First published at Think Left.

I would like to thank the organizers for inviting me to share my thoughts on this very important topic. It is a great honour for me personally, and for the Socialist Party of Malaysia to be given this opportunity to address this gathering of activists and progressive leaders from so many countries. Before going to the topic, I would like to salute the spontaneous and brave pushback on the night of December 3rd 2024 that defeated the attempt to declare Martial Law.

Trump tariffs

In August 2025, Trump finally declared a tariff of 19% on Malaysian exports to the US. This was a reduction from the 25% tariff threatened in April 2025. Of course, Malaysian business people and the government are still very concerned. Malaysia’s economy is very open. In 2024, our total exports amounted to 71% of GDP. And 12.7% of our total exports in 2024 went to the US — goods valued at USD 43.4 billion.

The truth is, it is extremely unlikely that a tariff of 19% or even 50% is going to induce firms to transfer production from SE Asia, to the US. The minimum wage in the US is USD 12.50 per hour — it is USD 15 or even higher in some States like California and New York. The minimum wage in Malaysia is RM1700 per month. This works out to USD 2.01 per hour.1 This 6-fold difference in wage levels militates against any significant “re-shoring” of production from SE Asia back to the US. It would still be much more “economic” for businesses to produce cheaply in Malaysia, pay the tariff and then sell in the US market.

Malaysia’s economy would take a hit if our main competitors for the US market — Thailand, Vietnam, Philippines and Indonesia — were given a much lower tariff compared to us. For then, businesses would consider transferring more of their production or procurement to the country with the lower tariff and Malaysia would lose orders and wage income. To our business sector’s relief, most SE Asian countries were given a similar tariff level. Indonesia, Philippines and Thailand were decreed tariffs of 19% and Vietnam, 20%.

However, it is likely that the ordinary people of SE Asia and elsewhere, are going to be affected by these tariffs. There is a high likelihood that these tariffs will spark a global economic recession. US goods imports amounted to USD 3.3 trillion or about 11% of the US GDP in 2024. With Trumps tariffs levied on friend and foe alike, prices of goods in the US are going to go up an average of 10 to 15%.2 Unless there is a concomitant increase in the income of US citizens, the effective aggregate demand in the US is going to shrink significantly. This means that the demand for goods and services from both US firms and the firms exporting to the US is going to decrease by at least 10–15%. Given the size of the US economy, this decrease in aggregate demand is likely to set off a deep recession — perhaps in about 18 months for now.

The Malaysian government does not seem to take this possibility too seriously at present. They are forecasting a growth rate of 4.0 to 4.5% for the Malaysian economy for 2026. Progressive movements in all continents should be prepared to mount campaigns to ensure that our governments handle this recession on the basis of solidarity if it actually develops. No one must be deprived of basic needs whether it be food, shelter, medical care or education. Society must marshal its resources to ensure that no member of society is left behind.

Globalization and the rules based economic order (1980–2024)

Many of the mainstream critics of Trump’s “tariff tantrums” speak about restoring the “rules based international economic order” that existed prior to Trump’s use of the US’ economic might to bully all its trading partners. This will probably be the majority position taken during the coming APEC Conference in Gyeongju. The PSM agrees that international trade should be governed by clear and consistent rules and guidelines and not be determined by the whims of a US President. But should it be the “international order” that was developed since the 1980s under the tutelage of the World Bank, the IMF and from 1995 onwards, the World Trade Organization?

That rules based order benefited the global elite and richest corporations far more than it benefited ordinary people. Consider the case of Malaysia. There are many who would call Malaysia a success story as it’s per capita GDP and health indices are better than many other countries in Asia and Africa.

Malaysia’s GDP grew 24-fold (in real terms) in the 50 years between 1970 and 2020.3 So, there would seem to be empirical basis for the postulate that Malaysia benefited from the rules based international order. But, if we investigate a little more deeply, we will find that:

• 60% to 70% of the Malaysian working population have to work more than 10 hours per day to make ends meet for their families.
• the prevalence of stunting for under-5 children is about 21% of the under-5 population in Malaysia. Stunting refers to heights less than the 3rd percentile of the normal range for that age bracket. It indicates long term malnutrition.
• About 40% of Malaysian graduates cannot get jobs that are commensurate with their training. They are forced to accept semi-skilled jobs at low wages or enter the gig market as motorcycle delivery riders.
• Old age poverty is a sad reality in Malaysia. About 70% of all those above the age of 65 years do not have any savings of their own and have to rely on their children or other relatives for their basic needs. (Malaysia has not yet committed to a universal old age pension scheme.)
• The younger generation is experiencing a mental health epidemic with many of them on medicines for anxiety and depression.
• Our public health care system has been chronically under-funded for the past 40 years. This has resulted in congested clinics and wards as well as inordinately long waiting times, delayed treatment and poorer health outcomes.

