Malaysia to lose nearly RM5 billion every year in TPPA deal, warns group

Various groups have protested Malaysia's participation in the Trans Pacific Partnership Agreement,
saying it was Washington's plan to expand its hegemony on developing economies.

Malaysia could stand to lose RM5 billion annually with the faster increase in imports than its exports when it signs the Trans Pacific Partnership Agreement (TPPA) by year-end, said a group against the trade deal.

Bantah TPPA chairman, Mohd Nizam Mahshar, said this was based on a report published by a United Nations senior economist, Rashmi Banga, who said that if it signs the agreement, Malaysia's exports to other TPPA countries would increase but its imports from them would increase even more. The TPPA is a free trade agreement involving 11 countries namely Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

Nizam said the bigger imports would result in an unfavourable trade balance with a net loss on the country.

"This means that while our government insists that the TPPA is an agreement where the 'benefits outweigh costs' and is quoted telling the media such, it is a half-truth," said Nizam, who is also the Malay Economic Action Council (MTEM) chief executive officer.

Nizam said Malaysia exported US$93.7 billion (RM305.7 billion) worth of goods to TPPA countries last year, and imported US$73.9 billion (RM241.1 billion) worth of goods from them.

"Malaysia thus enjoyed a surplus in its trade balance with the 11 countries of US$19.8 billion (RM64.6 billion)." Howeverm Banga, a senior economist in the UN's Unit of Economic Cooperation and Integration among Developing countries, or Unctad, said in her report that Malaysia's trade balance with its TPPA partners will fall to US$18.37 billion (RM59.94 billion), after the TPPA comes into effect.

"Once the TPPA is implemented, Malaysia’s exports to the 11 countries will increase by US$1.5 billion (from US$93.7 billion to US$95.2 billion). But its imports will rise by more than that - by US$2.9 billion (from US$73.9 billion to US $76.8 billion)," Nizam said.

"This means that Malaysia will not have net gains from the increased trade resulting from the TPPA. As imports will rise faster than exports, Malaysia will suffer a net loss in its trade balance.

"The loss is significant - US$1.465 billion or RM4.79 billion per annum." Nizam said the situation may be worse than what was predicted in Banga's report, as she had assumed that Malaysia would be able to export more textiles and clothing to the US at zero tariffs and without any other impediment.

He warned that the US was insisting on a "yarn forward rule", where TPPA countries like Malaysia can only use yarn from other TPPA countries when producing textiles and apparel items. As such, production cost for Malaysian textiles and clothing will be higher as they cannot use yarn from lower cost countries like China or even Indonesia.

"The estimated increase in Malaysian exports of textiles and apparel items to the United States by about RM454 million (US$139 million) may exaggerate the gains for Malaysia. If the increase of textiles exports is less than this RM454 million, then the loss in trade balance for Malaysia could be even more than RM5 billion per annum," he added.

In her report, Banga warned that Malaysia could see an increase in imports as high as 61% in electrical machinery from the US, a 97% and 90% jump in the import of vehicles and iron and steel respectively from Japan.

"All these industries are existent in Malaysia and would face direct competition – our steel industry, electrical machinery and the automotive sector," Nizam said. "We all know that these sectors employ tens of thousands of local Malaysians, are ailing, very dependent on government funds and policies and now have to compete on a global level."

Nizam said Prime Minister Datuk Seri Najib Razak must explain the "rosy picture" he had painted, saying it was now shown to be untrue.

"Bantah TPPA calls on the Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, and also Najib to clarify their stance. "Where are these facts that talk about 'benefits outweigh costs' on the TPPA? Where is the cost benefit analysis report that was pending since May 2014?," he asked.

He pointed out that many others, including Nobel Peace Prize winners like Joseph Stiglitz and Jean Pierre Lehmann from the International Institute of Management Studies, have agreed that Malaysia's involvement in the TPPA was a bad idea.

"So we ask our government to clarify who are these brilliant people who say otherwise. "Until all these questions are answered and facts, figures and direct engagement to debate this agreement is made available to civil society and stakeholders, Bantah TPPA will continue to call on everyone to protest against this deal," he added.

Najib had previously said that the TPPA deal would be completed by year-end on terms acceptable to the country, adding that negotiations would continue even if the deadline could not be met as the contents of the deal were more important.

He had said the aim of the TPP agreement was to achieve two main objectives of expanding trade and market access in terms of economic and investment growth, as well as to uphold the country's sovereignty based on current principles. He had also attributed criticisms against the TPPA to the opposition, saying that the benefits can only be seen in the long-term.


Sumber - The Malaysian Insider