IDEAS did not state the real issues that Malaysia will face if Malaysia chooses to ratify the CPTPP.
There are many challenges that Malaysia must face and the socio-economic consequences for Malaysia will be devastating as its policies were shaped by our multi-ethnic society.
CPTPP is not so much about free trade. In fact, only six out of 30 chapters deal directly with trade.
There are many chapters in the agreement that benefit major corporations more than the wellbeing of the people. Some of the major chapters that are controversial are on investment, investor-state dispute settlement and state-owned enterprises, to name a few.
Malaysia already has FTAs with many countries in CPTPP except for Canada, Mexico and Peru. But market access to Canada, Mexico and Peru can be easily obtained through bilateral FTAs without having to be chained to binding rules on non-trade issues.
Canada, Mexico and Peru are not countries with which Malaysia has significant trade with, so the CPTPP will not benefit Malaysia much.
On investment, if Malaysia chooses to ratify CPTPP, the government needs to provide foreign investors a minimum standard of treatment.
There should then be no changes to laws and regulations than can lead to negative consequences for foreign investors. This will impose a “regulatory chill” to the Malaysian government where the government will face difficulties in introducing new policies which may be good for the people but negative for investors.
Furthermore, many conditions imposed on foreign firms are restricted. This may negatively impact the viability of local companies as they lack the expertise and technologies of foreign firms.
Another controversial chapter in the agreement is on state-owned enterprises (SOE), or what is known here as government-linked companies (GLC).
GLCs have been instrumental in strengthening Malaysia’s economy by assisting numerous local SMEs. The spill-over effects generated employment for locals and provided business opportunities for them to grow and enhance their business.
If Malaysia chooses to ratify CPTPP, GLCs will be restricted in prioritising local SMEs and this will affect the growth of our SMEs. Admittedly, GLCs have many issues of their own but it will be best if reforms are done according to our terms and not be forced by outsiders.
There are many other controversial chapters such as e-commerce, ISDS, goods and government procurement.
The negative points mentioned above are solid arguments against Malaysia ratifying the CPTPP as it poses immense risks for Malaysia’s economic growth.
Moreover, Malaysia has a socio-political economic structure that is very sensitive, given the multi-ethnic nature of Malaysian society.
We have huge inequalities between ethnic groups and regions and the government needs sufficient space to implement policies to close the gap.
Malaysia will lose this essential flexibility if it chooses to ratify CPTPP. Therefore, it will be far better for Malaysia not to ratify it.
Mohd Effuan Aswadi Abdul Wahab is coordinator of Bantah TPPA/CPTPP
The views expressed are those of the author and do not necessarily reflect those of FMT.