The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) welcome the release of the independent cost-benefit analyses (CBAs) on the potential economic impact and the study of the impact on national interest which provides the public with more transparent, informed and detailed analysis of TPPA impact on Malaysia before tabling the TPPA for the Parliament of Malaysia for approval early next year.
Benefits of TPPA
The TPPA has four key priorities in assessing any trade deal – improved market access, a level competitive playing field, ease of cross-border data flows, and regulatory transparency. Malaysia, being a trade-dependent economy will be able to tap into the TPPA member countries, in particularly the four new markets, i.e. USA, Canada, Mexico and Peru, where Malaysia has yet to establish any free trade agreements (FTAs). Being one of the first 12 signatories to the TPPA, Malaysia stands to gain from its first-mover membership advantage, together with Vietnam, Brunei and Singapore. The key beneficiaries are the plantation, timber and wood industries, whilst in terms of manufacturing sector, the electrical and electronic (E&E) and the textile and garment industry stand to gain most.
The CBAs by PwC Advisory Services Sdn. Bhd. (PwC) and the Institute of Strategic and International Studies (ISIS) Malaysia reaffirms that TPPA is expected to bring more positive than negative impacts on the Malaysian economy and on our national interest.
By participating in TPPA, PwC projected that Malaysia will achieve a gross domestic product (GDP) cumulative gain of USD107 billion to USD211 billion (RM890.07 billion) over the period 2018 to 2027. This translates to an increase of GDP growth by 0.60 ~ 1.15 percentage points. On the other hand, Malaysia’s non-participation in the TPPA would not only forego the potential GDP gains of USD107-211 billion, but will cost the country a cumulative GDP loss of USD9 – USD16 billion over the same period.
At this juncture, ACCCIM would like to highlight the opportunities pertaining to TPPA. There are now more opportunities for SMEs as the ease in market access for goods and cross-border services is expected to benefit SMEs in terms of lower costs arising from greater tariff elimination, lowering of non-trade barriers, and lower cost derived from the effectiveness of internet and e-commerce. What is vital is for SMEs to transform to be more versatile and adaptable to market changes.
Apart from market access opportunities, Malaysian businesses will need to be ready in adopting labour standards in line with the 1998 ILO Declaration. Malaysia will need to amend its labour laws in order to conform to the Declaration, which over a time period can improve public perception of Malaysia’s labour standards, and lead to higher productivity and competitiveness. We trust that we can manage our manpower requirements by embracing holistic win-win approach, ensuring that these structural changes will not impede the economic and business growth.
The TPP initiatives also introduce new features and rules on e-commerce and telecommunications. These new rules are timely and essential considering that the e-commerce and electronically transmitted digital products and services are the new frontiers in facilitating efficient business transactions in the future.
On Intellectual property (IP), it plays vital role in a developing high-value and knowledge-based Malaysian economy, except for the contentious issue of the general public on pharmaceuticals. We viewed the standards adopted in different types of IP (e.g. patents, copyrights and trademarks, etc.) can provide businesses with more assurance as they invest in more innovative products and services.
Another feature that sets TPP apart from other existing FTAs is the Investor-State Dispute Settlement (ISDS). Despite the fear and critiques on the Investor-State Dispute Settlement (ISDS) mechanism, we believe that this provision, with ample procedural safeguards to prevent any abusive and frivolous claims, is important in protecting the interests of Malaysian companies investing abroad.
ACCCIM Recommendations and Initiatives
We reiterate our earlier recommendation to form a high-level private-public committee to explore further the effects and impacts of the terms of TPPA, and look at ways to promote trade and investments and enhance our participation so that we can be assured of the growth and economic integration driven by the TPP waves.
ACCCIM will continuously undertake feedback studies and engaging with its constituent members, with other trade associations/affiliates, and the business community to study the pros and cons of the TPPA. With that, we plan to come up with our own report on TPPA for the business community.
TPP is anticipated to open up the market of 800 million people, with a combined GDP of almost USD30 trillion vis-à-vis our limited domestic market of about 30 million people. Malaysia is so well-position to attract more investments because of its resources, strategic location, facilities and infrastructures, and socio-economic stability.
While TPP is expected to come into force within two years, it is important to be part of this agreement. Notwithstanding the challenges that we will be facing, we believe that we as private sector and industry can work together with the Government to pre-empt some of these risks while reaping the benefits brought by the TPP through capacity building measures, short-term adjustments and structural reforms.