KUALA LUMPUR: Malaysia should ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to ensure sustainable economic development in the future, says the Institute for Democracy and Economic Affairs (IDEAS).
IDEAS chief executive officer Ali Salman described the pact as a high-quality agreement that would benefit Malaysia because historically, the country’s economic growth was largely driven by trade openness rather than infrastructure developments.
“Malaysia’s economic growth is largely driven by its open trade policy,” he told Bernama after presenting a talk, themed ‘Malaysian Economic Policy under the New Government’ at the Policy Briefing and Network Gathering programme hosted by the Norway Embassy here recently.
Deemed a vehicle for regional economic integration, CPTPP has been renamed from Trans-Pacific Partnership Agreement (TPPA) after the United States (US) under President Donald Trump withdrew from it in January 2017.
The pact will enter into force at year-end as seven member countries, namely Australia, Canada, Japan, Mexico, New Zealand, Singapore and Vietnam have ratified it. Currently, only Brunei, Chile, Peru and Malaysia have not ratified the pact.
The CPTPP is a trade agreement among 11 countries that have potential access to a region of over 500 million consumers with a combined Gross Domestic Product (GDP) of US$10 trillion ((US$1 = RM 4.18).
Ali said Malaysia had been part of the global value and supply chains, part of the international trade agreements as well as a member of the World Trade Organisation (WTO) since Jan 1, 1995.
This has made possible for Malaysian firms to be part of the global production system, he added.
“Not just for this reason but also because CPTPP requires the Malaysian Government to be more open, more transparent and more competitive and have positive pressure on the government-linked companies (GLCs) sector,” he said.
Ali noted it was important for Malaysia to ratify CPTPP, considering the pact was not just about trade agreement but also about economic regulation and good governance.
“We believe it is beneficial for Malaysia to be part of this. There are concerns like national sovereignty but I think these concerns are not valid, and the latest form of CPTPP provides reasonable guarantee for national governments to protect their own interests,” he explained.
On the issue of protectionism, Ali said privately owned firms were already open to competition and were not protected.
However, on the other hand, GLCs and their subsidiary companies were subjected to protection, he noted.
“We feel that if we open up, for example in services, we may not be able to retain monopoly. Malaysia happens to be a country where the cost of Internet is high with worst quality.
“This is monopoly. So, we have not been able to bring the best out of it, given the protectionism despite relatively well-managed corporate governance structure,” he said.
Ali pointed out that the new Malaysian Government was committed to reduce government ownership of equities. He said the top 100 GLCs in the country had over 68,000 subsidiaries.
He said in order to raise the country’s revenue, there was a need to create space for the private sector and more efficiently reallocate assets the government needed to pursue a programme to reduce the number of GLCs, adding that this could be done in a manner consistent with the stated social objectives.
“The government needs to pursue a programme of reform such as to identify GLCs with legitimate function and improve governance and also explore options for responsible privatisation, including social enterprise and employee buyouts,” he added. — Bernama
Source: Borneo Post Online