaysia opportunities to grow trade and investments, experts say consistent engagement with international partners is crucial to ensure such opportunities materialise.
Malaysia’s commitment to fostering strong international relationships and positioning the nation as a prime investment destination is exemplified by the Prime Minister Datuk Seri Anwar Ibrahim’s working trips to Australia and Germany recently.
Speaking with StarBiz, Asia-Pacific Economic Cooperation (Apec) secretariat executive director Tan Sri Rebecca Fatima Sta Maria highlighted the importance of maintaining consistent business and international relationships.
She said regular engagement in international relations and diplomacy helps foster strong partnerships.
“You must set the tone at the highest level about Malaysia’s openness for business and interest in foreign investment. So, there is absolutely no problem with the Prime Minister going on his various trip missions,” the former International Trade and Industry secretary-general told StarBiz.
In the backdrop of China-US and EU-China trade tensions, Malaysian Institute of Economic Research head of research Shankaran Nambiar said the geopolitical tensions presented greater-than-normal opportunity for countries like Malaysia as investors and companies seek alternatives to China.
“The ‘anything but China’ policy will encourage countries with investments in China to relocate to Malaysia. Even Chinese companies will want to be based in Malaysia,” he added.
Despite recognising the possibility for Malaysia to do better, Sta Maria said the government must work hard to keep Malaysia competitive at the global stage.
She stressed on the importance of having a presence and engaging with international business communities and policymakers to foster political and economic relationships.“It is important to be seen being on the ground, to get a feel about what perceptions businesses have towards Malaysia. It is important to have those interactions,” she noted.
With Malaysia set to chair Asean next year, Sta Maria expects the prospects for trade and investment to improve.
Commenting on the positives, Nambiar pointed out Malaysia’s stable political environment and abundant supply of educated and skilled workers.
“We also offer a good investment ecosystem, strong investment facilitation and we have agencies such as Malaysian Investment Development Authority that have a long tradition of being investor-friendly. Besides, our economic fundamentals are solid,” he noted.
For example in the electronics and electrical sector, he said Malaysia enjoys a competitive edge, boasting top-notch supporting services and networks in the region.
He said such advantages position Malaysia well for leveraging opportunities in the global market.
When asked if Malaysia needs a free trade agreement (FTA) or other deals with the EU or other economies to gain a competitive edge against its rivals, Nambiar said the country has attempted to sign an FTA with the EU multiple times, but failed.
Instead of engaging in long talks of FTA with the EU, he suggested turning the focus to attracting investments from them.
“Rather than engage in long, costly negotiations with the EU, as a quick fix, we should direct our attention to attracting investments from the EU.
“At a firm-level that would give us quick results. An FTA with the EU should be on the radar,” he added.
On the impact of a potential Donald Trump’s second presidency term, Nambiar suggested it might escalate trade tensions with China, potentially redirecting investments intended for China to Malaysia.
“Trump’s attempt to make America great again will make Malaysia a tiger, since investments that are destined for China could find their way to Malaysia,” he said.
Consequently, he said Trump’s policies could inadvertently bolster Malaysia’s as an investment destination.
In contrast, Sta Maria emphasised the importance of maintaining business relationships regardless of the outcome of the November US presidential election.
“Regardless of who is in the White House, maintaining the economic relationship is important,” she noted.
In a recent survey conducted by Nomura Research, about 40.7% of respondents perceive a Trump second term (2.0) will have a positive impact on Asian economies, compared with his first term.
The survey findings, which received around 60 responses, noted that 33.9% of respondents expect Trump 2.0 to have a similar negative impact as his first term, while only 25.4% anticipate it to be worse than before.
Nomura Research said the findings were intriguing as the respondents suggested that although a second Trump presidency was viewed negatively for Asia overall, a majority expected it to be less detrimental than his first term.
“Our interpretation is that investors believe Trump 2.0 will be less of a shock factor (compared to Trump 1.0), given greater familiarity with his policies. We broadly agree,” the Japanese investment bank noted.
Unlike Trump’s first presidential term, Nomura Research said Asia is more prepared this time.
It added firms and investors have become well attuned to the ongoing trends of US-China decoupling and shifts in global supply chains, and now know how to navigate the situation better.
Source: The Star
