Jul. 19 – Malaysia, currently hosting the on-going negotiations concerning the much-lauded Trans-Pacific Partnership (TPP) agreement, is facing internal difficulties as some of its largest businesses resist membership to the TPP.
The TPP is a ten nation Asia-Pac trade bloc that includes the United States, Mexico, Peru, Chile, Australia, New Zealand, Brunei, Malaysia, Singapore and Vietnam, with Japan pondering membership. The United States wants to eventually expand the group to include all members of APEC. Part of the strategic impact of the TPP will be funding from the wealthier countries to improve production facilities in the poorer member nations such as Mexico and Vietnam.
China, unsurprisingly, views the TPP as distinctively ‘anti-Chinese’.
Now, however, Malaysia’s powerful Bumiputra groups are stirring up political resistance to their own countries membership, suggesting that it will level the playing field concerning foreign investment into Malaysia. They cite that increased competition would push up the prices of basic essential products such as food and medicine.
Certain platforms within Malaysian media have even described the TPP as “economic colonization.”
“If Malaysian Government procurement was conducted on a level playing field, many Malaysian companies would go under,” the Malay Economic Action Council stated.
Other groups, however, see huge benefits in joining the TPP. The Federation of Malaysian Manufacturers is pro-TPP and has advised its members to be ready and prepared for “opportunities ahead.”
The TPP aims to lift tariffs on goods and services throughout all participating countries. This results in easier access to Malaysia’s domestic markets for the other member states, but easier access for Malaysian companies to the domestic markets of other TPP member states.
Some Malaysian opposition is rooted in their historical past under British rule causing fierce national pride. As a result, national emotions rise to the surface when multilateral issues are concerned, especially involving powerful nations like the U.S.
There remains a perception in emerging Asia that the U.S. would grab the lion’s share of TPP benefits while countries such as Malaysia would be forced to cede ground.
Chris Devonshire-Ellis, Founder of Dezan Shira & Associates, comments: “These sorts of debates are part and parcel of these negotiations. Domestic Malaysian companies that have gotten used to feeding purely from the State will be feeling pressure and will resist these moves. Malaysian companies that have developed a more entrepreneurial and global perspective on trade will view the TPP as positive.”
“To be frank,” Devonshire-Ellis further commented, “giving up the right for exclusivity in Malaysia for the right to access markets in the U.S. and beyond is a no-brainer, and the Malaysian companies that resist this are demonstrating a mentality both outmoded and uncompetitive. In today’s global economy it is unrealistic to suggest wealth can only be created in your own country.”
The current round of TPP-talks are being held in the Malaysian state of Kota Kinabalu, and will continue until July 25.
You can stay up to date with the latest business and investment trends across Asia by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources.
Related Reading
China & Mexico Talk of Strategic Partnership Deal, But Much Remains to be Done
China Set to Lose Out to Vietnam as U.S. TPP Deal Looms
Viet–U.S. Pacific Free Trade Talks could Impact on China SOEs
The TPP’s 16th Round of Negotiation in Singapore
