The ASEAN Equation: Unity in Uncertainty - Overview by Nik Zafri

Please also read the previous article 

Given the attendance of major powers such as President Donald Trump - United States, reps from China and Russia, the key topics agenda would likely be :

1. Trade, Economics and Supply Chain resilience

The U.S. and China are in trade talks on the sidelines. The U.S., under Trump, is threatening big tariff hikes on Chinese exports and seeking concessions; the China leadership sees ASEAN as a priority partner.

The ASEAN region is concerned about how U.S. tariffs and shifting global trade flows affect its export-and-manufacturing base. 

China is pitching its upgraded “Free Trade Area 3.0” with ASEAN, emphasising digital economy, green economy, and production/supply-chain integration. 

ASEAN is also seeking to expand partnerships beyond the traditional powers (e.g., Latin America, Africa) as host Malaysia emphasises “inclusivity and sustainability.”

2. Regional Security, Maritime Disputes and Neutrality

The summit will discuss the broadening power competition in the region: the narrowing of ASEAN’s “space for neutrality” as big-power rivalry deepens (trade, tech, security) was explicitly flagged by Malaysia’s foreign minister. 

Maritime issues especially in the South China Sea and unresolved border or access disputes will be on the table. 

Internal ASEAN conflict management remains a key focus particularly the recent border clashes between Thailand and Cambodia. Malaysia has played a pivotal role in facilitating the ceasefire, a contribution publicly acknowledged and appreciated by President Trump. The summit is expected to witness the formal signing or endorsement of the ceasefire agreement or a broader peace framework.

3. ASEAN’s Internal Cohesion and External Partnerships

The 10 current ASEAN members plus the accession of Timor‑Leste as the 11th member will be formalised at this summit. 

ASEAN is going to meet with “dialogue partners” (China, U.S., Russia, Japan etc) in separate sessions.  It is not known if BRICS is going to be discussed.

The bloc is under pressure from multiple directions (economic, strategic) and must manage its collective identity and voice especially with members having differing alignments. 

4. Big Power Diplomacy and the U.S. - China – Russia Axis

With Trump attending, the U.S. may signal a renewed high-level engagement in Southeast Asia and trying to shore up trade and security ties. 

China will engage ASEAN pushing its economic agenda as well as its strategic footprint in the region. 

Russia and some countries will have representation (though the head of state may not attend) and is part of the conversation, especially via its linkages to China and in broader regional security issues. 

5. Other Cross-Cutting issues

Myanmar’s ongoing crisis remains a thorn in ASEAN’s unity and credibility; how the bloc deals with it will come up. 

Technology, cyber security and supply-chain issues: China has urged the U.S. to stop cyber-attacks; ASEAN will be mindful of technological dependencies and the “new economy” challenges. 

Environmental, “green economy” and “sustainability” framing (the theme of the summit is “Inclusivity and Sustainability”) though less emphasised in media, it provides an entry for ASEAN to project a positive agenda. 

6. WHAT TO WATCH

• Trade deal/announcements: Will the U.S. (with Trump) clinch new trade arrangements with ASEAN-members or announce tariff/market-access concessions? Media say yes.

• China-ASEAN FTA 3.0 implementation: Will there be formal commitment, timeline or institutional mechanism announced around the upgraded China-ASEAN free trade area? 

• Cease-fire or peace deal: Particularly the Thailand-Cambodia frontier conflict is expected to be addressed or formalised at the summit in presence of Trump via signing of Peace Deal. 

• Gaza - although President Trump has mentioned the ceasefire, it remains uncertain how extensively the issue will be discussed during the summit, as Palestine continues to face attacks despite the declared truce.

• Language on big-power rivalry: Expect statements around strategic autonomy, neutrality or how ASEAN will engage U.S., China, Russia without being drawn fully into one camp. The “space for neutrality” comment is telling.

