Malaysia’s Million Ringgit Man’s Leap of Faith in TPPA


January 28, 2016

Malaysia’s Million Ringgit Man’s Leap of Faith in TPPA–Good For Malaysia and Malaysians

by Tan Sri Shahrir Samad

http://www.themalaysianinsider.com

shahrirtppa

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.

 

17 thoughts on “Malaysia’s Million Ringgit Man’s Leap of Faith in TPPA

  1. Frankly, I don’t think they understand..Malaysia should have been ready for TPPA, but many are not. The Bumi policy protection concession seems to be the real core reason they agree to it. Very infantile reasoning..

  2. If I want to INVEST in some “thing”, I would consider multiple scenarios or options available to myself. Infrastructure to move my goods in and out promptly. Skilled workforce is EXTREMELY important, if I decide on Research & Development. Is there any “skilled” workforce down here? Numbering over 600 Institute of Higher Learning, churning out “RUBBISH” that is “useless’ to the entire nation. Pot holes filled roads, under maintained (public & private) infrastructures that would COLLAPSE or at the verge of collapse at anytime, plus a plethora of other problems; pathetic education, pathetic telecommunication, pathetic judicial, pathetic medical, plus lots more.

    I would prefer sticking to going LOW-TECH (such as easy assembly & manufacturing) and milk out all I can out this nation, while taking my HIGH-TECH (such as complex R&D) to more deserving nations than this one!

    Competition is HIGHLY unlikely (or rare) in a nation of COPY-CATS, from the very top till the very bottom. One fella sells “Ayam percik” in a pasar malam, then everybody will sell “Ayam Percik” in the following weeks. Same thing to “Tom Yam”, and many others…

  3. A funny thing happened in parliament yesterday (28 Jan 2016). A member of parliament proposed an amendment to the proposal tabled by the minister by suggesting that the words “..dan meratifikasi..” (‘to ratify’) be removed. If this amendment were to be accepted by other members, then the proposal would have read such: (my translation)
    “This house,
    taking into cognizance that Malaysia is a nation that practices an open economy by involving itself in international trade, foreign investment, technology and tourism,
    agrees that the involvement of Malaysia in Trans-Pacific Partnership Agreement (TPPA) will enhance competitiveness of Malaysia in regionally and globally;
    supports the decision of the Government for Malaysia to be one of the members of the nations of TPPA by signing the TPPA;
    By deciding that the participation of Malaysia in TPPA, this House calls on all quarters to join hands in ensuring the success of its objectives.”
    It is obvious that by putting up this alternative proposal that member of parliament asserts that he supports the signing of the TPP Agreement. It can be assumed that his seconder also have the same stand and so should be other members of the opposition. (It is just that he thinks its too early to ratify it)
    Yet, in the same breath while making his proposal, this person (supposedly clever) asserted that he does agree to TPPA. Other members who spoke in his favour also never fail to stress that despite agreeing to the amended resolution, it does not mean they support TPPA.
    Now, proposing a resolution that you yourself do not agree to, has never happened even in a village youth club. They would know better.
    What can we deduce? Double-talk? A stratagem to confuse the government supporters? Confusion (changed his mind, influenced by all the talk by other rational members yet cannot get around to say it)? or lack of sincerity?

  4. Supposedly TPPA is a free trade agreement, bit dominated by US policy and in USD’.

    Can a new TP$ created with a majority consensus of the member- countries to be used as a currency for freeer trades?

  5. I hope, for the sake of our country, that the views of the author will come true…

    Those who have expressed reservations (and still do) base their arguments on two main issues… the almost complete secrecy during most of the negotiating and the fact that elected representatives in the US will not be given the opportunity to debate/discuss a deal which, it is said, will affect the lives of millions… both in the US and elsewhere.

    Proponents of the deal can say what they like, but secrecy and “fast-track” go against the democratic process… but then some of us skeptics may be foolish to continue believing that the word “democracy” stlll means anything.

    Time will tell…

  6. /// Isa Manteqi January 28, 2016 at 2:13 pm
    I hope, for the sake of our country, that the views of the author will come true… ///

    What is the alternative? Opting out of the bandwagon? The world will pass Malaysia by. Maybe Malaysia can resort to barter trade with Russia and North Korea. Trade palm oil for fighter planes and timber for submarines.

  7. It would seemed that shahrir was only interested in the bumiputra agenda which for all intents and purposes will rob the bumiputras of their competitive edge. And this provision is actually not in perpetuity but only for 20 years.

    Shahrir seemed to believe that that the nation’s productive capacity will become competitive once we joined TPPA. Singapore had been building up their competitive edge and productivity and had been advising vietnam to do so for more than a decade while malaysia had been indulging itself with all the petrol dollars and with a highly incompetent and corrupt government we could hardly hold our own economy together. Our productivity and competitive edge had been seriously eroded and citing a few small ventures targeting very niche market would not change the reality that we are really the sick man of asean and we are hoping to enter the arena where the exploitaitve culture of huge multinationals will probably eat us alive.

