Call for contingency plans in face of US govt shutdown

 

-Photo credit Reuters.

PETALING JAYA: Several export-oriented sectors in Malaysia will be impacted if there is a prolonged shutdown of the US government, say industry players.

As one of the country’s largest export markets, contingency plans should be drawn up to assist the affected sectors in weathering the effects of the political impasse in Washington DC.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said that while the impact of a short-term shutdown would be minimal, an extended one would create a ripple effect on the US economy and Malaysian exporters.

“If US civil servants are not paid their salary, this will decrease their spending power and consumption. This in turn will affect the export of our furniture to the United States.

PETALING JAYA: Several export-oriented sectors in Malaysia will be impacted if there is a prolonged shutdown of the US government, say industry players.

As one of the country’s largest export markets, contingency plans should be drawn up to assist the affected sectors in weathering the effects of the political impasse in Washington DC.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said that while the impact of a short-term shutdown would be minimal, an extended one would create a ripple effect on the US economy and Malaysian exporters.

“If US civil servants are not paid their salary, this will decrease their spending power and consumption. This in turn will affect the export of our furniture to the United States.

“Also, the shutdown will interrupt services such as customs clearance at the ports and entry points in the United States. This will become an issue for our exporters.

“The disruption to the logistics sector would have an impact on the supply chain.

“This will be especially true for Malaysian companies involved in the export of electrical and electronics (E&E) products to the United States, which is a major importer,” he said when contacted yesterday.

The United States is one of the largest importers of Malaysian E&E, totalling almost RM120bil last year and representing about 20% of the country’s total E&E exports.

Of these figures, some RM60bil were semiconductor products, which account for about 20% of Malaysia’s total semiconductor exports.

Koong suggests that Malaysia leverage its position as Asean Chair to coordinate with other Asean members states and regional countries in facilitating exports.

“We could leverage the strength of Asean as a whole in respect of the individual countries’ niche products and services,” he added.

If there is a prolonged shutdown, he said the government should assist exporters by exploring other potential markets such as the Middle East and Africa.

Koong noted that development grants and soft loans, which were announced in Budget 2026, could help small and medium enterprises (SMEs) weather the effects of a prolonged shutdown.

The US government shutdown, which began on Oct 1, was triggered by the US Congress’ rejection of a Republican funding Bill, resulting in some 750,000 federal government workers being furloughed without pay.

The deadlock is expected to persist for a third week despite pressure from President Donald Trump on the Democrats to support the Republican Bill.

Airfreight Forwarders Association of Malaysia chairman Thomas Mathew said the shutdown, though a US domestic political issue, carries far-reaching implications for the global economy.

“As one of the world’s largest importers and exporters, any disruption in the operations of US federal agencies reverberates through supply chains worldwide,” he said when contacted yesterday.

Among the immediate impacts of the shutdown are delays in customs clearance, port congestion and slower regulatory processing by key US agencies, he added.

“This includes the Customs and Border Protection (CBP), the Department of Commerce, and the Food and Drug Administration (FDA).

“These delays can significantly disrupt the flow of goods into and out of the United States, prompting re-routing, rescheduling, and increased costs across shipping networks,” he said.

Mathew said a prolonged shutdown would have a multifaceted impact on Malaysia, as the country is a key trading partner of the United States, particularly in the E&E and manufacturing sectors.

“Malaysia may encounter delays in order fulfilment, payment cycles, and reduced demand from US buyers facing their own domestic uncertainties,” he said.

He added that there could also be logistical slowdowns affecting compliance-dependent sectors that require US regulatory approvals, such as semiconductors, medical devices and pharmaceuticals.

“Additionally, any resulting market volatility may impact the ringgit, investor confidence and broader business sentiment in Malaysia,” he said.

While a short-term shutdown can be absorbed with minimal disruption, a prolonged one risks undermining the predictability and efficiency upon which global trade and export-driven economies rely on.

Mathew suggests that contingency plans are drafted for the affected sectors.

“Diversifying trade partnerships will be key for Malaysian businesses navigating such external shocks,” he added.

