CICM: Ratification of CPTPP will benefit Malaysian economy

CICM: Ratification of CPTPP will benefit Malaysian economy

The council urged the government to expedite the ratification as it will benefit the Malaysian economy. — Picture by Yusof Mat Isa

By Shahrin Aizat Noorshahrizam

Wednesday, 03 Aug 2022 4:45 PM MYT

KUALA LUMPUR, Aug 3 — The Chemical Industries Council of Malaysia (CICM) lauded the Ministry of International Trade and Industry’s (Miti) efforts in ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The council urged the government to expedite the ratification as it will benefit the Malaysian economy, especially after the findings of the cost and benefit analysis (CBA) that was issued by Miti last month.

It said that the ratification will have four main impacts, including strengthening the role of the chemical industry as an enabler in the supply chain.

“The chemical industry is an enabler that supports the development of the supply chain of other sectors in Malaysia; be it manufacturing, agricultural, construction, as well as the services sectors.

“It represents 2.3 per cent of Malaysia’s GDP (in 2019) and accounts for 5.7 per cent of Malaysia’s total exports and 9.7 per cent of Malaysia’s total imports in 2021,” it said in a statement today.

Furthermore, CICM said that chemical manufacturing is capital intensive in nature, and therefore, would need to resort to world-scale capacity to remain competitive.

It said that given Malaysia’s small domestic market, an investment strategy is not feasible without favourable access to other export markets.

“CPTPP countries accounts for almost 22 per cent (RM 11.0 billion) of Malaysia’s chemical exports in 2019. Major export destinations were Singapore, Japan and Vietnam.

“Presently, Malaysian exports faces tariffs up to 270 per cent which affected key products exported to CPTPP countries, including organic and inorganic chemicals. With CPTPP, these tariffs will be fully eliminated by the year 2034 across all CPTPP countries.

“The CPTPP also opens up access to Canada, Mexico and Peru; providing better opportunities for Malaysian manufacturers to increase exports to these markets; substantiated by better price competitiveness following substantial elimination of tariffs by Canada (presently up to 270 per cent), Mexico (30 per cent) and Peru (9 per cent),” it added.

It also said that the ratification will enable local value-adding manufacturing activities to prosper and increase local or foreign investment attractiveness.

National news agency Bernama reported that the CBA report found that ratifying the CPTPP would be a net positive for Malaysia, and it would raise the country’s gross domestic product (GDP) by US$56.5 billion (RM251 billion) over the period of 2021 to 2030; thereby boosting GDP growth by 1.9 per cent relative to baseline figures in 2030.

With the possible entry of the United Kingdom and China into the CPTPP, cumulative GDP gains are projected to rise to US$125.4 billion over the baseline for the same period.

The report also showed that Malaysia’s trade balance is projected to be US$53.5 billion in 2030, and remain in surplus at 8.5 per cent of GDP within the same year.