Malaysia should strengthen Asean ties, engage in multilateral cooperation to counter trade pressures: Experts

The Sun

10-07-2025

KUALA LUMPUR: Malaysia should continue to strengthen its intra-Asean trade relations and engage in multilateral partnerships, as this approach will reduce dependence on any single country and benefit all parties by minimising both trade and non-trade barriers, including tariffs and the movement of goods across borders.
Amid an increasingly dynamic geopolitical landscape and rising unilateralism, Malaysia cannot control the actions of other countries that impose tariffs and duties as pressure tactics. However, it can choose to respond diplomatically and in ways that align with its national interests.
Economist Dr Nungsari Ahmad Radhi said Malaysia should maintain its current strategy of negotiating with the United States while simultaneously forming alliances and bolstering existing trade relations, especially within Asean.
'We leverage US companies to lobby the US government, since a significant portion of electronics and electrical exports involve intra-firm trade by US companies across borders,' he told Bernama today.
However, Nungsari emphasised that Malaysia must consistently support multilateral institutions over the long term.
'We need to do more to integrate Asean economies, even on a bilateral basis if not all at once, such as Malaysia-Singapore. We should deepen cooperation between Malaysia and Thailand, and definitely between Malaysia and Indonesia.
'Achieving free movement of goods between Malaysia and Singapore in the form of a customs union, Malaysia and southern Thailand, Sumatra and Peninsular Malaysia, and Sabah and Sarawak, with Kalimantan, are areas that should be explored and strengthened,' he added.
Sharing the same view, Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said that as long as there is room for negotiation, Malaysia should seize the opportunity, since some countries, like the Philippines and Vietnam, among others, have successfully reduced tariffs.
'We hope that this time the negotiations will succeed in lowering tariffs, if not eliminating them. We must continue negotiating because it is not impossible to secure exemptions or reductions.'
Malaysia has been negotiating with Washington to reduce these tariffs since April, with the latest round of talks held on June 18.
Ahmed Razman pointed out that Malaysia cannot rely solely on the outcome of these negotiations. 'We must continue to seek new markets, strengthen the domestic economy, and diversify our industrial products so that if tariffs are imposed on one sector, the impact will not be severe.'
Ahmed Razman stressed that Malaysia should boost intra-Asean trade, given the vast untapped potential.
'There is still room to increase trade among Asean countries. Trading within Asean reduces supply chain disruptions and tariff impacts, while also supporting local economies and the Asean economy as a whole,' he explained.
Ahmed Razman elaborated that Malaysia's participation in agreements such as the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and BRICS would lower costs through tariff elimination among member countries, reduce import duties, and facilitate the movement of goods.
'That is where I see the potential for cooperation with countries that have signed agreements with us,' he added.
The US has imposed a 25% tariff on all Malaysian products imported into the country, separate from sector-specific tariffs, effective Aug 1.
This rate is one percentage point higher than what was announced in April.
In a letter to Prime Minister Datuk Seri Anwar Ibrahim dated July 7, US President Donald Trump stated that 'the 25 per cent number is far less than what is needed to eliminate the trade deficit disparity we have with your country'.
However, the letter also noted that no tariffs would apply if Malaysia or Malaysian companies choose to build or manufacture products within the United States, and that Washington 'will do everything possible to get approvals quickly, professionally, and routinely - in other words, in a matter of weeks'.
Malaysia has been negotiating these US tariffs with Washington since April, aiming to reduce the earlier 24% tariff, with the most recent discussions held on June 18.
Senior lecturer at the School of Economics, Finance and Banking at Universiti Utara Malaysia (UUM), Muhammad Ridhuan Bos Abdullah, said that in the short term, industrial supply chains affected by the new tax will be disrupted as companies absorb the shock.
'A national stabilisation policy is crucial to drive growth by responding effectively to tariff issues, as competition is the main challenge. Bank Negara Malaysia, along with monetary and fiscal policies supported by appropriate instruments, must be more capable of absorbing the impact of US tariffs.'
Muhammad Ridhuan said Malaysia's response policies to support competitiveness need to be stronger.
'We must understand that labour costs in the US have been rising steadily, making it an important factor for businesses.
'This trend is driven by factors such as wage increases, higher interest costs, and a competitive labour market. Rising labour costs impact various industries there,' he added. – Bernama