Not being part of it will make country less attractive to investors
PETALING JAYA: Malaysia will become significantly less attractive as an investment destination for multinational corporations (MNCs) if it does not become a signatory of the Trans-Pacific Partnership Agreement (TPPA), says investment promotion agency InvestKL.
The MNCs Malaysia has attracted so far come mostly from the United States, Japan and Singapore, all of whom have agreed to sign on to the agreement, thus signing on would make Malaysia and particularly Kuala Lumpur a more attractive investment destination.
Not signing, warned InvestKL chairman Datuk Seri Michael Yam, would make Malaysia only “a second choice” for investors who prefer access to larger markets that the TPPA can give access to.
He told StarBiz that investors could choose other countries in the region should Malaysia exclude itself from the trade pact.
Last week, prominent Malaysian economist and former United Nations assistant secretary-general for economic development Professor Jomo Kwame Sundaram said Malaysian federal lawmakers should reject the TPPA as the trade pact only provided minimal economic growth.
There have also been concerns over national sovereignty as the Government would be obliged to compensate investors for losses of expected profits in binding private arbitration under the investor-state dispute settlement (ISDS) clause.
Yam said Malaysia had been an investment destination of choice in the region because of the infrastructure, economic-growth fundamentals and availability of talent.
“Given Malaysia’s size and resources, we are ranked very high in terms of trading and bilateral trade. And we are there because we are a relatively open economy, our talent pool is good and we are able to do much better than many other countries.
“Are we saying that we are not prepared to compete, that we are not prepared for the challenge?” he asked.
“The question is, will our job be more difficult if we are not part of the TPPA? The answer would be, yes,” Yap said, adding that out of the 50 MNCs brought in, 24 were from countries that had negotiated for the trade pact.
Yam said the invesments that InvestKL brought in were committed to creating jobs with regional responsibilities for locals as well as transferring skills and technology know-how to the country.
To-date, 4,600 jobs have been created since June 2011 from the 7,600 planned by the investors who have set up their regional operations in Malaysia.
Yam said these jobs had deep multiplier effects on the economy as the employees of these firms were high-earning professionals. There has also been demand for office space in Kuala Lumpur and the greater metropolitan region due to these investors.
Yam revealed that up until the end of last year, RM1.7bil worth of business spending and investments have been realised out of the approved or committed investments of RM5.7bil. The rest would be invested gradually up to 2020.
“What we will now have is Malaysians who are able to secure higher pay and higher skilled jobs ... the upgrading of the standard of living of our local professionals, who we could have otherwise lost to Singapore or other countries,” Yam added.
CIMB Investment Bank Bhd chief economist Maslynnawati Ahmad noted that Malaysia could not afford to be left out of either the TPPA or the Regional Comprehensive Economic Partnership (RCEP).
She pointed out that joining the TPPA at an earlier stage would help safeguard the nation’s interests as the Government would be able to negotiate better terms for the country, especially on clauses regarding ISDS, state-owned enterprises, government procurement policy and labour.
“The case for joining has more to do with potential losses outweighing benefits in the event of not joining, including the intangible impact of carved-out issues,” she said.