What does Trump mean for Malaysia?

 

In the end, the US election was not even close, with a landslide for Donald Trump and a majority of the popular vote.

Republicans took the Senate, will likely take the House and with a majority of Republican appointees on the Supreme Court, the American people have given  Trump almost complete control.

With this incredible power and despite the doomsayers of those who deplore him, a Trump victory is likely to be positive for the global economy and Malaysia should look forward to the opportunities that arise.

Whatever you think of his personality, Trump is above all a businessman who likes to negotiate a deal from a position of strength.

He is pragmatic and puts the best option above idealism. This is what the world surely needs now.

First, the extremely volatile geopolitical situation that has devastated trade and market confidence across the world will change under Trump’s wholly different approach to his predecessors.

During his last presidency there were no major conflicts in the Middle East or Ukraine. Trump has an entente with Putin, he reached out to North Korea and he brokered the Abraham Accords in the Middle East.

This ensured four years of relative peace under his administration and we can expect a return to that now.

Second, Trump has a market-driven domestic economic policy which will support growth in the US and open up trade and investment opportunities albeit with an emphasis on US interests. This will support global growth, trade and investment especially in Asia.

Third, there may be a different approach to China, which will shift Chinese business toward Asian trade and investment.

Malaysia has good trade and investment relations with China and this refocus will support those existing relationships and build new opportunities.

Malaysia’s observer status with BRICS for example puts it in a good place to take advantage of that.

“America First” trade policies and threats of tariffs might affect Malaysia and Asean’s exports to the US only if they are actually introduced.

In anticipation, Malaysia as Asean chair should begin the process of ensuring open trade with the US with reciprocal reductions in tariff and non-tariff barriers to trade.

For foreign direct investment (FDI) nothing much changes that would have an impact on Malaysia and Asean because US FDI is driven by private companies on commercial terms, not by the US federal government.

Again liberal, ease of business policies in Malaysia are key to attracting US FDI.

Digital economy investment and technological collaboration between the US and Asean presents opportunities for Malaysia in data centres, semi-conductors and the wider technology ecosystem.

This is driven by the US private sector and Malaysia must be open, attractive and easy to do business with in order to get its share.

With the election now out of the way and the US in an interest rate cutting cycle, exchange rate volatility will hopefully ease particularly for the ringgit and overall, the global headwinds that have been holding back economic growth in Malaysia and Asean in the recent past should now taper off.

Asean can play a key role in US economic and foreign policy and this presents the opportunity for Malaysia to lead that agenda but there are challenges too from Malaysia’s courtship of BRICS.

Nonetheless this gives Malaysia some bargaining power which Trump might appreciate.

Finally, we will hopefully see some sense on the sustainable development goals (SDGs) and net-zero agenda.

While Malaysia can still leverage US business sentiment towards renewable energy and sustainability to boost their own green initiatives there should be less push on the anti-hydrocarbon agenda, which will favour Malaysia too. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.