CPTPP set to raise Malaysia GDP by 1.9% in 2030 — PwC
25 Jul 2022
Malaysia’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is set to result in a 1.9% higher Gross Domestic Product (GDP) in 2030.
According to a study by PricewaterhouseCoopers Advisory Services (PwC), commissioned by the government, Malaysia’s GDP is set to reach US$628 billion by 2030 with the ratification of CPTPP, US$11.7 billion higher than the scenario without such ratification, whereby GDP is projected to reach US$616.3 billion by 2030.
PwC also said ratifying the CPTPP would result in US$56.5 billion of cumulative GDP gain between 2021 and 2030, and additional investment of US$112.3 billion over the same period.
“If Malaysia does not ratify the CPTPP, growth of foreign wealth located in Malaysian assets would decrease, but growth of domestic wealth located in domestic assets would remain unchanged. In this scenario, foreign wealth is diverted away from Malaysia to participating CPTPP countries,” it said.
The CPTPP is a free trade agreement between 11 economies that provides market access and harmonises rules for existing and emerging trade issues.
CPTPP countries, which have a combined population of 508 million, accounted for 15% of world trade and 13% of world GDP in 2019.
Senior Minister and Minister for International Trade and Industry (MITI) Datuk Seri Mohamed Azmin Ali reportedly said in March this year that Malaysia aims to ratify CPTPP by the third quarter of 2022.
Pwc said aother advantage for Malaysia to ratify the CPTPP includes market access to Canada, Peru and Mexico, which Malaysia does not have free trade agreements with.
Malaysia would be able to enjoy lower costs and ease of exporting as well due to customs cooperation, harmonisation and transparency, while being able to access wider sourcing channels for raw materials at competitive prices.
“[There will be] increased competition in sectors such as oil and gas and construction, but flexibilities secured allow certain preferences to be accorded to local companies,” it said.
Source: The Edge Markets