He said one possible effect of the trade war would be an increase in the cost of Chinese products in the US. Companies related to China might then relocate to other countries such as Malaysia, which is not subject to sanctions by the US.

“We are hoping that they will move to Malaysia, but at the same time we see that this trade war might bring about very negative things.

“A trade war does not solve any problems. It creates a lot of problems and undermines the economy, not only of the countries concerned, but the whole world,” he said during a dialogue at the 36th Japan-Malaysia Economic Association-Malaysia-Japan Economic Association joint conference and Malaysian Business Forum here yesterday.

Mahathir said he would like to see more joint ventures between Malaysian and Japanese small and medium enterprises (SMEs), but acknowledged that there were some problems faced by both parties.

“Unlike big companies, they are not very familiar with foreign investment. We will ensure that if they have problems, we will be able to help them tackle these,” he said.

He also spoke of the need for Malaysia to encourage its talents to return home.

“We need to reclaim people educated in new knowledge. There will be workers and managers who are familiar with new industries,” he added.

Mahathir said the Asean region had tremendous potential and, with a total population of 600 million, was the third biggest grouping in the world.

“Asean, I think, can overcome the difficulties in their own countries and have proper policies so that we can get involved in making full use of the potential in our countries. Our resources are very big but our governance is more focused on domestic rather than regional operations.”