• Commitments on supply-chain/green economy: Possibly new mechanisms or commitments to diversify supply chains, strengthen green/digital economy cooperation across ASEAN + China partners.

• Membership expansion and institutional developments: Timor-Leste’s entry, perhaps proposals about expanding ASEAN’s partnership footprint, may get spotlight.

7. Implications for Malaysia and ASEAN

For Malaysia (host): It means being centre-stage in regional diplomacy, enhancing its role as mediator and regional convenor.

For ASEAN's credibility: It’s a test of how the bloc navigates big-power competition while keeping its centrality intact.

For business/investment: Outcomes in trade and supply-chains could open new opportunities (or risks) for Malaysian and regional companies.

For security and geopolitics: How ASEAN positions itself vis-a-vis strategic competition (U.S.–China–Russia) will influence regional alignments for years.

8. Conclusion

The 2025 ASEAN Summit stands as a pivotal moment for Southeast Asia a region navigating the complex intersection of global power rivalries, economic realignments, and enduring humanitarian crises. 

With the presence of the United States under President Trump, alongside China and Russia, ASEAN faces the challenge of asserting its centrality while maintaining neutrality amid competing global interests. 

Yet, within this delicate balance lies opportunity: to strengthen internal cohesion, champion sustainable and inclusive growth, and reaffirm ASEAN’s role as a stabilizing force in an uncertain world. Whether through renewed trade cooperation, conflict resolution, or humanitarian advocacy, the summit’s true test will be how effectively ASEAN transforms dialogue into decisive, collective action for the peace, prosperity, and resilience of the region and beyond.

At the same time, I sincerely hope that the peaceful protests surrounding President Trump’s visit to Malaysia will not be met with penalties or suppression. In a true democracy, the right to express dissent is fundamental provided it remains orderly and non-violent. Many Malaysians, including the opposition and silent citizens alike, deserve the space to voice their concerns. Such demonstrations should not be seen as acts of hostility, but rather as a necessary form of check and balance one that reflects the maturity, integrity, and strength of Malaysia’s democratic spirit.

Trump’s presidency raises concerns for US investments in Malaysia’s semiconductor, data centre

 

Malaysia might experience a slowdown in investments as US firms focus on strengthening local operations

by SHAUQI WAHAB

Original Link : https://themalaysianreserve.com/2024/11/11/trumps-presidency-raises-concerns-for-us-investments-in-malaysias-semiconductor-data-centre/

DONALD Trump’s return to power after winning the recent US presidential elections against Democratic party’s Kamala Harris is stirring anticipation and concern within global industries.

The focus now is on the possibility of Trump repealing or significantly altering the CHIPS and Science Act, which has played a pivotal role in shaping the global semiconductor landscape.

The act, signed by President Joe Biden in 2022, allocated US$52 billion (RM288.91 billion) to support US semiconductor manufacturing.

Analysts are speculating that Trump may seek to revise the Act to place greater emphasis on domestic production rather than collaborating with international partners like Malaysia, affecting US-based companies such as Intel Corp, Texas Instruments Inc and Western Digital Corp.

Independent researcher and Noma SWO Consult associate partner Nik Zafri Abdul Majid said Trump’s policies are likely to focus heavily on reshoring production to the US, reducing dependence on foreign manufacturing.

He explained that Malaysia might experience a slowdown in investments as US companies focus on strengthening local operations instead of relying on international supply chains, as witnessed during Trump’s previous administration.

According to Wong, Malaysia must invest in local talent and create a robust environment for global companies to thrive (Pic courtesy of Wong)

Semiconductor Reshoring, Malaysia’s Strategic Position as Neutral Player

Although reshoring could present challenges, Malaysian Semiconductor Industry Association president Datuk Seri Wong Siew Hai said Malaysia has the potential to leverage changes in US trade policies as an opportunity to strengthen its semiconductor ecosystem.

He opined that Malaysia must invest in local talent and create a robust environment for global companies to thrive.

