KUALA LUMPUR – Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, has made it clear that while the Trans-Pacific Partnership (TPP) was, at least for now, off the table, Malaysia was “in no hurry to bury the agreement”.
Malaysia has been one such country which, while being disappointed by the US withdrawal from the TPP, has come to terms with what many Asian leaders describe as the “ground realities”.
“The coming meeting of the trade ministers of the Asia-Pacific Economic Cooperation (Apec) in May in Vietnam will also discuss this issue and provide the direction for the future course on the TPP.
“The TPP was pursued by us because Malaysia did not have a free trade agreement (FTA) with the US,” said the minister in an exclusive interview with Bernama recently.
The TPP would have given Malaysia an opportunity to enhance its trading and investment ties with the US.
“We already have FTAs with eight TPP-member countries. Frankly, we believe that President Donald Trump will not change his position (on TPP),” he said.
Mustapa also spoke about the Regional Cooperation Economic Partnership (RCEP) which China is now pushing after the Trump administration announced that it was withdrawing from the TPP.
Though China presently seems to be taking the lead in pushing the RCEP, it is by no means a China-led initiative. Indeed, the RCEP was initiated by the Asean group.
“RCEP is not China-led … also, the RCEP will not affect us because we already have a FTA with China,” Mustapa said, when asked if RCEP would not, primarily, serve China’s interest and allow it to dump its products on markets of the other member states.
Mustapa also pointed out that the RCEP had an embedded mechanism aimed at checking dumping of products on other markets.
“Besides, RCEP will also facilitate inflow of investments from China into Malaysia,” he said.
The creation of the Asean Economic Community (AEC) at the end of 2015 generated some interest in many countries of the world.
The AEC, with its strong regional focus, can serve many foreign companies as a vehicle to launch their expansion within the community.
US companies have also been doing this since some time.
Malaysia, Mustapa said, offered a good base for foreign companies to expand their operations within the AEC.
“Malaysia does have a good infrastructure and offers good connectivity with other member countries,” he said.
While US companies are passing through uncertain times, unsure of the future course of the Trump administration, many pundits say that Trump’s election campaign rhetoric — he had said that he would urge all US companies to create more jobs in the US and also bring back their manufacturing operations to their own country — was not fully enforceable.
They point out that the administration and the private sector have different interests.
The private corporate sector operates, however, on the principles of market economy.
The administration could not force its dictates on the private sector.
“Trump’s policy (of recalling US firms home) will not be fully implemented.
The US companies are well-entrenched here and are a firm part of the supply chain,” Mustapa said.
In 2016, the seven top leading investing nations in Malaysia were the US, The Netherlands, China, Japan, Singapore, South Korea and the UK.
These countries, according to the latest figures compiled by Malaysia Investment Development Authority (MIDA) together accounted for some 55.8 per cent of the total foreign investments approved in Malaysia’s manufacturing, services and primary sectors.
The US is among the top five largest buyers of Malaysia’s electrical and electronic products, including parts and components.
These products form the single largest product category being exported by Malaysia.
Mustapa also spoke about Malaysia’s “attractive attributes” as a regional or global operations base for multinational corporations (MNCs).
The country is being increasingly used as a principal hub that allows faster decision-making and supports evolving supply chain trends. Indeed, 2016 saw MIDA approve a total of 13 new principal-hub projects with a combined investment of RM13.8 billion.
Some of the international corporate players that received approval included Ansell Global Trading Centre, IMI Engineering, Nestrade, IOI Corporate Service, McDermott Asia Pacific, etc.