The problem with Globalisation based on the “Rules based order” that has been promoted all over the world since the 1980’s, is that most of the rules favour the largest corporations and the richest individuals in society. The pro-elite rules include the following

• Intellectual Property Rights provisions that have been used by the largest corporations to create monopolies and extract high rates of profit by bullying the subordinate firms in the value chains.
• “National Treatment” provisions. Many “Free Trade Agreements” require governments to give at least similar access to foreign investors as they give to local companies.
• The Investor State Dispute Settlement provision allows the biggest MNCs to haul governments to international tribunals if any aspect of government’s policies restricts the profits of the MNCs. It is considered “expropriation”.
• Unrestricted flow of capital across national boundaries. This has created a situation that has forced government to reduce tax rates for corporations and the richest individuals. This occurred both in the advanced economies as well as in the global South. In the ASEAN region for example, there has been a race-to-the-bottom in corporate taxes. Malaysia has reduced its corporate tax from 40% of profits in 1988, to its current 24% of profits. Malaysia felt pressured to do so because its neighbours also acted similarly, with Thailand’s and Vietnam’s corporate tax currently at 20%, and Singapore’s at 17%. The SE Asean countries have been reducing corporate tax in a bid to attract FDI as well as to ensure that domestic investors do not relocate to neighbouring countries.
• The “Zero Tariff Regime” of Free Trade Agreements have markedly eroded the economic sovereignty of governments. For example, the ASEAN FTA has brought the tariffs of 99% of goods traded among ASEAN countries to zero, and this FTA has the provision that tariffs can only be lowered, but never raised. As a consequence, the Malaysian government is apprehensive that raising the minimum wage for Malaysian workers might affect the competitiveness of Malaysian firms and lead to the loss of both the domestic and the exports markets to firms from other ASEAN countries.

These rules have led to the de-industrialisation of advanced countries in Europe and the US, and wage suppression in the developing countries in the Global South which had to, under this system, compete with their peers to attract foreign direct investment. The net impact of the international economic system created in the last 45 years is reflected in the pie chart reflecting income distribution in Malaysia in 2024.

Currently, 90% of the Malaysian population receives 28% of total national income, while the Malaysian government receives 16%. (The Malaysian’s government share was 30% of GDP in 1988, before we started lowering our corporate tax rate). The richest 10% of the population and the companies with more than 50 employees receive 56% of the national income.4 This is the “price” of “success” under the rules based economic order that has built up since 1980s.

The globalisation we have experienced has resulted in a huge increase in the productivity of the global economy. However, the major beneficiary of this growth in productivity, are the largest MNCs in the world and the richest 0.1% of humanity who have become obscenely wealthy. Competition for investments from these MNCs has resulted in wages remaining stagnant and declining government revenue in almost all countries. Many countries in the global South are hugely in debt and are food insecure. Even the countries that grew their economies (like Malaysia — 24 fold in the past 50 years!) are unable to use the income generated in their economies to provide a better quality of life for their citizens or to mitigate against climate change.

Recalibrating the economy to serve the people

Multi National centric Globalisation cannot be rapidly reversed. Our national economies are now highly integrated in regional and international networks, and too rapid a disarticulation will lead to loss of jobs and economic chaos. We, the PSM, have been trying to develop practical medium- term strategies to build a more equitable society. We have been proposing to our progressive partners in SE Asia that Comrade Samir Amin’s proposal for partial de-linking from the global economy and the formation of regional blocks, should be the central strategy to

1. retain a larger portion of the value created by the labour of the ordinary workers, farmers and business people in our region
2. share a larger portion of the wealth created in ASEAN with the people who created it through higher prices for primary agricultural products, higher pay for our workers and more robust and comprehensive social protection schemes — such as high-quality health care, old age pension, reasonably priced rental residences, etc.

