By Tan Sri Soh Thian Lai
COVID-19 and its ensuing impact have emerged as the top risk to global trade flows as it affects both supply and demand of goods.
The manufacturing sector has been hit hard with a myriad of issues caused by disruptions in the supply chain which has severely impacted production and trade activities.
Therefore, the post-COVID-19 trade recovery for Malaysian companies is going to be more about re-establishing critical supply chains and establishing new global value chains to boost economic growth.
The Federation of Malaysian Manufacturers (FMM) is a strong advocate of Free Trade Agreements (FTAs) as Malaysian companies will benefit from the (i) lowering of trade barriers to facilitate greater market access, (ii) harmonious alignment of trade and investment norms to strengthen supply chain links, and (iii) deepening of exchanges and cooperation to increase economic activities.
FMM thanks the Government for placing importance for Malaysia to participate in Regional Trade Agreements to open up new market opportunities for Malaysian manufacturers and therefore welcomed the signing of both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018 and the Regional Comprehensive Partnership Agreement (RCEP) in 2020.
FMM firmly believes that these Regional Trade Agreements will greatly contribute to manufacturers’ post-pandemic recovery and in creating resilient supply chains.
Complement instead of compete
Signing the CPTPP and RCEP are significant achievements for Malaysia. Once both agreements are ratified, manufacturers are expected to benefit from diversification of import sources of industrial inputs and components.
The CPTPP eliminates tariffs on nearly 96% of products entering the intra-regional trade and the RCEP will likely cover 90% of these products.
Similarly, these mega FTAs will complement rather than compete as the RCEP and CPTPP provide structured frameworks for cooperation for the local manufacturing sector to link our strengths in manufacturing and technology with the strengths of our partner countries in agriculture and natural resources.
The further integration of regional economies under RCEP and CPTPP, in addition to providing Malaysian exporters with preferential access into growing markets across the Asia Pacific, allows for increase in imports of raw materials and natural-resource-based materials from Latin America and Canada.
At the same time, it will provide strategic nearshore options which will reduce costs and time for companies by allowing them to both import and export products anywhere within the East Asia region without meeting
To ensure that Malaysian businesses maximise the gains and minimise any possible losses from these FTAs, FMM on its part has launched a series of webinars on RCEP to assist companies to identify the potential opportunities and gaps on some of the new areas in this FTA such as the impact on intellectual property and rules around digital economy.
FMM’s commends the Ministry of International Trade and Industry (MITI) on its commitment to complete domestic procedures for the ratification of RCEP by first quarter of 2022.
As it is imperative to stabilise manufacturing activities and rebuild supply chain connectivity in the region, FMM calls on the Government to hasten the ratification process for RCEP to be implemented by this year to benefit businesses in this time of need.
While we are aware that there is no deadline for Malaysia to complete the domestic process to enable the ratification of the CPTPP, FMM believes that the ratification of the CPTPP at the earliest date possible will greatly contribute to Malaysia’s post-pandemic recovery. – April 16, 2021
Tan Sri Soh Thian Lai is the president of the Federation of Malaysian Manufacturers.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Photo credit: iStock.com
