KUALA LUMPUR: The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has helped to boost foreign direct investment (FDI) into the country, with Malaysia’s cumulative FDI rising by RM14.9 billion to reach RM914.9 billion at the end of the third quarter (3Q) of 2023.
Investment, Trade And Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said FDI from Japan increased by RM4 billion while that from Australia rose by RM1 billion in comparison to 2022.
Japan and Australia are both members of the CPTPP.
In a statement today, the minister said the largest recipient of the overall FDI is the services sector (50 per cent), followed by manufacturing (42 per cent).
"Based on data collated by the Malaysian Investment Development Authority (MIDA), 181 new projects valued at US$2.94 billion (US$1=RM4.61), with almost 11,000 potential employment opportunities, were recorded from CPTPP countries between January and September 2023,” he shared.
In terms of trade facilitation, Tengku Zafrul said, the CPTPP has enabled Malaysian exporters and producers to enjoy preferential tariff treatment via the CPTPP certificate of origin (CO), whose utilisation reached 4,482 COs valued at about RM1.58 billion, for the period of Nov 29, 2022 to Oct 31, 2023.
The top export destination is Japan, followed by Mexico, Canada and Peru, he noted.
"Compared to the same period in 2022, Malaysia’s total exports to the CPTPP countries for the January-September 2023 period showed a two per cent increase for iron and steel products, and also for textiles; while petroleum product exports grew by 15 per cent.
"The growth of Malaysia’s exports to CPTPP countries is expected to grow exponentially when these countries progressively eliminate duties,” he said.
The Ministry of Investment, Trade And Industry (MITI) is urging Malaysian businesses and small and medium enterprises (SMEs) to fully utilise the CPTPP, which promotes trade and investment by facilitating numerous multilateral benefits through various enablers.
Tengku Zafrul said these benefits include access for the export of Malaysian business and professional services, including in legal, engineering, taxation, accounting, and architecture.
"There are also prospects in computer-related services in Australia, Chile, and Mexico; environmental services in Australia, Canada, New Zealand and Mexico; construction in New Zealand and Mexico; and financial services in Peru,” he shared.
Businesses and SMEs can get further information by visiting https://fta.miti.gov.my/index.php/pages/view/tpp_cptpp.
Tengku Zafrul highlighted that cross-border mobility for professionals among CPTPP countries can also be facilitated through mutual recognition agreements (MRA).
"After an MRA has been developed, different licensing and qualification procedures will be recognised by the relevant authorities or professional services bodies of the respective CPTPP countries.
"Potential collaborations with professionals from other CPTPP countries could enrich businesses’ pool of expertise, leading to knowledge transfer, talent development and the creation of a diverse Malaysian workforce,” he said.
In addition, Tengku Zafrul said, CPTPP’s e-commerce provisions reduce trade barriers, allowing Malaysian businesses and consumers to benefit from easier access to online trading of goods and services with other CPTPP countries.
This is facilitated by encouraging and enabling cross-border data flow for businesses and SMEs in CPTPP member countries, he said.
"This enablement includes the CPTPP countries’ commitment to not impose ‘localisation requirements’ that would force businesses to build data storage centres or use local computing facilities in CPTPP markets; commitment to not impede companies from delivering cloud computing and data storage services to essential and expanding CPTPP markets; and commitment to cybersecurity, as well as privacy and consumer protection through, among others, each country’s national computer emergency response teams,” he explained.
On another note, he said the CPTPP’s provisions for government procurement (GP) will provide Malaysian businesses equal opportunities to bid for government projects in other CPTPP countries such as Mexico, Peru, and Vietnam.
"In fact, under the GP provisions, Malaysia’s initial and landing threshold for construction services is one of the highest compared to other CPTPP parties. Malaysia was also granted one of the longest transitional periods for construction services,” he said.
According to Tengku Zafrul, the CPTPP also recognises the importance of SMEs through two critical initiatives, namely information sharing, and enabling the SMEs to capitalise on the benefits and opportunities from the CPTPP, with the aim of integrating them into the global supply chain.
"MITI is currently working closely with the Ministry of Entrepreneur and Cooperatives Development (KUSKOP) to improve the data collection of SMEs.
"This is an important step to enable the government to construct a customised supporting mechanism for Malaysian SMEs to join the global supply chain seamlessly, and to have at least 90 per cent of Malaysian SMEs digitalise their business, which is one of the aims of the 12th Malaysia Plan,” he said.
Other CPTPP provisions which are equally important in facilitating SME growth include protection on intellectual property rights (IPR) via a regional standard of protection and enforcement across the Asia Pacific region.
The provisions also include assisting SMEs in overcoming obstacles in the use of e-commerce and encouraging businesses to voluntarily adopt environmental, social and governance (ESG) principles and standards to ensure a sustainable and resilient industry.
To this end, he said, MITI's newly launched National Industry ESG Framework (i-ESG Framework) will support Malaysian businesses and SMEs to integrate ESG principles systematically and seamlessly into their operations.
Elaborating further, Tengku Zafrul said CPTPP countries have also committed to eradicate bribery and corruption in international trade and investment, providing greater assurance to businesses and SMEs that the smooth movement of goods and services among CPTPP countries can be executed with no hidden cost.
Another significant CPTPP benefit is capacity building, particularly in agricultural, industrial and services sectors, as well as in the promotion of education, culture and gender equality.
"By fostering, for example, relationships between different businesses within the same industry or supply chain from identified CPTPP countries, industries and SMEs can learn from each other, and share best practices.
"Collaborative efforts can also make it easier for SMEs to compete internationally,” he noted.
Tengku Zafrul said CPTPP members are currently embarking on a review of the agreement to ensure relevancy, taking into account current economic, ESG and geopolitical developments globally.
"MITI will work closely with other CPTPP countries’ working teams to address issues such as supply chain resilience, decarbonisation, emerging technologies, and artificial intelligence, while also strengthening policy implementation and regulations, developing industrial capabilities, and enhancing export promotion.
"The ministry will always ensure that Malaysia’s interests will continue to be promoted and safeguarded via the country’s membership of all free trade agreements,” he added. - Bernama
