Call for contingency plans in face of US govt shutdown

 

-Photo credit Reuters.

PETALING JAYA: Several export-oriented sectors in Malaysia will be impacted if there is a prolonged shutdown of the US government, say industry players.

As one of the country’s largest export markets, contingency plans should be drawn up to assist the affected sectors in weathering the effects of the political impasse in Washington DC.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said that while the impact of a short-term shutdown would be minimal, an extended one would create a ripple effect on the US economy and Malaysian exporters.

“If US civil servants are not paid their salary, this will decrease their spending power and consumption. This in turn will affect the export of our furniture to the United States.

PETALING JAYA: Several export-oriented sectors in Malaysia will be impacted if there is a prolonged shutdown of the US government, say industry players.

As one of the country’s largest export markets, contingency plans should be drawn up to assist the affected sectors in weathering the effects of the political impasse in Washington DC.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said that while the impact of a short-term shutdown would be minimal, an extended one would create a ripple effect on the US economy and Malaysian exporters.

“If US civil servants are not paid their salary, this will decrease their spending power and consumption. This in turn will affect the export of our furniture to the United States.

“Also, the shutdown will interrupt services such as customs clearance at the ports and entry points in the United States. This will become an issue for our exporters.

“The disruption to the logistics sector would have an impact on the supply chain.

“This will be especially true for Malaysian companies involved in the export of electrical and electronics (E&E) products to the United States, which is a major importer,” he said when contacted yesterday.

The United States is one of the largest importers of Malaysian E&E, totalling almost RM120bil last year and representing about 20% of the country’s total E&E exports.

Of these figures, some RM60bil were semiconductor products, which account for about 20% of Malaysia’s total semiconductor exports.

Koong suggests that Malaysia leverage its position as Asean Chair to coordinate with other Asean members states and regional countries in facilitating exports.

“We could leverage the strength of Asean as a whole in respect of the individual countries’ niche products and services,” he added.

If there is a prolonged shutdown, he said the government should assist exporters by exploring other potential markets such as the Middle East and Africa.

Koong noted that development grants and soft loans, which were announced in Budget 2026, could help small and medium enterprises (SMEs) weather the effects of a prolonged shutdown.

The US government shutdown, which began on Oct 1, was triggered by the US Congress’ rejection of a Republican funding Bill, resulting in some 750,000 federal government workers being furloughed without pay.

The deadlock is expected to persist for a third week despite pressure from President Donald Trump on the Democrats to support the Republican Bill.

Airfreight Forwarders Association of Malaysia chairman Thomas Mathew said the shutdown, though a US domestic political issue, carries far-reaching implications for the global economy.

“As one of the world’s largest importers and exporters, any disruption in the operations of US federal agencies reverberates through supply chains worldwide,” he said when contacted yesterday.

Among the immediate impacts of the shutdown are delays in customs clearance, port congestion and slower regulatory processing by key US agencies, he added.

“This includes the Customs and Border Protection (CBP), the Department of Commerce, and the Food and Drug Administration (FDA).

“These delays can significantly disrupt the flow of goods into and out of the United States, prompting re-routing, rescheduling, and increased costs across shipping networks,” he said.

Mathew said a prolonged shutdown would have a multifaceted impact on Malaysia, as the country is a key trading partner of the United States, particularly in the E&E and manufacturing sectors.

“Malaysia may encounter delays in order fulfilment, payment cycles, and reduced demand from US buyers facing their own domestic uncertainties,” he said.

He added that there could also be logistical slowdowns affecting compliance-dependent sectors that require US regulatory approvals, such as semiconductors, medical devices and pharmaceuticals.

“Additionally, any resulting market volatility may impact the ringgit, investor confidence and broader business sentiment in Malaysia,” he said.

While a short-term shutdown can be absorbed with minimal disruption, a prolonged one risks undermining the predictability and efficiency upon which global trade and export-driven economies rely on.

Mathew suggests that contingency plans are drafted for the affected sectors.

“Diversifying trade partnerships will be key for Malaysian businesses navigating such external shocks,” he added.

Malaysian Consortium of Mid-Tier Companies honorary president Callum Chen said a prolonged shutdown would be a double whammy to businesses, not only globally but also Malaysian too.

