More consumer power – The Star Online

Credit: Original article can be found here

PETALING JAYA: Consumers are set to enjoy more competitive prices and greater product choices following the government’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), say business groups and economists.

The Malaysian Consortium of Mid-Tier Companies president Callum Chen said as far as consumers and businesses are concerned, the CPTPP free trade agreement (FTA) is suitable for them, despite some concerns in its adaptation from some business operators.

As CPTPP broadens Malaysia’s access to new markets such as Canada, Mexico and Peru, which are not covered by any existing FTA, he said it allows consumers more high-quality products, including raw materials for businesses at competitive prices.

“We can have more choices for consumers, better quality and cheaper prices in the long run.

“As a businessman, if I can bring in products from overseas cheaper, then I add value to it to make it into other products and re-export; why not?” he said yesterday.

On Oct 7, International Trade and Industries Ministry (Miti) said the Cabinet agreed to ratify CPTPP and officially submitted the instrument of ratification to New Zealand as the CPTPP depository on Sept 30.

CPTPP is a FTA among Malaysia, Australia, Brunei, Canada, Chile, Japan, Mexico, Peru, New Zealand, Singapore and Vietnam that comes into effect to the country on Nov 29.

It came into force for Australia, Canada, Japan, Mexico, New Zealand and Singapore in December 2018, Vietnam in January 2019, and Peru in September 2021.

Brunei and Chile are the only countries that have yet to complete their ratification processes.

The United Kingdom is in the final stages of acceding to the CPTPP, while China, Ecuador and Costa Rica have also applied to join.

To see these advantages come into fruition, Chen said the onus is on Malaysian companies to embrace the changing business landscape.

“Some micro, small and medium enterprises (MSMEs) and business groups are worried about being left behind, and they are not wrong.

“However, if not all, most mid-tier companies were once small companies too, and we went through the process. Most of the time, the perception and mindset caused the fear.

“SMEs should not be afraid of FTAs like the CPTPP and RCEP (Regional Comprehensive Economic Partnership). They create more avenues and much bigger platforms for us to import and export,” he said.

National Chamber of Commerce and Industry of Malaysia president Tan Sri Soh Thian Lai agreed that Malaysia’s participation in the CPTPP will benefit consumers and create new opportunities for businesses and workers.

“Malaysians will benefit from CPTPP countries’ lower export costs in terms of tariff reduction and simplification of Customs procedures, especially for intermediary goods imported by manufacturers to produce finished products.

“The finished products can then be sold at competitive prices to domestic consumers,” he said when contacted.

He added that the CPTPP will also allow companies to diversify their supply chains, resulting in competitive pricing for Malaysian consumers.

“This is due to the CPTPP widening sourcing channels for competitively priced raw materials, especially to three new markets of Canada, Mexico and Peru,” he said.

Moving forward, Soh said an additional investment of US$112.3bil (RM530.3bil) between 2021 and 2030 is also expected to be contributed by the CPTPP, as per Miti’s cost-benefit analysis.

“This will benefit our economy and our people as it leads to more jobs and economic opportunities,” said Soh, also the Federation of Malaysian Manufacturers (FMM) president.

In terms of consumer protection, Soh said CPTPP provisions in the intellectual property (IP) chapter also struck a balance between IP rights holders and consumers.

“The Malaysian government retains the right to issue compulsory licensing and can continue the current practice of entering direct negotiations to procure affordably priced pharmaceuticals for the public healthcare system.

“This alleviates concerns that drug prices could increase due to the CPTPP, whereas the electronic commerce chapter requires the protection of consumer information, verification of electronic transactions and cybersecurity measures to safeguard ecommerce users,” he said.

SME Association of Malaysia national president Ding Hong Sing said the price of goods should be lower once the CPTPP comes into effect.

“At the same time, consumers can enjoy a better choice of products alongside higher quality ones due to the CPTPP.

“Given how SMEs can also expand their markets into countries such as Mexico, Canada and Peru, which are part of the CPTPP, there is also the potential for more job opportunities to be created locally,” he said.

“In particular, SMEs now have an avenue to tap into new markets, participate in global supply chains, and source raw materials at competitive prices while also enjoying the ease of exporting through reduced tariffs and technical trade barriers,” he said.

By joining the CPTPP, Malaysia’s total trade is projected to increase to US$655.9bil (RM3.04 trillion) in 2030, while exports are projected to reach US$354.7bil (RM1.64 trillion) in 2030, with the trade balance remaining in strong surplus at 8.5% of the GDP for 2030.