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The Star
26-05-2025
- Business
- The Star
Removing barriers will hasten integration, say experts
PETALING JAYA: Asean countries must tackle persistent regulatory and financial barriers that continue to hinder regional economic integration, say experts. Economist Geoffrey Williams said there are still many trade barriers among Asean countries, especially for small and medium enterprises (SMEs). 'Asean needs to establish a framework to identify regulatory barriers across all areas. 'This process should systematically remove or harmonise regulations at the lowest cost,' he said when contacted. Williams said there are still many constraints on simple issues, such as setting up businesses, bank accounts, and even payment transfers. 'Harmonising regulations on payment transfers, reducing transaction costs and building common platforms for e-payments is essential,' he said. Asean countries still vary greatly in economic development, political systems, and economic self-interests. This variance, he said, is holding back closer integration. 'Tourism provides a good model because private-sector-driven business models make travel, accommodation and currency exchange easy. 'So integration is not impossible if it is market-driven, but it is proving difficult if it is government-driven,' he explained. He said Asean can follow a market-driven integration model using technology platforms and e-commerce which avoids brick-and-mortar business models and moves online. 'An Asean-wide digital nomad visa would be a good idea and would be attractive for the region as a whole while reducing competition between countries. 'Another Asean-wide entrepreneur visa would also be helpful in reducing costs, especially for the non-Asean business community. 'This would allow foreign investors to move easily around the 10 member states,' he argued. Centre for Market Education chief executive officer Carmelo Ferlito said going cashless can become a burden if a person needs to have a different app in each country. 'I travel often to Indonesia, and I struggled with their cashless system, which must be linked to a local bank. 'So I think having more integration is good, but in reality, it is better to increase options rather than reducing them,' said the economist. At a special media briefing on May 21, Prime Minister Datuk Seri Anwar Ibrahim outlined a strategic vision for Asean's next phase of growth. Under Malaysia's Asean chairmanship this year, he emphasized stronger economic integration, trade expansion, and cross-border energy connectivity as key pillars.
The Star
26-05-2025
- Business
- The Star
Address long-standing trade barriers, Asean members told
PETALING JAYA: Economists are calling for Asean countries to address long-standing barriers that hinder economic integration among member states. Despite close and strong cooperation, the situation can be improved by addressing key regulatory hurdles and inconsistent financial systems. ALSO READ: Asean leaders assemble in KL today for key summit, related meetings Economist Geoffrey Williams said there are still many trade barriers among Asean countries, especially for small and medium businesses (SMEs). "Asean needs to establish a framework to identify regulatory barriers across all areas and begin a process to systematically remove them or to harmonise regulations at the lowest cost," he said, when contacted yesterday. Malaysia, as Asean Chair is the host of 46th Asean Summit and Related Summits. Wisma Putra is taking the lead in organising these summits under Malaysia's Asean chairmanship this year with the theme 'Inclusivity and Sustainability'. Two other high-level meetings – the 2nd Asean-Gulf Cooperation Council (GCC) Summit and the Asean-GCC-China Economic Summit – will also be held. Williams said there are still many constraints on simple issues such as setting up businesses, bank accounts and even payment transfers. "So harmonising regulations on payment transfers, reducing transaction costs and building common platforms for e-payments is essential. "Even issues related to the free movement of workers are underdeveloped as Asean members protect their own labour markets," added Williams ALSO READ: Asean-GCC-China model will help forge inclusive, sustainable future, says Anwar Asean countries, said Williams, are still very different in terms of economic development, political systems and the economic self-interests of each country and this holds back closer integration. "Tourism provides a good model because private sector driven business models make travel, accommodation and currency exchange easy. "So integration is not impossible if it is market driven but it is proving difficult if it is government driven," he explained. He said Asean cannot follow the integration model of the EU for example because that is government driven but it can follow a market driven integration model using technology platforms and e-commerce which avoid brick-and-mortar business models and move online. "An Asean-wide digital nomad visa would be a good idea and would be attractive for the region as a whole while reducing competition between countries. "Another Asean-wide entrepreneur visa would also be helpful in reducing costs, especially for the non-Asean business community allowing foreign investors to move easily around the 10-member states," he argued. Centre for Market Education chief executive officer Carmelo Ferlito said forcing cashless can become a burden if a person needs to have an app in each country, but instead such initiative can be linked with a local bank account. "I travel often to Indonesia and I struggled with their cashless system, which must be linked to a local bank. "Some places do not accept any other form of payment. "So I think having more integration is good but in reality it is better to increase options rather than reducing them," said the economist. He also said that abolishing barriers to entry was much more effective rather than thinking about cashless. "Good infrastructure and fast procedures, this is what travellers want. Cashless is an option but not a game changer. More tourism or travel affects the generality of the economy," said Ferlito. At a special media briefing on May 21, Prime Minister Datuk Seri Anwar Ibrahim outlined a bold strategic vision for Asean's next phase of growth, emphasising stronger economic integration, trade expansion and cross-border energy connectivity as key pillars under Malaysia's Asean chairmanship this year. Responding to questions on the direction of the regional bloc amid growing global geopolitical competition, Anwar said Malaysia is determined to drive Asean beyond its traditional role as a neutral platform towards becoming a more cohesive, values-driven force in the Indo-Pacific. "As part of our thrust this year, we are focusing on strengthening Asean's cohesiveness, increasing economic interest and trade, and boosting investments among member countries," he said.
