Ratify CPTPP or lose out to Vietnam, Malaysia told

Malaysia’s infrastructure and port facilities are one of its advantages over Vietnam. (Bernama pic)

KUALA LUMPUR: A trade advocacy group has warned that Malaysia will become less attractive than Vietnam to foreign investors if Putrajaya doesn’t promptly ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Asian Trade Centre executive director Deborah Elms said Malaysia had to act quickly because many companies were already relocating out of China.

“Businesses are thinking where they are going to put their factories for the next decade or two,” she said.

Elms, speaking to FMT at the venue of an economic seminar here, referred to Vietnam as Malaysia’s closest competitor among CPTPP member countries, given that the likes of Singapore and Japan aren’t its rivals in the manufacturing sector and Chile is too far from the region.

“If Malaysia opts out of the CPTPP, investment dollars headed for Malaysia or which would have been split between Vietnam or Malaysia will go to Vietnam. Once those factories go to Vietnam, they will not move.”

She said Malaysia had many advantages over Vietnam, citing its better infrastructure and port facilities, more skilful labour and deeper experience in electronics, engineering and the automotive industry. She also mentioned the more pervasive use of English in Malaysia.

However, she said, CPTPP would change the game because of the huge tariff benefits to member countries.

“In some countries, the tariff for shampoo, for example, goes down by 10% immediately. For cotton shirts, it goes down 20%. This opens the door for Malaysian producers to enter these markets.

“This also applies to exporters. Malaysian producers will also be able to export food to Japan, which will open its food markets for the first time.”

Recently, Prime Minister Dr Mahathir Mohamad said Malaysia was still weighing the pros and cons of ratifying the CPTPP.

Economist KS Jomo as well as Pakatan Harapan backbenchers Nurul Izzah Anwar, Wong Chen and Charles Santiago have said they would be against Malaysian ratification.

Jomo, a former member of the Council of Eminent Persons, said the trade benefits to Malaysia would be meagre. He also said the provisions for enhanced intellectual property rights and investor-state dispute settlement (ISDS) would fetter Malaysian economic prospects.

Nurul, Wong and Santiago said the ISDS would allow foreign investors to skirt national laws and challenge governments at arbitration tribunals to demand high compensation. -FMT