“The impact will make things worse. Ports in the United States are already jam-packed with stuck containers due to tariff uncertainties.

“Most US SMEs are already facing cash flow problems due to the tariffs,” he said when contacted.

He added that unpaid US federal workers would be forced to prioritise their spending.

“They will have less money to buy things, and their priority will be putting food on the table,” he said.

Chen expects the latest episode to be longer than the previous 35-day shutdown from Dec 22, 2018, to Jan 25, 2019, which is the longest in US history.

“Everyone is in a limbo and this only creates more uncertainty for businesses,” he said.

https://www.thestar.com.my/news/world/2025/10/11/white-house-says-substantial-us-government-job-cuts-have-begun

https://www.thestar.com.my/news/nation/2025/10/12/experts-theres-a-silver-lining-amid-us-shutdown

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  US GOVERNMENT SHUTDOWN

    https://bbc.com/news/articles/crrj1znp0pyo Anthony Zurcher North America correspondent  and James FitzGerald   Watch: What could happen du...
• 
  

Goodbye trade war

US GOVERNMENT SHUTDOWN

 

https://bbc.com/news/articles/crrj1znp0pyo

Anthony ZurcherNorth America correspondent and

James FitzGerald  

Watch: What could happen during the US government shutdown?

The US federal government has shut down after Republican and Democratic politicians failed to resolve a budget dispute.

It means that some, but not all, US government services are temporarily suspended, and 40% of the federal workforce – about 750,000 people – are expected to be put on unpaid leave.

Although budget confrontations are common in US politics, this spending fight is especially tense because President Donald Trump has drastically reduced the size of the national government since taking office, and has suggested he may use the current impasse to make further cuts.

Why has the US government shut down?

The shutdown happened because Republicans and Democrats could not agree to pass a bill funding government services into October and beyond.

Under the US system, the different branches of government have to reach an agreement on spending plans before they can become law.

The Republicans currently control both chambers of Congress. But in the Senate - or upper chamber - they are short of the 60 votes needed to pass the spending bill, which gives opposition Democrats some negotiating power.

They want to see an extension of expiring tax credits which make health insurance cheaper for millions of Americans, and for a reversal of Trump's cuts to Medicaid, a government healthcare programme used by millions of elderly, disabled and low-income people.

Democrats also oppose spending cuts to government health agencies.

A stopgap bill designed to avoid the shutdown was passed in the House, or lower chamber, but did not clear the Senate.

And so, at 00:01 EDT on Wednesday 1 October (04:01 GMT), it became official: the US had its first shutdown for nearly seven years.

Which government services will stop, and which will carry on?

Not all aspects of government will shut down - services deemed essential will continue as normal, although in many cases staff will not be paid for the duration of the shutdown.

Border protection and law enforcement staff, Immigration and Customs Enforcement (ICE) agents, in-hospital medical care and air-traffic control workers are expected to operate as usual.

Social security and Medicare cheques will still be sent out, although benefit verification and card issuance work may stop.

Government employees deemed non-essential will be temporarily put on unpaid leave. Contractors who work for federal agencies but are not directly employed by the government will miss out on work, too.

Services like the food assistance programme and federally-funded pre-school and institutions like the Smithsonian museums will likely be reduced or closed.

Several agencies, like the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH) are also expected to furlough many workers, affecting ongoing research projects.

National parks and forests remained open during the last shutdown in 2018, but with few or no staff, which experts said led to a rise in vandalism, littering and looting of historical sites.

There could also be travel delays. The Airlines for America trade body warned that flight systems might "need to slow down, reducing efficiency". Passport agencies have also warned that it could take longer than usual to process travel documents.

• Jobs, travel, national parks - what impact will the shutdown have?
• 18 ways the 2018 shutdown hurt

Mail will still be delivered and post offices will remain open because the US Postal Service does not depend on Congress for funding.

Most American schools are state-funded, but the federal government is responsible for billions of dollars in grants and student loans, which could effectively come to a halt.

However, because the grants are typically awarded during the summer, they will be largely unaffected during this shutdown, according to the education secretary.

Members of Congress will also still be paid, a convention that has been criticised by some politicians.