New Straits Times
10-05-2025
- Business
- New Straits Times
Look within, say experts and industry groups
KUALA LUMPUR: Policy makers should look internally at ways to facilitate ease of doing business and investing in the country as part of a wider response to the United States' tariffs, says an economist. Centre for Market Education chief executive officer Dr Carmelo Ferlito said while it was encouraging that Malaysia had sent a delegation to Washington to discuss the issue with the US, it was also important for the country to "look within". Ferlito said that this is because while tariffs are negotiated at a government-to-government (G2G) level, business was conducted at a business-to-business (B2B) level. "There is merit for new opportunities where trade diversification and alternatives are concerned," he told the New Straits Times. "But we have to be clear that trading partners cannot be changed overnight because trade happens between businesses, not countries per se." A 10 per cent export loss to the US cannot easily or necessarily be shifted to another market like China or the European Union, he said, as it boils down to agreements between firms in two countries. "Can a US importer find an alternative supplier domestically or from another country at the same or better price after the tariff is imposed? "What are the transaction costs involved in such a search? Can the Malaysian firm find a European customer to replace the American one, in case the American one is lost? How long will it take?" Ferlito said the tariff issue should not be viewed from an aggregate perspective without considering "microfoundations" because in the economy, everything happens at a "microlevel". "The macro level exists only in the statistics books." He said each transaction is the consequence of many other micro transactions, interrelated in a way which cannot be changed overnight or as a consequence of an interstate agreement. Ferlito said there were measures that Malaysia could take beyond tariff discussions and exploring other markets, including non-tariff barriers. "We can take a leaf from Indonesian President Prabowo Subianto, who called for simplifying and streamlining regulations to make to increase competitiveness and attract investments." "Such a measure would help boost investments, not just foreign direct investments (FDI) but also domestic direct investments (DDI)." This, in turn, could help soften the blow from any impact of the tariffs once the 90-day pause on the measure ends, he said. During the special parliamentary session on May 5, Prime Minister Datuk Seri Anwar Ibrahim outlined several measures to address the US tariff situation. These include RM1.5 billion in financial aid for SMEs and the fast-tracking of infrastructure projects to stimulate domestic economic activity. In response, business groups say internal strengthening is just as critical as external support. The Federation of Malaysian Manufacturers (FMM) backed the formation of a National Supply Chain Council to address vulnerabilities across key sectors. "Private sector participation is essential to ensure that the Council's strategies are grounded in operational realities," said FMM president Tan Sri Soh Thian Lai. FMM also urged the swift rollout of the Government Procurement Act, calling it vital to "stimulating domestic demand and enhancing national production capabilities." It added that government-linked companies should be subject to "a clear mandate or strong policy encouragement to increase their procurement from local manufacturers." Small and Medium Enterprises Association (Samenta) noted that non-exporting SMEs make up the bulk of Malaysia's business landscape. "These businesses... will be equally impacted as input costs rise, supply chains tighten, and consumer spending begins to contract," said president Datuk William Ng. He called on the government to "pause all new and planned cost increases on SMEs" and freeze compliance requirements that could push more businesses into distress.
