On the commercial front, a change of pace is expected, but the substance of policies would remain the same
by RAHIMI YUNUS / pic by BLOOMBERG
MALAYSIA is well-positioned to attract more foreign investment, as a result of “the power struggle” between the US and China that is expected to continue with US President Joe Biden’s administration after the departure of Donald Trump.
Centre for Market Education CEO Dr Carmelo Ferlito said the US-Malaysia relationship will also depend much on how the relationship between the US and China evolves.
On the commercial front, he said a change of pace is expected, but the substance of policies would remain the same.
“Trump was very direct with his commercial policy by imposing duties. Biden may change strategy and prefer international fora such as the World Trade Organisation in order to push China in a different direction.
“This could actually put more pressure on China because Biden will most probably try to involve the European Union in his pressing toward China on its anti-competitive behaviours and human right violations,” Ferlito told The Malaysian Reserve (TMR).
He said there may be relaxation at the beginning, probably due to the change in tone rather than in substance, but the longterm relationships are to remain complicated.
He added that Malaysia and other Asean countries could be gainers if the US-China relationship goes south, pushing foreign direct investments to relocate.
“Asean should probably play a stronger and more united role in proving to be an alternative investment hub,” he added.
Given Biden’s more conventional approach, he said the US may re-enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Ferlito, however, said countries like Malaysia should push for bilateral agreements and not put too much hope on big comprehensive agreements that are full of rules and thus quite contradicting with a “free trade” agreement.
Asia Pacific Economic Cooperation Secretariat ED Tan Sri Dr Rebecca Fatima Sta Maria told TMR that the US-Malaysia relationship has always been positive and with Biden, there is an opportunity to take it to a higher level.
She said the US will have to go through a certain process if it decides to rejoin the CPTPP, and terms will be determined by the 11 member countries.
Williams Business Consultancy Sdn Bhd founder and director Dr Geoffrey Williams said the regional and global trade will be boosted if Biden reverses Trump’s decision on the CPTPP or joins a Regional Comprehensive Economic Partnership-type framework.
Regardless, he said the US-Malaysia trade was buoyant and grew in dollar terms during the Trump period and that is expected to continue once Covid-19 is out of the way.
“Old discussions of a bilateral Malaysia-US free trade agreement are unlikely because of the multilateral frameworks now. So, it will be the regional and global impact that counts,” Williams told TMR.
In 2019, US goods and services trade with Malaysia totalled an estimated US$59.2 billion (RM238.6 billion), according to the US data.
Exports (the US to Malaysia) were US$16.3 billion, while imports were US$42.9 billion, putting the US goods and services trade deficit with Malaysia at US$26.7 billion.
Malaysia is currently the US’ 19th-largest goods trading partner with US$53.8 billion in total (two ways) in 2019.
The trade in services with Malaysia (exports and imports) totalled an estimated US$5.4 billion in 2019.
Malaysia was the 26th-largest goods export market for the US and the 15th-largest supplier of imported goods in 2019.