23 January, 2016 by Idris Jala
Growing up within idyllic yet rugged surroundings nestled within mountainous jungles, I knew my adult years would pose different challenges. I knew I had to go out to a different world to pursue vibrant opportunities for both personal and career growth.
The journey wasn’t easy. Leaving family and the simplicities of village-life in the Kelabit highlands to pursue a degree at Universiti Sains Malaysia in Penang, then a Master’s degree at University of Warwick in the United Kingdom meant departing from what was easy and familiar. Adapting to new conditions, competing to excel in studies and then securing employment.
If there was one constant through the years, it was that fervent belief in competing in order to excel.
Many Malaysians would share this common struggle. With grit and determination, dire circumstances can usually be turned around. Add discipline and innovation, and we can certainly rise above these struggles and succeed. Remaining within our comfort zone would yield an opposite result. We would only have mediocrity to contend with. And we all know, nothing really thrives on mediocrity.
This very same notion is exactly why Malaysia needs to embrace the Trans-Pacific Partnership Agreement (TPPA) and compete. It is a chance for admission into the big leagues.
Malaysia’s total trade is roughly 150% of our GDP, which means we must continue to move with the times and embrace mechanisms to sustain and grow the momentum of trade. More importantly, the TPPA will be catalytic in helping our companies tap global opportunities and evolve from over-dependence on domestic markets and protectionism.
Over the last six years since Malaysia’s TPPA negotiations commenced in October 2010, discourse and debates have centred on whether it will truly benefit our country.
Looking at the larger picture, signing the TPPA has to do with how much of a net benefit it would offer Malaysia.
Malaysia isn’t entering the TPPA in isolation. There are 11 other signatories including Singapore, Brunei and Vietnam from this region. Thailand, Philippines and Indonesia are reportedly keen to join the next round of negotiations. These are countries we are competing with in this region on trade. Why would they be interested in the TPP? What do they see that we can’t?
It boils down to the answers to the following questions:
- Will Malaysia benefit by having free access to markets of other TPPA countries?
- What do we lose from not signing it?
- What is the price we pay if other competing trading partners are a part of it and we have to wait for the next round of negotiations?
Assessing the macroeconomic benefits of the TPPA to member countries, the World Bank in its Global Economic Prospect 2016 release highlighted that its model simulations suggest by 2030, the TPP will raise member country gross domestic product (GDP) by 0.4 percent to 10 percent. The GDP of countries with trade barriers like Malaysia and Vietnam could grow as much as 8 percent and 10 percent respectively by 2030 upon liberalisation.
Meanwhile PricewaterhouseCooper’s cost-benefit analysis on the impact of Malaysia’s participation in the TPP points out that export-oriented firms such as textiles, automotive components and electric and electronic players stand to benefit from increased market access with member countries.
PwC’s study also predicts potential increase in investments on the cards - an additional US$136 billion to US$239 billion between 2018 to 2027. The textiles sector is expected to lead investment growth in 2027, followed by the construction and distributive trade sectors.
There will naturally be adjustment costs to firms from increased competition and cross-sectoral TPPA obligations. These are however calculated trade-offs to enable our businesses to extend their reach to larger markets.
The Federation of Malaysian Manufacturers (FMM), along with several other business and trade associations and chambers have recently expressed their support for the TPPA.
“The business sector is confident that a first-mover advantage in the TPP would yield positive results given the uncertainties in the global trading environment”, said FMM president Datuk Saw Choo Boon.
Government has the responsibility to address concerns on the impact of a more open economy on local businesses. Safeguards on Bumiputra policy implementation, Government procurement and State Owned Enterprises were successfully negotiated and retained adequately. This is indeed in line with our Prime Minister's directive that we will only participate in the TPPA as long as it clearly benefits Malaysia and protects our interests.
Since 2010, Minister of International Trade and Industry Dato’ Sri Mustapa Mohamed and his team have diligently held over 50 briefings to the Parliamentary Caucus on TPPA and Cabinet, each time taking back all concerns raised to the negotiation table. It isn’t surprising that Malaysia almost got the boot from negotiations due to an extensive list of demands. Much of these demands have been admitted into our agreement and there has to be a positive outcome for all that back-breaking work.
Today we stand on the brink of ratifying the TPPA, to finally seal the decision whether it will be an aye or nay for Malaysia. Commencing tomorrow, there will be a special three-day sitting in Parliament for our lawmakers to debate and vote on the TPP bill before the final decision is made by the Senate on Thursday. Make no mistake, this decision will have real impact on the long term sustainability of our competitiveness in global trade.
Here I wish to return to my earlier point about many Malaysians who have always known that being competitive facilitates growth. It is possible to hold ourselves to higher standards and excel. This is both the opportunity and challenge that the TPPA presents to us.
Signing the agreement will not only enhance market access and open up new opportunities, it does the very things that our country actually needs as we move towards our high income aspirations by 2020 and beyond – a catalyst to spur productivity, innovation and competitiveness, as well as to improve governance.
Let us not confuse the TPPA as the singular solution for all of Malaysia’s woes. This is just the beginning in our quest to a more resilient business and trade environment for Malaysia. Let us not be left behind. Malaysia has been playing catch up for too long. We need to stop dribbling and score!
And thus, my vote is an aye to the TPPA! Malaysia, we can do this!
(Datuk Seri Idris Jala is CEO of Pemandu, the Performance Management and Delivery Unit. Fair and reasonable comments are most welcome at email@example.com)