Malaysia's Membership In CPTPP To Boost GDP, Says IDEAS

KUALA LUMPUR, Nov 3 (Bernama) -- The Institute For Democracy and Economic Affairs (IDEAS) is estimating that Malaysia's membership in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) would boost the country's gross domestic product (GDP) by one per cent, with a positive impact on trade and employment, and that Taiwan's membership would further extend the benefits. IDEAS director of research Laurence Todd said as Malaysia and Taiwan have a strong trade and investment relationship, it also share a deep underlying industrial collaboration, which helped Malaysia's economic development. He said there is evidence to suggest that this industrial collaboration could be improved if trade were to be liberalised and this would boost Malaysia’s industrial development, particularly in key sectors for the Fourth Industrial Revolution (4IR), including electronics, machinery and chemicals. “With Taiwan as Malaysia's sixth largest trading partner over the last few decades and a significant investor in Malaysia, focused mainly on high-technology related sectors, this strong investment relationship provides a platform for industrial collaboration which underpins the firm trading relationship. "The reduction of tariffs mandated under the CPTPP is likely to constitute the largest benefit from liberalising trade between Malaysia and Taiwan. “Taiwan is one of Malaysia’s few trading partners where there is no preferential trade agreement, and therefore, tariffs continue to represent a significant additional cost,” he said at the IDEAS webinar session titled ‘Malaysia, Taiwan and CPTPP: An Opportunity for Growth’ in line with the release of its Policy Ideas Papers No 65 -- Malaysia, Taiwan and CPTPP: Economic Impact Assessment. Todd said provisions to reduce and harmonise Non-Tariff Measures (NTMs) and Customs Facilitation would also reduce the cost of trade in sectors important to Taiwan-Malaysia trade, including in manufacturing sectors, although reforms in these areas are harder to enforce. Other provisions aimed at facilitating trade in services and addressing other broader dimensions of trade, such as competition could contribute to a further deepening of the economic relationship in the future, whilst having a relatively lower impact in the immediate term. Under the CPTPP, Malaysia has committed to reduce all tariffs to zero per cent, with a range of exceptions and transitional periods. Overall, the reduction of tariffs would have a substantial impact on the cost competitiveness of Taiwanese imports. “The CPTPP is part of a strategy that will help increase the resilience for the Malaysian economy and creates more options as a platform and that is what you want in a world where supply chains are experiencing a small degree of turbulence. "With the disruption that is happening in the global economy and reconfiguration of supply chains, we think it will be a big opportunity for Malaysia and ASEAN in the next 18 months or two years to signal or influence the direction of the CPTPP,” Todd said. At the time of writing, Malaysia has not made a final decision on whether to ratify the CPTPP. On the other hand, Taiwan has expressed its interest to join the CPTPP in 2016 and is currently engaging with CPTPP members. Meanwhile, Malaysian Institute of Economic Research (MIER) senior research fellow Dr Shankaran Nambiar said given that Malaysia is a small but open economy, there is a need to explore new areas that could benefit Malaysia. "The CPTPP offers a new channel for trade and investment and Malaysia could gain through the electrical and electronics (E&E) sectors, given Taiwan's great contingent in that area,” Shankaran said. -- BERNAMA