Malaysian Consortium of Mid-Tier Companies honorary president Callum Chen said a prolonged shutdown would be a double whammy to businesses, not only globally but also Malaysian too.

“The impact will make things worse. Ports in the United States are already jam-packed with stuck containers due to tariff uncertainties.

“Most US SMEs are already facing cash flow problems due to the tariffs,” he said when contacted.

He added that unpaid US federal workers would be forced to prioritise their spending.

“They will have less money to buy things, and their priority will be putting food on the table,” he said.

Chen expects the latest episode to be longer than the previous 35-day shutdown from Dec 22, 2018, to Jan 25, 2019, which is the longest in US history.

“Everyone is in a limbo and this only creates more uncertainty for businesses,” he said.

https://www.thestar.com.my/news/world/2025/10/11/white-house-says-substantial-us-government-job-cuts-have-begun

https://www.thestar.com.my/news/nation/2025/10/12/experts-theres-a-silver-lining-amid-us-shutdown

MOFCOM slams US' planned 100% additional tariff, says willful threats not right way to get along with China

China's Ministry of Commerce (MOFCOM) on Sunday slamm

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  US GOVERNMENT SHUTDOWN

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Goodbye trade war

Goodbye trade war

 

China seems to be winning the tariff war even as Trump threatens to impose a massive increase of tariffs on Chinese imports in response to the republic's announcement of new export controls on rare earths. — Getty Images/AFP

South-east asia, once only a bruising trade war’s secondary victim, should now have asean showing its mettle as china wins.

BEYOND multiple global uncertainties are two core fundamentals: Us-china relations being the world’s most important bilateral relationship, and economics determining much of everything else.

This makes the trade war between the world’s two biggest economies pivotal to all. Multiple spheres in various regions are impacted accordingly.

That much is the main plot in today’s geopolitics. Problems tend to arise when the script is amended without warning, explanation or acknowledgement.

US President Donald Trump has sought a personal meeting with Chinese President Xi Jinping since last year, but that will happen only next year. Why does it take two years for such a crucial event to occur?

It is precisely because of the summit’s importance that it has to take so long. Unlike MOUS, summits do not set the tone of an intended agreement but to cap what has already been agreed.

Transnational deals are too important to be left to formal summits with their pomp and pageantry. The serious business of negotiations by government experts and specialists differs vastly from the PR theatre of official photo opportunities.

The months and years between signalling interest in a summit and actually holding it are for senior officials to work out sufficiently agreeable terms to constitute a deal. That period of talks by officials began informally last year between the incoming US administration and China’s incumbent team.

It is a period now effectively coming to a close in ending the trade war, but still only unofficially. The basic agreement that is now done in all but writing has the US broadly conceding to China’s terms.

China is the only country that has pushed back on Trump’s tariffs, with resounding effect as recent events show.

After Commerce Secretary Howard Lutnick’s grating condescension about supplying China with only Nvidia’s sub-par microchips, Beijing blocked all of Nvidia’s chips. Nvidia boss Jensen Huang said China’s own chip development is only “nano seconds behind” his company’s best products.

In agriculture, China has stopped buying US soybeans for supplies from Brazil and elsewhere. With US farmers devastated, China again demonstrated considerable leverage.

With Trump clamping down on countries buying Russian and Iranian oil and gas, India was hit with high additional tariffs, but not China. Instead, China raised Russian gas supplies with the Power of Siberia (POS) pipeline and now also POS 2.

China is also importing more than a million barrels of Iranian oil daily, amounting to almost 90% of Iran’s output. These major purchases were never going to be impacted by US restrictions.

Trump declared victory on Tiktok but it was a net gain for China. Beijing refused to sell Tiktok’s proprietary algorithm, the heart and brain of the winning platform.

A copy of the original algorithm was supplied to US investors, and China’s Bytedance owns just under 20% of US Tiktok – yet is entitled to 50% of US profits. US negotiators must have realised that was the most they could get from China’s tough bargaining position and accepted it.

China has introduced new restrictions on rare earth exports, launched an antitrust probe into US chip giant Qualcomm, and will raise port fees for US ships in return. In virtually every sector China is fighting back through tit-for-tat action and new policies.

