AFTER a marginal drop in the first half of the year, Putrajaya is cautiously optimistic about seeing slight growth in Malaysia’s full-year trade performance, said Deputy International Trade and Industry Minister Ong Kian Ming.

In a recent exclusive interview with The Malaysian Insight, Ong said the marginal decrease in total trade in the first half of the year is not solely attributable to the US-China trade war but other factors, such as softer global trade and investment conditions and slower production due to the long Chinese New Year break in February.

Trade figures released last week showed that Malaysia’s total trade contracted by 1% to RM895.95 billion for the first six months of the year, compared with the same period of 2018.

However, in June, Malaysia recorded a trade surplus of RM10.26 billion, which is 71 % higher compared with the same month last year.

“Of course, for the full year we are cautiously optimistic that we will see some trade growth,” said the Bangi MP.

Malaysia, he said, has a much more diversified economy compared with countries like Singapore and hence able to cushion some of the negative impacts stemming from global uncertainties.

Asked on whether the lacklustre global economic outlook, which the International Monetary Fund (IMF) forecast down to 3.2% from 3.3% for 2019, is a source of concern for Malaysia, Ong said global uncertainties continue to be a potential risk factor.

“It is a concern but we are still cautiously optimistic that our domestic economic fundamentals can help us pull through.

“The Finance Ministry projected GDP (gross domestic product) growth of between 4.3-4.9%. So we hope we can come out at the higher side of the projected growth although I know the consensus among most economists (is) more towards the middle of that range.

“At least, touch wood, we are still having positive economic growth. This is something that we want.”

US-China trade war

An open economy like Malaysia’s is likely to suffer in the long term from the trade tension between two of the world’s economic powerhouses, especially since both China and US are its top trading partners.

“We cannot control what happens with these two economic giants,” said Ong.

“To mitigate the impact of this trade war, what we can do is try to attract investment as well as production that could otherwise head or go to China either from multinationals that are based in Europe, or the US or Chinese companies wanting to diversify their productions.

“We are seeing some of that move to Malaysia but definitely have to admit that there are also negative impacts.”

Malaysia’s trade with China in the first half 2019 amounted to RM148.76 billion whereas trade with US stood at RM77.99 billion. – August 6, 2019.