KUALA LUMPUR: Employees Provident Fund (EPF) warns that Malaysia is at risk of being dragged into “global trade war” that may be triggered by US President Donald Trump’s more protectionist or “America First” policies.
The EPF’s head of economics and capital markets department, Nurhisham Hussein said although global export numbers are indicating that global economy could be on track to recovery, there is increasing skepticism about global trades now given Trump’s negative portrayal of such trades and that they are no longer beneficial to the US.
“There is a change in the ideology. It’s a pullback from globalization. Global economy looks like it’s finally on the recovery but we need to be aware of the risk of a trade war with Trump’s policy and we are all going to be dragged into it,” Nurhisham said during Nomura’s Breakfast Conference on “Navigating Through Geopolitical Uncertainties” yesterday.
He added that while forging more bilateral agreements would be an option for Malaysia, the compliance costs of having multiple bilateral agreements would be higher than a multilateral agreement like the Regional Comprehensive Economic Partnership (RCEP).
RCEP is a planned free trade agreement (FTA) between the Asean member countries and six other countries, which Asean has FTAs with. The six countries are Australia, China, India, Japan, South Korea and New Zealand.
Countries that will likely be more resilient if geopolitical tensions escalate would be Indonesia, India and the Philippines, said Nurhisham, as these countries’ economies are domestic-driven and so are less dependent on trades.
However, Dr Zulkiply Omar, senior research fellow with Malaysian Institute of Economic Research, was more optimistic, saying global trade remains important regardless of what Trump’s policies would be.
He also said multilateral agreements are more important for emerging markets compared to bilateral agreements, which are more beneficial for developed countries that have already reaped the benefits of trade agreements in the past.
He also said there have been arguments that emerging countries have benefited from trade agreements at the expense of developed nations, but added that there is no evidence to such claims.