If there is still any doubt that China is leading the charge of what remains of the trade war, its use of carrots and sticks to access the US market confirms it. Beijing has offered more than a trillion dollars (RM4.2 trillion) of investment in the US through Chinese companies admitted there.

These could include Chinese electric vehicle companies, which Trump last year said he would invite to the US to provide jobs. Only the stronger economy can dish out inducements of such proportions to the relatively subordinate economy.

Such is the substance of a negotiated trade peace. Ultimately, Trump is less concerned about what actually makes a trade victory than what can be interpreted and portrayed as his personal triumph.

He is anxious to gain snatches of a win between trade skirmishes, however fleeting or questionable, and China is only too happy to provide them to win the trade war. More of this can be expected at next year’s summit.

Meanwhile, Louis Gave of Hong Kong’s Gavekal Research has declared China’s trade war victory. South-east Asia should likewise flip the old script to its favour.

Asean countries are not just collateral economies subjected to the whims of a trade conflict. When China takes a beating, South-east Asia was assumed to be beaten also.

But the US still hopes to obtain from this region what it failed to get from China. To do this it needs to keep up appearances that it is winning over China as the centre of global supply chains.

Asean can call that bluff to protect itself.

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Call for contingency plans in face of US govt shutdown

 

Trade War Spurs Recession Risk in Singapore

The Tanjong Pagar container terminal in Singapore.

• Shock contraction in quarterly GDP raises risk of job losses
• Officials already grappling with aging, productivity threats

Singapore’s economic data have gone from bad to worse this month. Exports slumped to their second-worst rate since the global financial crisis, the purchasing managers index slipped into contraction for the first time since 2016, and the economy shrank the most in almost seven years in the second quarter.

After spending much of early 2019 enjoying relative resilience, a recession is now looming. That’s a warning shot for regional and global economies, since Singapore’s heavy reliance on trade makes it somewhat of a bellwether for the rest of Asia.

Read More: South Korea, Taiwan Feel Electronics Slide in Trade Tracker

The severity of the slump may be down to trade tensions and a global slowdown, but Singapore has been grappling with longstanding economic threats that have been slowly eroding the city state’s growth potential: rapid aging, labor market shrinkage, and sluggish productivity among them. Those risks will become more acute for policy makers now.

“Any undue turbulence or prolonged stresses from the trade war are only going to compound the challenges of all the other issues -- productivity, demographics, anything else,” said Vishnu Varathan, head of economics & strategy at Mizuho Bank Ltd. in Singapore. “External demand concerns will be at the top of the list for now, because if you don’t get that one right it’s that much more difficult to solve everything else.”

Singapore remains one of the most export-reliant economies in the world, with trade equivalent to 326% of gross domestic product, according to World Bank data. That puts the city state at the center of the storm stirred up by its top two trading partners sparring over tariffs.

The shock GDP figures earlier this month prompted some analysts to downgrade their Singapore forecasts for the year to below 1%. The government is set to revisit its own 1.5%-2.5% range next month, but for now, it’s remaining calm, seeing no recession for the full year.

What Bloomberg’s Economists Say...

“Barring a swift rapprochement in U.S.-China trade relations, our forecast for a 0.2% year-on-year contraction in Singapore in 2019 remains on course.

The government has ample firepower to cushion the blow, but it may not be enough to avoid a recession.”

-Tamara Henderson, Asean economist

The slump is largely contained so far to manufacturing, which makes up about a fifth of the economy, but could soon spread to other sectors such as retail and financial services. That increases the risk of job losses at a time when businesses like International Business Machines Corp. are already laying off workers and banks such as Nomura Holdings Inc. cut staff.

The number of retrenched workers in Singapore rose to the highest in more than a year in the first quarter, though the unemployment rate has remained fairly steady at 2.2% amid a recovery in construction.

“The labor market looks to be on two tracks at the moment -- there’s a weak market in the manufacturing sector but a steady one in the services sector,” said Shaun Roache, chief Asia-Pacific economist at S&P Global Ratings in Singapore. “High-frequency indicators including industrial production and trade suggest that the environment will remain challenging in manufacturing for the year.”

