Economist Alicia García-Herrero says Trump’s attendance at the 47th ASEAN Summit gave Malaysia a rare advantage, but the challenge lies in turning symbolic diplomacy into real economic gains.
BY TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Oct 29 — The 47th ASEAN Summit in Kuala Lumpur underscored the shifting dynamics of U.S.–China rivalry in Southeast Asia, but it was Malaysia that emerged as a key beneficiary of Washington’s recalibrated approach. The attendance of U.S. President Donald Trump not only signaled renewed American engagement with the region but also placed Malaysia in a stronger economic and strategic position than some of its neighbors.
According to Alicia García-Herrero, Chief Economist for Asia-Pacific at Natixis, Trump’s participation carried weight far beyond symbolism.
“Trump’s attendance signals a renewed U.S. push for economic ties in Southeast Asia amid rivalry with China, emphasizing reciprocal trade and supply chain diversification,” she said. “It could lead to targeted investments in tech and infrastructure, but much depends on follow-through; otherwise, it’s largely symbolic to counter Beijing’s influence.”
Malaysia Gains Favorable Treatment
Malaysia’s advantage was clear when compared to Vietnam, which was subjected to a 40% tariff on trans-shipment practices. Kuala Lumpur escaped such penalties, reflecting what García-Herrero described as a more conciliatory U.S. approach.
“This is good news for Malaysia because they can cope with this without a tariff, and it shows that the U.S. is changing its intent,” she explained. “By pushing ASEAN too hard, Washington wasn’t getting anything in exchange, which was effectively a gift to China. Malaysia benefited from a more conciliatory U.S. approach compared to its neighbors.”
She added that Malaysia’s role in key sectors could prove transformative.
“A U.S.–Malaysia trade pact would boost Malaysia’s exports in semiconductors and EVs, adding 1–2% to GDP growth, while pulling ASEAN toward more balanced alignments beyond China dependency,” García-Herrero noted.
Malaysia as a Bridge Economy
Beyond immediate trade benefits, García-Herrero sees Malaysia’s neutrality and resources as an advantage in navigating U.S.–China competition.
“Yes, Malaysia’s neutral stance and rare earth resources position it as a key bridge, facilitating U.S.–China deals in green tech and fostering ASEAN’s inclusive growth agenda,” she said.
ASEAN’s Broader Balancing Act
While Malaysia gained from Trump’s softer tone, ASEAN as a bloc still faces challenges in balancing ties with both Washington and Beijing.
“ASEAN should negotiate sector-specific deals, like in digital trade, to secure benefits while diversifying partners to mitigate U.S. protectionism risks,” García-Herrero advised.
On China, she added: “ASEAN will hedge by deepening supply chain integration with both powers, focusing on neutral tech standards and regional pacts like RCEP to avoid picking sides.”
Dollar Dominance vs RMB Gains
The Summit also highlighted the region’s financial vulnerabilities.
“ASEAN economies, especially Indonesia and Thailand, remain vulnerable to Fed hikes; smaller members like Cambodia could face capital outflows and debt stress if dollar tightens further,” García-Herrero warned.
Yet, the renminbi continues to gain traction. “Trump’s presence reinforces dollar dominance in ASEAN finance, but RMB gains continue in trade settlements, now at 20–25% in some bilateral flows, driven by China’s regional heft,” she said.
Looking Ahead
Despite ongoing risks, García-Herrero remains optimistic about ASEAN’s prospects.
“Risks include U.S. tariffs and geopolitical tensions; opportunities lie in AI, renewables, and intra-ASEAN trade,” she said. “Under the Philippines’ chair, expect focus on the maritime economy and resilience, targeting 5–6% regional growth.”
Final Takeaway
For García-Herrero, Malaysia stands out as one of the clear beneficiaries of Trump’s renewed engagement with ASEAN. By avoiding steep tariffs, strengthening its exports in semiconductors and EVs, and leveraging its rare earth resources, Malaysia is positioned as a bridge in U.S.–China competition. As she emphasized, the opportunity is real — but whether Malaysia can translate this favorable treatment into lasting growth will depend on how effectively it reforms and competes in a more challenging global trade environment.- TNS NEWS