Miti official: Trade war may benefit Malaysia at first but not in long run

Miti deputy secretary-general, Norazman Ayob. (Bernama pic)

KUALA LUMPUR: The US-China trade war provides Malaysia with opportunities to increase exports and attract investments, international trade and industry ministry (Miti) deputy secretary-general Norazman Ayob said today.

However, he warned that there were also downsides to the trade war.

“Last year, our agricultural commodities and agri-based product exports to China rose 27% to RM 9.1 billion,” he said.

Noting that China was Malaysia’s largest palm oil importer after India, he said the imposition of a 25% tariff on soy beans, as part of the trade war, might reduce the supply of edible oil to China.

Therefore, he said, Malaysia had an opportunity to supply edible oil to China. However, there may only be a temporary surge in exports as the US may take other measures to expand its soybean oil exports globally.

This might lead to increased competition for Malaysia which supplies palm oil internationally, he said at the China Conference here, organised by the South China Morning Post.

He said the government had received requests by companies from China looking to expand their operations to Malaysia as a result of the trade war tension.

“Surveys among US companies also show they are interested to relocate to the Southeast Asia region, including Malaysia. Although these are just early stage enquiries, the government is very happy to facilitate such investments.”

However, he warned that the trade war would have negative effects as well.

“It may cause people to be out of jobs and bring misery to people’s livelihood. Malaysia is but a small trading economy… we are also affected in the medium and long-term by the trade conflict.”

He said there were many uncertainties, including how long the trade conflict would last, its effects on the global geopolitical economic landscape, the future direction of global trade policies, and the effects of advancements in science and technology.

He added that there were concerns the conflict might spiral into a geopolitical dispute with military ramifications, if prolonged.

“In fact, the effects of the trade conflict may expand to the global financial markets, where markets have to price in the rising costs and weak performance of trade.

“Divergence of monetary policies among world economies will also contribute to outflows of capital which will hit hard on developing economies, including Malaysia.

“We would, therefore, urge both the US and China to work towards an amicable solution sooner,” he said.

Norazman said the ministry had established a task force to monitor developments of the trade war and to engage in global discussions.

“We strongly believe strengthening bilateral and multilateral relations is the best way to solve trade conflicts,” he said.