KUALA LUMPUR, Feb 14 — The presence of long-established major electronic companies in Malaysia such as US-based Dell and Japan’s Sony and Panasonic will allow for easier transition for the local industry to take advantage of the trade disagreements between the US and China.
Economist Intelligence Unit (EIU) Principal Economist for Asia Fung Siu pointed out that the infrastructure already available also makes it attractive for trade.
“Major electronics companies such as Dell (US), Sony and Panasonic (both Japan) already have plants in Malaysia. This means that they would be able to re-deploy investment and production relatively smoothly.
“In addition, Malaysia has strong road, rail and port infrastructure, which has in turn helped to develop strong local logistics and shipping networks to support merchandise trade.
“Malaysia is also a signatory of numerous FTAs, including the CPTPP and the Asean Economic Community,” Fong said in reply to an email from Malay Mail.
She also pointed out that positive business environment considerations — such as the existence of a clear and stable system for corporate law in Malaysia — add to the nation’s attractiveness for firms to consider as potential sites for ICT investments.
In the EIU’s Global Outlook Report, it was reported that the US-China trade war is unlikely to de-escalate this year.
US President Donald Trump is also unlikely to back down from his focus on trade protectionism and reducing trade deficit as he faces an election next year.
The report reiterated its forecast that any deal between the two superpowers is unlikely to happen before March 1 — meaning that US tariffs on US$200 billion-worth of Chinese imports will increase to 25 per cent from 10 per cent.
At the same time, the EIU also expects the Asia-Pacific economy to expand at an average rate of 4.3 per cent a year over the next five years, faster than any other region.
“Despite the negative effect on global trade, some exporters in Asia are set to benefit as supply chains adjust to the new environment. The trade war is likely to result in corporate restructuring of regional supply chains as companies seek to insulate themselves from the dispute.
“Technology and electronics manufacturing exporters in Malaysia and Vietnam, auto parts manufacturing exporters in Thailand and garment exporters in Bangladesh and Vietnam are likely to see benefits in the long term as a result of these shifts,” the EIU reported.
However, it also warned that the benefits will be uneven across the industry.
Only well-established industries like Malaysia and Vietnam in the electronics manufacturing sector and Bangladesh’s garment sector have an advantage in capturing and redirecting foreign investments that will occur due to the changing economic scenario.
*A previous version of this story contained an error which has since been corrected.
