Southeast Asia’s exporters, particularly Malaysia, Singapore and Thailand, are “well placed” to benefit if the Trump administration proceeds with a trade war, CGS-CIMB said in a note dated Thursday.
Categories of products where Southeast Asian countries compete with China and the U.S. — such as electrical and electronic equipment (E&E), machinery, chemicals, aircraft parts, rubber tyres and medical equipment — could benefit from displacement of demand, CGS-CIMB said.
Additionally, “Indonesia and Malaysia are well-placed to take advantage of China’s proposed tariff on soybean imports from the U.S. (US$13.8 billion in 2016) as the two largest exporters of palm oil, which is a substitute for edible oil,” it said.
To be sure, CGS-CIMB noted that if the tariff measures announced as of Thursday, before Trump upped the ante by threatening even more tariffs, it was possible MIST (Malaysia, Indonesia, Singapore and Thailand) could also take a hit.
“Some sectors will also face disruptions in the supply chain for intermediate/capital goods that it exports directly or via other countries to China and eventually destined for the U.S. (TVs, PCs, HDDs),” it said. “Among MIST, Indonesia is relatively insulated from U.S.-China trade tensions due to its low exposure to E&E and machinery exports.”
But CGS-CIMB said it counted more potential winners than losers in MIST.
Singapore’s winners and losers
In Singapore, it said the potential winners would be exporters competing directly with China for the U.S. export market, including automatic data processors, aircraft parts, turbo-jets, propellers and other gas turbines, printing machinery, and medicaments; those were at US$5.7 billion and accounted for 25 percent of Singapore’s total exports to the U.S., it said.
But Singapore’s potential losers were exporters of intermediate and capital goods to China and destined for the U.S. market, including semiconductors, HDDs and storage and machinery parts; that was a cumulative US$1.8 billion and accounted for 8.0 percent of Singapore’s exports to the U.S.
Thailand’s winners and losers
Thailand’s potential winners would be automatic data processors, air conditioning machines, pneumatic rubber tyres and printing machinery, it said, noting it was a total US$5.8 billion and accounted for 23.8 percent of Thailand’s exports to the U.S.
But the potential losers included liquid crystal devices, machinery parts, motor vehicles and air or vacuum pumps, fans or compressors, it said, adding those totaled US$1.1 billion and accounted for 4.3 percent of Thailand’s exports to the U.S.
Malaysia’s winners and losers
Malaysia’s potential winners would include semiconductors, printers, measurement instruments, HDDs and storage, medical equipment and electrical apparatus, it said, noting that accounted for 25.2 percent of Malaysia’s exports to the U.S. and was valued at US$4.9 billion.
“Malaysia’s well-developed auto industry may also benefit from China’s tariffs on U.S. motor vehicles and parts,” it said, adding that as the second-largest producer of palm oil globally, Malaysia was well-placed to take advantage as a substitute oil amid China’s proposed tariff on U.S. soybean imports.
But some Malaysian products were also potential losers as they were meant to be exported to China before going to the U.S., such as automatic data processors and machinery parts, CGS-CIMB said, noting that accounted for 6.5 percent of Malaysia’s exports to the U.S.
Indonesia’s potential winners would include pneumatic tyres, printers, monitors and projectors, seats, and wires and cables, CGS-CIMB said, noting those account for 11.2 percent of Indonesia’s exports to the U.S., or US$1.8 billion.
Indonesia is also the world’s largest producer of palm oil, meaning it can take advantage of substitution if China proceeds with tariffs on U.S. soybean imports, it said.
But when it comes it losers, Indonesia’s exporters have limited exposure to intermediate and capital goods headed to China, but eventually destined for the U.S., it said.