Pelaut ADIPATI l Kalitbang INDOMARITIM l CEO TRUST l Presiden SPI l Volunteer INMETA
This week, Malaysia unexpectedly announced plans to reform its antidumping laws to address the surge of cheap goods from China. This move is in response to the growing issue of dumping, which harms domestic industries, especially due to China’s expanding exports. Both Malaysia and Indonesia, two major countries in Southeast Asia, are facing similar challenges with the negative impacts of international trade, particularly the detrimental effects of dumping practices. Malaysia has had antidumping laws in place since 1993, but these policies are set to be strengthened with simplified procedures that will allow companies to more easily file complaints about goods being sold below fair market prices or production costs. The aim of these reforms is to protect local industries, particularly small and medium-sized enterprises (SMEs), from unfair competition posed by cheap foreign imports, especially from China, which is increasingly seeking alternative markets amid a decline in domestic demand.
This policy is seen as a way to shield local businesses, especially SMEs, from the adverse effects of unfair trade. The Malaysian government plans to simplify the process, making it easier for companies to lodge complaints regarding dumping—where goods are sold at prices lower than production costs or fair market value in foreign markets. This move is a direct response to weakening demand in China, which has led Chinese companies to search for alternative markets, including Malaysia, to export cheap goods. The policy is expected to help maintain the competitiveness of local industries and ensure that the domestic market is protected from the negative impact of unfair trade, which often undermines local producers.
As an initial step, Malaysia has imposed temporary antidumping duties on steel products imported from China, India, Japan, and South Korea. However, despite this, Malaysia does not plan to directly raise tariffs or implement more aggressive preventive measures. Instead, the government hopes that the market will determine the fair prices of goods, encouraging healthy competition and preventing price distortions caused by dumping practices. As part of a long-term solution, Malaysia is also encouraging Chinese companies to form long-term partnerships in the country and establish regional headquarters. This strategy aims to localize supply chains and bring greater benefits to the local economy, including job creation and increased foreign investment.
Meanwhile, Indonesia faces a similar problem with the influx of cheap Chinese steel, which threatens the competitiveness of local steel producers, such as Krakatau Steel. Like Malaysia, Indonesia has also been forced to adopt antidumping measures to protect its domestic industry. While Indonesia has not yet taken measures as swiftly as Malaysia, the protection of its manufacturing sector remains a priority. This challenge reflects the increasingly complex trade dynamics in Southeast Asia, where both countries are striving to find the right balance between opening up markets and protecting domestic industries from unfair trade practices.
Indonesia also implemented antidumping measures in 2016 after conducting investigations into the impact of dumping on its domestic market. However, the process of adopting these measures has been slower compared to Malaysia’s quicker response to dumping issues. In terms of foreign investment policy, Malaysia is more open to long-term partnerships with Chinese companies, inviting them to invest and set up regional headquarters in Malaysia, which would help strengthen the local economy and create jobs. On the other hand, Indonesia is more cautious and focused on diversifying its sources of investment, aiming to attract investments from countries other than China, such as Japan and the European Union, while placing greater emphasis on developing its domestic industries, particularly in technology and manufacturing sectors.
When it comes to free trade agreements (FTAs), Malaysia tends to be more aggressive, as seen in its efforts to resume negotiations with the European Union to rebuild an agreement that had been stalled for 12 years. Malaysia hopes this FTA will provide greater access for Malaysian products, such as electronics and green energy, to the European market. Meanwhile, Indonesia relies more on regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), which involves countries in the Asia-Pacific region. While Indonesia is also negotiating with the EU, the process has been slower, and Indonesia is more inclined to maintain the advantages of commodities like palm oil in international trade negotiations.
Despite facing similar challenges, the two countries have adjusted their economic policies to strike a balance between protecting domestic industries and integrating with the increasingly complex global economy. Malaysia tends to take quicker, more decisive protectionist actions and is more proactive in opening new markets, while Indonesia is more cautious, focusing on diversifying investment sources and strengthening regional cooperation. Both countries aim to strengthen their local economies while maintaining important trade relationships with major partners, including China and the European Union, to navigate the growing tensions in global trade.
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