SE Asia has a population of 680 million. That should provide sufficient economies of scale for the local manufacture of most of the goods we use in daily life, except for things like advanced medical technologies like robotic surgery and passenger airplanes. A policy of import substitution at an ASEAN level should be discussed by progressive movements in the region. This policy would reduce dependence on economies outside the region, generate more jobs for the youth in ASEAN, and reduce outflow of local currency. It would also spur technological research and innovation at ASEAN level. The ASEAN member states will need to carefully and fairly apportion the manufacturing opportunities as well as associated job creation equitably among themselves, on the basis of population size to ensure continued buy-in on this endeavour.

The process of import substitution might require tariffs to keep the ASEAN market from being flooded with cheaper products from outside. We need to uphold the principle that one of the primary roles of the economy is to generate enough jobs for all the people in that society who need work. The “right to life” is an empty slogan if it does not encompass the “right to livelihood” — to be offered work at a reasonable wage level. The principle of “Free trade” should not be used to undermine our people’s right to decent jobs.

We need many new rules to move towards a better ASEAN. For example, ASEAN countries should commit to increasing corporate tax to 30% of profits over a period of 10 years. That would require Malaysia to increase its corporate tax rate by 0.6% annually as we are at 24% currently. Thailand, with a corporate tax of 19% at present, would have to go up 1.1% annually to make the target of 30% by 10 years. Increasing government revenue would help government provide better services to the people and to do serious climate mitigation work which is grossly overdue. Increase in government expenditure would augment aggregate demand, and this will provide a larger market for the businesses in the ASEAN region.

We need to explain the importance of this programme to the people and to businesses, because we need to cultivate political support to demand that the ASEAN Free Trade Agreement be modified to include a new provision that a tariff of certain percentage must be levied incrementally5 against the exports of any ASEAN member state that fails to adhere to the increment in corporate tax agreed at ASEAN level.

Another programme that needs to be considered at ASEAN level is to overcome wage suppression and attain a living wage for all. At present the minimum wages in ASEAN are at different levels. Jakarta is at about 75% of Malaysia’s minimum wage. Sulawesi and Cambodia are at about 50% of Malaysia’s. ASEAN nations should commit to increase the minimum wage in all ASEAN countries by 10% each year for the next 10 years, starting from their differing starting points — so that at 10 years, we would be at double today’s wage rate though still at different absolute levels. The benefits are obvious — lower income families would live better, eat more nutritious food and have better financial security. Businesses of all sizes would have a larger market to sell to.6 The increase in manufacturing and commercial activities would generate jobs that are desperately required all over ASEAN. Quite probably, government tax collection would also go up.

As in the case of the proposal to increase corporate tax progressively, we would need to work this into the existing ASEAN Free Trade Agreement. Any country that attempts to gain by keeping its wages static but nevertheless benefit from the expanding regional market created by wage increases in other ASEAN countries should be incurred a penalty in the form of a tariff of, perhaps 5%, against all its exports to other ASEAN countries. This penalty tariff would be cumulative, increasing for each year that country failed to implement the increase in minimum wage.

Would this lead to a flight of investment capital? Unlikely that capital will flee to advanced countries or to NE Asia. As explained earlier, the wage level in ASEAN is about 1/6th to 1/12 of that in Europe, the US and North East Asia. Translocation of investment capital to neighbouring ASEAN countries has been the possibility that national policy makers have had to be wary about. But if ASEAN countries had a unified policy on wage increase, where would international capital run to? The wages in the advanced countries would still be more than 3 times higher even after we managed to double ASEAN wage rates.

Africa might be a choice for international capital still dependent on very low wages. If that develops, we (being progressive internationalists) should not begrudge poorer African nations this opportunity to attract investments, create jobs and build their economies. Africa is still the poorest and most marginalized continent. But being one of the last remaining bastions of overly suppressed wages, they would be in a better bargaining power to insist on more decent returns for their countries in terms of wages and technology transfer.

APEC 2025 — and a message of hope

Would discussion of the themes outlined in the section above take place in the APEC summit? I seriously doubt. Most of the government leaders who will be attending APEC have been exposed to World Bank–IMF–World Trade Organisation dogma for the past 30 years such that they are unable to think outside that neoliberal policy framework.

