CIMB: US TARIFF PAUSE A CHANCE FOR MALAYSIA TO RECALIBRATE GROWTH, PUSH REGIONAL INTEGRATION

KUALA LUMPUR, May 2 (Bernama) -- CIMB Investment Bank Bhd views the 90-day pause on reciprocal tariffs by the United States (US) as a watershed moment for Malaysia to recalibrate its growth strategy through stronger regional integration and domestic economic reforms.

In a note released today, CIMB shared insights from a recent fireside chat with Taylor’s University pro vice-chancellor and former Deputy International Trade and Industry Minister Ong Kian Ming.

Citing Ong, CIMB said Malaysia’s early discussions with the US on reciprocal tariffs were promising, although it was too early to assess their outcome.

“Malaysia’s leverage will depend on how its proposals compare with those of its peers.

“Notably, Indonesia gained favour for its early and well-received proposals, while Thailand faced setbacks due to a postponed bilateral discussion,” it said.

The investment bank highlighted the importance of leveraging regional resources by strengthening intra-regional supply chains and collaboration as catalysts for resilient growth.

It said initiatives like the Johor-Singapore Special Economic Zone, aimed at attracting investments into manufacturing and services, exemplify this strategy, but effective execution remains key.

“There is a need to persevere with economic reforms such as petrol subsidy rationalisation to anchor market confidence and support fiscal consolidation amid external shocks.

“The financial markets may not have fully priced in the near-term downside risks to the economy,” it said.

CIMB said that the US tariff measures are reshaping global trade dynamics, compelling Malaysian firms to reassess their strategies, and businesses should evaluate both direct and indirect cost impacts.

“Substitution effects and weaker demand are first-order risks, while softer external demand from key markets -- alongside potential import dumping from China -- represent second-order threats.

“There are opportunities amid the chaos, and we urged firms to explore new markets and diversify abroad,” it said.

CIMB also urged the government to focus on both attracting foreign direct investment and reinvigorating efforts to support the overseas expansion of Malaysian companies.

-- BERNAMA