Malaysia’s nonagenarian Prime Minister Tun Dr Mahathir often speaks fondly of the heydays when Malaysia was an Asian Tiger economy during his previous watch as prime minister in the 1990s. His wish for Malaysia to become an Asian Tiger economy again may well be granted sooner than we think.
Many views have been aired about the US China Trade War, and the one I think is most likely to happen is this:
“What is far more likely is that both the United States and China will protect high-value technology critical to their national interests, develop supply-chain redundancies, and continue economic networking with emerging middle powers in Southeast Asia and sub-Saharan Africa. In the long term, it remains possible for both the United States and China to achieve a healthier diversification of economic connections that will forge a path to a distinctly new and more stable economic order.”
Even if the trade war is resolved, the US China trade deficit is unlikely to go away. Taking a leaf from the last mega trade war between US and Japan, the then titanic trade deficits were mitigated by the Japanese Akamatsu Flying Geese Formation model of economic development in Asia. With hindsight, this forerunner of the supply chain revolution was an inspired piece of trade deficit management.
In the ongoing US China Trade War and the coming New Global Economic Order, Malaysia is in a strong position to claim its title as an Asian Tiger economy reborn.
Why? As predicted in my blogposts a few weeks ago, the tide of shifting China based supply chains to Malaysia is quickly rising and will soon turn into a full flood. Win win collaboration is the way forward to overcome Malaysia’s national debt deficit and help China based manufacturers trapped by the trade war at the same time:
Since then, Malaysia and Vietnam have taken the lead as destinations of choice for shifting supply chains and migrating production:
In his recent trip to the US for the United Nations General Assembly and follow on trip to the UK, Tun Dr Mahathir met with many investors who are keen to relocate factories to Malaysia both for the purpose of export to the US as well as China:
While Malaysia has good manufacturing infrastructure and logistics connectivity to accommodate a huge migration of production from China and the US, the bottleneck in capacity is likely to be human. Local highly skilled engineers, technicians and workers need time to be trained.
Instead of relying on foreign workers from Nepal, Bangladesh and South East Asia, it is in Malaysia’s national interest to capture opportunities from migrating supply chains and manufacturing outfits by tapping the largest pool of well trained and experienced manufacturing labor in the world that is affected by the US China trade war – Chinese engineers, technicians and workers.
That nimble and quick decision will swing Chinese and other foreign investments into Malaysia in large numbers in the fastest possible time.
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