Start work on forming Asean customs bloc to counter US tariffs, says group

 

Samenta president William Ng said an Asean customs union should be formed with the aim of benefitting its member countries, as both an exporting bloc and a large regional market. (AP pic)

PETALING JAYA: 

A business group has urged Asean to immediately begin talks on forming a customs bloc, saying the newly announced reciprocal tariffs by the US could severely affect the region’s trade prospects.

In a statement, Small and Medium Enterprises Association of Malaysia (Samenta) president William Ng said regional importers and exporters would be hit by higher costs, with the tariffs also reducing competitiveness in multiple markets and potentially affecting SME jobs and investments.

“We can expect a short period of uncertainty as economies across the region and other impacted economies readjust their strategies to counter or mitigate these series of tariffs.

William Ng.

“In the past, we could rely on larger economies such as the US, China and Europe to take up most of our exports.

“But today, it is very clear that the future must be about ‘prospering thy neighbour’.

“The discussion on creating a single Asean market must be re-opened immediately, with the aim of creating some semblance of a customs union that can benefit us as both an exporting bloc and as a large regional market.”

Ng said major industries such as electronics, palm oil derivatives, rubber products and garments could take significant hits under the new tariffs.

“These sectors are among the key contributors to our trade with the US,” he said.

Ng said the impact would also be felt locally, with higher import costs from the US and the risk of “dumping” by larger countries trying to divert excess stock to Malaysia.

“We should really be looking out for potential dumping from affected economies, especially the large manufacturing hubs.

“This will have higher repercussions for our SMEs than the direct tariffs on exports to the US,” he said.

Ng said SMEs must diversify both their suppliers and customers to reduce risks from the tariffs.

“We must urgently move away from the concept of ‘Made in Malaysia’ to ‘Made by Malaysia’, focusing on production in Asean economies with lower production costs, while reinforcing our domestic research and development and innovation.”

Ng said SMEs can benefit from the tariff hike in the long run, so long as they adapt quickly.

“With the right strategies, local SMEs can adapt and even benefit from this shift in global trade dynamics.

“We urge all SMEs to stay informed, adapt proactively and seek opportunities in the evolving global trade landscape,” he said. - FMT