January 28, 2016
Malaysia’s Million Ringgit Man’s Leap of Faith in TPPA–Good For Malaysia and Malaysians
by Tan Sri Shahrir Samad
When I first heard of the Trans-Pacific Partnership Agreement (TPPA), I, like most parties, felt very uncomfortable and anxious at the thought of Malaysia entering into negotiations for an agreement that was led and dominated by the United States of America.
It is for the above reason in 2013, I supported the forming of the TPPA Parliamentary Caucus as was suggested by Lembah Pantai MP.Around 2014, I had the opportunity of highlighting my concern regarding the TPPA to Datuk Seri Mustapha Mohamed, the Minister of International Trade and Industry (Miti).
Would the US be able to recognise and agree to all of our list of demands?What about the carve outs and exceptions that we needed? I was inclined to believe that the TPPA would jeopardise our development policies since they did have a history of changing the negotiation goalposts in the past.
Initially, in the conversations that I had with Michael Froman (American Trade Representative), I was under the impression that he did not comprehend the importance of the Bumiputera agenda to us. However, when I learned that Japan had decided to join the TPPA, I perceived this as a positive development as it indicated that the TPPA was not entirely dominated by the US.
In my capacity as chairman of the Barisan Nasional Backbenchers Council (BNBBC), I had attended various TPPA Parliamentary Caucus briefings.
I was periodically appraised of Malaysia’s standing throughout the TPPA negotiations.Instead of blatantly getting emotional and rejecting the TPPA right from the very beginning, I had decided to keep an open mind.
However, that had not meant that I supported the trade pact agreement. Nevertheless, after various engagements and briefings with the negotiators, I slowly started to warm up to the TPPA.
The way that the negotiators had carried themselves while describing, explaining and briefing us had indicated that they were all very capable and accomplished individuals.Through their clarification and justification of their stance on the individual chapters, I had managed to gauge the firmness and decisiveness of our negotiation team on facing disputable issues such as the Bumiputera policy, status of Islam, capital control, halal certification and environment.
What a lot of people do not realise is the reason the Malaysia-US Free Trade Agreement (FTA) in 2007 had collapsed was because importance of the Bumiputera policy was flatly rejected by the US as being protectionist and discriminatory.
Undeniably, the TPPA negotiations were demanding. There were numerous instances where our representatives had left the negotiation table when they had failed to reach a consensus. Meanwhile, back home in Malaysia they were being faulted for trying to sell the country. I cannot imagine what that must have felt like!
After the TPPA negotiation text was released in December 2015, I was pleased to see that all 12 TPPA nations had come to the consensus to accept the Bumiputera policy.The TPPA enables our policy makers to empower the Bumiputera through its policies such as 30% allocation of government procurement.
The outcome of the TPPA negotiations proved to be in favour of Malaysia as we received a lot of exceptions, carve outs and flexibilities. The threshold in construction services given to Malaysian companies was the highest compared to the other TPPA nations.
The 20-year transition period should be more than sufficient for them to embrace the new challenges faced.The hike in medicinal drug prices is not an issue. The TPPA does not change our domestic policies on patents. Halal requirements are carved out from the trade requirements thus allowing us to continue implementing halal requirements related to importation and exportation of food products.
The much feared Investor-State Dispute Settlement (ISDS) tribunal issue was re-evaluated with great concern.The previous ISDS under the other FTAs seemed to be less just and fair to the government. When there is a dispute, the government has the right to interprete matters related to investment through the TPPA Commission.
The burden of proof now lies with the investor and not the state to prove losses suffered. Investors cannot claim losses based on projected future profits.Instead, they can only claim losses based on initial investments made. Ultimately,we must remember that the TPPA does not restrict the government in enforcing administrative actions to regulate policies concerning public health, national security and matters of the environment.
To sum it up, the much maligned agreement is nothing like the actual TPPA text. For that, we have the Miti negotiation team to thank for.
What about the cost of joining the TPPA? Admittedly, new challenges are bound to exist with the formation of the TPPA. For example, SMEs and Malaysian GLCs will have to learn to adjust their business models and operations as they compete with companies from other TPPA countries.However, let’s not forget that we are not changing for the sake of change. We change because these changes come with greater incentives.
TPPA provides an avenue for market access, especially to four new markets (US, Peru, Mexico and Canada).Currently, 18% of our SMEs are already exporting their products and services to other countries. With the TPPA, the possibilities are endless!
The TPPA will give us a competitive edge as it requires us to discipline ourselves in trade and investment matters. This ensures conducive investment avenue, healthy competition and overall improving society through multi-products and the increased availability of high-paying jobs.
Remember, the TPPA is still going to be implemented with or without Malaysia. Vietnam will overtake us if we are not part of the TPPA.We would have to say good bye to high-value investments because countries such as Vietnam and Singapore will look more and more attractive to said investors.
What is worse is that in order to be more competitive, our home-grown companies might even decide to relocate and invest in TPPA countries.Should we decide to join the TPPA in the future, it would not be on our own terms as we were not part of the negotiations and therefore would have to accept the TPPA that had originally been agreed by the founding members. The changes we would then have to make to our laws would be more difficult and painful.
For some strange reason, there are those that are sceptical with the ability of Malaysia to compete with developed nations.They believe that Malaysian companies are not equipped with the expertise required and that Malaysians are inferior to the westerners. This view greatly saddens me.
Do they need to be reminded that a Malaysian consortium currently runs the best property development project in London?Malaysians are also the ones that had planned the Dawn Raid in 1981 which shocked the London capital market when we acquired Guthrie.
Currently, three Malaysian scientists have been named as the world’s most influential minds. To me, these examples (and there are many more) justify Malaysia’s standing as a globally acclaimed success.If it was possible for “Malaysia Boleh” back then, why would it be any different now?
Today, our young generation has become more inter connected. By utilising technology and its advancements on social media, they are now venturing into sharing economy model which has revolutionised the way business is conducted.
More and more of these startup companies have been created and now some have become very lucrative. Recently, two young Malaysians successfully reinvented the way we hire lorries via TheLorry.com. They have been so successful; a Singaporean company has decided to invest US$1.5 million to expand their business in Southeast Asia.
On another front, FashionValet.com has managed to secure a multi-million dollar investment deal from a San Francisco-based venture capitalist. Currently they operate in four different ASEAN countries (Brunei, Singapore, Indonesia and Malaysia).
These examples clearly illustrate young Malaysians are capable of keeping up with the times and embracing change. Not only are these young Malaysians able to compete in today’s global arena, they are triumphant in doing so.
Competition is not an alien concept to Malaysia. Ever since our independence, we have strived to be competitive. Nothing has changed as we will only continue to do so now and in the future.
Over January 25 and 26, the Malaysian Parliament will discuss, debate and vote on the merits of the TPPA. Some will say that the ruling party will bulldoze the TPPA through Parliament because we have the numbers.
I want to emphasise that the BNBBC will not blindly support the TPPA simply because we have to toe the party line but rather, we support it because we truly believe that the TPPA will benefit the country and its people.
I believe that Malaysia should be unafraid to take our place in the world. Change is a constant and it is a fact of life. The TPPA is my leap of faith in Malaysia and in Malaysians.
* Tan Sri Shahrir Samad is chairman of Barisan Nasional Backbenchers Club and Johor Baru MP.