KUALA LUMPUR: Small and medium enterprises (SMEs) in Malaysia and other Asean countries are expected to gain more from the de-escalation of the US-China trade war.

This follows the positive outcome from the Phase 1 trade deal between the two largest economies, said HSBC Malaysia.

HSBC Malaysia country head of commercial banking Andrew Sill said the outcome signalled positive prospects for local SMEs to grow healthily without certain tariff restrictions.

“Trade war does not benefit anybody in a long term. We have seen Malaysia in the interim period being the beneficiary of the previous trade war, with increasing manufacturing investment coming into the country,” Sill said at a press conference yesterday.

He said some manufacturers had looked Malaysia as an alternative manufacturing base, given the tension between the US and China.

“But I think in the interim period, Malaysian SMEs probably have the opportunity to benefits from some of the uncertainties that the trade war has created,” he added.

He said Asean has over 200 largest companies in the world operating in the region.

“Within that (region), we have certain industries that are very much in the global supply chain like automotive and manufacturing.

“Asean is a very important hub. Hence, it is important for SMEs to be active in certain sectors to benefits from some of the changes of inflow (investment), where manufacturing is base and how SMEs can participate in the whole of supply chain,” he said.

Sill said the local SMEs market domestically was favourable due to an attractive alternative option for investment.

“The country’s central position within Asean is extremely important. In broader sense, the Malaysian government incentives and schemes for foreign direct investments (FDIs) facilitate businesses, creating an open market.

“However, for foreign investors, the challenge is expanding into overseas market as they need to understand the regulations and environment as well as work with local partners.

“The key is to understand the main government agencies and who can facilitate with investment and funding,” he added.

Country head of business banking Anita Tang said SMEs were the big part of HSBC Malaysia’s businesses in terms of customers base, making up about half of the entire commercial banking.

“A lot of opportunities space for us, not just number of customers but rather those who will seize value in HSBC, giving them not only the access to funding but also the networking,” she said.

However, she said the adoption cost of certain technologies and the knowledge of understanding the importance of embracing new technologies posed a challenge for local SMEs.

“Local SMEs are still optimistic about the growth. Over the years, there were various business segments who have been the beneficiaries of the trade tension.

“For instance, some some manufacturers have been diverting to Malaysia.

“However, there is still a sense of cautiousness in terms of working capital and development of external environments,” she said.

Sill said SMEs are about creating and building scale domestically, and the next stage involved their consideration to expand into overseas market.

“SMEs need to understand all the regulations and guidelines in terms of the operating environment of the market that they are targeting.

“Very often SMEs will consider collaborating with local partners to venture into overseas market.

“It also important for them to understand and know who are the government agencies to facilitate their investments and help with funding or incentives,” he added.