PETALING JAYA: Fresh from his controversial appointment as international trade and industry minister, Tengku Zafrul Aziz now has another political hot potato on his hands – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Even before he can settle into the Miti hot seat, Tengku Zafrul has to grapple with a growing tide of opposition to the CPTPP.
Malaysia ratified the CPTPP on Sept 30, 2022, becoming the ninth out of eleven countries to ratify the agreement. The other signatories are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, and Vietnam.
His predecessor, Azmin Ali, had announced on Oct 6, four days before parliament was dissolved, that the CPTPP will come into effect for Malaysia on Nov 29.
Critics who oppose the free trade agreement (FTA) say the ratification should not have been rushed prior to parliament’s dissolution.
They argue that since a new government is now in place, it is vital for it to relook the CPTPP and its implications. And they expect Zafrul, as the minister overseeing international trade agreements, to take the lead role in re-evaluating Malaysia’s participation in CPTPP.
Groups and prominent individuals opposing the trade agreement have coalesced under Gabungan Kedaulatan Negara (GKN) – a platform comprising 143 civil society organisations, economists, labour groups, experts, and individuals.
This coalition sent a memorandum to new Prime Minister Anwar Ibrahim on Nov 25 urging him to retract Malaysia’s ratification of the CPTPP.
Among the signatories were prominent economist Jomo Kwame Sundaram, former Klang MP Charles Santiago, former Petaling Jaya MP Maria Chin Abdullah, and most tellingly, Anwar’s own daughter Nurul Izzah Anwar, the former Permatang Pauh MP.
In addition, 57 NGOs also supported this memo including the Malaysian Medical Association (MMA), Consumers’ Association of Penang (CAP), and the Malay Chamber of Commerce Malaysia.
Workers unions have signed on as well, representing sectors including banks, plantations, textile, electronics, air travel and rail.
The GKN expressed disappointment that the ratification was done without extensive feedback from the public and that the cost-benefit analysis (CBA) of joining CPTPP was not debated in parliament.
It added the CBA done was “too narrow and biased” towards benefits from export and investment, and did not deep dive into the costs and risks of joining CPTPP.
However, there are opposing views on both sides of the CPTPP aisle. The Malaysian Consortium of Mid-Tier Companies and the Federation of Malaysian Manufacturers (FMM) were against the call for the government to withdraw from the CPTPP.
Think tank, Institute for Democracy and Economic Affairs (IDEAS) also warned against withdrawing Malaysia from the CPTPP as advocated by certain groups.
Its CEO Tricia Yeoh said, “A U-turn now would severely impact Malaysia’s international credibility, and could possibly scare off foreign investors who above all crave stability in a partner country.”
In response, Third World Network executive director Chee Yoke Ling told FMT Business there is a certain hysteria in statements made that withdrawal from the CPTPP will be “disastrous for the economy”.
She said Malaysia’s export market shares and supportive foreign investment climate remain intact and will continue without being a party to CPTPP.
“We are still bound by the rules of the World Trade Organization (WTO) and many other regional trade and investment agreements.
“The CBA expressly states it did not include potential economic impact on consumers and did not address national strategic interests, such as social welfare and security. The CBA also left out impact on agriculture and food security,” said Chee, who with Third World Network, are signatories to the GKN memo to Anwar.
Sunway University economics professor Yeah Kim Leng said that Tengku Zafrul will have to deal with the objections to CPTPP and address all the concerns raised.
He added that the best move forward was to get PriceWaterhouseCoopers (PWC), appointed by Miti to conduct the CBA, to revisit some of the objections and concerns, and perhaps have a third party to ascertain these concerns and rebut them properly.
“He (Tengku Zafrul) will have to deal with the CPTPP and Regional Comprehensive Economic Partnership (RCEP), as trade competition will intensify and because trade opportunities will be there for Malaysia’s taking,” Yeah told FMT Business.
RCEP is an FTA between the 10 Asean nations and its five FTA partners – China, Japan, Australia, New Zealand and South Korea.
Tengku Zafrul may well have to employ a new communications team if he’s to diffuse the CPTPP timebomb.
Center for Market Education CEO Carmelo Ferlito said Tengku Zafrul will face internal resistance and opposition to the trade agreement.
“This will imply he will have to deploy a communications campaign that is able to explain how Malaysia can benefit from the agreement,” he told FMT Business.
Ferlito believes in the long term it would be better for Malaysia to be a party to CPTPP.
“Malaysia may suffer from more aggressive competition from other countries, but this could become a push towards modernisation and help Malaysia make steps in the right direction.” - FMT
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