The Response to Protectionism is Not Unfettered Free Trade

I am delighted to be invited to speak at Forum Ekonomi Malaysia, organised by the Ministry of Economy, alongside Professor Kuik Cheng-Chwee, Datuk Ruben Emir Gnanalingam, and Dr. Deborah Elms. The panel, titled “Global Protectionism, Tariff Walls, and Geopolitics”, was moderated by Maybank’s Dr. Chua Hak Bin.

As Professor Kuik rightly pointed out, “while one may not be interested in geopolitics, geopolitics will impact on everything in our lives”.

The world has certainly entered a new phase in history, especially with the election of the second Trump Administration. Globalisation and unfettered free trade, as we know it since the fall of the Berlin Wall in 1989, are no longer the commonly acceptable operating assumptions.

There is no point to just complain about protectionism and tariff walls. It is more important to first recognise that protectionism and the right wing populism that prompted it has its roots in voters’ economic insecurity in these advanced economies.

To ensure that Malaysia and ASEAN societies would not be swept away by right wing populism, it is the shared responsibility of governments and the private sector in this region to ensure that the majority of the people feel economically secure.

For Malaysia and ASEAN, there should also be space and room for industrial policy. While the old free trade orthodoxy treated industrial policy with abhorrence, it is now advanced economies, including the United States and European Union, that are actively pursuing their respective versions of industrial policy.

Due to the comparatively small size of our economy, Malaysia alone may not be able to pursue a full-fledged national industrial policy. To respond to the end of globalisation and rise of global protectionism is not by rehashing the free trade trope, but perhaps by building a strong and positive regionalism in the form of ASEAN industrial policy.