POSITIVE SPILLOVER
MALAYSIA will gain greatly from the revived trade pact involving 11 Asia-Pacific nations, which is set to be signed in March. The pact will also liberalise trade and boost growth in the region, say analysts.
MALAYSIA’S economy will stand to gain tremendously from the revived trade pact involving 11 Asia Pacific countries, which is set to be signed in March, said economists.
The pact, comprising the original member economies of the Trans-Pacific Partnership (TPP) with the exception of the United States, will liberalise trade and boost growth in the region, they said.
Spillover gains include creating jobs, alleviating poverty, raising income, boosting innovation and accelerating productivity, said Asian Research Institute of Banking and Finance director Dr Irwan Shah Zainal Abidin.
Japan announced late on Tuesday that negotiators from 11 TPP member economies agreed to sign a free-trade deal without the US in Chile on March 8.
The deal has been dubbed TPP-11 or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The agreement came after two days of talks ended in Tokyo, capping off a series of formal and informal discussions to salvage the original TPP after the US pulled out early last year.
“As Malaysia is now on course towards a new vision called the National Transformation 2050 (TN50), the CPTPP will be a new catalyst in transforming the economy further, especially in the area of digital economy,” said Irwan Shah.
He said CPTPP will help improve regulations in the areas of governance, labour and environment among member countries. This can help tackle some critical issues affecting the Malaysian economy, such as corruption, transparency, wage growth and environmental degradation.
“For Malaysia, it will be another milestone in transforming the economy and preparing the economy for the future,” Irwan Shah added.
Sunway University’s Dr Yeah Kim Leng said while the net benefits from TPP-11 will be lower without the US, it was still positive for open and trade-dependent economies like Malaysia.
“The successful deal will also assuage investors’ sentiments that have been negatively affected by US President Donald Trump’s protectionist policies and his pushback against globalisation and regional trade agreements,” he added.
Maybank Investment Bank Bhd group chief economist Suhaimi Ilias said Malaysia would also benefit from Japan now being the biggest economic power in the new trade pact.
“Malaysia already has some RM70 billion worth of foreign direct investment from Japan, as outlined during Prime Minister Datuk Seri Najib Razak’s keynote address on Tuesday.
“The record shows that some 65 per cent of our trade is with countries that we already have trade agreements, so I won’t be surprised if our trade will grow bigger with Japan on the back of the new TPP,” he said at the Invest Malaysia 2018, here, yesterday.
Suhaimi added that since Trump’s administration would only last between four and eight years, there was the possibility of US joining the TPP-11 later.
Japan’s Economic Revitalisation Minister Toshimitsu Motegi said in Tokyo on Tuesday that Japan would explain to the US about the significance of TPP to woo it back to the trade pact.
Japan hopes the TPP-11 will go into effect in early next year.