Donald Trump is at it again.
The US President has threatened yet another round of tariffs after proceeding with tariffs on Canada and Mexico.
This time, his target is China as the first round of 10% tariffs attracted a retaliatory response from the Middle Kingdom.
He intends to impose a further 10% tariff on China as the trade war between the two countries rages on.
Amid the chaos, there is one country that stands unscathed and may even benefit – Malaysia.
A springboard for Asian expansion
The good news is that Malaysia could emerge relatively unscathed from this “tariff on steroids” war that America is waging.
Back in January, Singapore and Malaysia signed an agreement for the Johor-Singapore Special Economic Zone (SEZ).
This new zone, carved out for business and investment, looks set to create 20,000 skilled jobs for people on both sides of the Causeway.
This SEZ is not Malaysia’s first.
Back in 1972, a special industrial zone was set up in Penang.
Hence, these two zones could provide companies with a convenient launchpad to target the huge Southeast Asian market, which is home to around 700 million people, nearly twice the population of the US.
Healthy economic fundamentals
Apart from these special zones, Malaysia also boasts strong economic fundamentals.
Industrial production grew by 4.6% in December 2024, the fastest pace of expansion since July of the same year.
Some of the best-performing manufacturers included computers, electronics, and optical products.
Retail sales grew at a respectable rate of 5.4% in December.
As for the Malaysian economy, it expanded by 5% in 2024, with government spending, fixed investments, and consumer spending all contributing to the growth.
The good news is that the inflation rate came in at just 1.7%, the lowest in 11 months.
These numbers demonstrate the stability of the Malaysian economy and its potential for further growth.
A slew of dividends declared
And if you are an income investor, there’s more good news.
Many of Malaysia’s largest businesses, along with a few smaller ones, dish out dependable dividends.
For instance, Tenaga Nasional (KLSE: 5347), Malaysia’s largest electricity generator, reported a 69% year-on-year surge in its 2024 net profit.
The power company declared a final dividend of RM 0.26 per share.
If you are a beer drinker, you may recognise the Heineken brand.
Heineken Malaysia (KLSE: 3255) offers a chance for you to own a slice of this beer business and the brewery reported a 21% year-on-year jump in 2024’s net profit on the back of a 6% year-on-year increase in revenue.
The Dutch brewer has proposed a final dividend of RM 1.15.
And if you feel confident about Malaysia’s economy, you can choose to own its largest bank Maybank (KLSE: 1155).
For the fourth quarter of 2024, the lender posted a 6% year-on-year improvement in net profit and declared a final dividend of RM 0.32.
Smaller companies are also doing well.
Padini (KLSE: 7052), a manufacturer and retailer of mass-market apparel, posted a 21.1% year-on-year rise in net profit for the latest quarter ending 31 December 2024.
The apparel retailer also declared a third interim dividend of RM 0.018.
Get Smart: A growing economy with dividend-paying stocks
If you are an income investor, you can feel assured that Malaysia should remain relatively unaffected by the tariff war because of its SEZs.
The country is also posting healthy economic growth and is seeing inflation taper off.
With many companies growing their profits and declaring dividends, you can rest assured that your Malaysian portfolio will be in safe hands.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
