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How can Southeast Asian economies protect trade, expand markets, and stay resilient amid U.S. tariffs and shifting global trade dynamics?

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How can Southeast Asian economies protect trade, expand markets, and stay resilient amid U.S. tariffs and shifting global trade dynamics?

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Theme: How can Southeast Asian economies stay resilient amid U.S. tariffs?

1. Trade Response

Status: Malaysia heavily relies on exports to the U.S. and China.

Challenge: Tariffs create export volatility and unstable demand.

Recommendation:

Dual strategy:

① Strengthen regional trade through RCEP/ASEAN as the foundation to safeguard livelihoods and intra-regional trade.

② Diversify markets to the Middle East, Africa, and Latin America, leveraging Malaysia’s oil, gas, and rubber resources to generate new demand.

Expected Result: Reduced dependency on single markets and a more resilient trade structure.

2. Supply Chain & Investor Confidence

Status: Investors worry about supply chain instability; some firms consider relocating.

Challenge: Malaysia’s construction efficiency is relatively slow, and external cooperation is not fully controllable.

Recommendation:

Short-term: Fiscal and tax incentives to support businesses with subsidies and tax relief, boosting liquidity and commercial activity.

Long-term: Upgrade infrastructure (railways, ports, logistics) and foster public-private partnerships to secure supply chains.

Expected Result: Short-term recovery of market confidence; long-term improvement of competitiveness and supply chain stability.

3. Globalisation vs Regionalisation

Status: U.S.-China relations are tense, and U.S. policies are unpredictable.

Challenge: Global cooperation is weakening, creating uncertainty.

Recommendation:

Prioritise regionalisation: Strengthen ASEAN, RCEP, and APEC cooperation to build a more stable regional ecosystem.

Expected Result: Accelerated regional integration and reduced reliance on single powers.

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How vulnerable are Southeast Asian economies to U.S. and China trade tensions compared to other regions?

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• Market Diversification

Expand exports to non-U.S./non-China markets (EU, India, Middle East, Africa).

Strengthen intra-ASEAN trade flows

• Industrial & Economics Upgrading

Shift from low-cost assembly to high-value manufacturing (semiconductors, EV parts, green tech).

Invest in services exports (tourism, fintech, digital platforms)

• Financial & Policy Stabilisation

Provide fiscal buffers and subsidies for affected industries

Strengthen SME support schemes to cushion shocks

• Geopolitical Positioning

Maintain neutral diplomacy between U.S. and China

Attract supply chain relocations from firms diversifying out of China

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Issue: Malaysias export is extremely reliant on trade with China and USA

Statistics: According to the World integrated trade solutions (WITS), Malaysia export to US and china is 24.38% of total trade. ( 13.58% china, 10.80% USA)

https://wits.worldbank.org/CountrySnapshot/en/MYS/textview

Solutions:

The 2 main methods to solve or reduce the issue of over dependence on US/China is:

- ASEAN as supply chain backbone

- Diversification to Indian Ocean bordering nations and nations with cultural ties (global south)

Justification: ASEAN nations whom are all of the same region shares much of the similar issues in politics, economics and social, making it certain that the economy, diplomacy or politics of all of its members can impact each another.

As Malaysia is a member of ASEAN, Malaysia will have a say in the decision among ASEAN nations via trade agreement, diplomacy and treaties. As compared to US or china, where Malaysia have little to no say in its decision (Trump tariff for example)

1. ASEAN as backbone of trade

• This mainly focus on supply chain, while exports may be diversified, Malaysia should ensure the supply chain of making the exported product are mostly from ASEAN not any other country

• malaysia should double down on this, probably most of all supply chain outside of Malaysia should be in ASEAN

Example: Electric Vehicles where Raw materials are from Indonesia, component manufactured in Malaysia, assembled in Vietnam, Singapore as supporting services like finance.

Justification:

• Close distance

• similar geopolitical and regional issues and prospective like China's claim over South China sea and Us/ china trade war

• shared common interest focusing on economy

• historical ties

• foreigner view of ASEAN as one entity (such as China+1 policy)

• precedent (such is already the case currently)

Explaination:

Malaysia could not produce everything ourselves, but at the same time if the supply chain is done so in another region such as India, Malaysia will have no say over the trade policy of the country such as India's restrictions on rice exports.

However, in ASEAN, Malaysia have more say in the form of agreements and treaties that binds the members in in the trade policy towards one another. This mutually beneficial relationship ensures equality and ensures that member nations may not make trade policies that hurts their neighbours too much

2. Diversification

Malaysia should focus on diversification to organisation (that malaysia is a part of) more so than individual nations, as this way we may have more say in trade matters of member nations. Particularly to country whom may not be strong enough on its own such as UAE, African nations and Central Asian nations (mostly from global south) and less dependent on big economies like Russia, china, India, US..

This ensures that the diversification of exports also ensures that Malaysia have a say and that the relationship is more equal. This will also ensures a bigger portion of export to middle East, Africa and other countries bordering Indian Ocean or even further.

Example of organisations: OIC (while not a economics organisation, it's close cultural connection allows easy integration), ASEAN (for reasons stated), and Commonwealth of nations (may expanded in terms of agreement due to existing diplomacy between the countries and military partnership with Australia，although less depend

ent compared to other 2 nations)