THE Federation of Malaysian Manufacturers (FMM) has welcomed the much-awaited findings of the Cost and Benefit Analysis (CBA) conducted on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The analysis was published yesterday (July 25) by the International Trade and Industry Ministry (MITI) which revealed that the CPTPP presents net economic benefits to the country.
According to the CBA, the CPTPP offers market access opportunities to three new countries which Malaysia has no free trade agreements (FTAs) with.
Based on the 2021 data from World Bank, the three new markets – namely Canada, Mexico and Peru – collectively represent a population of over 200 million with a combined GDP that is about 9.4 times bigger than our own economy.
In addition, it allows wider sourcing channels for raw materials at competitive prices for businesses in Malaysia and this directly improves Malaysia’s competitiveness and attractiveness as an investment destination.
Malaysia, alongside Brunei, Singapore and Vietnam make up the only four countries in ASEAN that are participating in the CPTPP.
However, reports have noted that Malaysia now lags behind its ASEAN neighbours in expanding its global market share due to the delay in ratifying the agreement.
Vietnam, for example, is ahead of Malaysia in this aspect, having already ratified and implemented the CPTPP back in 2019.
Within that year it has significantly increased its exports to Canada, Mexico and Peru by 29.7% and its overall exports growth of 8.5%.
In the same vein Vietnam has also benefited from Foreign Direct Investments (FDIs) from CPTTP countries which accounted for US$39 bil or 24.2% of the total FDIs into the country in 2019.
The CPTPP is also advantageous to Vietnam and has contributed significantly to its trade recovery during the COVID-19 pandemic.
“Similarly, FMM believes that the ratification of the CPTPP at the earliest date possible will further contribute to Malaysia’s pandemic recovery,” opined FMM president Tan Sri Soh Thian Lai.
“We note that there are challenges in implementing such a broad and high-level agreement across different parties but as the main thrust and centrality of the CPTPP agreement is to facilitate and promote regional economic integration, trade, and investment, we are confident that Malaysia’s interest is safeguarded extensively through the necessary carve outs and suspended provisions in the agreement and added advantages to protect domestic interests.”
Soh said as four years have already passed since Malaysia had signed the agreement in 2018, the country cannot afford to delay the ratification of the CPTPP or risk being relegated to the side-lines as other ASEAN neighbours move ahead.
“Indeed, the relocation of our exporting industries to other countries in ASEAN cannot be ruled out and Malaysia will become a less attractive investment destination for investors,” Soh warned.
“At the same time, Malaysian exporters will not have preferential access to the growing CPTPP market where China, Ecuador and Taiwan have submitted their applications to be members of the CPTPP last year while the United Kingdom (UK) is currently in the process of the CPTPP accession negotiation.”
Meanwhile, South Korea, Thailand and the Philippines have also expressed interest in joining the CPTPP and have informally studied what it would take to formally accede to the trade pact.
“As such, any delay or non-participation in the CPTPP would result in opportunity cost for Malaysia and the extensive safeguards secured would be forgone,” Soh said. – July 26, 2022
