Diversification Ensures Malaysia's Economy Remains Resilient
By Samantha Tan Chiew Tieng
PUTRAJAYA, July 2 (Bernama) -- Malaysia remains on solid footing due to its inclusive and long-term economic strategy despite geopolitical tensions in the Middle East raising concerns over the potential closure of the Strait of Hormuz and disruptions to global energy supply.
The Investment, Trade and Industry Ministry's bilateral economic and trade relations division director, Raveendran Nair, said Malaysia’s consistent approach of diversifying into new markets has allowed the country to stay competitive and resilient against external pressures.
“To be fair, we faced numerous major challenges – from the Asian financial crisis to the US financial crisis, and then the COVID-19 pandemic.
“During COVID-19, we faced an unprecedented and extraordinary situation. Yet, we managed to recover and move towards a progressive recovery trend in this post-pandemic era,” he said at Universiti Kebangsaan Malaysia forum Bicara Persada – Iran-Israel War: Implications for Malaysia and the New World Order held here.
He said challenges such as the retaliatory tariffs imposed by the United States (US) do not pose a significant threat to Malaysia’s economy because the impact is also felt by other countries.
“There are concerns that these tariffs could shrink our economy. But from a broader perspective, Malaysia is not the only one affected.
“In Southeast Asia, for example, Singapore faces a 10 per cent tariff, the Philippines is second, and Malaysia faces a 24 per cent rate. Compared to other neighbouring countries in the region, some face tariffs as high as 30 to 40 per cent. So in terms of competitiveness, Malaysia still has an edge,” he said.
Raveendran noted that Malaysia’s trade with the US only accounts for about 13 per cent (of its total trade), with the rest involving a variety of global markets.
“Our strategy is not to depend on a single country. That’s why we continue to diversify our markets. As seen recently, Prime Minister (Datuk Seri Anwar Ibrahim) has frequently travelled abroad with MITI to conduct business programmes, meet local industry leaders, and identify potential investors to bring into Malaysia.
“This strategy ensures we are not reliant on just one country. If one country’s economy declines, we still have other alternatives,” he said.
As part of the effort to strengthen trade connectivity, Malaysia is actively signing free trade agreements (FTAs) to open up opportunities for national exports.
“For instance, we recently signed the Malaysia-European Free Trade Association agreement, which involves Iceland, Liechtenstein, Norway and Switzerland. We have also resumed FTA negotiations with the European Union and Gulf countries. Overall, we have 18 FTAs with various nations,” he said.
On tensions in the Strait of Hormuz, Raveendran said the situation could potentially impact the global energy supply chain but Malaysia remains focused on strengthening its economic resilience through diverse trade networks and strong internal preparedness.
He also said no country can survive on its own without a stable supply network in an interconnected global economic landscape.
The Strait of Hormuz issue has attracted attention following heightened Iran-Israel conflict, which also pushed oil prices above US$89 per barrel — an increase of more than 25 per cent since April.
-- BERNAMA
