ASEAN Finance Ministers To Deepen Resilience And Economic Integration As Global Trade War Erupts 

By Nor Baizura Basri

KUALA LUMPUR, April 6 (Bernama) -- ASEAN finance ministers will meet here next week amid a sense of urgency to deepen economic integration and enhance financial resilience as the global trade war erupts, no thanks to debilitating tariffs imposed by the United States.

Against such testing times and the threat of global inflation — or worse, a recession — Malaysia’s chairmanship of the 12th ASEAN Finance Ministers and Central Bank Governors' Meeting (AFMGM) on Wednesday has taken on an added significance.

bootstrap slideshow

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim and Finance Minister II Datuk Seri Amir Hamzah Azizan, as chair of ASEAN and AFMGM, respectively, have had their work cut out for them.

In chairing a series of preparatory finance meetings beginning tomorrow, Malaysia has to collectively emphasise the importance of expanding financial access and strengthening financial mechanisms to support fair and sustainable economic development via AFMGM.

Rhetorics aside and with no time to waste, there must be a call to action to integrate purposefully their financial systems quickly so as to facilitate regional trade and investments.

bootstrap slideshow

This would undoubtedly raise Southeast Asia’s economic independence and hopefully lessen the adverse effects of US President Donald Trump’s baseline and reciprocal tariffs on 168 countries, including a penguin and seal habitat islands in Antarctica.

As the world’s fifth-largest economic bloc, with a total gross domestic product (GDP) of RM3.8 trillion in 2023 and a combined population of 677 million, the grouping must do more to raise its stature, possibly towards becoming a single market.

It is imperative, therefore, for ASEAN’s economy to move forward in unison, taking into account that some of its lesser-developed Indo-Chinese members were the hardest hit with tariffs.

Cambodia was slapped with baseline and retaliatory tariffs totalling 49 per cent, followed by Laos (48 per cent), Vietnam (46 per cent), and Myanmar (44 per cent).

Thailand was hit with tariffs of 36 per cent, Indonesia 32 per cent, Brunei and Malaysia both at 24 per cent, the Philippines 17 per cent and Singapore a baseline tariff of 10 per cent.

Some 300 delegates, comprising ASEAN finance ministers, central bank governors, officials from international financial institutions and private sector representatives, will converge for AFMGM at the sprawling Kuala Lumpur Convention Centre (KLCC) to discuss ways to move the region forward from the finance point of view.

Aside from closed-door meetings, there will be business conferences, exhibitions, as well as trilateral meetings and meetings on the sidelines with dialogue partners, namely China, Japan and South Korea.

The trilateral meeting is crucial, particularly since China has been hit with the highest tariff rate of 54 per cent, and Beijing has retaliated with its import levies of 34 per cent on American imports, a move which has escalated the trade war between two economic giants.

Amid the 1997 Asian financial crisis, China, Japan and South Korea came together to establish ASEAN+3 to leverage each others' strengths and those of ASEAN member states. Perhaps they will cooperate to bolster economic linkages with ASEAN as they meet in Kuala Lumpur.

Officials from Timor-Leste, vying for ASEAN membership and currently holding observer status, are also attending the event.

Malaysia’s three priority economic deliverables (PEDs) under the financial track, namely digital economy, sustainable financing, and inclusive development, to be deliberated at AFMGM, are vital steps for ASEAN to accomplish as much as possible quickly.

Other issues confronting the grouping include the ASEAN Power Grid (APG). A region-wide initiative introduced in 1997 to connect electricity infrastructure among member states, it will be a key project to be highlighted as leaders want to move it forward with an emphasis on securing more financing.

As for the digital economy, efforts have been undertaken by member states to accelerate the growth of a sustainable and inclusive ASEAN capital market to strengthen the regional capital market foundation and review the ASEAN Capital Markets Forum (ACMF) action plan between 2026 and 2030.

Inclusive development entails expanding ASEAN's instant payment network connectivity. Developing regional payment systems is vital to facilitate small businesses, which are synonymous with Southeast Asian trade establishments.

It will be interesting to see the outcome of the AFMGM chaired by Malaysia, given the unsettling variables in the global and regional economy.

ASEAN comprises 10 member states, namely Malaysia, Indonesia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

-- BERNAMA