Let’s do our part to help build Malaysia

Saying aye to the TPPA

Growing up within idyllic yet rugged surroundings nestled within mountainous jungles, I knew my adult years would pose different challenges. I knew I had to go out to a different world to pursue vibrant opportunities for both personal and career growth.

The journey wasn’t easy. Leaving family and the simplicities of village-life in the Kelabit highlands to pursue a degree at Universiti Sains Malaysia in Penang, then a Master’s degree at University of Warwick in the United Kingdom meant departing from what was easy and familiar. Adapting to new conditions, competing to excel in studies and then securing employment.

If there was one constant through the years, it was that fervent belief in competing in order to excel.

Many Malaysians would share this common struggle. With grit and determination, dire circumstances can usually be turned around. Add discipline and innovation, and we can certainly rise above these struggles and succeed. Remaining within our comfort zone would yield an opposite result. We would only have mediocrity to contend with. And we all know, nothing really thrives on mediocrity.

This very same notion is exactly why Malaysia needs to embrace the Trans-Pacific Partnership Agreement (TPPA) and compete. It is a chance for admission into the big leagues.

Malaysia’s total trade is roughly 150% of our GDP, which means we must continue to move with the times and embrace mechanisms to sustain and grow the momentum of trade. More importantly, the TPPA will be catalytic in helping our companies tap global opportunities and evolve from over-dependence on domestic markets and protectionism.

Over the last six years since Malaysia’s TPPA negotiations commenced in October 2010, discourse and debates have centred on whether it will truly benefit our country.

Looking at the larger picture, signing the TPPA has to do with how much of a net benefit it would offer Malaysia.

Malaysia isn’t entering the TPPA in isolation. There are 11 other signatories including Singapore, Brunei and Vietnam from this region. Thailand, Philippines and Indonesia are reportedly keen to join the next round of negotiations. These are countries we are competing with in this region on trade. Why would they be interested in the TPP? What do they see that we can’t?

It boils down to the answers to the following questions:

  1. Will Malaysia benefit by having free access to markets of other TPPA countries?
  2. What do we lose from not signing it?
  3. What is the price we pay if other competing trading partners are a part of it and we have to wait for the next round of negotiations?

Assessing the macroeconomic benefits of the TPPA to member countries, the World Bank in its Global Economic Prospect 2016 release highlighted that its model simulations suggest by 2030, the TPP will raise member country gross domestic product (GDP) by 0.4 percent to 10 percent. The GDP of countries with trade barriers like Malaysia and Vietnam could grow as much as 8 percent and 10 percent respectively by 2030 upon liberalisation.

Meanwhile PricewaterhouseCooper’s cost-benefit analysis on the impact of Malaysia’s participation in the TPP points out that export-oriented firms such as textiles, automotive components and electric and electronic players stand to benefit from increased market access with member countries.

PwC’s study also predicts potential increase in investments on the cards – an additional US$136 billion to US$239 billion between 2018 to 2027. The textiles sector is expected to lead investment growth in 2027, followed by the construction and distributive trade sectors.

There will naturally be adjustment costs to firms from increased competition and cross-sectoral TPPA obligations. These are however calculated trade-offs to enable our businesses to extend their reach to larger markets.

The Federation of Malaysian Manufacturers (FMM), along with several other business and trade associations and chambers have recently expressed their support for the TPPA.

“The business sector is confident that a first-mover advantage in the TPP would yield positive results given the uncertainties in the global trading environment”, said FMM president Datuk Saw Choo Boon.

Government has the responsibility to address concerns on the impact of a more open economy on local businesses. Safeguards on Bumiputra policy implementation, Government procurement and State Owned Enterprises were successfully negotiated and retained adequately. This is indeed in line with our Prime Minister’s directive that we will only participate in the TPPA as long as it clearly benefits Malaysia and protects our interests.

Since 2010, Minister of International Trade and Industry Dato’ Sri Mustapa Mohamed and his team have diligently held over 50 briefings to the Parliamentary Caucus on TPPA and Cabinet, each time taking back all concerns raised to the negotiation table. It isn’t surprising that Malaysia almost got the boot from negotiations due to an extensive list of demands. Much of these demands have been admitted into our agreement and there has to be a positive outcome for all that back-breaking work.

Today we stand on the brink of ratifying the TPPA, to finally seal the decision whether it will be an aye or nay for Malaysia. Commencing tomorrow, there will be a special three-day sitting in Parliament for our lawmakers to debate and vote on the TPP bill before the final decision is made by the Senate on Thursday. Make no mistake, this decision will have real impact on the long term sustainability of our competitiveness in global trade.

Here I wish to return to my earlier point about many Malaysians who have always known that being competitive facilitates growth. It is possible to hold ourselves to higher standards and excel. This is both the opportunity and challenge that the TPPA presents to us.

Signing the agreement will not only enhance market access and open up new opportunities, it does the very things that our country actually needs as we move towards our high income aspirations by 2020 and beyond – a catalyst to spur productivity, innovation and competitiveness, as well as to improve governance.

Let us not confuse the TPPA as the singular solution for all of Malaysia’s woes. This is just the beginning in our quest to a more resilient business and trade environment for Malaysia. Let us not be left behind. Malaysia has been playing catch up for too long. We need to stop dribbling and score!

And thus, my vote is an aye to the TPPA! Malaysia, we can do this!

