Can Malaysia weather a 25% levy?

AWANI

Malaysia has less than two weeks to finalise a trade deal with the U.S. before a 25% tariff takes effect in August, expert Ooi Tze Howe from think tank HEYA Inc. discusses the potential consequences and strategies for Malaysia if negotiations fail.

Transcript

00:00Malaysia has less than two weeks to strike a trade deal with the US

00:04before a 25% tariff takes effect in August.

00:08What happens if we fail to reach an agreement?

00:10And how might Malaysia manage?

00:12Uyzer Hao from non-profit think tank Haya Inc. shares his insights.

00:17We have a 25% of tariff versus Vietnam getting 20 and versus Indonesia getting 19.

00:25We are actually on a very disadvantage in terms of the price competitiveness.

00:31And how are we going to navigate that?

00:33I think, first thing, of course, you know, the way Trump's one thing is he likes to,

00:41he likes you to honor his power, right?

00:43So regardless of what, I think retaliation is definitely not a plan on the table.

00:47But the key things over here is how could we actually draw U.S. interests or U.S. motivations

00:55to actually strike a proper deal, to strike a proper tariff trade agreements with us?

01:00So we heard a lot of news that the U.S. would like us to remove a lot of those non-tariff barriers,

01:06including the limit cap for formal equities to invest in our business company

01:11or even some of the export rules such as the HALA rules and things.

01:15You know, politically, this might not be feasible to remove or even to reduce in certain ways

01:20because it might be a political result for the administrations.

01:23So we need to put something Trump is more interested.

01:27That seems to be a better bet to Trump's administrations.

01:30And I would say that would be one of the very important things now is Red Earth.

01:36All right. So I think Red Earth is a good thing for us to put on the table

01:42because for information, Malaysia is the second refined Red Earth producers.

01:48So we are actually in a situation that we can form a quad.

01:53You know, there's a geopolitical quad organizations between Malaysians, India, Japan and Australia.

02:01But in fact, if you look into red of metals, the red of industrial metals in Malaysia,

02:06that is also a semi-quad that was funded by Japanese, operated by Australians in Malaysia.

02:12So this, if we are able to put this on the table, U.S., Malaysia, Australia and Japan,

02:18this will again, a red of metal quad for the U.S.

02:22And this is of very, very huge interest to the U.S.

02:24because they are facing a huge supply problem.

02:28The supply chain choked by China.

02:30China is trying to use these red of metals to choke the U.S.

02:32to leverage more on the negotiation tables.

02:35Zihau also discussed how repeated tariff threats and shifting rates

02:39from the Trump administration may affect Malaysia's long-term economic resilience.

02:44So if Malaysians were to have slapped long-term by 25% of tariff

02:49and Canadians continue to get a 20%,

02:51you probably will see some of the MNC here will start to look for some new opportunities in Vietnam.

02:58They might not even shift their factories.

02:59They will just build a new supply chain away in Vietnam to support all the exports to U.S.

03:05And in that case, you could see a lot of business in Malaysia,

03:09whether it's in SME or some of the local champions that have a huge export to U.S.,

03:14will be affected.

03:16And if this is affected, you will start to see a certain degree of unemployment

03:21might not be that huge, right?

03:23But bear in mind that if governments do nothing, like I mentioned,

03:27to help the furniture industries or the rubber industries,

03:30then we'll see a massive layoff in that case.

03:33And then the rising relief cost issue will even be more critical.

03:39So government is in a very difficult position, you know,

03:43when you try to look into these two policies together,

03:46rationalizing the subsidies and also phasing the tariff from the U.S.

03:50Because the tariff from the U.S. will actually cause economic uncertainties

03:57and hence causing our businesses' revenue to reduce

04:02or even to a certain extent of unemployment rates.

04:05And that is the time the governments will need to find a way to reduce the living costs

04:11to kind of balance up the rising living cost issues.

Category

Transcript

Be the first to comment

Recommended