Version : Jan 2023
The CPTPP was signed by all 11 participating countries on March 8, 2018. Malaysia ratified the CPTPP on September 30, 2022, and the agreement took effect in the country on November 29, 2022.
The agreement aims to enhance regional economic integration and has significant implications for state-owned enterprises and government procurement, which are key areas of concern for Malaysia.
Benefits of CPTPP for Malaysia
The CPTPP is expected to provide improved market access for goods and services exports to Malaysia, including through new government procurement opportunities. The agreement removes 95% of tariffs between its 11 members, providing Malaysian businesses with much greater access to new markets.
The CPTPP also promotes exports of services, including through mutual recognition of professional qualifications, licensing, or registration, which will facilitate greater regulatory alignment among the CPTPP countries. The agreement is expected to boost economic growth, create and preserve employment, enhance innovation, productivity, and competitiveness, elevate living standards, diminish poverty, and promote transparency, good governance, and improved labor and environmental protection.
Concerns
While the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may offer potential benefits, critics express concerns about its impact on Malaysia, particularly in areas such as labor empowerment, state-owned enterprises, and government procurement. They argue that the CPTPP could pose risks to Malaysia’s economic growth and socio-political-economic structure, especially considering the country’s multi-ethnic society.
Critics fear that the benefits of the CPTPP may not be evenly distributed among different communities in Malaysia, potentially exacerbating social and economic disparities. While the agreement could boost big businesses and certain sectors, it might also harm others, particularly smaller businesses and certain communities.
State-owned enterprises (SOEs), which play a significant role in the Malaysian economy, could be affected by the CPTPP’s provisions. Critics argue that these provisions could limit the preferences that SOEs can give to local small and medium-sized enterprises (SMEs), potentially hindering their growth.
Moreover, critics worry about the potential increase in imports due to the CPTPP, which could outpace the increase in exports, leading to a trade deficit. This could negatively impact Malaysia’s economy.
They also express concerns about the investor-state dispute settlements provision in the CPTPP, which allows foreign investors to sue the government of the country they are investing in. Critics argue that this could potentially lead to situations where the interests of foreign investors are prioritized over the interests of the local population.
Recommendations
Considering the potential advantages and concerns associated with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), it is essential to regularly evaluate its impact on Malaysia.
To maximize the economic potential of all sectors, particularly those less developed, it is recommended to prioritize capacity-building activities. These activities should also aim to uphold high environmental and labor standards.
Balancing the potential benefits of increased market access and economic growth with the protection of local industries and the maintenance of socio-economic stability is crucial.Furthermore, it is recommended to establish support programs to assist small and medium-sized enterprises (SMEs) in leveraging CPTPP export opportunities.Learning from the implementation experiences of other CPTPP members, especially on contentious issues, can provide valuable insights.
Lastly, the CPTPP review process should be utilized to refine the agreement based on its impacts and public feedback. This will ensure that the benefits of the agreement are maximized while minimizing any potential negative effects.