The Colombian experience

During my time at Shell in Holland some 25 years ago, I made visits to the Colombian cities of Bogota and Cartagena for work purposes. At the time, it struck me that the country was still grappling with the throes and challenges of poverty typical of third world countries. Owing to many years of armed conflict, these struggles were very real and it was played out right there on the streets for all to see.

A few weeks ago, at the invitation of the Colombian government, I made a visit to Bogota. Recalling what I previously witnessed, I embarked on the 30 hour journey with much trepidation at heart.

Upon arrival, I was happy to note that in 25 years Bogota had changed a lot for the better, demonstrating visible signs of progress in the city. This transformation provided a refreshing perspective, allowing also for a better outside-in view of our own journey as a country.

The Colombians, highly impressed with Malaysia’s national transformation programme, reached out for us to share this experience at a conference to mark the Colombia National Competitiveness Report launch. I was given a standing ovation after my presentation. On the other hand, Malaysia has a few lessons from Colombia too.

Two points that I would like to share from my recent visit is the thriving bus rapid transit system in Bogota, and their take on the Trans-Pacific Partnership Agreement (TPPA).

I was enthralled that Colombia had become one of the world’s examples for the Bus Rapid Transit (BRT), pulling it off in a setting as dense as Bogota, which is home to more than 7 million people.

In a tight urban sprawl choking with motorists fighting for space on roads – not dissimilar to Kuala Lumpur – setting up a dedicated lane for buses means less space for cars and it certainly did not go down too well.

But today, Bogota’s BRT stands as a global benchmark in deploying a cost-effective and efficient urban mass transit option. And they did this ahead of us.

Upon reflection, we have been talking about a similar model for the last six years but breakthrough only came with the commencement of the elevated Sunway BRT Service in June 2015. Being an elevated BRT obviously means additional cost, however, it is still ground-breaking. For the first time, Malaysians have the opportunity to sample the convenience of the BRT system in a larger scale. In short, no traffic jams and on-the-dot punctuality.

This pilot BRT system has been part of the Government’s prioritisation to introduce more solutions for numerous public transportation issues. Amongst which is to develop a similar model for the Federal Highway.

The initial idea to develop the Federal Highway BRT was met with a usual chorus of critics. Many felt that reducing road space for cars on the crowded highway would not work. Some lobbied for an elevated highway, but where is the sense in that? Not only will the design and structure of such a highway jack up costs significantly, it is counter-productive.

Having elevated highways in congested areas would simply shift the problem by creating more bottlenecks instead of addressing it. This does not help to reduce the number of cars on the road by 2020 with urban public transport having a modal share of 40% or more. To do that, we need radical, proven and acceptable solutions.

Upon conclusion of relevant studies and public syndication, the Cabinet has given the green light for work on the Federal Highway BRT to begin.

My second observation during the trip involves the Trans-Pacific Partnership Agreement (TPPA). At the conference, Minister of Commerce, Industry and Tourism, Cecilia Alvarez Correa presented the country’s position of good economic growth although challenges prevailed in global competitiveness.

Here she chided the country’s private sector for their fickleness in adopting the TPPA. Having caused the Government to miss the first round of negotiations on concerns of losing to foreign competitors, these same voices of dissent is now accusing the Government of not liberalising to facilitate competitive Colombian exports. It was sad, she said, that Colombia had missed that chance and Malaysia was fortunate to be one of 12 countries that have reached the final stage.

Reaching the finishing line was arduous. The Prime Minister had made it abundantly clear that the TPPA would only be negotiated on our terms, which would serve us as an exporting nation, as well as providing competitive opportunities for Bumiputera and state-owned enterprises.

I understand, as a matter of fact, that Malaysia came very close to being ejected because we had demanded too much. Yes Dato’ Sri Mustapa and his team were tough as nails, doing a very, very good job in presenting our case in convincing the 11 countries to accept our demands. Tirelessly, they delivered about 50 briefings to Cabinet throughout the years.

Now that we are at the critical juncture of getting it passed in Parliament, the threat comes in the form of those looking at the matter from a ‘protectionist’ lens.

We are a nation whose total trade is 150% of our GDP. We do not really have the option of backing down but instead to see this is a coveted opportunity to increase trade.

Opposing the TPPA will only cut us at the knees in the long term. Take oil palm, for example. We are the second largest CPO producer, with Indonesia in the lead. They are not part of the deal, we are. With this deal, all 11 countries are open to us without import duties or levies, not Indonesia. Do you see the competitive edge if we sign? We would be in a clear advantage.

In determining the way forward, these are the questions we should weigh:

  1. How can Malaysia benefit as much from the fact that we have free access to those markets? There are many countries that are not signatories and now we have full access with no levies. Doesn’t this put us in a stronger position to drive up trade and gain from it?
  2. What do we lose from not signing it? Can you imagine the price we have to pay if other competing trading partners are a part of it and we have to wait for the next round of negotiations?

Becoming globally competitive creates strong, resilient companies. There is much to be gained by breaking away from the shackles of myopia and protectionism.

It was a rare opportunity to present Malaysia’s success to the Colombians, and that too to an appreciative crowd. The last thing I expected from the audience of about 500 people – from their public and private sectors – was a standing ovation.  It was a remarkable and heart-warming moment for our country and our achievements because none of the other 19 speakers received this honour. The Malaysia story had captured both their imagination and hearts.

Although there is plenty of room to improve in Malaysia, my Colombian experience proves that we have recorded good strides as a young nation, and to those who strive for such progress, our experience sets a fine example as we continue to build a better Malaysia for all.

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