The Message of Hope7 can only come from Progressive Movement. We have the responsibility of putting forward ***an alternative vision ***of a world where the vast wealth created by the growth of technology and science is utilized to benefit the ordinary people and the planet on the basis of solidarity. It is our duty to chart out a realistic (and believable) roadmap in that direction. And we need to rally people to this vision and attempt to take political power in our respective countries.

Rosa Luxemberg’s observation that the choice human society faces is either Socialism or Barbarism remains relevant. The Left has a crucial role to play in ensuring that it’s the former!

Jeyakumar Devaraj is Chairperson of Parti Sosialis Malaysia.

• 1

There is no single minimal wage rate in the US. It varies State by State. It is as low as USD 7.50 in certain States and as high as USD 16.50 in New York and California. The weighted average US Minimum Wage, taking into account the population of the individual States is about USD 12.50 per hour. Minimum wage in Malaysia now is RM 1700 per month. This works out to RM 1700 div by 25 days div by 8 hrs per day – RM 8.50 per hour, which is equivalent to USD 2.01 per hour. (at the exchange rate of RM 4.22 to the US Dollar)

• 2

Private consumption makes up approximately 68% of US GDP – 23% on goods and 45% on services. Approximately half of these goods are imported. In addition, the tariffs against certain countries such as Brazil, China and India are much higher than the tariffs on ASEAN countries.

• 3

Real = after taking into account the effect of inflation.

• 4

The percentage accruing to the top 1% at a global level would be more than the 56% figure quoted in the Malaysian analysis. This is because, Malaysia’s top 10% of individuals and firms are several steps down the global “pecking order” and they are forced to give up a major portion of the surplus they have extracted from their workers. The firms higher than them in the global value chains squeeze these surpluses from them. Refer to John Smith’s Imperialism in the 21st Century for a detailed description of this phenomenon.

• 5

Incrementally here means that if a particular ASEAN member State fails to raise corporate taxes by the agreed percentage for a second year, another increase in the tariff rate would have to be added to the one declared after the first default.

• 6

Implicit in these plans is the perception that the Left alliance that takes over government in any country in SE Asia, will not be in a position to implement a full “socialist” program that includes taking control of all productive assets by the State immediately. It is our perception that any such attempt would lead to economic mayhem and a steep drop in living standards. We think that we instead need to aim for the following

a) increase the material wellbeing of the ordinary citizen by immediately expanding social protection programs, and then later working towards increasing jobs and wage rates. A progressive larger share of the income generated by the economy should be shared with the working classes.

b) making food, energy and pharmaceutical self-sufficiency high priority targets

c) building grassroots democratic structures – by mandating unions in all work places with more than 5 workers, and by organizing people to set up residential communities that can participate in community budgeting. Empowering people to take over the management of the economy and society should be the aim. Involving people in the transformation of society is crucial. (Marta Harnecker’s book, “Rebuilding the Left”, is well worth reading!)

d) wherever possible, new industries should be owned by the government or “Government Linked Companies” and managed by workers, cooperatives or communities.

In other words, our expectation is that the incoming “left” government would be managing (hopefully competently) a capitalist economy for the first 2 or even 3 decades, while building the capacity of ordinary people, and laying the groundwork for the progressive socialization of production, and further progress towards socialism.

• 7

Some comrades still like to shout slogans like “Smash the system” and “Revolution now”. This is unlikely to appeal to people outside our echo-chambers. I can understand the anger against the unfair system and the frustration that young people feel, but the point, as Marx said, is to change the world. To change the world, we need the masses on our side in overwhelming numbers. There isn’t much appetite for anarchy among ordinary people in Malaysia. Yes, times are difficult, but there have also been significant improvements. Life expectancy at birth in Malaysia was 57 years in 1960. It is now 75 years. Maternal mortality was 242 per 100,000 births in 1960. It is now about 25.7 per 100,0000 (2023). Literacy has gone up. Most adults have their own handphones and are incredibly well connected. There has been an improvement in material conditions over the past 70 years. This “Smash the system” slogan will not rally the majority. But a narrative that given the greatly enhanced productive capacity of our society, life could be so much less stressful if that increase in productive capacity is used based on solidarity with all, might succeed to win people to our program especially if we can put forward a believable line of march. And if espoused by a political movement that has been consistently with the people, lobbying for bread and butter issues affecting the masses – decent wages, old age pension, decent health care, affordable housing, etc.