PETALING JAYA: Malaysia will stand to both gain and lose when Donald J. Trump becomes the 47th US president, say experts.
Economist Prof Emeritus Dr Barjoyai Bardai said Malaysia will be affected by Trump’s trade policies, especially with the increasing sentiment to move away from the use of the US dollar, or de-dollarisation, due to US-China competition.
“Malaysia could be affected by Trump’s presidency if he can’t solve the country’s issues with China.
“China’s development has become a threat to the US economy and the Americans are feeling the same,” he said in an interview.
Trump, he added, would need to find a solution on trade issues involving China.
The emeritus professor at Malaysia University Science and Technology said Trump’s policies on ongoing wars and conflict would also have an impact on world trade, which could trickle down to Malaysia.
“We expect him to be able to end the war (between Palestine and Israel) and the Ukrainian-Russian conflict, which would in turn help stabilise the global economy,” he said, pointing to when Trump pulled US troops out from several countries in the Middle East.
According to MIDF Research, Malaysia stands to benefit from the possible “Trade War 2.0” between the United States and China following Trump’s re-election.
It predicted the export outlook would remain positive because the redirection of trade flows could encourage greater re-exports through Malaysia.
“In terms of investment, multinational companies may increase their investment in Malaysia as one of the destinations to relocate their operations as part of the China+1 strategy.
“In the longer run, we expect the US move to tighten its trade rules will promote greater integration between Malaysia with the Global South, both in terms of trade, investment and financial flows.
“In other words, Malaysia’s trade outlook will benefit from growing final demand from regional countries and other emerging economies,” said MIDF research in a report yesterday.
The report also estimated a steady increase of foreign direct investments (FDIs) from China, adding that Trump and (current US president) Joe Biden’s presidency had seen a steady rise in FDIs from China.
“Given that President Biden did not reverse any of the tariffs that was enacted by Trump – and in fact, he added to it – we postulate that the first US-China trade war played a major factor for this increase.
“In fact, we should note that there was a significant increase of FDIs from other countries as well. We believe that we might see a continuation of this FDI trend going forward and may accelerate with the possibility of Trade War 2.0,” the report said.
International Islamic University Malaysia political analyst Dr Tunku Mohar Tunku Mohd Mokhtar said Malaysia should maintain good relations with the United States.
“Furthermore, the United States would not want China to be more dominant in South-East Asia, and Malaysia needs the United States’ assurance of its engagement to restrict China’s ambitions in the region,” he said.
Tunku Mohar said Trump’s approach would not be much different from that during his previous administration.
“It was him who decided not to join Trans-Pacific Partnership Agreement (TPPA) and based on what he said during his campaign, he would continue with his unilateral approach.
“Trump’s previous presidency did not have a strong focus on Malaysia and South-East Asia. There had been few engagements with leaders from this region, including Malaysia.
“However, his unilateral approach did not have much impact on the region as he was more occupied with relations with China and other domestic concerns,” he added.
Tunku Mohar said considering Trump’s threats against de-dollarisation, Malaysia’s tilt towards China may negatively impact its trade with the United States.
“The United States is one of Malaysia’s trading partners and any hike in US import tariffs would hurt our exports to the United States. Being a ‘partner country’ of BRICS (that advocates de-dollarisation) would make Malaysia a target,” he said.
BRICS, originally comprising Brazil, Russia, India and China, was set up in 2009 as a cooperation platform for emerging economies, with South Africa joining in 2010.
Malaysia was officially made a partner country with BRICS on Oct 26.
“Malaysia says that we are ‘neutral’ (actually non-aligned) but BRICS is not a trade bloc. It is in my view a rival to the G7 Summit,” said Tunku Mohar.
However, Prof Barjoyai said Malaysia’s move to join BRICS was to assert Malaysia’s neutrality.
“Malaysia is not distancing itself from the US by joining BRICS. Rather, it was to assert our neutrality. We want to pursue a more progressive economy,” he said.
