January 26, 2016
TPPA–The United States wins, the rest are along for the party
by Hafidz Baharom
He is no Economist, just a misguided Huddudist
It is not surprising that PAS chief Dato’ Seri Abdul Hadi Awang decided to say that the Chinese would benefit from the Trans-Pacific Partnership Agreement (TPPA). What is surprising is the fact that it took him this long to say it.
The truth is, no race will benefit more than the other come the TPPA, be they Chinese, Malay, Indian or the Sabahan and Sarawakian indigenous peoples. What Hadi points out is because the Chinese control big business, therefore they will emerge benefiting from the agreement.
Also, a fallacy. The question of who will benefit from this trade deal is answered simply by who can compete on a global scale. It can be state-owned companies, developers and even construction magnates all alike, regardless of race.
Malaysia may need his help soon
But it won’t be small and medium entrepreneurs not the micro businesses. In fact, news reports now say 30% of the Malaysian SMEs may have to shut down, salaries will see no drastic rise and even question whether our GLCs, such as Telekom Malaysia (TM), can compete with incoming competitors from America in the telco sector.
As one source pointed out, TM makes RM10 billion largely from their Unifi service with a staff of 26,000 and even had to sell off their African business after the market opened. Would the state broadband giant see itself reduced to fourth place with the entry of companies such as Verizon, T-Mobile and even Sprint from America?
In fact, with our ringgit devalued (so Bank Negara constantly points out) to the point that it’s now a 4:1 spending ratio to America and a 3:1 ratio to Singapore and Brunei, do Malaysian companies have access to the capital to even set up shop abroad?
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Or will they then be able to approach foreign banks the likes of Wells Fargo, who already have a branch at G-Tower in Kuala Lumpur?And if this is the case, would this mean Malaysians will then become more reliant on foreign funds, whereas local banks will lose out due to their lack of access to capital? Subsequently, due to the lack of local customers, will Malaysian banks then have to venture out and cater to lower capital markets, such as Vietnam?
Meanwhile, though the Health Ministry says medical bills won’t go up due to the passing of intellectual property evergreen conditions in the agreement, it will still mean that the onus will be on the government to then spend more on subsidising medicine for public healthcare facilities.
Does the Minister guarantee that the private medical sector won’t see a raise in the bills? Of course not.And while some insist that Malaysians can compete with other nations in terms of SMEs, would they be open to admitting that even the very definition of what is an SME is questionable in each and every nation?
Case in point, is an American SME the same size as a Malaysian SME? Will there be a case for standardising these definitions, or will such be seen as just “Malaysian companies being non-competitive” and thus, likely to be shut down?
The TPPA in all regards is a double-edged sword – or in this case, a 12-edged blade – which will allow anyone with the size and capital to take advantage of the removal of tariff and non-tariff barriers.
The problem with Malaysian businesses is this question; can we compete? To summarise, our federation of manufacturers (FMM) are salivating saying they can, as well as AMCHAM (American Malaysian Chamber of Commerce) and even our plastic manufacturers.For some awkward reason, even the Proton car vendors think they’ll make a killing, thinking they will be able to sell their cars in America.
And yet, government-linked corporations – from palm oil to telecommunications are cautious. Nobody has yet to ask the banks on their thoughts, nor has anyone asked the agriculture, construction and even services industry, which have all gone mum.
The early effects of this trade deal is already here. Just last week, Astro announced that Netflix coming into the country has affected their share price. Well, that is but a small case study of what the TPPA can do. Can Astro cope with the likes of the oncoming entertainment onslaught from US companies, such as Time Warner Cable, HBO Go and Hulu Plus?
Will Uber finally be recognised and taxi companies just having to deal with it? In fact, the company just recently launched a food delivery service as well, so Food Panda may want to take notice.
The TPPA won’t just affect the Malays, as Hadi Awang wrongly points out. It will affect all of us hard, be it in SMEs or even micro industries or state-owned enterprises without access to capital or even the economies of scale, to compete on a global scale.
While some are die-hard optimists, falling for Obama’s “yes we can” mentality by supporting this trade deal, I’ll be a realist and just wait for the axe to fall, for me to say “I told you so”.