Posted on 10 Mar 2016
"We are very excited about some of the ongoing trade liberalisation initiatives, in particular the TPPA where Malaysia is participating. It is already a signed deal, it is now up for ratification and could come into effect in the coming months," said HSBC Global Research senior trade economist Douglas Lippoldt.
"This agreement, according to some of the studies out there, could contribute an increase in exports for Malaysia of up to 20% and a boost to GDP once the agreement is fully implemented, to something like 7%," he told reporters at a briefing yesterday.
He noted that while the TPPA is a positive development, Malaysia is also engaged in the Regional Comprehensive Economic Partnership (RCEP), which is being negotiated among 16 Asian countries and has an important economic potential.
"If you take the combination of TPPA and the RCEP, Malaysia is participating in both initiatives, I think it combined with some of the domestic resources here – you've got a dynamic young population, good geographic position, flushed with natural resources – combine this with some of the manufacturing sector strength, service sector potential, it situates Malaysia very well going forward for economic development," he added.
On how these regional trade agreements would affect small and medium enterprises (SMEs), Lippoldt said it is important that the agreements take into account the situation of SMEs.
"SMEs in any country account for the majority of all enterprises. The TPPA has a special chapter looking at SMEs, it has special provisions to help raise awareness among SMEs of the potential for trade to contribute to their growth and success," he said.
While it is important to have access to information and governments participating in the TPPA should raise awareness for SME stakeholders, he said it is also important for SMEs to be engaged.
"It takes action on the part of businesses to prepare for increased competition and also to capture, to seize, the new opportunities that trade liberalisation presents," he added.
Commenting on trade performance, Lippoldt said 2015 was a difficult year for trade with emerging markets experiencing a contraction in overall trade in goods and services (in real terms, factoring out price effects).
"Merchandise trade, including price effects saw an even more substantial decline. I think that there should be in the medium term some strengthening of demand, there should be some recovery in the valuation of commodity prices for example and I think that right there you have some impetus toward better numbers going forward," he said.
"If we are able to achieve the trade liberalisation that's in the pipeline, this will reinforce the positive and I think we will see a more robust trade picture looking out into the medium to long term," he added.
