KUALA LUMPUR: The Institute for Democracy and Economic Affairs (IDEAS) called for the prompt ratification of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) by end-2022 to help facilitate the country's post-COVID-19 recovery.
In a statement, the research institute said it welcomed the release of the 'Cost Benefit Analysis (CBA) on the Potential Impacts of CPTPP on the Malaysian Economy and Key Economic Sectors' by the Ministry of International Trade and Industry (MITI).
"The latest CBA publication launched in 2022 reinforces the welfare gains that Malaysia is poised to benefit in the medium to long term as part of the CPTPP pact.
"However, the cost of Malaysia not ratifying the agreement is quite significant as welfare gains are expected to be lower due to effects of trade diversion and limited market access to other new trading partners," said the director of research and also director of the economics and business unit Juita Mohamad.
She added that ratification of the CPTPP will no doubt bring short-term adjustment costs, however, IDEAS believed these challenges could be addressed by the government within the available policy space, while looking at examples of how other CPTPP partners have successfully transitioned.
The CBA report finds that ratifying the CPTPP would be a net positive for Malaysia, and projects it would raise gross domestic product (GDP) by US$56.5 billion over the period of 2021 to 2030, thereby raising GDP growth by 1.9 per cent relative to baseline figures in 2030.
With the possible entry of the UK and China into the CPTPP, cumulative GDP gains are projected to rise to US$125.4 billion over the baseline for the same period.
The report also showed that Malaysia's trade balance is projected to be US$53.5 billion in 2030, and remain in surplus at 8.5 per cent of GDP within the same year.
IDEAS also pointed to two National Interest Studies on Malaysia joining the Trans-Pacific Partnership Agreement (TPPA) published in 2015, each of a quantitative and qualitative nature.
On the quantitative side, IDEAS said it was found that Malaysia's participation in the TPPA is projected to achieve a cumulative gain in GDP of US$107 billion to US$211 billion over 2018 to 2027, assuming all tariffs are eliminated and non-tariff measures (NTMs) are reduced by 25-50 per cent across the 12 prospective TPPA member countries.
More than 90 per cent of the cumulative GDP gains are attributable to the reduction in NTMs.
An elimination of tariffs without any reduction in NTMs would reap a cumulative gain of only US$12 billion over 2018 to 2027, it said.
"On the qualitative side, it was emphasised that by looking at the economic, social and security pillars, on balance, it was in the interest of Malaysia to join the original TPPA," it said.
Source: https://www.nst.com.my/business/2022/08/818616/ideas-calls-ratification-cptpp-end-2022