While those cyclical headwinds buffer the outlook, policy makers are also grappling with structural impediments to growth.

An employee clears tables at a food center in Singapore.

Faced with a rapidly aging population, the government has been on an aggressive campaign to re-skill its labor force and prepare workers for a postponed retirement. The median age is set to rise to 46.8 years in 2030 from 39.7 in 2015, faster than the other top economies in Southeast Asia as well as the world as a whole, according to United Nations projections.

Tied to its rapid aging is Singapore’s productivity conundrum.

As the labor pool shrinks and gets older, the city state’s answer to the productivity challenge has been to automate and digitize. With an ambition to become a “Smart Nation,” the government has poured money and energy into digitization projects of all kinds, from helping seniors fine-tune smartphone skills at digital clinics to attracting financial technology giants to set up shop and test their ideas.

It’s that technological advancement, along with its world-beating infrastructure and efficiency, that continues to make Singapore attractive to businesses like Dyson Ltd., the U.K. manufacturer that picked the city state for its location to build its first electric cars. It’s also a reason why officials are confident Singapore can meet its foreign investment targets for this year.

“They’re saying the right thing, doing the right thing,” said Edward Lee, chief economist for South and Southeast Asia at Standard Chartered Plc in Singapore, who has penciled in 1% growth for 2019. “Retraining, ongoing structural reforms on the labor side -- those are the right things.”

By Michelle Jamrisko, Bloomberg

 — With assistance by Cynthia Li

(Adds economist comment in 10th paragraph.)

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Recession? No, not this year 2019

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THE influential International Monetary Fund (IMF) has predicted slower global growth this year on the back of financial volatility and the trade war between the United States and China.

Turkey and Argentina are expected to experience deep recessions this year before recovering next year.

China, apart from fighting the trade war, is also experiencing its slowest quarterly growth since the 1990s, sending ripples across Asia. In the last quarter of 2018, China recorded an economic growth of 6.4%, which is the third consecutive quarter of slowing growth.

This has led to fears of China’s economy going into a hard landing and it possibly being the catalyst to spark global economic turmoil.

After all, it has been more than 10 years since the world witnessed the last recession in 2008 that was caused by a financial crisis in the US. If we are to believe the 10 to 12-year economic turmoil cycle, the next downturn is already due.

However, the economic data so far does not seem to suggest that the world will go into a recession or tailspin this year.

The bigger worry is what would happen next year.

The narrowing spread between the two-year and 10-year US Treasury papers would lead to banks being more selective in their lending. It is already happening in the US.

The impact is likely to be profound next year. When banks are more selective in lending, eventually the economy will grind to a halt.

But that is the likely scenario next year, assuming there is no fresh impetus to spur global growth.

At the moment, there is a significant amount of asset price depression due to slowing demand. The reason is generally because of the slower growth in China and the trade war.

China has fuelled demand for almost everything in the last few years. Companies and individuals from China drove up the prices of everything – from property and valuations of companies to commodities.

China itself is experiencing a slowing economy and the government has restricted the outflow of funds. Its overall debt is estimated at 300% of gross domestic product and banks are reluctant to lend to private companies for fear of defaults.

China’s manufacturing sector has slowed down because of the trade war. Companies are not prepared to expand because they fear the tariffs imposed by the US.

Nevertheless, the world’s second-largest economy is still growing, albeit at a slower pace. A growth rate of 6.4% per quarter is still commendable, although it is far from the 12% quarterly economic growth it recorded in 2011-2012.

The US, which is the world’s largest economy, is also facing slower growth this year. The Federal Reserve has predicted a slower economic growth of 2.3% in 2019 compared to the 3.1% the country recorded last year.

The ongoing US government shutdown is not going to make things easy.

As for Europe, the European Central Bank (ECB) has warned of a slowdown this year. The warning came just six weeks after the ECB eased off on its bond-buying programme that was designed to reflate the economy.

Business sentiments on Germany, which is a barometer of what happens to the rest of Europe, is at the lowest.

