Malaysia’s ICT, auto sectors may benefit from China-U.S. trade war, the economist says

KUALA LUMPUR, 28 January 2019 - Malaysian exporters in the automotive sector and information, communications and technology are potential winners from the trade dispute between the U.S. and China, said Pamela Qiu, associate director for Southeast Asia at The Economist Corporate Network.

Southeast Asia is expected to benefit from a shake up of the global supply chains as more companies relocate out of China as a result of the trade war, which will continue to be a threat to global growth outlook in 2019, Qiu said at a InvestKL presentation on 2019 economic outlook in Kuala Lumpur today.

"We singled out automotive and ICT because Malaysia has got quite good experience in those sectors already. You’ve got a car, you have a long history in electrical and engineering in Malaysia,’’ Qiu said.

"People are holding back mostly because of policy uncertainty and regulatory uncertainty. It’s not because they think that the country has no potential, in fact, in many cases they think there is more potential now because the talents are coming back, and more vibrancy in the economy.

The government plans to address investor’s concern by actively engaging all stakeholders this year, according to InvestKL Chief Executive Officer Datuk Zainal Amanshah.

"Our ministry, the Ministry of International Trade and Industry (MITI), will give a big push over what we call the 5Cs -- clarity, certainty, consistency, continuity on policies and to build confidence. So you will see a lot of interaction and dialogues between us and the multinational companies, the chambers, embassies and the business community at large to mitigate any concerns.’’

The bigger risk threatening Malaysia’s business outlook this year are mostly external, including the U.S.-China trade war and Brexit, Zainal said.

“We also see a lot of upside in MITI’s Industry 4.0 initiative, namely Industry4WRD. This is not just for the manufacturing sector but also the services sector where we encourage multinationals to set up their hubs in KL for activities such as artificial intelligence, big data, augmented reality, cloud solutioning, analytics and cybersecurity to name a few.”

Jagdev Singh, a tax leader at PwC Malaysia also spoke on tax and fiscal policy reforms at the event.

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