How has the White House responded to the shutdown?

In the past, lengthy government shutdowns were usually seen as politically dangerous, hampering voters' everyday lives and the reputation of lawmakers and the president.

After previous shutdowns were resolved, government operations mostly returned to normal, with staff and spending levels largely going back to what they had been before.

However this time, the White House appears more than happy to shutter large parts of the US government for an extended period.

Over the past nine months the Trump administration has slashed government spending and sacked many federal workers, testing the boundaries of presidential power.

Officials have threatened to use the shutdown to identify more "non-essential" workers who could be permanently let go.

"We'll be laying off a lot of people," Trump said on Tuesday 30 September, the day before the shutdown began.

• White House says layoffs 'imminent'

While both Democrats and Republicans are blaming each other for the current standoff, they did make last-ditch efforts to try to avoid it.

On Monday 29 September, Trump met all four congressional leaders - the top Democrats in the House and Senate as well as their Republican counterparts, but little progress was made, and both sides appeared to dig deeper into their positions.

How long will the current shutdown last?

It is difficult to say. In this case, it really depends when - or if - either of the parties will agree to a compromise.

The Republicans could negotiate an extension to the healthcare subsidies demanded by the Democrats.

Alternatively the shutdown could become so disruptive that the Democrats decide to back down and agree to fund the government - at least temporarily - to get things up and running again.

So far, the Trump administration has been been unwilling to offer substantive concessions. It believes the Democrats will bear the brunt of the public's blame because it argues the party's demands caused the shutdown.

Meanwhile the Democrats believe their efforts to secure cheaper healthcare are popular.

The party's congressional leaders provoked the ire of some left-wing activists for backing down during the last budget dispute in March.

Many Democrats seem to be itching for a bigger fight this time around – and funding the government is one of the only places where the party has some leverage.

• Four ways this shutdown could end

How could the shutdown affect the economy?

The scale of the damage will depend in part on how long the shutdown lasts - and how wide ranging it is.

Analysts estimate it could shave roughly 0.1 to 0.2 percentage points off economic growth for each week that it continues - although much of that could be recouped, as has happened after previous shutdowns.

That relatively muted impact may be why the stock market seems to be shrugging off this latest threat.

But if Trump ends up firing workers, rather than temporarily putting them on furlough, the impact could be more substantial.

The US economy has already been hit by the effects of Trump's tariffs, with the likely delay of key data - such as the official US monthly jobs report - expected to add to the uncertainty.

• What tariffs has Trump announced and why?

What happened during the last US government shutdown?

Shutdowns over budgets are a unique aspect of US politics.

They have become quite common over the past 50 years - with three taking place during Trump's first presidential term.

The last shutdown in late 2018 lasted 35 days - the longest in history.

It was brought about by disagreements over funding a wall on the Mexico border. It finally ended in part because air traffic controllers, who had been working for a month without pay, started calling in sick en masse.

Flights were cancelled or delayed because of the lack of staff, and the shutdown came to an end shortly afterwards.

The Congressional Budget Office (CBO) estimated that the 2018-2019 shutdown reduced economic output by about $11bn, including $3bn that it never regained.

But shutdowns pre-date Trump.

The second longest to date was 21 days, under Democrat President Bill Clinton in 1995. His fellow Democrat Barack Obama had a 16-day shutdown during his time in the White House, and Republican Ronald Reagan oversaw eight shutdowns during his presidency in the 1980s - though all were relatively brief.

• Why government shutdowns only seem to happen in the US

Erosion of confidence: US avoided a debt default, debt ceiling shifted to next year

It happened again last week – at the last minute the United States avoided debt default. But the world is losing patience with this latest episode of dysfunctional leadership.

THE world waited with bated breath as the deadline neared. And breathed a sigh of relief when at the last minute, the United States avoided crossing its “debt ceiling” and a default on its debts.

The debt ceiling was raised, and the government shutdown also ended last Thursday after weeks of a high-profile standoff between US President Barrack Obama and the Republicans in Congress.

But this relief was mixed with incredulity and frustration.

First, the respite is only temporary; the can is just kicked down the road.

The deadlines for government shutdown and debt ceiling are shifted some weeks away to January and February next year.