As for Malaysia, the country is going through an economic transition of sorts following the change in government. Government spending has traditionally been the driver of the domestic economy when global growth slows.

The new government has cut back on spending, which is a necessary evil, considering that many of the projects awarded previously were inflated. Generally, the cost of most projects is to be shaved by at least 10% – and some by up to 50%.

However, the projects with revised costs have not got off the ground yet and contractors have not been paid their dues. For instance, contractors in the LRT 3 project had complained of not getting payments for work done a year ago.

Fortunately, a new contract for the LRT 3 has been signed. Hopefully, the contractors will be paid their dues speedily and work recommences on the ground fast.

The volatile oil prices are not helping improve revenue for the government.

Domestic demand is still growing, although people complain of their income levels not growing. This is because companies as a whole are also not doing as well as in previous years.

Nevertheless, even the most pessimistic of economist is looking at Malaysia chalking up a growth rate of more than 4.5% this year, which is respectable. The official forecast is 4.9%.

One of the reasons for the optimism is that they feel government revenue is expected to be much higher than expected, giving it the flexibility to push spending if the global economic scenario takes a turn for the worse.

According to the Treasury report for 2019, federal government revenue is to come in at about RM261bil, which is 10.7% higher than in 2018.

The amount is likely to be much higher, allowing the government the option to put more money in the hands of the people. It also allows the government to reduce corporate taxes, a move that would draw in investments.

Malaysia has a new government in place. What investors are looking for are signs of where all the extra revenue earned will go. They are also looking for the next growth catalyst.

The trade war and financial volatility is causing structural shifts in the global economy. It is impacting China, the US and Europe.

Eventually, the global crunch will come, but it is not likely to happen this year.

By m. shanmugam

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Huawei unveils server chipset as China cuts reliance on imports

New chip: A Kunpeng 920 chip is displayed during an unveiling ceremony in Shenzhen. Huawei is seeking growth avenues in cloud computing and enterprise services. — AP

https://youtu.be/IX5k_k4Q68c

HONG KONG: Huawei Technologies Co Ltd has launched a new chipset for use in servers, at a time when China is pushing to enhance its chip-making capabilities and reduce its heavy reliance on imports, especially from the United States.

Huawei, which gets the bulk of its revenue from the sale of telecommunications equipment and smartphones, is seeking growth avenues in cloud computing and enterprise services as its equipment business comes under increased scrutiny in the West amid worries about Chinese government influence over the firm.

Huawei has repeatedly denied any such influence.

Chinese firms are also seeking to minimise the impact of a trade dispute that has seen China and the United States slap tariffs on each other’s technology imports.

For Huawei, the launch of the chipset – called the Kunpeng 920 and designed by subsidiary HiSilicon – boosts its credentials as a semiconductor designer, although the company said it had no intention of becoming solely a chip firm.

“It is part of our system solution and cloud servicing for clients. We will never make our chipset business a standalone business,” said Ai Wei, who is in charge of strategic planning for Huawei’s chipsets and hardware technology.

The Shenzhen-based company already makes the Kirin series of smartphone chips used in its high-end phones, and the Ascend series of chipsets for artificial intelligence computing launched in October.

It said its latest seven nanometre, 64-core central processing unit (CPU) would provide much higher computing performance for data centres and slash power consumption.

It is based on the architecture of British chip design firm ARM – owned by Japan’s SoftBank Group Corp – which is seeking to challenge the dominance in server CPUs of US maker Intel Corp.

Huawei aims to drive the development of the ARM ecosystem, said chief marketing officer William Xu. He said the chip has “unique advantages in performance and power consumption”.

Xu also said Huawei would continue its “long-term strategic partnership” with Intel.

Huawei’s new ARM-based CPU is not a competitor to the US company’s x86 CPUs and servers, but complementary, Xu added. Redfox Qiu, president of the intelligent computing business department at Huawei, said the company shipped 900,000 units of servers in 2018, versus 77,000 in 2012 when it started.

Huawei was seeing “good momentum for the server business in Europe and Asia Pacific” and expects the contribution from its international business to continue to rise, Qiu added.

