China’s Hainan FTP Marks Major Liberalisation Move, Spurring Potential Gains For Malaysia

By Harizah Hanim Mohamed

KUALA LUMPUR, Dec 12 (Bernama) -- China’s Hainan Free Trade Port (FTP), which will officially begin island-wide special customs operations on Dec 18, 2025, is yet another testament to China’s continued economic liberalisation, in contrast to the United States’ policy directions.

While the contrasting policy directions might not change the existing global trade landscape in a very significant way, this will, however, strengthen China’s position in the global trade system, said Thought Partners Group Consulting managing partner and former Northport Malaysia Bhd chief executive officer Abi Sofian Abdul Hamid.

He noted that China’s commitment to liberalisation offers investors and businesses greater policy clarity at a time when the US is tightening market access, thereby influencing global investor confidence.

Abi Sofian explained that, with the US tightening trade and customs procedures and enforcing the American Reciprocal Tariff (ART) on many countries, Hainan’s operations could open the door for countries impacted by the ART to consider their options.

“With the US tightening trade and customs procedures, as well as the enforcement of ART on many countries, Hainan’s operations could open the door for those countries impacted by ART to consider their options, and this is particularly attractive for Asia-Pacific countries and even wider.

“It will strengthen China’s position in the global trade landscape. More products will be coming out of China. Will this create a new trade war? That’s another question,” he added.

For Malaysia, the development is significant as it intersects directly with the country’s maritime trade role, port competitiveness and ability to capture shifting supply chains in the region.

Malaysia sits on the China-Southeast Asia and China-Europe sea lanes, and two of its ports, Port Klang and Port of Tanjung Pelepas (PTP), are among the largest China-connected hubs in ASEAN.

This positions Malaysia among the economies most likely to experience spillover effects of Hainan’s rise.

Echoing the sentiment, maritime industry expert Nazery Khalid said that while the US under Trump 2.0 has ratcheted up protectionism and adopted an America-first policy in trade that has rattled even its close trading partners, China has underlined its intention to welcome the free flow of money, trade and economic activities and embrace an open-trade stance.

Nazery said China’s move is a sign of its confidence as a global economic superpower and underscores its readiness to assume global economic leadership through establishing a high-level economic zone at a time when global trade is undergoing realignment.

“Hainan is clearly being positioned as a strategic bridge linking China with Southeast Asia and the wider Asia-Pacific.

“As this network deepens, we will see shifts in sourcing strategies and trade dynamics as companies reassess their supply chains and sourcing, manufacturing and distribution strategies to leverage Hainan FTP,” he said.

Nazery added that Hainan's transformation will also draw the attention of regional financial centres.

He said well-established economic and financial hubs such as Singapore, as well as international offshore financial centres, will certainly see Hainan as rising competition.

“I do not foresee Malaysian ports being adversely affected by Hainan FTP. First, Port Klang -- already cemented its profile as the 10th busiest container port as measured by throughput -- has a proven indigenous cargo base and is Malaysia’s key trade gateway and logistics hub.

“PTP has the backing of Maersk, among the world’s largest container shipping companies, which guarantees the port a steady flow of containers,” he added.

Nazery explained that both ports handle sizeable intra-Asian trade and transhipment containers originating in and bound for China, and that they are expanding their handling capacity, so he foresaw that the ports will remain busy and continue to grow.

He noted that this places Malaysian ports in a stable competitive position even as Hainan grows.

Nazery further said that, for what it is worth, Malaysian ports stand to benefit from the emergence of Hainan FTP, as more cargo originating from Chinese ports finds its way to Malaysian shores from the favourable base Hainan offers.

“Smooth customs clearance and financial flows, comprehensive logistics facilities and services, vibrant tourism and shopping activities and overall conducive environment for industries, business, trade, tourism and consumption will see more containers going into and out of Hainan that can have a positive spillover effect on our ports,” he said.

Similarly, Abi noted that Malaysia either has to strive to be the place of choice or position itself as a strong complementary partner to Hainan.

“To achieve that, Malaysia needs to have a seamless channel for supply chain mobility.

“The movement of products through the system must be fast without unnecessary hindrances, and work at critical points, such as seaports and airports, must be efficient with high productivity,” he added.

Abi asserted that Malaysia needs to position itself as a better option than Hainan, or work in partnership with Hainan, especially in areas where Hainan requires support from Malaysia and ASEAN.

“This includes, among others, halal products, which also include cosmetics and other halal services,” he said.

Abi elaborated that Malaysian companies could use Hainan as a distribution hub for the Far East, thereby expanding their business outreach.

“They could even reduce costs of doing business in the region, especially involving halal products, palm oil, halal cosmetics and pharmaceuticals.

“Their base in Hainan would enable them to have better access to Mainland China in terms of compliance, speed and efficiency,” he said.

He noted that Hainan’s push into digital economy solutions, artificial intelligence, the Internet of Things, big data and green industries also offers further avenues for Malaysian firms to integrate into higher-value regional supply chains. 

-- BERNAMA