Second, this fiasco has happened several times already.

Each time the Congress gave the President a reprieve of just a few more months, before the new deadline loomed again.

The Republicans are adamant to cut the government’s spending and its budget deficit and won’t allow the government to function unless they get what they want.

Previously, Obama compromised and gave in significantly.This time, he stood firm and refused to negotiate.

The Republicans went too far, choosing to defund and damage his landmark medical insurance reform as a condition for lifting the debt ceiling.

Obama decided “enough is enough” and relied on public opinion to win his gamble. The Republican Party blinked, as the public heaped the blame on them.

The party leaders in Congress had to eat humble pie and agree to stop the shutdown and lift the debt ceiling without defunding or changing the “Obamacare” health reform.

But thirdly, while the President finally showed the Republicans who was boss, the damage had already been done to the United States’ image as a superpower and the champion of American-style democracy.

The US system of governance has become dysfunctional, with one side of the political divide willing and able to paralyse the government functions led by the other side, using the weapon of withholding approval of the government’s budget and capacity to borrow.

Just days before the deadline, the world’s finance ministers meeting at the annual IMF-World Bank meeting in Washington highlighted the extreme dangers of a US debt default.

Around the world, leaders and analysts mourned the end of the past certainties surrounding the United States and its dollar as the world’s financial leader.

A widely-quoted article in China’s Xinhua news agency was titled: “Washington’s political chaos proves it’s time for a de-Americanised world.”

The commentator, Liu Chang, said the latest crisis reveals that the United States is unfit to govern itself, let alone lord it over the rest of us.

“It is perhaps a good time for the befuddled world to start considering building a de-Americanised world.”

After castigating the United States for meddling in the political affairs of countries in its efforts in building a world empire, the writer attacks a self-serving Washington for shifting financial risks overseas, while the debt ceiling crisis “has again left many nations’ tremendous dollar assets in jeopardy and the international community highly agonised”.

“Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.

“Part of that reform is the introduction of a new international reserve currency that is to be created to replace the dominant US dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

As the Xinhua opinion piece indicated, many countries are concerned about the US dollar being the world’s dominant currency. It is by far the most important reserve currency.

Countries holding US dollar treasury bills have been worried about the once unthinkable, that the US would be unable to honour its debt service obligations, thus putting their hard-earned assets in jeopardy.

On the other hand, countries that took loans denominated in US dollars could face punishing terms of repayment if the interest rate on the US dollar shoots up upon fears of a US debt default.

Companies, traders and governments that use the US dollar as the medium of exchange would also suffer from chaos in the markets for money, commodities and trade, if there is a massive loss of confidence in the US and its dollar.

Thus, continuing uncertainty arising from feuds in Washington will accelerate the erosion of confidence in the US as world economic leader.

The Financial Times columinist Martin Wolf commented that the US debt ceiling is the legislative equivalent of a nuclear bomb, and that the law needs to be repealed since there cannot be orderly government under so destructive a threat.

But another editorial comment in The Independent states that while there is a straightforward case to ditch the debt ceiling law, the same extremists who use it as a weapon of mass destruction will be loath to part with it.

In the past few days, some Democrat and Republican leaders in charge of budget policy in Congress have started meeting, giving hope they plan to avoid a repeat of the fiasco when the budget and debt ceiling deadlines re-appear in a few months.

But given the polarisation and ideological divides in Washington, chances are that the world will be treated to another round of the battle and the chaos. If that happens, there will be more calls for a new world order.

Contributed by Global Trends by Martin Khor
> The views expressed are entirely the writer’s own.

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A de-Americanized world needed !

SHUTDOWN. A view of a hall on Capitol Hill September 29, 2013 in Washington, DC. AFP/Brendan Smialowski

As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.

Emerging from the bloodshed of the Second World War as the world's most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.

With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.

Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.

Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.

Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.

As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.

Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized.

Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.

To that end, several corner stones should be laid to underpin a de-Americanized world.

For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.

Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.

Apart from that, the world's financial system also has to embrace some substantial reforms.

The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that they could better reflect the transformations of the global economic and political landscape.

What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.

Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.

And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse.

- By Xinhua Commentary writer Liu Chang 2013-10-13

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