TOKYO (Nov 7): Malaysia is observing very closely what is happening in the world due to the possible trade war between the United States (US) and China and hoping to see opportunities for the country, Tun Dr Mahathir Mohamad said.

The Prime Minister said one possible effect of the trade war would be the cost of Chinese products in the US could go up and companies related to China could relocate to other countries such as Malaysia which was not subject to sanctions by the US.

“While we are hoping that they will move to Malaysia but at the same time we see this trade war has very negative things.

“Trade war does not solve any problem and it creates a lot of problems and undermines the economy not only of the countries concerned but the whole world,” he said during a dialogue at the 36th Japan-Malaysia Economic Association (Jameca)-Malaysia-Japan Economic Association (Majeca) Joint Conference and Malaysian Business Forum here Tuesday.

Dr Mahathir said he would like to see more joint ventures between Malaysian and Japanese small and medium enterprises (SMEs), but he realised that there were some problems faced by both parties.

“Unlike big companies, they are not very familiar with foreign investment. We will ensure if they have problems, we will be able to help them and tackle the problems,” he said.

Dr Mahathir also spoke of the need for Malaysia to encourage its talents to return home.

"We need to reclaim people educated in new knowledge. There will be workers and managers who are familiar with new industries,” he said.

Dr Mahathir said the ASEAN region has tremendous potential and with a total population of 600 million, is the third biggest grouping in the world today in terms of population.

“ASEAN I think can overcome the difficulties in their own countries and to have proper policies so that we can get involved in making full use of the potentials in our countries. Our resources are very big but our governance is more focused on domestic rather than regional operations,” he said.

The Prime Minister also said that having a diverse economy is important to Malaysia and although Malaysia wants to industrialise and go into manufacturing it is not forgetting agriculture and fisheries.

Dr Mahathir is on the second day of his three-day visit to Japan.