When we create more markets, the way we see the world will change, says Liew

New Straits Times

5 hours ago

KUALA LUMPUR: Southeast Asian countries must go beyond merely diversifying production and focus on developing a thriving consumer base, says Deputy Investment, Trade and Industry Minister Liew Chin Tong.
Speaking at a plenary session during the 38th Asia-Pacific Roundtable, Liew said global supply chains were undergoing structural change, shifting from a centralised "just-in-time" model to a more fragmented "just-in-case" approach, with regional supply chains shaped by geopolitical tensions.
"As the world moves on from 'just in time' to 'just in case', and from China as the sole and main factory of the world — from a single global supply chain to the idea that there will be multiple regional supply chains underpinned by geopolitical tension — I guess diversification is here to stay," he said in the session titled "China Plus One: Reshaping Global Supply Chains."
However, Liew said the broader and more fundamental question lay in identifying new markets that could potentially replace the United States.
"We have to ask a fundamental question. Is the world still going to depend on the US as the consumer of the last resort and, in many instances, consumer of the first resort, and whether the US has sustained its position as the final destination of global export?
As a result, he said nations had to ask themselves if the export-led industrialisation policy was still relevant if they no longer saw the US as their sole export destination.
Liew said the traditional model presupposed a race to the bottom in terms of wages, environmental standards and other areas in pursuit of cost-efficiency.
However, he said that with US demand plateauing, Asean nations needed to rethink their role.
"If we're not taking the US as the only final destination of our exports, we will have to start asking these questions: where will the market be?
"How do we not just be a production site but also be a consumer market?" he said.
He added that Europe and China had emerged as strong demand centres, and Asean could follow suit if it could grow a stable and prosperous middle-class society.
"If China can have strong domestic demand, if Asean becomes a middle-class society and not just like it is now, then we will have a world with more markets. When there's more markets, the way we see the world will change," he said.
To support this, labour and wage policies must be refined.
"In order to create those markets, we will have to refine how we think about labour policy, how we think about wages, how we think about not racing to the bottom — especially among Asean countries.
"We must stop seeing ourselves as competing with each other. We must see complementarity between us, among us," he said.
Liew called for a unified response to investor demands that often played Asean countries against each other.
"When an investor comes to ask us for incentive and tells us that 'Vietnam is giving me more incentive', we will have to answer with clarity and say: whatever that you can do in Vietnam right now, please do it, because I want to see Vietnam become more prosperous.
"And Vietnam being more prosperous is good for Malaysia, because then Malaysia can export more to Vietnam. Can we have that conversation?" he said.
In the long run, Liew said the region needed to build domestic demand and rethink its industrial strategies.
"We need a middle-class society. We need to create demand in China and create demand in our society. But in the short run, we may have to ask ourselves: should we start thinking about creating an Asean industrial policy?
He called on policymakers to address not only the supply side of economic planning, but also the demand side.
"Very rarely we ask about where to create demand and how to create demand. But if we continue to have a situation where we have supply, we have a lot of supply, yet not enough demand — we will face depression.
"Can we purely rely on the private sector, or is there a need for public involvement?" he said.
Ultimately, he said trade agreements might need to be reimagined to address emerging challenges such as overcapacity and trade imbalances.
"I think the question we have to start asking is not just about future agreements. It is about future agreements, and it is also potentially repurposing future agreements to negotiate for potentially voluntary export issues — repurposing trade agreements to deal with certain issues, such as excess capacity.
"These are the questions that we are going to face. We are actually facing them on a daily basis," he said.