On the positive side, Brexit will allow for a new trade talk between Malaysia and the UK
By FARA AISYAH & SHAHEERA AZNAM SHAH / Pic By TMR
The deferment of the UK’s withdrawal from the European Union (EU) — or Brexit — would have little impact on the local economy as Malaysia’s trade with the UK is not as substantial, according to an economist.
Universiti Malaya economics Professor Dr Rajah Rasiah (picture) said Brexit would benefit other trading nations as the separation would equalise each countries’ economic relationship with the UK, which is currently dependent on the trade bloc.
“The amount of trade we have with the UK has shown a declining trend since the end of colonialism, and has not been on a substantial scale such as our trade with China or Japan, thus reducing the adverse effect of the separation,” Rajah said.
“What that actually means is that, on both the demand and supply sides, the EU will be facing similar treatments as Malaysia,” he added.
However, he also noted that Malaysians do have the tendency to invest in the UK as private and government-owned companies are seen to be investing in properties, particularly in London.
Sunway University Business School economist Professor Dr Yeah Kim Leng said the departure date, which has been pushed back for almost two months, is expected to disrupt the European financial market as it needs to adjust to the change of the economy.
“Of course, we have to brace for some reaction. If the decision is on the ‘no-deal’ Brexit, the financial market would be very volatile,” said Yeah.
“If that is the case, Malaysia would see an indirect impact rippled from the disrupted financial market in Europe. However, there could be some negative impact on asset prices that investors should consider,” he added.
Yeah said on the positive side, Brexit will allow for a new trade talk between Malaysia and the UK, which is currently being negotiated through the bloc.
“The UK will be seeking agreements with other countries so that they can pursue trades on their own, while trying to reduce dependency on the EU.
“It will open up opportunities for the UK to expand its trade relations with other countries and the UK has been one of our traditional partners, although the value is not significant,” he said.
In 2017, the UK is Malaysia’s fourth-largest trading country in the EU, with annual goods and services trade at £3.34 billion (RM17.92 billion).
Brexit was scheduled to take place on March 29, 2019, before British Prime Minister Theresa May requested it to be postponed to June 30, 2019.
The EU has agreed to an extension until May 22, 2019, provided that the Withdrawal Agreement is approved by the House of Commons.
If the twice-rejected deal is dismissed again, the UK will have until April 12, 2019, to offer a new plan or leave the union without a settlement.
Another economist expressed worry that the delay on the Brexit decision would prolong uncertainties in the local market.
“We do not like the uncertainties. They are causing jitters in the market, affecting the investors’ confidence and suspension of trading activities. We need the conclusion, so we can now plan for the next move,” Dr Barjoyai Bardai said.
According to him, it will be advantageous for Malaysia if Brexit is called off, as the deal will affect the UK’s economy negatively — in addition to the fear of a possible upcoming recession.
Essentially, Barjoyai said, Brexit will impact the global economy — in terms of trade barriers, immigration, as well as the general financial and fiscal aspects — as the UK economy is quite substantial in the world.