Tengku Zafrul: Longer term pain from US-China rift


Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz - BERNAMA

While trade tensions between the US and China are bringing more investments to Southeast Asia, including Malaysia, worries over slower global growth and higher costs loom, according to Malaysia’s trade and investment chief.

In the short term, US, European and even Asian companies based in China have been looking to relocate their supply chains or open new plants in Southeast Asia, Malaysia’s Trade and Investment Minister Tengku Datuk Seri Zafrul Abdul Aziz told Bloomberg Television’s Lisa Abramovicz on Thursday in Lima, Peru. That has led to higher investments into the region and into Malaysia, he said.

"But in the longer term, I think, it is going to be a concern,” Zafrul said on the sidelines of the Asia-Pacific Economic Cooperation meetings, discussing the US-China rivalry as the two nations play outsized roles in world trade and investments. "For global economies we’re going to see slower growth. Consumers may end up paying higher prices for the same goods,” he said.

The Malaysian official underscored the importance of bilateral and multilateral trade deals and sustained engagements among policymakers and companies to shield economies from uncertainties that may arise from the policies of President-elect Donald Trump. Staying neutral on foreign policy will also be key, he said.

The Southeast Asian nation has long positioned itself as a neutral haven for investment, with electronics hub Penang state emerging as a major winner during Trump’s first term. More recently, tech giants including Microsoft Corp., Nvidia Corp. and Amazon.com Inc. have pledged to invest billions of dollars in the country’s infrastructure amid Malaysia’s booming artificial intelligence sector and improved political stability.

Foreign direct investments into Malaysia is expected to rise as firms seek stable manufacturing bases in the region, according to Vincent Loo, an analyst with CIMB Securities in a Nov. 7 research note. The trade-reliant nation could also see increased export demand from US companies looking to source products outside China, he added.

Still, Zafrul conceded that it has become increasingly tougher to stay neutral.

"It has always been more difficult over the last five years. I can’t deny that fact,” he said. Malaysia saw investment in semiconductors rise by 18% in the first half of this year, mainly from the US, according to Zafrul.

Policymakers have to monitor the sector "very closely” as technology is a key aspect of trade tensions, he said.

Higher tariffs and worsening US-China tensions risk lowering investor appetite and accentuating capital outflows in emerging markets such as Malaysia.

A rally in the greenback and fears over higher tariffs on imports into the US already started to weigh on the ringgit, which slid to its lowest level since August this week. - Bloomberg

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

Asia , APEC , Trade , US , China , Malaysia , Zafrul Abdul Aziz

   

Next In Business News

Ringgit seen range-bound against US dollar next week on cautious sentiment
Toto lifts the lid on smart toilets
Transparency is the best policy in Batu Kawan project bid
ITMAX in Aim-Force smart parking solutions tie-up
Cypark, Terengganu Inc to develop a 500MW HHFS plant at Tasik Kenyir
Industry veterans to lead Resorts World Las Vegas
Lombok’s Luxurious suite spot
OSK Property buys Sungai Petani land for RM72mil
Asia can sidestep unsteady ground
Investing with ESG in mind

Others Also Read