Malaysia Fourth Biggest beneficiary of Sino-US Trade War

June 2019

According to a research report by Japanese Bank Nomura, Malaysia is the fourth biggest beneficiary of the trade war. Vietnam is the biggest beneficiary, gaining 7.9% of its gross domestic product (GDP) as a result of increased exports, followed by Taiwan (2.1%) and Chile (1.5%). The report further states that China has lost 0.5% of its GDP due to trade diversions, with the US has lost 0.3% of its GDP.

The Electrical and Electronics (E&E) sector and the natural gas industry in Malaysia were among the biggest beneficiaries, due to trade diversions from the US and China in light of the trade war. Gains from the US were particularly salient in integrated circuits production as well as semiconductor devices and light-emitting diodes. 

The improvement in exports led Malaysia to record a MYR 10.9 billion (USD 2.6 billion) trade surplus. According to an Economic advisor to the country’s prime minister, the country’s economic growth is set to gain an additional 0.1% from companies moving their Manufacturing to Malaysia.

The trade war has also led to a boost in approved FDI (Foreign direct investment) which increased 73.4% y-o-y in the first quarter of 2019 to MYR 29.30 billion (USD 7.3 billion) from MYR 16.9 billion (USD 4 billion) a year ago. Of this MYR 20.2 billion (USD 4.8 billion) of FDI was in Manufacturing, 57% of it coming from the US, 22% from China and 11% from Singapore. 

(Sources: The Star; CNBC Markets; The Edge Markets)


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