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FMM PRESS STATEMENT: Building and Enhancing Resilient Supply Chains through Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Kuala Lumpur, September 7, 2021. Recognising the economic and strategic importance of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a multilateral free trade agreement formerly known as the Trans-Pacific Partnership (TPP), CPTPP leaders of 11 nations signed the agreement on March 8, 2018 in Santiago, Chile. The Agreement, which provides a market of over 500 million people with combined GDP of US$10.7 trillion have entered into force for Australia, Canada, Japan, New Zealand, Mexico, Singapore and Vietnam while Peru has become the eighth member country to ratify the Agreement last month.

Since the onset of the COVID-19 pandemic early last year up until now, businesses have witnessed the impact of the pandemic and the economic disruptions resulting from the movement control orders introduced to contain the COVID-19. As world economies continue to ramp up efforts for economic recovery, it is therefore important for Malaysian businesses to leverage on CPTPP as COVID-19 business recovery tool to boost trade as the CPTPP is expected to open up another three countries that Malaysia currently has no FTAs with namely Canada, Mexico and Peru. The three markets collectively represent a population of over 199 million with a combined GDP of US$2,921 billion i.e., 8.6 times bigger than our own economy.

Noting that the Agreement is expected to eliminate tariffs of current Malaysian exports to CPTPP countries and allow Malaysian businesses to supply goods (parts & components and raw material) for global supply chain and involve in domestic supporting services, the Agreement also provides the opportunity for exporters to tap into the supply chains of other CPTPP countries. With Malaysia’s graduation from the General System of Preferences (GSP) in 2014, Malaysian exporters are currently paying higher duties for their exports to Canada. In addition, the current high protective regime and non-tariff barriers imposed currently by Mexico and Peru may not be beneficial to Malaysian exporters. As such, CPTPP is expected to provide the needed leverage as zero or reduced duties, manufacturers will have a better opportunity to export to Mexico and further access the US market under the North American Free Trade Agreement (NAFTA). According to the Department of Statistics Malaysia, Malaysia’s total trade last year with these three economies amounted to US$4.317 billion with exports of US$3.087 billion and imports of US$1.23 billion.

The Federation of Malaysian Manufacturers (FMM) is a strong advocate of Free Trade Agreements (FTAs) and FTAs such as the CPTPP once ratified will contribute significantly to strengthening Malaysia’s global supply chain. With the recent United Kingdom’s accession to CPTPP coupled with the announcement of interest from other countries such as Indonesia, South Korea, Thailand and the Philippines, we firmly believe that the early ratification of CPTPP would assist Malaysian exporters to secure preferential market access within CPTPP countries to remain competitive over our regional competitors and helps to build investor confidence in Malaysia during this time of uncertainty.

Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers

About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 10,000 member companies (3,000 direct and 7,000 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.

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