    The question that had been asked but never answered was at what price will we be paying if we fail in our bid to compete with the big boys ?

  8. Does anyone here even understand the decoupled Economic and Trade hubris that has haunted this ‘nation’ since hardball hyper-UMNOputraism was introduced in guise of the NEP?

    For instance despite all the privileged and ‘protected’ MARA/Bumi vendors of the nascent aerospace industry, Boeing chose a Non-Entity as their ‘Champion’ locally?

  9. Interesting point about “barter trade”… Exactly what the BRIIC countries have on their menu… as a way of doing away with a pernicious trade system and bringing some sanity to the world.

    By all means hop on the bandwagon… but before doing so, at least make sure it is not speeding towards the edge of a cliff…

  10. CLF Boeing learned things the hard way and is further restricted by the Foreign Corrupt Practice Act. The privileged and protected vendors only knows how to reap commission and be a rent seeker and not a business partner. Boeing have lost out on many projects when they had “privileged and protected” vendors represent them including a certain business entity linked to a Royal family. So we should not be surprised.

  11. Yes semper.

    With the TPPA, perhaps they will be more amenable to see the ‘bigger’ picture. Our SMEs who are ready will not have a problem, but the dependency on perpetual gomen grants as operating and not R&D expenses by the sycophants will definitely persist. High incomes doesn’t necessarily mean hi-tech, skill, efficiency or prudence but ball-l**king over here.

    You will be needed back home soon, if they really intend to ramp up the MRO activities. Private sector safer. Better than the frigid climate snowing you in now. Cheers, buddy.

  12. Dr Abdollah,
    I don’t get you – was there a typo?

    . . . this person (supposedly clever) asserted that he does agree to TPPA.

    Did you mean “does not agree”, because further down you said, ” . . . proposing a resolution that you yourself do not agree to, has never happened even in a village youth club . . .” ?

    Thank you.

  13. A minister once said, prices would be cheaper once gst is implemented. But its the opposite. Who could blame the public for not trusting the government.

  14. It is comforting indeed to know from Dato Mustapa that we could exit the TPPA at any point of time without penalty within six months of notice.” As originally conceived, or at least that was what was strenuously emphasised by Bernie Sanders that there was no exit clause. Divorce must always be possible if affection is no more — life must go on along a new path with or without a new partner.

    Now back to something that has bugged me from the start, and that is the question of how disputes could be settled equitably; Shahrir has shed some light by stating that, “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.” This is a definite improvement over the earlier proposals on how the ISDS was going to be implemented and which he admits, “seemed to be less just and fair to the government.”

    Queries: How is the TPPA Commission constituted? Who makes up the members of the Commission, and how many parties are involved? Is the TPPA Commission the same entity as a three-person tribunal made up of corporate lawyers — a tribunal labelled fairly or unfairly as a pseudo-court?

    To find out why, “People are freaking out about the Trans-Pacific Partnership’s investor dispute settlement system”, go to
    The TPP has a provision many will love to hate: ISDS. What is it, and why does it matter? By Todd Tucker [October 6, 2015 Washington Post] – https://www.washingtonpost.com/blogs/monkey-cage/wp/2015/10/06/the-tpp-has-a-provision-many-will-love-to-hate-isds-what-is-it-and-why-does-it-matter/

    Excepts:
    While the United States has never lost a case, U.S. corporations have won many of their complaints against foreign governments.

    The system is unusual in international law. Most international courts only allow disputes between states. ISDS, in contrast, creates one-way rights: Corporations can sue governments, but not vice versa.

    It’s also ad hoc: The legal challenges are decided by arbitrators hired for that case only. The typical set-up is that the foreign investor appoints an arbitrator, the host state appoints a second, and the two parties or arbitrators appoint a third to chair the case. After their decision, they are paid by the parties, and the tribunal is dissolved.

    . . . it’s also unusually powerful for international law. Arbitrators can order governments to pay cash to the investor, who can then enforce arbitrators’ decisions with the full force of domestic courts. As the U.S. Supreme Court determined last year, domestic courts must defer to their decisions and not review their merits.

    . . . . TPP opponents, on the other hand, will have to argue why this deal is singularly problematic when there are already 3,200-plus treaties around the globe that already contain similar investor rights.

    . . . . investors engage in what I call ‘standard stacking.’ This means they allege as many bases for protection as they can, to increase the odds that a tribunal will side with them on at least one, which is typically enough to be entitled to some cash damages.”

    Shahrir has oversimplified the ISDS issue.

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