KUALA LUMPUR: Moody’s Investors Service said the US’ decision to withdraw from the Trans-Pacific Partnership (TPP) agreement implies that the trade deal will not be implemented, adding that this is a lost opportunity for export reliant nations like Malaysia.
Prime Minister Datuk Seri Najib Razak, however, urged Malaysians not to be worried about the economy if the TPP is not implemented as it will remain “firm, dynamic and filled with opportunities from our existing trade partners”.
Moody’s said it does not expect the TPP to be implemented after US President Donald Trump on Monday signed an executive order for Washington to pull out of the pact. The main losers, it said, are the exporters seeking to gain greater access to a market of 800 million consumers with close to US$28 trillion (RM124.04 trillion) of wealth.
“Among the 12-member countries, the economies of Vietnam, Malaysia, Brunei and Mexico are reliant on exports and show the greatest exposure to trade with TPP countries. With this lost opportunity, prospects for significant large gains in incomes, for instance in Vietnam or Malaysia over the medium term — on the back of higher trade — will be reassessed,” said Moody’s associate managing director Marie Diron in a statement yesterday.
Diron noted that some countries have begun exploring other trade options, bilaterally or with China through the Regional Comprehensive Economic Partnership (RCEP).
“However, the potential trade deals currently envisaged are unlikely to provide as big an economic benefit as the TPP, where member countries accounted for 40% of global gross domestic products,” said Diron.
Najib, in a posting on his blog najibrazak.com, said following the US move, Malaysia together with the other 10 TPP member countries would hold a meeting to discuss the next direction and move.
“Whatever the conclusion of the meeting, I would like to explain that we should not be worried about Malaysia’s economic condition if the TPP (agreement) did not materialise,” said the prime minister, as the country would look at participating in other trade deals.
The Malaysia External Trade Development Corp (Matrade) noted that the China-led RCEP is going to be the next trading platform for Malaysia and the other nine Asean countries to boost trade, with access to a US$22 trillion market that is supported by 3.5 billion people.
The Federation of Malaysian Manufacturers (FMM) said it was heartened to note that there is still communication among the 11 remaining countries to consider all available options to keep the TPP alive including reformulating the agreement without the US.
FMM is therefore hopeful of the possibility of salvaging an Apec (Asia-Pacific Economic Cooperation)-wide agreement among the remaining members of the TPP. As such, FMM will remain an active partner with the government and will continue to support with views and business inputs on the way forward in the crucial months to come,” it said in a statement.
Boutique consultancy firm Glenreagh Sdn Bhd sees TPP’s non-implementation having a minimal impact on the Malaysian economy and businesses in general.
“This is for the simple fact that Malaysia has a host of free trade agreements — both bilateral and multilateral — and that export figures to these countries are steadily growing,” Gleanreagh managing director Nordin Abdullah said in a separate statement.
“While the US market will remain important, Malaysian exporters should continue to look at the high-growth markets in Asia and West Asia as they are both geographically closer and easier markets to operate in for Malaysian companies looking to expand internationally,” he said.
The Consumers Association of Penang (CAP), meanwhile, said the US withdrawal from the TPP is a good opportunity for Malaysia to rethink its approach to trade and investment agreements.
“While trade is an important part of the Malaysian economy, free trade agreements are not automatically good for the country and we need to take part only in agreements that are in the interests of the public,” CAP president S M Mohamed Idris said in a statement.
News appeared in The Edge Markets https://www.theedgemarkets.com/article/us-move-has-%E2%80%98killed%E2%80%99-tpp-says-moody%E2%80%99s