The Star
06-05-2025
- Business
- The Star
Better support needed amid tariffs
PETALING JAYA: Support measures aimed at helping Malaysian exporters navigate US-imposed tariffs must be designed with clarity, accountability, and measurable outcomes, say economists. While recent government initiatives signal the right intentions, Centre for Market Education CEO Dr Carmelo Ferlito said concerns remain over how effectively the support will be implemented and who will ultimately benefit. 'There's a right spirit in the government's initiatives, but we must ask who benefits and how efficiently the money will be spent,' he said. Ferlito was commenting on Prime Minister Datuk Seri Anwar Ibrahim's announcement yesterday on allocating RM50mil for market exploration and additional financial aid for exporters. Instead of upfront cash or loan guarantees, Ferlito advocated for tax-based incentives tied directly to export performance. 'It may be more effective to reduce taxes on profits derived from sales to alternative markets. 'A tax incentive is ex-post – it's given after results are achieved. Incentives not linked to clear key performance indicators risk mismanagement and inefficiency.' He also questioned the suggestion made in the Dewan Rakyat yesterday to delay fuel subsidy rationalisation, arguing that such structural reforms should not be compromised. 'Are we truly in a state of emergency to justify postponing this? 'It sends the wrong signal on policy commitment,' he said. Emeritus Prof Dr Barjoyai Bardai of Universiti Tun Abdul Razak pointed out that efforts to identify new markets will take time to materialise. 'Finding new buyers isn't immediate. Exporters must ensure credibility and secure demand – and most new markets will be in developing countries with lower purchasing power,' he said. Therefore, in the short term maintaining strong trade flows with the United States and China remain critical, he said. 'If we can retain those markets while exploring new ones, that's already a big achievement.' Prof Barjoyai also highlighted the importance of complementing export strategies with broader economic resilience measures, including food security and reducing reliance on imported essentials. 'We import nearly RM90bil in essential goods annually. 'If we can reduce that, we protect ourselves from currency volatility and global shocks,' he said. He also stressed the need to support micro, small and medium enterprises (MSMEs), which collectively employ more than 65% of Malaysia's workforce. 'Helping MSMEs improves job quality and wages, which stabilises the broader economy,' Prof Barjoyai said. Industry groups echoed similar concerns and recommendations. The Federation of Malaysian Manufacturers (FMM) welcomed the government's immediate actions but called for enhanced export-focused initiatives. FMM president Tan Sri Soh Thian Lai said more than half of its members are already pivoting away from traditional markets like the United States. He said that while the RM50mil allocation to Matrade (the Malaysia External Trade Development Corporation) and the resumption of European Union free trade agreement (FTA) talks are timely, Malaysia needs stronger Market Development Grant (MDG) support to help exporters lead missions into emerging markets. Soh stressed the need for enabling associations like FMM to access funding directly and organise targeted export activities to boost reach and competitiveness. 'These measures are crucial to ensure Malaysian manufacturers remain viable globally despite mounting geopolitical pressures.' Meanwhile, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) voiced concerns about unintended consequences of increased tariffs, including potential abuse of trade routes and increased risk of anti-circumvention actions. Its president, Datuk Ng Yih Pyng, warned of 'renegade products' -- goods rebadged or misclassified to evade tariffs – distorting trade flows and exposing Malaysian firms to legal and reputational risks. 'We must enhance Customs enforcement and strengthen compliance on certificates of origin,' he said. Ng also urged the government to accelerate FTA negotiations and expand MDG support to help SMEs explore new markets. He cautioned that with global tariffs rising, Malaysia may face an influx of dumped foreign products that could undermine local industries, especially MSMEs in sectors like furniture, steel, retail and e-commerce. 'Swift, targeted safeguards and international collaboration are needed to protect our domestic economy.' The Small and Medium Enterprises Association (Samenta) said the United States' reciprocal tariffs on Malaysian goods have exposed the fragility of the country's SME export ecosystem. While welcoming the government's targeted support measures, Samenta said many SME exporters were already operating on razor-thin margins and remain vulnerable to global trade shocks. 'The latest tariff shock is a reminder that Malaysia's economic model must be recalibrated around the needs of SMEs, not just large corporations,' the association said in a statement. Samenta added that broader structural imbalances must be addressed to ensure sustainable support for exporters and to build long-term resilience in Malaysia's trade environment.
