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MALAYSIA must elevate its economy to the next level of productivity to maintain its competitiveness in light of the recent US tariff announcements, according to Nordin Abdullah, the founding chairman of the Malaysia Global Business Forum.
He stressed that internal reforms will play an increasingly vital role in the country's economic future.
In a commentary today, Nordin highlighted the importance of adopting a strategic approach, rather than reacting impulsively, to the evolving trade environment.
"Trade is only one element of Malaysia’s bilateral relationship with the United States, and a more measured response is necessary," he noted.
He pointed out that recent investment strategies have largely targeted US-based companies, with the US remaining the largest investor in Malaysia’s economy.
However, Nordin warned that some regional competitors may now benefit from more favourable positions on the tariff spectrum, which could lead to increased inward investments from companies seeking optimal locations for parts of their global supply chains.
"Trade diversification is an obvious strategy, but it’s one that many will pursue. This will create an even more competitive landscape, meaning Malaysia will need to allocate more resources to promoting its exports," he said.
He added that if Malaysia can outshine its competitors in this regard, the tariff shake-up could become an advantage for Malaysian exporters.
"This is a time for bold leadership. It’s an opportunity to step into the breach and outspend competitors during this period of rapid change," Nordin remarked.
Looking beyond the immediate tariff adjustments, he urged economic planners to anticipate further shifts from the US administration. "Detailed scenario planning is essential for export-dependent companies. We need to manage rapid changes and avoid a wider economic crisis," he explained.
In response to the tariffs, the Ministry of Investment, Trade and Industry (MITI) has stated it is not considering retaliatory measures but is actively engaging with US authorities to seek solutions that promote fair and free trade.
“While respecting such sovereign decisions, Malaysia strongly believes in constructive engagement for mutually beneficial economic relations,” the ministry said.
MITI also announced that to mitigate the impact of the tariffs, Malaysia is diversifying its export markets by focusing on high-growth regions and leveraging existing free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
Additionally, Malaysia plans to foster new partnerships within ASEAN and strengthen its supply chain resilience through key industrial policies, including the New Industrial Master Plan 2030 and the National Energy Transition Roadmap. – April 3, 2025
