By SHAHEERA AZNAM SHAH
The full adoption of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will help alleviate the impact of Covid-19 on local manufacturers while fostering exports growth, said the Federation of Malaysian Manufacturers (FMM).
Its president Tan Sri Soh Thian Lai said while there is no deadline on Malaysia’s ratification process, prioritising the process will intensify and diversify Malaysian manufactured exports.
“The impact of Covid-19 has 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 production and supply chains of most companies being on a near standstill due to the Movement Control Order (MCO) and this has severely impacted economic and trade activities,” he said in a statement today.
As Malaysian manufacturers were only given the green light to resume full manufacturing operations in May, FMM believes business recovery including export activities would only resume from six months onwards as businesses gradually adapt to the new norm.
“Looking at the current situation, it is imperative to stabilise the manufacturing production while further expanding market access for Malaysian exports,” Soh said.
He said the CPTPP would enhance Malaysia’s market access into countries such as Canada and Latin American countries, particularly Mexico, as these countries currently impose high tariffs for electrical components, telecommunication devices and consumer electronics.
It would also boost exports for Malaysia’s electrical and electronics (E&E) industry, which has been a key contributor to the nation’s export earnings, while giving local nitrile glove manufacturers an advantage over China in exports to Canada.
Soh added that the agreement will help increase Malaysia’s textile exports by 20% due to the elimination of duties on textiles in CPTPP countries.
It would also enable local automotive parts and components manufacturers to export to global original equipment manufacturers (OEMs) in CPTPP countries such as Mexico, becoming part of their supply chains.
“Over 80% of Malaysian exports of automotive parts, particularly rubber components are expected to enjoy duty-free access immediately,” he said.
The CPTPP has been in force in Australia, Canada, Japan, Mexico, New Zealand and Singapore since Dec 3, 2018 and from Jan 14, 2019 in Vietnam.
Malaysia, Chile, Brunei, and Peru have yet to ratify the CPTPP, which comprises 11 countries.
Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali recently said the federal government is still engaging with state governments, federal ministries and the Attorney-General’s Chambers to ratify the trans-pacific deal.
He said however that a deadline has not been set for Malaysia to complete its domestic process for the ratification given the two-year period stated in the Trans-Pacific Partnership (TPP) Agreement, which was never entered into force.