“To capture this once-in-a-generation opportunity of the semiconductor industry forecasted to grow to RM4.4 trillion by 2030, Malaysia needs to cultivate its talent and attract top-tier global talent to contribute to Malaysia’s aspiration to move up the value chain,” he said.

Despite the challenges posed by shifting US policies, Malaysia could stand to benefit from its strategic positioning as a neutral, non-aligned country.

Wong pointed out that Malaysia continues to be an attractive investment destination due to its stable political environment and strong relationships with both the US and China.

“Malaysia will continue to benefit from the ‘Plus One (+1)’ strategy. This trend encourages companies from the US, China and Europe to diversify their investments by considering Malaysia as a stable and strategic location to mitigate their risks.”

Amid ongoing geopolitical tensions, Malaysia’s neutrality allows the country to attract investments from both sides of the trade war.

Wong stressed that Malaysia must take advantage of this positioning by accelerating its development of a competitive semiconductor ecosystem.

As businesses shift away from China, Malaysia’s role in global supply chains could grow significantly, says Innes (Pic courtesy of Innes)

This includes initiatives such as the National Semiconductor Strategy, enhancing Malaysia’s standing in the global semiconductor market.

By fostering strong relationships with global players and focusing on innovation and talent development, Wong believes Malaysia could secure a leadership position in the industry, even if global trade dynamics shift.

Meanwhile, SPI Asset Management managing partner Stephen Innes believes while the US-China trade war continues to create volatility, Malaysia could still be poised for growth due to its central position in South-East Asia.

He said Malaysia stands at a crossroads, potentially emerging as the region’s “Silicon Valley”.

“In a region brimming with opportunity, Malaysia stands poised to position itself as a linch-pin for Asia Pacific trade, deftly navigating the US-China rivalry while keeping doors open to both economic powerhouses.”

Innes then elaborated on the potential of the semiconductor industry in Malaysia, citing the BRICS agreement as a possible avenue for growth through increased regional cooperation.

However, he remained optimistic about Malaysia’s resilience even if Trump was to repeal the Chips Act.

Additionally, he opined that Trump’s strict policies may transform Malaysia’s export landscape, in which electronics, palm oil and machinery exports may face shifting demand dynamics, yet with a huge upside.

“As businesses look to diversify away from China, Malaysia’s role in critical global supply chains could expand exponentially,” he added.

Trump may seek to revise the Act to place greater emphasis on domestic production rather than collaborating with international partners, affecting US-based company such as Western Digital (pic: Bloomberg)

Impact of the US-China Trade War on Malaysia’s Semiconductor Industry

Trump’s approach to trade, particularly his imposition of tariffs on Chinese goods, remains a key concern for Malaysia.

While the US continues to grapple with its trade deficit, the tariffs have created volatility in the global supply chain, especially for countries like Malaysia that depend on both US and Chinese imports and exports.

Universiti Malaya’s finance expert in Business and Economics Faculty Dr Aidil Rizal Shahrin discussed the ongoing uncertainty that these trade dynamics create for Malaysian businesses, notably the retaliatory tariff on Chinese goods.

“In terms of Malaysia’s exports, this trade war creates more uncertainty. Prices also become volatile, making it harder for businesses to plan,” he told TMR.

He said it is challenging for exporters and importers in Malaysia who are already dealing with currency risks.

The continuation of these trade tensions could further complicate Malaysia’s semiconductor industry, which relies on an intricate global supply chain.

Aidil Rizal added that the trade war has not shown clear economic benefits for the US, and it remains uncertain whether Trump would re-evaluate the retaliatory tariffs that continue to affect global trade.

He also pointed out how these shifting policies, compounded by currency volatility, make it more difficult for businesses to plan effectively.

He noted that the depreciation of ringgit could have a mixed impact on exports and imports.

“When ringgit depreciates, exports become relatively cheaper for foreigners, while imports become relatively expensive for Malaysians and vice versa.”

