Deputy Investment, Trade and Industry Minister Liew Chin Tong says Asian economies cannot depend on the United States as its export destination of first and last resort “forever”, but instead it will have to create its own consumer markets, especially within Asean.
He was speaking during his opening remarks at the Asean Economic Opinion Leaders Conference: Outlook for 2025 at Menara Miti in Kuala Lumpur on Wednesday (Jan 8).
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He was speaking during his opening remarks at the Asean Economic Opinion Leaders Conference: Outlook for 2025 at Menara Miti in Kuala Lumpur on Wednesday (Jan 8).
Read more at https://bit.ly/40pTCYr
WATCH MORE: https://thestartv.com/c/news
SUBSCRIBE: https://cutt.ly/TheStar
LIKE: https://fb.com/TheStarOnline
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NewsTranscript
00:00Ever since the COVID-19 pandemic in 2020, the world is facing a poli-crisis, or in simpler terms,
00:18a perfect storm of pandemic and other health crisis, geopolitical competitions and wars in
00:26Europe and in the Middle East. Financial volatilities that hurt both developed and
00:35developing countries, which include high inflation, high interest rate and the debt crisis,
00:40as well as a permanent and worsening climate crisis. With this as a background,
00:46now the world are facing the following paradigm shift and new relevance. First,
00:54the pursuit of cheap outsourcing in the name of efficiency is giving way to the concern
01:01for supply chain resilience and diversification. Gone are the days when many thought the world
01:08was constituted by a single global supply chain. Increasingly, supply chains will be divided
01:16along geopolitical lines or form according to regional proximity to avoid risks associated
01:23with too long a supply chain, such as those experienced during the COVID-19 pandemic or the
01:29RISC crisis. Second, no one now believes the idea that economics and politics or security do not
01:40mix. Economics will intertwine with politics and security even more from now. Nation states
01:50and national elections or politics have huge consequences on the economy, as we learned in
01:562024, especially the elections of the second Trump administration. Each nation has domestic
02:05politics to deal with, as we all realize, not only in the developing world and now in the
02:12developed world. And to prevent popular revolt or right-wing populism to take root, all governments
02:20have to ensure that the economy delivers decent socio-economic outcomes for their people. Third,
02:28there is a limit to export land industrialization. In the last 70 years, from Japan to the four
02:42dragons or four tigers, to the tiger cubs, to China, Asia in general grew rich by exporting
02:54to the United States and to a lesser extent, Europe. On the one hand, this market, Europe and
03:03the United States, are seeing the shrinking of their middle classes as well as the shrinking
03:09population. On the other hand, Asian industrialization has generated a massive productive
03:15overcapacity or capacity, huge capacity. The two do not add up. Something will break somewhere.
03:25Asian economies cannot forever think of the United States as the export destination of the first
03:32and the last resort. We will have to create more consumer markets, especially in ASEAN.
03:39These three massive trends or massive changes bring home a simple message. Business as usual
03:47won't cut it. ASEAN needs to be bold to face the challenges while taking advantage of the
03:54opportunity presented. As we envisage ASEAN in 2045, as this year we will be unveiling the ASEAN
04:042045 mission, there are three key elements which are important. First, ASEAN as a regional supply
04:12chain. If we leave it to the major powers, the supply chain will probably eventually bifurcate
04:20as the United States and China extricate themselves from each other. It is not in the interest of the
04:26rest of the world to see supply chains bifurcate. And therefore, ASEAN together with the European
04:33Union, Global South and the rest need to do the heavy lifting to ensure that the middle ground
04:40or the common ground of trade is big enough to resist bifurcation. And this is also the time
04:48that ASEAN member states should see each other not as competitors but complementing each other
04:56to form a resilient regional supply chain. It is in this context that the Johor Singapore
05:03Special Economic Zone, which was signed or agreed yesterday, has the potential of creating an
05:11exciting future and as a role model. More ASEAN-wide joint investment projects or sub-regional
05:19cooperation will help to make the ASEAN supply chain stronger. The sum is much bigger than the
05:26parts. Second, ASEAN as a middle power. When ASEAN was formed in 1967, it was during a volatile world
05:37in transition just like today. ASEAN's non-aligned stance wasn't born out of a vacuum.
05:44ASEAN was established precisely because the founders thought that ASEAN should not be aligned
05:52to each side during the Cold War and that we had to get together to be a force to be reckoned with.
06:02The 2020s is exactly such a moment that we in ASEAN need to hang together
06:07so not to be hung separately. We need to work with each other very closely and we need to ensure
06:15that each ASEAN member state is economically secure and well-to-do enough so to form a much
06:23stronger regional solidarity. Third, ASEAN as a prosperous middle-class society does an important
06:33market. Over the last two decades, ASEAN should emerge as a middle-class society
06:45and thus becoming a sizable consumer market and not just production sites in the old formulation
06:52of export-led industrialization. To do so, we must ensure that ASEAN member states do not enter
06:58into a race to the bottom in terms of wages, tax cut or tax holidays and environmental standards.
07:07Instead, ASEAN must uphold environmental standards and also do more together.
07:16ASEAN is used to the old export-led industrialization model in which we help
07:20multinationals to suppress wages to make to make us a cheap destination to produce.
07:27ASEAN is also used to giving tax cuts or tax holidays to multinationals. As countries begin
07:34to adopt a global minimum tax, there's an urgent need for ASEAN to work together for ASEAN member
07:41states to come together to work up an agreement not to circumvent the GMT. The multinationals
07:49are knocking each country's treasuries to ask for cash funds to circumvent the GMT.
07:55We will have to stand together to tell the multinationals that we need to collect taxes
07:59and we need to collect these taxes for the greater good of our people and for ASEAN to
08:05emerge as a middle-class society which in turn will be a huge market for all, including for
08:11the multinationals. Also, we need to ensure that when we develop our economy, we are protecting
08:16the climate and the environment together and there should be no race to the bottom among us.
08:22As you can see, I have high hopes on ASEAN coming together as a supply chain,
08:29as a middle power, as a middle-class society. I hope you will deliberate more over the next
08:34few days, especially on the theme of Malaysia's ASEAN challenge, inclusivity and sustainability,
08:42which aims for the growth and sustainable development to ensure no one is left behind.
08:49Prime Minister Datu Sri Anwar has expressed his hope for Malaysia that to achieve growth,
08:55inclusivity and sustainability at the same time, just like in the economy modernity framework,
09:03Prime Minister Anwar articulated the needs to raise the floor and to raise the ceiling at once.
09:11Of course, a lot has to be done to achieve this. I believe ASEAN members need to share this vision.