Malaysia-us Free Trade Agreements seek better market access by addressing tariffs and nontariff measures. Increase intense competition will lead to lower prices for consumers. Local or domestic producers will be compelled to raise productivity, invest more in research and development (R&D) serve as an impetus for Malaysia to 'leap-frog' its way to being an R&D hub in the region.
Malaysia-us Free Trade Agreements seek better market access by addressing tariffs and nontariff measures. Increase intense competition will lead to lower prices for consumers. Local or domestic producers will be compelled to raise productivity, invest more in research and development (R&D) serve as an impetus for Malaysia to 'leap-frog' its way to being an R&D hub in the region.
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Malaysia-us Free Trade Agreements seek better market access by addressing tariffs and nontariff measures. Increase intense competition will lead to lower prices for consumers. Local or domestic producers will be compelled to raise productivity, invest more in research and development (R&D) serve as an impetus for Malaysia to 'leap-frog' its way to being an R&D hub in the region.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
(FTA): Assessing the Potential Positive and Negative Impacts
Associate Professor Dr. Shakila Yacob University of Malaya
Wacana Urustadbir Soleh siri 3
“FTA: Benarkah Rakyat Sengsara?” Anjuran JK SAKSI, JIM 14 Julai 2007 Pusat Komuniti JIM, Pusat Bandar Melawati, KL Malaysia (Potential)
Malaysia 's objectives in negotiating FTAs are to:
– seek better market access by addressing tariffs and non- tariff measures; – further facilitate and promote trade, investment and economic development; – enhance the competitiveness of Malaysian exporters; and – build capacity in specific targeted areas through technical cooperation and collaboration. The FTAs or Comprehensive Economic Partnership (CEP) agreements currently pursued with selected countries are not confined to liberalisation and market opening measures alone. They are comprehensive and include investment, trade facilitation, intellectual property rights (IPR) as well as economic cooperation in areas such as: – competition policy; – standards and conformity assessment; – information and communication technology; – science and technology; – education and training; – research and development; – financial cooperation; – Small and Medium Enterprises (SMEs) development; and – paperless trading. Benefits:
Increased intense competition will lead to lower
prices for consumers for example in the areas of IT hardware; Breaking up the monopoly of local giants and gives more choice to local consumers; Local or domestic producers will be compelled to raise productivity, invest more in research and development (R&D), thus increasing the quality of goods and services; in the areas of bio-tecnology: food technology, foodstuff. Chilean example: • From 2003-2005, Chilean exports to the United States increased by over 80 percent. • Increases in U.S. exports to Chile have also been spectacular with over 90 percent growth. • Chile took on the hard work of undertaking the necessary economic reforms to ensure a key role of the private sector in the productive process, general openness, macroeconomic stability, and overall competitiveness. • Chile managed to achieve these reforms in conjunction with enactment of social programs to reduce poverty that were missing with NAFTA. US-Malaysia FTA Serve as an impetus for Malaysia to ‘leap-frog’ its way to being an R&D hub in the region, as local manufacturers will focus on R&D as a branding tool for market distinction, explore international joint-ventures (IJVs) with US firms for technical transfer on a wider basis (i.e. the expansion of IJVs in Malaysia), taking advantage of the increase exposure to the free flow of goods and services as a means to test and engage in comparative analysis for the purpose of quality improvement; More employment opportunities for Malaysia as it has an educated and sophisticated population which speak English. Representative offices, sales and marketing agencies, etc. will be set up by US firms to facilitate the transactions and liaisons between the two countries; US-Malaysia FTA A prelude to the a freer cross-border movement of labour, thus granting the privilege and right to Malaysians to have more opportunities of seeking employment in the US without having to go through stringent immigration controls or naturalisation process. Thus, Malaysia need not worry about suffering a ‘brain-drain’ since it is more an issue of geographical mobility within a globalised economy rather than migration per se. More transparency in the awarding of contracts and tenders, reversing the cronyism trend and promoting efficiency in the delivery system. Losses - 1 National pride would be impacted in the area of government procurement, if the US insists that it should be incorporated into the FTA; To Malaysia it means the erosion of NEP indirectly. Government procurement in Malaysia includes the area of telecommunications, banking and insurance, construction, utilities (water and electricity). Unlike our closest neighbour, Singapore we are not ready to be as open. Among the more competitive U.S. service sectors that will enjoy non-discriminatory treatment in Singapore under the agreement are tourism, express delivery, telecommunications, advertising, construction and engineering, and financial services, including banking and insurance. Malaysian GLCs like MAS, Tenaga , Telekom Malaysia are considered as strategic national assets which is vital to the government agenda of economic development. Losses - 2 Dilution of the symbolism of national icons such as Proton, and perhaps other strategic national assets; Downsizing of the bureaucracy in the ‘backroom’ offices because of business process outsourcing (BPO); The increase in the price of branded medical supplies because of intellectual property rights (IPO) protection, thus burdening the Malaysian consumers, and hampering equitable healthcare access; Real danger of trade deficit with the US with the Malaysian Ringgit further weakening instead of appreciating since de- pegging in order to stall the deficit. One implication is that inflation will continue to rise, burdening the lower income groups. Losses - 3 Malaysian Agricultural sector would be affected as Malaysia would not be able to compete with American agricultural products in terms quality, price and varieties. The signing of the FTA would quash the PM’s vision to turn the agricultural sector to be the third engine of growth in the Malaysian economy. For example in Australia-US FTA (2004) improved the overall U.S. trade deficit situation with Australia creating a trade surplus with Australia which rose 31.7% in the first quarter of 2005, compared to the same timeframe in 2004. U.S. exports to Australia increased 11.7% in the first quarter of 2005 to nearly $3.7 billion for the quarter. Agriculture exports to Australia were up 20%. CONCLUSION
Overall the signing of the US-Malaysia FTA would
generate positive impact in certain sectors but the disadvantages outweighs the advantages in other sectors in particular agriculture. With the expiration of the Fast Track, there is a likelihood that the US-Malaysia FTA would not be signed in the near future. This allows for a period of reflection on the part of Malaysia to continually assess the positive and negative impact of signing the FTA. Probably Malaysia should carry out domestic reforms to enhance its competitiveness in the global market.