Malaysia: Local Exporters To Equip With Adequate Capacity For TPP Markets

By Niam Seet Wei KUALA LUMPUR, Feb 6 (Bernama) -- Local exporters should equip themselves well, especially with adequate production capacity, to meet the huge demand and vast opportunities the Trans-Pacific Partnership Agreement (TPPA) will offer. Malaysia External Trade Development Corporation (MATRADE) Lifestyle Director of Trade and Services Promotion Division Abu Bakar Yusof said capacity constraints has always been the biggest problem encountered by local exporters, causing many of them to become inactive in the industry. "Currently, about 15,000 exporters have registered with MATRADE but the active ones account for approximately 5,000 companies," he told Bernama in a interview. To assist them, he said, MATRADE was ramping up export promotion and capacity building programmes to ensure local exporters were well-equipped for the new markets. "MATRADE is embarking on several initiatives to prepare our exporters, especially small and medium enterprises (SMEs) so that they will be ready and more competitive for the TPP markets," said Abu Bakar. Efforts also include having more targeted and dedicated promotion programmes in the TPP countries, arranging more seminars and briefings on the standards and import requirements set by TPP nations as well as undertaking more outreach programmes together with their business partners. "We want to make sure our exporters are ready within two years before the agreement is fully enforced. We have to start doing it from now," he said. The 12-nation free trade agreement (FTA) was signed in Auckland, New Zealand on Feb 4 whereby signatories - Malaysia, Australia, Brunei, Canada, Chile, Japan, Singapore, Mexico, New Zealand, Peru, the US and Vietnam - would have two years to ratify their respective legislatures. To assist the local exporters, Abu Bakar said MATRADE has been working together with agencies like SME Corporation Malaysia, SME bank, Export-Import Bank of Malaysia Bhd (EXIM Bank) and the Bumiputera Agenda Steering Unit (TERAJU), for financial support. This is to help them upgrade their production capabilities and subsequently improve their competitiveness in order to sustain in the export business. "Otherwise, it will be pointless as when they get big orders, they will not be able to fulfill the huge demand," he said. To date, Malaysia has signed 13 FTAs, with TPPA being the biggest trade deal of its kind for exporters to benefit. "We are talking about a huge market of 800 million people with a combined gross domestic product (GDP) of US$27.5 trillion," he added. Abu Bakar also echoed the views of the Managing Director of Cliff Ink Sdn Bhd Michelle Lau Sook Yee who contended that Malaysian companies must identify their competitiveness and that capacity building would be a must, in order to pursue the mass market. Lau, whose company is mainly engaged in the export and advertisement for batik products, textile designing and other products, said exporters could seek assistance from MATRADE or the Malaysian Investment Development Authority (MIDA) to strengthen their capacity. "These authorities will be able to "marry" the investment between foreign and local investors together via the establishment of joint venture companies in the country," she said. Lau also believed that Malaysia's textile industry could one day also include a cotton or silk farm, enabling the country to compete with Indonesia and Vietnam, one of the world's biggest silk exporter. For Abu Bakar, the TPPA would open up greater access to foreign direct investment in Malaysia, including the textile and raw material industry, and provide the ecosystem for upstream and downstream sectors. With the opening up of TPP markets, Abu Bakar said the lifestyle sector, especially textile and furniture industries, were set to benefit. For instance, he said, in the first 11 months of 2015, the exports of textile, apparel and footwear rose by eight per cent, year-on-year, (y-o-y) to approximately RM12 billion while that of furniture, increased 13 per cent. "We feel that these sectors have potential and room to grow, especially to the United States which accounted for 30 per cent of Malaysia's total furniture exports in the January-November period," he said. Abu Bakar reiterated that Malaysia's exports could grow steadily with better access to Chile, Mexico, New Zealand and Australia. On copyright protection, he said MATRADE and MIDA would take measures stated within the platform of the World Trade Organisation to safeguard the local industry. "We will conduct investigations and make our assessment whether these inflow of cheaper goods or raw materials into the country will affect our local sector. "Then, we will impose certain kind of tariff or higher tariff on the imported goods," he added. Malaysia signed the TPPA after five years and 19 rounds of intense negotiations. By coming on board, the country is expected to see a GDP growth of US$107 billon to US$211 billion over 2018-2027 while investments are projected to increase by US$136 billion to US$239 billion, largely due to higher investment growth in textiles, construction and distributive trade. -- BERNAMA