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FMM: CPTPP must be ratified at the earliest date possible

FMM In The News: THE SUN DAILY, Petaling Jaya, Thursday, July 26, 2022 - The Federation of Malaysian Manufacturers (FMM) believes the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at the earliest date possible will contribute to Malaysia's pandemic recovery.

As four years have passed since the agreement was signed by Malaysia in March 2018, Malaysia cannot afford to further delay the ratification of the CPTPP or run the risk of being relegated to the sideline.

FMM president Tan Sri Soh Thian Lai said the relocation of Malaysia 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 applications to be members last year while the UK is in the process of the CPTPP accession negotiation. 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, any delay or non-participation in the CPTPP would result in opportunity cost for Malaysia and the extensive safeguards secured would be forgone,” warned Soh.

He noted that there are challenges in implementing the CPTPP across different parties, but is confident that Malaysia's interest is safeguarded through the carve-outs and suspended provisions in the agreement and added advantages to protect domestic interests.

The findings of the Cost and Benefit Analysis conducted on the CPTPP revealed that CPTPP presents net economic benefits to Malaysia and that it must be ratified at the earliest date possible.

Soh said CPTPP offers market access opportunities to three new countries which Malaysia has no free trade agreements with.

“Based on the 2021 data from World Bank, the three new markets namely Canada, Mexico and Peru collectively represent a population of over 200 million with a combined GDP of over US$3.5 trillion, which is 9.4 times bigger than our economy. In addition, it allows wider sourcing channels for raw materials at competitive prices for businesses in Malaysia and this directly improves Malaysia's competitiveness and attractiveness as an investment destination,” he said in a statement today.

Malaysia along with Brunei, Singapore and Vietnam are the only four countries in Asean participating in the CPTPP. He added, unfortunately, Malaysia now lags behind its Asean neighbours in expanding global market share due to the delay in ratifying the agreement.

“Vietnam, for instance, is ahead of Malaysia in this aspect as it has already ratified and implemented the CPTPP in January 2019 and within that year has significantly increased its exports to Canada, Mexico and Peru by 29.7% and overall exports growth of 8.5%. In addition, Vietnam has also benefited greatly from foreign direct investments (FDI) from the CPTPP countries which accounted for US$39 billion or 24.2% of the total FDI into the country in 2019. It also contributed significantly to trade recovery during the pandemic,” added Soh.

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