The ASEAN Summit 2025, which took place in Kuala Lumpur from 26 to 28 October, concluded with significant outcomes for Malaysia. Unlike previous summits, which may have been more ceremonial, the latest meeting saw the direct participation of U.S. President Donald Trump, who made his first visit to Asia since beginning his non-consecutive second term in January.

More importantly, Malaysia, as the ASEAN chair and host country, succeeded in bringing together top leaders and delegates from ASEAN countries and key partners, including Chinese Premier Li Qiang, Brazilian President Luiz Inacio Lula da Silva, South African President Cyril Ramaphosa, Australian Prime Minister Anthony Albanese, Canadian Prime Minister Mark Carney, South Korean President Lee Jae-Myung, President of the European Council Antonio Costa and newly elected Japanese Prime Minister Sanae Takaichi.

The strong interest shown by the respective countries' leaders, who attended the summit in person, reflects their full commitment to the region's future. It also shows a desire for a collaborative approach to formulating strategies that will drive sustainable growth, strengthen resilience, and secure long-term prosperity for member states and partners.

Malaysia in the limelight

Malaysia, in particular, has been in the limelight and has marked a historic milestone in its diplomatic journey. It was a notable achievement and a great testament to Prime Minister Datuk Seri Anwar Ibrahim's skill and art of negotiation in the realm of foreign diplomacy that he has successfully demonstrated his ability to treat all countries and partners on equal terms.

Furthermore, the peace agreement between Thailand and Cambodia, presided over by both Anwar and Trump through the Kuala Lumpur Accord, reinforces Malaysia's position as a unique middle power globally and burnishes Anwar's reputation as among the most influential Muslim figures in the world. This was further demonstrated by the recent announcement from the Royal Islamic Strategic Studies Centre (RISSC) in Amman, Jordan, that he has climbed to 10th place in the 2026 edition of The World's 500 Most Influential Muslims.

Certainly, Trump, who is currently seen by many as a controversial leader, was one of the most important people at the summit. The occasion presented a great opportunity for Malaysia to convey its stand on Gaza. At the time, Prime Minister Datuk Seri Anwar Ibrahim spoke without hesitation and with courage, reaffirming Malaysia's unwavering support for Palestine and durable peace in Gaza to get things back on a good course.

Equally important, convening in person with Trump also provided an opportunity for Malaysia to strengthen economic and investment relations with the United States.

As far as we are concerned, the impact of global uncertainties and the higher tariffs imposed by the United States have posed a daunting challenge for Malaysia. As a small and open economy, Malaysia's vulnerability to external shocks has become increasingly evident amid shifting trade dynamics and rising protectionism, which pose challenges to the country's long-term economic planning.

Export strength in E&E products

If we look at our economic contribution by sectors, electrical and electronics (E&E) products remain Malaysia's export strength, contributing around 40 per cent of country's total exports. In 2024, the United States was Malaysia's largest export market for E&E products, representing about 20 per cent of total exports of such products. In addition to being a significant player in the global semiconductor supply chain, Malaysia contributes around 7 per cent to the overall global semiconductor market volumes, ranking as the world's sixth-largest semiconductor exporter.

As of September 2025, imports of semiconductors by the United States remain exempt from tariffs, including those from Malaysia, pending the outcome of ongoing U.S. national security investigations.

But any removal of this exemption could result in repercussions, reduce competitiveness and strain sectors that are closely integrated with the U.S. supply chain.

With that in mind, whether we like it or not, Trump is a key figure for discussing crucial trade deals, particularly concerning semiconductors. The recent Agreement on Reciprocal Trade (ART) between Washington and Kuala Lumpur encourages the U.S. to take Malaysia's semiconductor sector position into consideration as the investigation under Section 232 of the Trade Expansion Act of 1962 is slated to be finalised by the end of this year.

On top of that, the trade pact also provides greater assurance to investors that Malaysia's access to the American market remains stable, which in turn will boost investors’ confidence to make Malaysia as a stepping stone to serve the global market.

ART opportunities in rare earth element sector

Furthermore, the ART also opens opportunities for foreign investment and technology transfer in the rare earth element (REE) sector. This is a critical development, especially given China's policy of restricting the processing of these minerals outside its borders, which incentivises the growth of Malaysia's value-added downstream industries.

Overall, the ART agreement is positioned to strengthen Malaysia's economic competitiveness. The Ministry of Investment, Trade and Industry has also clarified that a controversial RM1-trillion purchase commitment does not involve government funding, though further details are still needed to address public concerns.

Negotiating the ART was a necessary and proactive effort. Without it, Malaysia faced the significant risk of higher U.S. tariffs, potentially ranging from 25 per cent to 50 per cent. Such a scenario would severely impact the E&E and semiconductor sectors, threaten jobs for over 72,000 skilled workers in the industry, and destabilise the national economy. Therefore, the ART is a strategic manoeuvre to safeguard Malaysia's economic stability and ensure its continued global competitiveness.

Building resilience against sluggish global economy

Last but not least, Malaysia needs to implement swift and proactive measures to build resilience against the sluggish global economy and persistent geopolitical unrest.

As such, the country must continue to broaden export markets by prioritising high-growth regions and leveraging existing free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the incoming Malaysia-EU FTA (MEUFTA), which is slated to be finalised by next year.

Therefore, the strong support given by the Brazilian President for Malaysia's aspiration to become a full member of the BRICS bloc, expressed during the summit, was a welcome development for the country's plans to expand its export footprint into emerging markets across Asia, the Middle East, Africa, and Latin America.

-- BERNAMA

Dr Ahmad Shahir Abdul Aziz is the Chief Operating Officer (COO) of InvestPerak, Malaysia, and serves as Adjunct Lecturer at University Technology PETRONAS.