Early ratification of CPTPP vital to economy: FMM

Manufacturers group says move will help drive growth and exports during post-pandmemic recovery period

PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) believes that the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will greatly contribute to Malaysia’s post-pandemic recovery as it is expected to intensify and diversify Malaysian manufactured exports.

FMM president Tan Sri Soh Thian Lai said at present, Malaysia is among four countries alongside Brunei, Chile, and Peru which have not ratified CPTPP. It noted that the government is still engaging Federal ministries and agencies as well as the state governments and the Attorney-General’s Chambers to ratify the CPTPP.

“FMM is a strong advocate of the CPTPP, which we view as one of the more important new free trade ageements (FTAs) expected to provide competitive edge over our regional competitors and build investor confidence in Malaysia. Comprising 11 countries, the CPTPP will contribute significantly towards improving market access, expanding exports, increasing economic activity and enhancing employment,“Soh said in a statement.

While it is aware that there is no deadline for Malaysia to complete the domestic process to enable the ratification of the agreement, FMM believes that the ratification of the CPTPP at the earliest date possible will enhance market access into countries such as Canada and Latin American countries particularly Mexico as these countries currently impose high tariffs for electrical components, telecommunication devices and consumer electronics.

In addition, the ratification of the CPTPP will boost exports for the electrical and electronics industry which has been a key contributor to Malaysia’s export earnings; provide an advantage to nitrile glove manufacturers over China in exports to Canada; assist the textile industry to increase its exports by 20% with the elimination of duties on textiles in the CPTPP countries; as well as assist Malaysian automotive parts and components manufacturers to export to global OEMs located in the CPTPP countries.

“We also look forward with equal anticipation to the successful conclusion of other important FTAs in particular the Regional Comprehensive Partnership Agreement and the Malaysia-EU Free Trade Agreement. As an open economy dependent on trade and investment to sustain and grow the GDP, we welcome the significant commercial and strategic benefits that these FTAs would bring especially during this critical period,“said Soh.

The impact of Covid-19 has emerged as the top risk to global trade flows as it affects both supply and demand of goods. The manufacturing sector has been hit hard with production and supply chains of most companies being on a near standstill due to the movement control orders and this has severely impacted economic and trade activities.

“Given that Malaysian manufacturers in general were only allowed to resume operations at full capacity in early May 2020, FMM envisages that business recovery including export activities would only start from six months onwards as Malaysian businesses gradually adapt to the new norm in dealing with Covid-19. Looking at the current situation, it is imperative to stabilise the manufacturing production while further expanding market access for Malaysian exports,“added Soh.