FMM urges govt to expedite ratification process for RCEP and CPTPP to aid recovery

FMM urges govt to expedite ratification process for RCEP and CPTPP to aid recovery
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KUALA LUMPUR (April 16): The Federation of Malaysian Manufacturers (FMM) has urged the government to expedite the ratification process for the two major free trade agreements (FTAs) — the Regional Comprehensive Partnership Agreement (RCEP) and Trans-Pacific Partnership (CPTPP) — soon in a bid to help local manufacturers or exporters to recover faster during the post-pandemic era.

FMM president Tan Sri Soh Thian Lai said in a statement that the two FTAs will enable local manufacturers to benefit from the diversification of import sources of industrial inputs and components.

According to Soh, the CPTPP eliminates tariffs on nearly 96% of products entering the intra-regional trade and the RCEP will likely cover 90% of these products.

FMM also commends the Ministry of International Trade and Industry (MITI) on its commitment to complete domestic procedures for the ratification of RCEP by the first quarter of 2022.

However, FMM has called on the government to hasten the ratification process for RCEP to be implemented by this year to benefit businesses in this time of need as it is imperative to stabilise manufacturing activities and rebuild supply chain connectivity in the region.

For CPTPP, on the other hand, while there is no deadline for Malaysia to complete the domestic process to enable the ratification of the CPTPP, FMM commented that the ratification of the CPTPP at the earliest date possible will greatly contribute to Malaysia’s post-pandemic recovery.

“Covid-19 and its ensuing impact have emerged as the top risk to global trade flows as it affects both supply and demand of goods. The manufacturing sector has been hit hard with a myriad of issues caused by disruptions in the supply chain which has severely impacted production and trade activities.

“Therefore, the post-Covid-19 trade recovery for Malaysian companies is going to be more about re-establishing critical supply chains and establishing new global value chains to boost economic growth,” Soh added.

He pointed out that the two FTAs will complement rather than compete against each other.

“The further integration of regional economies under RCEP and CPTPP, in addition to providing Malaysian exporters with preferential access to growing markets across the Asia Pacific, allows for increase in imports of raw materials and natural-resource-based materials from Latin America and Canada.

“At the same time, it will provide strategic nearshore options which will reduce costs and time for companies by allowing them to both import and export products anywhere within the East Asia region without meeting the separate requirements for each country,” he added.

FMM is a strong advocate of FTAs as Malaysian companies will benefit from the lowering of trade barriers to facilitate greater market access, harmonious alignment of trade and investment norms to strengthen supply chain links, and deepening of exchanges and cooperation to increase economic activities, said Soh.

“FMM firmly believes that these regional trade agreements will greatly contribute to manufacturers’ post-pandemic recovery and in creating resilient supply chains,” said Soh.

Kathy Fong