by ANIS HAZIM / pic MUHD AMIN NAHARUL
ANY attempt to withdraw from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) now will be disastrous for the Malaysian economy.
The Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai (picture) said Malaysia cannot afford to backtrack now and withdraw from the CPTPP as it runs the risk of being relegated to the side-lines since Asean neighbours have moved ahead strongly.
For example, he said Vietnam is ahead of Malaysia as it has already implemented the CPTPP in January 2019 and within that year had significantly increased its exports to Canada, Mexico and Peru by 29.7% resulting in overall export growth of 8.5%.
Vietnam has also benefitted from foreign direct investments (FDIs) of the CPTPP countries which accounted for US$39 billion (approximately RM175.85 billion) or 24.2% of the total FDIs in 2019.
Malaysia is the ninth country to implement the agreement, which comes into force today, and is expected to benefit local businesses in terms of preferential access for exports to three new markets namely Canada, Mexico, and Peru which Malaysia has no free trade agreements.
“Based on the 2021 data from World Bank, these three new markets collectively represent a population of over 200 million with a combined GDP of over US$3,500 billion or 9.4 times bigger than our own economy,” Soh said in a statement today.
He noted that the implementation of CPTPP will improve Malaysia’s competitiveness and attractiveness as an investment destination for global companies to use Malaysia as a gateway to both trade blocs along with the recent Regional Comprehensive Economic Partnership.
“As four years have passed since the agreement was signed by Malaysia in March 2018 and the CPTPP enters into force for Malaysia only today, we are already lagging behind our Asean neighbours in expanding global market share,” he added.
According to Soh, Malaysia is interested in safeguarding extensively through the necessary carve-outs to protect domestic interests and 22 suspended provisions from the original Trans-Pacific Partnership agreement, based on the Cost and Benefit Analysis published by the Ministry of International Trade and Industry on July 25.
“In safeguarding Malaysia’s sovereignty, foreign investors can no longer make an Investor State Dispute Settlement claim under the CPTPP for violation of private investment contracts with the government or investment authorisations.
“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 have 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,” he added.
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, there should not be any flip-flop on the decision to implement CPTPP which has already been approved by the Cabinet and Parliament.
“Otherwise, any withdrawal from the CPTPP would result in a grave opportunity cost for Malaysia and shake the confidence of investors in Malaysia,” Soh concluded.