Ratifying CPTPP will drive manufacturing exports – FMM
06 Aug 2020
The Federation of Malaysian Manufacturers (FMM) believes that ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will greatly contribute to Malaysia’s post-COVID-19 pandemic recovery.
Noting that there is no deadline for Malaysia to complete the domestic process to enable the ratification of the agreement, FMM president Tan Sri Soh Thian Lai said doing it at the soonest possible could enhance market access into countries such as Canada and Latin American countries, particularly Mexico.
Such countries currently impose high tariffs for electrical components, telecommunication devices and consumer electronics.
“It could also boost exports for the electrical and electronics industry which has been a key contributor to Malaysia’s export earnings, as well as providing an advantage to nitrile glove manufacturers over China in exports to Canada,” he said in a statement today.
Soh said ratifying the CPTPP early could also assist the textile industry to increase its exports by 20 per cent, with the elimination of duties on textiles in the CPTPP countries.
“It could also assist Malaysian automotive parts and components manufacturers to export to global original equipment manufacturers (OEMs) located in the CPTPP countries, for instance, Mexico which become part of their global supply chain,” he said.
In this regard, he said over 80 per cent of Malaysian exports of automotive parts, particularly rubber components, are expected to enjoy duty free access immediately.
Soh said the manufacturing sector had been hit hard with production and supply chains of most companies being on a near standstill due to the Movement Control Orders (MCO), which severely impacted economic and trade activities.
“Given that Malaysian manufacturers in general were only allowed to resume operations at full capacity in early May 2020, FMM envisages that business recovery including export activities would only start from six months onwards, as Malaysian businesses gradually adapt to the new norm in dealing with COVID-19,” he said.
Looking at the current situation, he added that it was imperative to stabilise the manufacturing production while further expanding market access for Malaysian exports.