Dr Mahathir: Asean must not resort to protectionism

Asean must pursue achieving over 30% regional intra-trade


Asean countries should not resort to protectionism under the disguise of rising nationalistic movements, said Prime Minister (PM) Tun Dr Mahathir Mohamad.

The PM said there are indications of a rise of trade protectionism and implementation of inward-looking policies among Asean countries which run contrary to the grouping regional integration agenda.

He said Asean countries should seek amicable solutions and resolve trade issues through multilateral dialogues and not resort to closing their doors under the pretext of trade protectionism.

“It is now that we must continue to expand our intra-trade and deepen the economic integration within Asean,” he told an Asean Business and Investment Summit 2018 in Singapore yesterday.

Dr Mahathir said the Asean regional integration is critical to grow intra-regional trade and create opportunities for small and medium enterprises (SMEs). “Intra-regional trade intensity has to be raised. In Malaysia’s case, our trade with Asean is around 27%.”

Dr Mahathir said increasing intra-regional trade does not mean Asean is inward-looking, but instead it should be viewed as opening up opportunities for SMEs and exploring new possibilities.

He said since the formation of Asean Free Trade Area, intra-regional trade has hovered between 22% and 26%, lower than other regional groupings like the European Union (EU) which is between 60% and 70%.

“Asean’s own agenda must aim to boost intra-regional trade from the current level that has been stagnant at around 25% to over 30%.

“This is far below what the EU and North American Free Trade Agreement have achieved, which is 63% and 50% respectively,” he said.

Dr Mahathir said achieving over 30% intra-trade in Asean is seemingly an ambitious target, but a mission Asean must pursue.

“The target can be realised as we can see that intra-regional investments are growing. From 5% some 20 years ago, intra-regional investments are now close to 20%. This shows great promise and it must be capitalised to benefit Asean SMEs.”

Dr Mahathir said the ongoing trade tension between the two world powers — the US and China — is bound to create a “domino” effect that will affect trade reactions and lead other developed countries to adopt protective measures against developing countries.

This, he said, includes the imposition of technical barriers to trade such as quotas, embargoes, sanctions, levies and other restrictions to regulate markets, consumer protection and preservation of natural resources, as well as discrimination against imports in order to protect big domestic industries.

“As for Malaysia, we will continue to actively express our concerns over rising trade tensions and risks of escalating protectionism at the various World Trade Organisation (WTO) bodies as it may impact all of us in the medium to long term.

“The Malaysian government is ready to take the leading role through our active participation in negotiations at the WTO level to ensure that the WTO remains a rules-based, open and non-discriminatory platform for meaningful progress towards the development agenda of the developing countries and least developed countries,” he added.

Dr Mahathir said the private sector has been pushing for trade facilitation and opportunities such as speeding up cross-border shipments and reducing bureaucratic processes in order to boost trade volume and lower the costs of doing business.

“I also commend the proposed collaboration between Asean-Business Advisory Council and Economic Research Institute for Asean and East Asia to formulate national level priorities for the reduction of non-tariff measures to support 10% reduction in trade costs by 2020.”

The PM said these are indeed initiatives which need to be accelerated in order to see higher rate of growth within Asean in the next few years.

“Malaysia is undertaking structural reforms to ensure we remain competitive, including the formation of a committee jointly chaired by both the Ministers of Finance, and International Trade and Industry to improve regulatory framework on trade facilitation and taxation,” he said.