Huawei also released its TaiShan series of servers powered by the new chipset, built for big data, distributed storage and ARM native applications.

The firm founded chip designer HiSilicon in 2004 to help reduce its reliance on imports.

In modem chips, Huawei internally sources 54% of those in its own devices, with 22% coming from Qualcomm Inc and the remainder from elsewhere, evidence presented at an antitrust trial for Qualcomm showed. — Reuters


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Apple faces brewing storm of challenges

Shrinking share: People walk outside an Apple store in Beijing. Apple’s market share in China in the third quarter of 2018 was around 9, and has dipped from above 14 in 2015, overtaken by local rivals like Huawei, Oppo and Vivo. — Reuters
https://youtu.be/iJfCBqPUKHQ

SHANGHAI: Apple Inc’s chief executive Tim Cook has his work cut out in China this year: the iPhone maker faces the looming threat of a court-ordered sales ban, the uncertain outcome of trade war talks and the roll-out of a new 5G network, where it finds itself behind rivals like Huawei and Samsung.

The complex outlook raises a challenge for Apple as it looks to revive its China fortunes after weakness there sparked a rare drop in its global sales forecast, knocked US$75bil from its market valuation and roiled global markets.

Cook told investors that the main drag on the firm’s performance in China had been a sharper-than-expected slowdown in the country’s economy, exacerbated by the impact of trade tensions between Washington and Beijing.

“We did not foresee the magnitude of the economic deceleration, particularly in Greater China,” he said.

Chinese shoppers told Reuters another element had been key: the high price-tag on Apple’s flagship phones.

Analysts said the firm faced a brewing storm of challenges: an economic slowdown, stronger rivals like Huawei Technologies Co Ltd bringing out comparable tech at lower prices and bubbling patriotic sentiment amid the trade war.

A Chinese court has also issued a preliminary injunction banning some Apple phones, part of a legal battle with chip maker Qualcomm Inc. This ban, potentially hitting iPhone models from the 6S through the X, has yet to be enforced.

Last Thursday a local industry body, the China Anti-Infringement and Anti-Counterfeit Innovation Strategic Alliance, called on Apple to heed the court order and not “trample the Chinese law by leveraging its super economic power and clout.” Apple declined to comment on the group’s statement but has previously said it believed its current phones complied with the Chinese court’s order.

“These are tough times for Apple in China,” said Neil Shah, research director at Counterpoint, adding the iPhone could see its market share slip to 7% this year in the face of stronger local rivals and worry about the sales ban.

Apple’s market share in the third-quarter of 2018 was around 9%, and has dipped from above 14% in 2015, overtaken by local rivals like Huawei, Oppo and Vivo.

Another question mark for Apple is its 5G strategy in China, where the US firm is not expected to have a 5G-enabled phone until 2020, behind rivals like Huawei, Xiaomi Corp and Samsung Electronics.

China is looking to push ahead with its rollout of a faster 5G network, with a pre-commercial phase this year and a commercial network in 2020.

Some are looking to make an early bet on the technology.

Huawei is planning a 5G phone mid-year, while Xiaomi is aiming for the third quarter. Samsung is expected to unveil a 5G phone in the first half of the year.

Industry insiders, however, said Apple would likely hold off until the fall of 2020 to have its own 5G-enabled phone, a strategy that would bypass the untested early period of the technology, but which could mean Chinese shoppers delay iPhone purchases or buy another brand that switched to 5G earlier.

“I’ll definitely be paying attention to 5G functionality when I buy my next phone,” said Wu Chengjun, a graduate student in Beijing who currently uses an iPhone X.

With the exception of Huawei, which makes it own 5G chips, Qualcomm is providing the technology to many of the major phone makers releasing 5G handsets this year.

“If you’re a (phone maker) looking for a ‘super cycle’ (of sales), if you don’t have 5G, your situation won’t get any better,” Cristiano Amon, Qualcomm’s president, told Reuters in an interview. ”

The carrier channel is going to be incentivised to start selling 5G phones in the second half of 2019, he said. — Reuters

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