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) which reveals its net economic benefits to Malaysia, as published by the Ministry of International Trade and Industry (MITI)
The CBA reaffirms that 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 of over US$3,500 billion i.e., 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,” FMM president Tan Sri Dato’ Soh Thian Lai said in a statement.
Malaysia along with Brunei, Singapore and Vietnam are the only four countries in Asean participating in the CPTPP. Unfortunately, Malaysia now lags its Asean neighbours in expanding its global market share due to the delay in ratifying the agreement.
Vietnam, for instance, is ahead of Malaysia in this aspect as it has already ratified and implemented the CPTPP in January 2019 and within that year has significantly increased its exports to Canada, Mexico and Peru by 29.7% and overall exports growth of 8.5%.
In addition, Vietnam has also benefited greatly from Foreign Direct Investments (FDI) from the CPTPP countries which accounted for US$39 billion or 24.2% of the total FDI into the country in 2019. The CPTPP is advantageous to Vietnam and contributed significantly to its trade recovery during the pandemic.
“Similarly, FMM believes that the ratification of the CPTPP at the earliest date possible will further contribute to Malaysia’s pandemic recovery.
“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.
As four years have passed since the agreement was signed by Malaysia in March 2018, Malaysia cannot afford to further delay the ratification of the CPTPP. Otherwise, we run the risk of being relegated to the sidelines as our ASEAN neighbours have moved ahead strongly, added Soh.
“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.”
At the same time, Malaysian exporters will not have preferential access to the growing CPTPP market where China, Ecuador and Taiwan submitted their applications to be members of the CPTPP last year while the United Kingdom is currently in the process of the CPTPP accession negotiation.
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, Soh stressed that any delay or non-participation in the CPTPP would result in opportunity costs for Malaysia and the extensive safeguards secured would be forgone.
