Diversify to other markets, economists urge exporters

 

Malaysia’s largest export markets are Asean, China, the US, the European Union and Taiwan. (Bernama pic)

PETALING JAYA: 

Malaysian exporters should seek to further diversify their export market to help lighten the impact of a 24% US tariff on Malaysian imports, say economists.

Universiti Malaysia Kelantan lecturer Abu Sufian Yaacob said Malaysian firms cannot afford to become too dependent on one nation or market.

Abu Sufian Yaacob.

“What Malaysia needs to do now is to expand its market scope, such as among Asean countries. This step can reduce the direct impact of the 24% US tariff,” Abu Sufian told FMT.

Malaysia’s top trading partners in 2024 were Asean, China, the US, the European Union and Taiwan, with China remaining the largest single-nation trading partner for 16 consecutive years.

Exports to Singapore topped the list of Asean countries at RM230 billion, followed by Thailand (RM59 billion), Indonesia (RM54 billion), Vietnam (RM54 billion) and the Philippines (RM28 billion).

Idham Razak.

Idham Razak of Universiti Teknologi Mara said a diversified market was key to alleviating the effects of the US tariff, especially for larger firms with more capital, who could diversify their markets immediately.

The government should make use of trade deals such as the regional free trade agreement among Asean and its six trading partners, and avoid unilateral protectionist policies.

Abu Sufian also urged Bank Negara and the Securities Commission to keep an eye on developments in the capital market, to prevent any shocks in the market or sentiment-driven pressure from investors.

He suggested that more flexible fiscal policies be taken in response to the tariffs.

Malaysia was hit with a so-called reciprocal tariff of 24%, alongside neighbouring countries such as Thailand (37%), Indonesia (32%), Brunei (24%) and the Philippines (18%).

US customs began collecting an across-the-board 10% tariff on Saturday, with higher rates due to be imposed on certain countries on April 9.

Yesterday, Prime Minister Anwar Ibrahim said the tariff would not cause Malaysia to slip into a recession as the economy remained resilient.

He described the unilateral decision by US president Donald Trump to impose a new tariff regime as a major threat to the global trade and investment system which went against the World Trade Organization’s principles of free, non-discriminatory, predictable and open trade. - FMT