PETALING
JAYA: UOB Malaysia economist Julia Goh said Malaysia should further diversify
away from traditional export sectors towards higher value-added segments to
support its economic growth with the breakdown of the Trans-Pacific Partnership
Agreement (TPPA), which saw the lost of trade opportunities for the country.
Given
Malaysia’s high dependence on trade and strong financial linkages, potentially
destabilising protectionist US policies or political fallout that threatens the
economic stability of the EU, will also challenge the country’s economic growth
this year.
Goh opined
that Malaysia should continue to facilitate intra-regional exports through
Asean and Asean trade partners and reinforce regional integration within Asia.
However, the
key growth driver for the Malaysian economy and its neighbouring Asean
economies in the longer term will stem from the development of mega
infrastructure projects that improve connectivity and facilitate mobilisation
of goods, services, and people.
She noted
that without the US in the TPPA, it is unlikely that the other 11 members will
push ahead with the deal – instead the members are likely to focus on the
Regional Comprehensive Economic Partnership (RCEP), which is a more
Asia-centric trade deal that is being negotiated between 16 countries including
Asean, Japan, China, India, South Korea, Australia and New Zealand.
Market size
of RCEP is US$23 trillion (RM102 trillion) or 30% of global GDP.
If the RCEP
is realised, she said it would open up opportunities particularly for Vietnam,
Malaysia, South Korea, India, China and Hong Kong, given some similarities in
the trade deals.
As president
Trump deems the large trade deficits between the US and China as unfair, Goh
said other trade partners with similar “unfair” advantage would also be at
risk, including Malaysia, alongside with countries like Mexico, Canada, Japan,
Vietnam, South Korea and Thailand.
Singapore
and Hong Kong would likely escape on this front given that the US has trade
surpluses with these two economies.
Goh believes
the growth spotlight will remain in Asia where countries are embarking on large
scale infrastructure programmes to boost long-term competitiveness and drive
sustainable growth.
“Rising
Asian affluence will be a net positive for consumption-related sectors such as
the transport, logistics, utilities, information and communications technology,
healthcare and education sectors,” she added.
Goh also
highlighted that Asean has been successful in its draw of foreign direct
investment (FDI) whereby the FDI inflows into Asean is estimated to surpass
China for the first time in 2017, after falling behind for more than a decade.
She said the
stock of FDI accumulation in Asean has been rising at a steady annualised rate
of 15% since 1980.
“Even with a
conservative assumption of about 7.3% in annual growth (i.e. half the growth
rate between 2009 and 2013), we expect the stock of investment in Asean to
nearly triple to US$5.2 trillion in 2030, from our estimates of US$1.8 trillion
in 2015,” she noted.