KUALA LUMPUR: Asian economies cannot depend on the United States as its export destination of first and last resort “forever”, but instead it will have to create its own consumer markets, especially within Asean, says Deputy Investment, Trade and Industry Minister Liew Chin Tong.
“These massive changes bring home a simple message: business as usual won’t cut it. Asean needs to be bold to face the challenges while taking advantage of the opportunities presented,” he said during his opening remarks at the Asean Economic Opinion Leaders Conference: Outlook for 2025 here at Menara Miti on Wednesday (Jan 8).
He said the world is facing a poly-crisis since Covid-19, with a “perfect storm” of a pandemic and various health crises; geopolitical competitions and the worst wars in decades in Europe and in the Middle East as well as financial volatilities that hurt both the developed and developing countries, which include high inflation, high interest rate, and a debt crisis and a permanent and worsening climate crisis.
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Therefore, he said the world is experiencing shifts and new realities including the pursuit of cheap outsourcing in the name of “efficiency” is giving way to the concerns for supply chain resilience and diversification.
“Gone are the days when many thought the world was constituted by a single global supply chain. Increasingly, supply chains will be divided along geopolitical lines or formed according to regional proximity to avoid the risks associated with too long a supply chain such as those experienced during the Covid-19 pandemic or the Red Sea crisis,” he said.
(From left:) Star Media Group (SMG) Bhd group chief executive officer Chan Seng Fatt, Miti’s Mastura Ahmad Mustafa, Asean Economic Community deputy secretary-general Satvinder Singh, Deputy Investment, Trade and Industry Minister Liew Chin Tong, Dr Ceferino Perry S. Rodolfo, Deputy secretary-general Miti Investment & Management Datuk Bahria Mohd Tamil and Nurlin Salleh from BCG Consulting.
Second, no one now believes the idea that economics, politics and security do not mix. Economics will intertwine with politics and security even more from now. Nation-states and national elections or politics have huge consequences on the economy, as we learnt in 2024, especially the election of the second Trump Administration,” he added.
Liew said each country has its own domestic politics to deal with and governments will have to ensure that their economy delivers decent social economic outcomes.
He said there is a limit to export-oriented industrialisation, although in the last seven decades Asia’s Dragons and Tigers—South Korea, Taiwan, Hong Kong, Singapore —as well as Tiger Cub Malaysia, Thailand, Indonesia, the Philippines, Vietnam and China since its ascension to the World Trade Organisation in 2001— grew rich by exporting to the United States, and Europe to a lesser extent.
“On the one hand, these markets are seeing the shrinking of their middle classes as well as shrinking population. On the other hand, Asian industrialisation has generated massive productive capacity. The two don’t add up. Something will break somewhere,” he said.
Asian economies cannot forever think of the US as the export destination of the first and last resort. We will have to create more consumer markets, especially in Asean,” he added.
He said three key elements important for Asean in 2025 namely, making Asean a regional supply chain, making the regional bloc a middle power and a prosperous middle class society which is an important market.
“If we leave it to the major powers, the supply chain will probably eventually bifurcate as the United States and China extricate themselves from each other. It is not in the interest of the rest of the world to see the supply chain bifurcates, and therefore, Asean, together with European Union, the Global South, and the rest, need to do the heavy lifting to ensure that the middle ground or the common ground is big enough to resist bifurcation,” he said.
And, this is also the time that Asean member states should see each other not as competitors but complementing each other to form a resilient regional supply chain. In this context, the Johor-Singapore Special Economic Zone has the potential of creating an exciting future and a role model. More Asean-wide joint investment projects or sub-regional cooperation will help to make the Asean supply chain stronger. The sum is much bigger than the parts,” he added.
He said Asean members states will need to work with each other very closely and ensure that each of them are economically secure and well-to-do so to form a much stronger regional solidarity.
In the next two decades, Liew said Asean should emerge as a middle class society and a sizable consumer market, not just production sites as in the old formulation of export-led industrialisation.
“To do so, we must ensure that Asean member states do not enter into a race to the bottom in terms of wages, tax cuts or tax holidays. Instead, Asean must uphold environmental standards. It is used to the old export-led industrialisation model in which we help multinationals to suppress wages to make us a cheap destination to produce. It is also used to giving tax cuts or tax holidays to multinationals,” he said.
As countries begin to adopt the Global Minimum Tax (GMT), there is an urgent need for Asean member states to work towards an agreement not to circumvent the GMT.
"The multinationals are knocking on the door of each country’s treasury to ask for cash grants to circumvent the GMT.
"We will have to stand together and tell the multinationals that we need to collect these taxes for the greater good of our people, and for Asean to emerge as a middle class society, which in turn will be a huge market for all, including the multinationals. Also, we need to ensure that when we develop our economy, we are protecting the climate and the environment together. Asean members should not be racing towards the bottom but top,” he added.
Liew said he has high hopes on Asean coming together as a supply chain, as a middle power, and as a middle class society.
“Our Prime Minister Datuk Seri Anwar Ibrahim has expressed his hope for Malaysia, that to achieve growth, inclusivity, and sustainability at the same time, we must raise the ceiling and the floor at once. Of course, a lot has to be done to achieve this. I believe many Asean member states share this vision,” he said.
Star Media Group is an exclusive media partner of the conference. Also present were Star Media Group (SMG) Bhd group chief executive officer Chan Seng Fatt, SMG chief content officer Datin Paduka Esther Ng and SMG chief business officer Lydia Wang.
“I would also like to thank Datuk Omar Siddiq of HSBC Malaysia for not only sponsoring the event but also spending time to oversee the preparation of the conference. I thank Lydia Wang and Chan Seng Fatt of The Star Media Group, and Nurlin Salleh of BCG Consulting, for volunteering their time to create the contents and to make this conference possible. Thank you to Ng Wei Wei of UOB and Tan Sri Tony Fernandes of AirAsia for co-sponsoring the conference,” said Liew.
