Moody’s Analytics director and head of Asia-Pacific Economics Katrina El
PETALING JAYA: As regional leaders converge in Malaysia for the Asean Summit 2025, various topics and issues are set to be discussed in an effort to shape collective responses to shared challenges.
Moody’s Analytics director and head of Asia-Pacific Economics Katrina Ell said when it comes to regional trade, one of the more pressing issues is the protectionist stance of US trade policy.
The Asean region currently accounts for about 7% of global gross domestic product.
She told StarBiz that the 90-day pause on US tariffs will soon come to end, in early July 2025.
“If nations are not able to negotiate more favourable terms with the United States, it will hurt.
“Vietnam and Thailand are particularly vulnerable because exports are the backbone of their economies and the United States is an important destination for those goods,” she said.
According to Ell, President Donald Trump wants to negotiate with economies bilaterally – thus limiting the clout and leverage that Asean would have if it were to negotiate as a bloc.
“Global demand is being hit by chaotic US tariff policy, as businesses and households hold back.
“Asean is acutely vulnerable to a weakened global economy, given that exports are a critical driver of the region’s economic performance,” she explained.
As for opportunities for Malaysia to boost intra-regional trade, Ell said first and foremost, it is important to recognise that the United States is the world’s largest consumer market.
This makes it a critical final destination for goods.
“As the United States becomes (increasingly) reluctant to receive foreign goods, it is a sound strategy for Malaysia to look at alternative markets.
“While no (single) region can completely replace US demand, now is the time to look at alternatives.
“Cementing linkages within Asean, as well as further abroad, is valuable,” Ell said.
Furthermore, as the European Union (EU) actively expands its engagement with the region to fill the vacuum left by the United States, Malaysia can position itself as an attractive destination for the EU to expand its manufacturing capacity, particularly given the country’s growing tech ecosystem.
Meanwhile, the Centre for Market Education (CME) noted that a missed golden opportunity for Asean lies in attracting investment migration from outside the region.
In its policy brief, “A golden opportunity: Investment migration in South-East Asia”, author Emile Phaneuf III argued that investment migration options in the region are both scarce and, for the most part, only competitive at a regional level.
“Many find Malaysia’s Malaysia My Second Home programme difficult to navigate, prohibitively costly, and no permanent residence (PR) visa offered as an incentive to justify the cost for many migrant investors,” the brief stated.
In contrast, the Residence by Investment and Citizenship by Investment programmes elsewhere have evolved to reflect more modern expectations.
“Allowing dual citizenship, simplifying visa requirements and offering multiple pathways to PR are some of the proposals CME makes,” it added.
