Malaysia stands to benefit from Trump’s trade policies: KSI and ECKL
26 Jan 2025
Malaysia is poised to seize significant opportunities from Donald Trump’s return as president of the United States, especially in attracting foreign direct investment (FDI) and enhancing export potential, according to an analysis by the KSI Strategic Institute for Asia Pacific and the Economic Club of Kuala Lumpur (ECKL).
In a statement, KSI and ECKL said that with Trump’s plan to impose 10% tariff on Chinese goods from Feb 1, companies seeking to shift production lines to other countries may turn to Malaysia.
“For Malaysia, a key exporter of electronic products and components to the US, such measures could impact export competitiveness. However, as companies seek to diversify supply chains away from China, Malaysia’s semiconductor industry, which holds about 13% of the global market in chip packaging and testing, may attract increased investment,” they said.
According to the statement, the intensification of US-China trade tensions under Trump’s policies is expected to accelerate the “China Plus One” strategy, where companies diversify their manufacturing bases outside China.
“Malaysia stands to benefit from this shift, potentially seeing an increase in FDI, particularly in the electronics, machinery, and palm oil sectors. This influx could contribute an additional RM19.7 billion to Malaysia’s gross domestic product over four years, equivalent to a one per cent increase,” it said.
The statement also highlighted the potential impact of Trump’s energy policies, noting that his support for the traditional energy sectors, including fossil fuels, may lead to increased US production and exports. “For Malaysia, a net oil exporter, this could result in lower global energy prices, affecting revenue from mineral fuel exports,” it cautioned.
However, it said, Malaysian petroleum companies could find new opportunities if the US reduces renewable energy incentives, which may result in increased demand for traditional energy sources.
KSI and ECKL said Trump’s return to the White House may also pose challenges that require vigilant and proactive policy responses to safeguard economic stability. They cited Malaysia’s domestic strengths, which include a diversified economy, strategic global position, robust infrastructure, skilled workforce, and strong financial systems.
“Policymakers should capitalise on these strengths by diversifying trade partnerships, attracting FDI, enhancing digitalisation, and building resilience in key sectors. By taking proactive measures, Malaysia can mitigate the potential impacts of Trump’s policies and maintain steady economic growth,” they said.
KSI and ECKL said the combination of US tariffs and China’s domestic economic challenges is expected to weigh on Malaysia’s economy, particularly in the export-driven manufacturing and electrical and electronics sectors.
Despite the challenges, Malaysia’s strategic positioning and economic fundamentals provide a buffer against the worst effects, they concluded.
Source: Bernama