The ongoing trade war could worsen this situation, as businesses face rising costs from tariffs and fluctuating exchange rates.

Trump’s Tax Policies and Their Economic Consequences

Another major concern of a Trump presidency is the possibility for changes to tax policies, particularly those impacting corporations and individual income taxes.

Aidil Rizal said Trump’s previous administration saw the introduction of the Tax Cuts and Jobs Act, which included corporate tax reductions aimed at stimulating economic growth.

These cuts, he said, led to an increase in the US government’s deficit.

Trump has suggested that similar tax cuts could be a central part of his 2024 campaign platform, which could further strain the US budget.

“If this promise (of more tax cuts) is delivered, it would put more strain on US debt, around US$35 trillion today,” Aidil Rizal added.

Such changes might indirectly impact Malaysia’s economy through shifts in global investment patterns and currency fluctuations.

Meanwhile, Bank Islam’s chief economist Dr Mohd Afzanizam Abdul Rashid warned that while tax cuts might boost the US economy in the short term, the long-term implications could be problematic as the country is still in a large amount of debt.

“Given that Malaysia’s GDP growth has historically shown a 70% correlation with US economic performance, a slowdown in US growth could dampen Malaysia’s economic expansion as well,” he said.

Hence, any disruptions to US fiscal policy could ripple across the globe and affect Malaysia as well.

He also pointed out that Malaysia’s financial relationship with the US could be affected by Trump’s tax policies.

Mohd Afzanizam said the Double Taxation Agreement between the US and Malaysia is designed to prevent double taxation on income.

Therefore, he said if Trump pursues further tax cuts, this could complicate the tax landscape and create additional burdens for businesses operating between the two countries.

Any disruptions to US fiscal policy could ripple across the globe and affect Malaysia as well, opines Mohd Afzanizam (Source: Media Mulia)

US-M’sia Partnership: Insights, Future Economic Prospects

For concerns on the future economy, International Islamic University Malaysia’s economist and expert on international trade relations Prof Dr Azhar Mohamad shared his insights into the future of the US-Malaysia relations under the Trump administration.

He noted that Trump’s “America First” focus could lead to a more protectionist stance, which would have ripple effects on global trade, especially for countries like Malaysia that depend on both US and Chinese investments.

“If similar policies are reinstated, there might be a strategic shift encouraging US technology firms to prioritise domestic investments over foreign ventures,” he told TMR.

However, he remained cautiously optimistic, stressing Malaysia’s strengths in diversifying its economic relationships.

Azhar said Malaysia’s focus on economic diversification and strengthening ties within Asean and other regions would give the resilience needed to mitigate some of the risks posed by potential US policy shifts.

Trump’s foreign policy has traditionally been marked by isolationism, particularly in his withdrawal from multilateral agreements such as the Paris Agreement and the Trans-Pacific Partnership (TPP).

His stance on these issues could have long-term consequences for the US-Malaysia relations.

Malaysia needs to cultivate its talent to move up the value-chain (pic: TMRpic)

Meanwhile, Aidil Rizal speculated that Trump might continue with his previous withdrawal from the TPP, which could cause some South-East Asia countries to strengthen their ties with China instead.

It could affect Malaysia’s trade relationships, potentially leaving a vacuum that China will likely fill with its Belt and Road Initiative.

Despite these potential challenges, Wong believes that Malaysia will continue to navigate these complexities by focusing on its own economic resilience.

Finally, Mohd Afzanizam noted that while Trump may continue his isolationist policies, Malaysia’s emphasis on regional cooperation through initiatives like the Asean Economic Community and the Regional Comprehensive Economic Partnership provides a buffer.

He said Trump may withdraw from multilateral frameworks, but Malaysia has already positioned itself as a key player in regional trade agreements, ensuring that the country remains well-integrated into the global economy.

This article first appeared in The Malaysian Reserve weekly print edition

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