KUALA LUMPUR: THE Trans Pacific Partnership (TPP) is an important initiative for Malaysia to expand its market access opportunities and enhance its competitive advantage, says the Malaysian International Chamber of Commerce and Industry (MICCI).
It serves to build investor confidence and attract foreign investment into the country as well as build capacity through free-trade agreements (FTA).
“To ensure that Malaysia continues to gain market access internationally and remain an attractive location for foreign investment, the country needs to pursue bilateral and regional trading arrangements,” said MICCI president, Datuk Wira Jalilah Baba, in a statement today.
As a relatively small but active economy, Malaysia continuously seeks new and greater market access for its goods and services by creating a more liberalised and fair global trading environment.
FTAs play a key role in regional integration. The agreement is being negotiated by 12 countries including Malaysia. The others are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, US and Vietnam.
The successful conclusion of the TPP is anticipated to open an unprecedented market of 793 million people, with a combined gross domestic product (GDP) of US$27.5 trillion – far surpassing the limited domestic market of 29.5 million people and a GDP of US$300 billion in Malaysia.
In addition to benefiting Malaysian companies that export to FTA partner countries, TPP offers a greater advantage to Malaysia as it covers nearly 40 per cent of the global economy.
“This would allow local products better access to countries that Malaysia does not have FTAs with, such as the the United States, Canada, Mexico and Peru.”
With the TPP Malaysia could serve as a base of operations for foreign companies in non-TPP countries as well.
Likewise, Malaysia will also be able to participate as an important link in the whole regional supply chain.
In the long run, the TPP is anticipated to bring benefits of lower cost of goods and more efficient production by taking advantage of the competition and economies of scale.
“With the TPP, Malaysia will be able to go on the offensive and take advantage of new international markets.
“We will also continue to be an integral part of the deepening economic integration taking place within the Asia Pacific region, and engage more tangibly with important trade partners such as the US, Canada, Mexico and Peru, with whom we currently do not have any structured framework or trade agreements,” she added.
She said, a satisfactory conclusion of the TPP could pave the way for similar FTAs in future, such as the EU-Malaysia FTA.
“The TPPA is representative of modern trade agreement thinking, and as such, Malaysia should not shy away from measuring itself against this yardstick.
“Moving away from ‘developing nation’ towards ‘developed nation’ means relying less on preferences granted and more on competitive access to global markets – this is what the TPP and future FTAs will bring.”