1. The Trans-Pacific Partnership Agreement (TPPA) is a multilateral trade negotiation that currently comprises 12 countries, namely the United States, Australia, Japan, Mexico, New Zealand, Singapore, Malaysia, Vietnam, Peru, Chile, Brunei Darussalam, and Canada. TPPA is expected to be positive for Malaysia as the TPP will become a free trade region of 800 million people, accounting for approximately 30% of global trade and 40% of the world’s GDP.

2. While awaiting for the tabling of the TPPA at the Parliament for approval early next year, we welcome the release of the independent cost-benefit analyses (CBAs) on the potential economic impact of TPPA conducted by PwC Advisory Services Sdn. Bhd. (PwC), and the study of the impact on national interest by the Institute of Strategic and International Studies (ISIS). Both reports have indeed provided the business community and public with more understanding and analysis on the potential outcomes of the partnership, and reaffirms that the benefits of TPPA will outweigh the negative impacts.

3. The key priority of this trade partnership converges on improved market access and cross-border trade, fair and level playing field, and regulatory transparency. Being a trade-dependent economy, we believe that Malaysia 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 FTAs.

4. The elimination or lowering of import tariffs, and removal of other trade barriers play critical role for our businesses as they open door to new global markets, will certainly strengthen the competitive of our products and services. By being the original 12-signatories to the TPPA, Malaysia stands to gain from its first mover membership advantage, together with Vietnam, Brunei and Singapore.

5. The ‘national treatment’ and ‘most-favoured-nation (MFN) provisions ensure our businesses/investors cannot be treated in less advantageous manner than the domestic counterparts when doing business abroad. We anticipate that commodity-based export businesses such as plantation, timber and wood industries, and manufacturing sector namely electrical and electronics (E&E) and textile and garments stand to gain most from TPP. Although some of our exports are already zero or very low duties, the increase in ease of market access lies mainly on the reduction on non-tariff measures (NTBs) such as restrictive policies on trade in goods, services and investment, and elimination of cumbersome procedures.

6. The report on CBA by PwC projected that Malaysia will achieve a gross domestic product (GDP) cumulative gain of USD107 billion to USD211 billion (RM890.07 billion) from 2018 to 2027. This translates to an increase of GDP growth by 0.60 ~ 1.15 percentage points. Investment is projected to escalate by USD136-239 billion, while the accumulated savings from elimination of tariffs alone is estimated at USD12 billion over the same period.

7. On the contrary, our non-participation in the TPPA would not only forego the potential GDP gains of USD107-211 billion, but will cost Malaysia a cumulative GDP loss of USD9 billion to USD16 billion over the same period.

8. Therefore, it is imperative for us to put in place some immediate actionable plans to tackle the gaps, and manage the potential challenges ahead of us in order to reap the advantages of TPP.

9. In this respect, we reiterate our 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 wave. Meanwhile, ACCCIM is continuously undertaking feedback studies and engaging with its constituent members, other trade associations/affiliates and the business community to gauge and appraise the impacts. Next, ACCCIM plans to come up with our own report on TPPA for the business community.

10. Notwithstanding the changes or transformation that we will be facing, we believe that we can pre-empt some of these challenges while reaping the benefits brought by the TPP. To realize the maximum benefits and avert the potential costs, capacity building measures, short-term adjustments and structural reforms have to be undertaken by the industries and the Government.

11. TPP is anticipated to open an unprecedented market of 800 million people, with a combined GDP of almost USD30 trillion, far surpassing our limited domestic market of about 30 million people and a GDP of USD327 billion in Malaysia. Malaysia is so well-position as the magnet for investment because of its resources, strategic location, facilities and infrastructures, and socio-economic stability.

12. Thus, we have to move forward, whether domestically or globally, and irrespective of the size of enterprises. It is important to be part of this agreement and hence timely for us to quickly explore the TPP markets, identify the business partners, build-up our capacity and evolve, and make a timely pathways into this liberalized regional networks.

Full text of ACCCIM Statement