While it is fairly seen as a positive move by Malaysia to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) there are many nuances that need to be well considered and addressed in order for local businesses to remain competitive and not lose out in any way when the ratification is finally concluded.
According to SME Association of Malaysia President Ding Hong Sing, the findings from PWC’s “Cost-Benefit Analysis on the Potential Impacts of the CPTPP on the Malaysian Economy and Key Economic Sectors” reaffirm the association’s view that ratification will elevate Malaysia’s gross domestic product (GDP) and economic growth while providing an array of trade benefits to small and medium enterprises (SMEs) in the country. It is well recorded that during the 2-year pandemic the sector had been greatly affected where the SME GDP registered a contraction of 7.3% in 2020, steeper than the comparative decline of 5.6% and 4.6% for Malaysia’s GDP and non-SME GDP respectively. Subsequently, the sector continues to be afflicted by labour shortage, supply chain interruptions, inflationary pressure, and escalating raw material and utility costs in the transition to the endemic phase.
To this effect, SME Malaysia anticipates these challenging business conditions to persist in the medium-term. Timely ratification of the CPTPP will alleviate the current strain on the business community to some extent, enabling SMEs to access new markets in CPTPP member economies, participate in global supply chains, source raw materials at competitive pricing, and enjoy the ease of exporting through reduced tariffs and technical trade barriers.
However, Ding also cautions a more competitive environment is in the offing, SMEs are reminded to brace themselves for the inflow of foreign goods and services from CPTPP member economies into the country which will pose greater competition in terms of choice, quality, and pricing. Pending ratification of the CPTPP and the impending competition between local SMEs and their foreign counterparts, he urges SMEs nationwide to prepare their businesses now by employing digitalisation to strengthen their marketing and branding capabilities alongside automation to increase productivity and innovation.
He hopes the Malaysian government will empower SMEs on their Industrial Revolution 4.0 journey through interest-free loans for SME automation from development banks with a payback period of 8 to 10 years, as well as the provision of digitalisation grants.
The industry looks forward to supporting various initiatives by the Ministry of International Trade and Industry, the Malaysian Industrial Development Authority, and other government agencies in moving towards prompt ratification of the CPTPP to realise the benefits of free trade for Malaysia and its SMEs.
