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IMPACT OF OPENING UP OF ECONOMY
Example 1: South Korea
 In 1960s, South Korea faced economic difficulties. The population was
growing at 3%, GDP per capita US$155, high unemployment and lacked
natural resources.
 Today, South Korea's market economy ranks 15th in the world by nominal
GDP and 12th by PPP, a high income economy, member of the G20 and
OECD. The per capita income grew from US$1,689 in 1980 to US$24,329
in 2013.
 South Korea is a competitive economy and has industrial strength in heavy
industries such as automobile manufacturing, shipbuilding and construction.
Chaebol system produced Korean MNCs e.g. Samsung and LG.
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IMPACT OF OPENING UP OF ECONOMY
Example 2: China
 In 1978, Deng XiaoPing introduced "Socialism with Chinese
characteristics" to reform the Chinese economy by opening its markets
to the world.
 From 1978 to 2010, China grew rapidly at 9.5% per annum. China is now
the 2nd biggest economy in the world after United States and is projected
to become the biggest economic power in world by 2025 (Frost &
Sullivan).
 China is now a major consumer market. It has developed in recent years
excellent infrastructure facilities to promote connectivity within China as
well as with rest of the world.
 President Xi Jinping is continuing with reforms. China has opened the
Shanghai Free Trade Zone to upgrade financial services, promote trade
and improve governance as well as measures to encourage foreign
investment in 18 sectors in the country's tightly regulated service
industry. China has issued 25 licenses to operate in the zone.
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CHINA: BEFORE AND AFTER WTO
Economy Indicators
Before
After
GDP
US$200 billion
(Yr 1980)
US$8.227 trillion
(Yr 2012)
Trade Value
US$38 billion
(Yr 1980)
US$3867.1 billion
(Yr 2012)
US$200
(Yr 1980)
US$6,000
(Yr 2012)
Income per Capita
Annual Growth Rate
(1978-2010)
9.5%
• China is now the world’s leading automobile manufacturer surpassing the United States with
production of 22.1 million units in 2013 (US 11.4 million units).
IMPACT OF OPENING UP OF ECONOMY
Example 3: Myanmar
 After a parliamentary government was formed in 1948, Prime Minister U
Nu attempted to make Burma a welfare state and adopted central planning.
The 1962 coup d'état was followed by an economic scheme called
the Burmese Way to Socialism, a plan to nationalize all industries, with the
exception of agriculture.
 The catastrophic program turned Burma into one of the world's most
impoverished countries.
 Economic liberalization (2011-present).
 Myanmar's gross domestic product (GDP) per capita has grown 11 times since
it joined ASEAN. ASEAN makes up for 13% of Myanmar's total exports and
20% of their total imports.
 Myanmar recorded US$4.1 billion in foreign investment for fiscal year 20132014, tallying the total investment from 34 countries to US$46 billion.
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WHY GLOBALISATION IS AN IMPERATIVE?
 ICT has allowed wide information access.
 Goods and services can move cheaper thanks to cheap
transportation and ICT.
 The world is more borderless.
 In a flat world, competition searches for lowest cost.
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WHY TRADE IS IMPORTANT TO MALAYSIA?
Openness (GDP Trade Ratio)
Malaysia: Exports % As Per GDP
5.00
4.50
140.0
4.40
3.94
4.00
120.0
3.50
100.0
3.00
119.8
110.4 108.3
115.4 117.5 116.5
106.9
110.0
103.2
96.4 97.3
2.50
1.77 1.65
2.00
1.50
80.0
1.40 1.35
1.02
60.0
0.71
1.00
0.50
0.56 0.48
40.0
0.00
Indonesia
China
Philippines
South Korea
Thailand
Taipei, China
Viet Nam
Malaysia
Singapore
Hong Kong
20.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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WHY WE ARE IN WTO / APEC / ASEAN / REGIONAL FTAs?
 Third most international trade dependent nation in Asia after Hong Kong and Singapore.
 In 2013, Malaysia was ranked as the 25th largest exporting and 24th largest importing
country in the world.
 Singapore: Exporter - 14, Importer - 15
 Thailand: Exporting - 24, Importer - 20
 Indonesia: Exporter - 27, Importer – 27
 Malaysia population: 30 million, total trade: RM1.4 trillion (2013).
 Small domestic market, need to expand to new markets to spur exports and seek new
investments. Malaysia is developing infrastructure and other facilities to be connected
globally e.g. Port Klang, KLIA, KLIA2.
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MALAYSIA IN THE EYES OF THE WORLD
Ranked No.6
Ease of Doing Business 2014
among the 189 countries
Ranked No.12
Most Competitive Country from
60 participated countries
(World Competitiveness Yearbook 2014 )
Ranked 19th
Business Environment (2014-2018)
(Malaysia is now the top 20 investor-friendly
nations) 19/82 Countries
Ranked 53/177
Corruption Perception Index 2013
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FREE TRADE AGREEMENT - DEFINITION
An agreement between two or more countries that provides favourable treatment
such as:
 Improved Market Access for exports as a result of elimination or reduced import
duties;
 Relaxation or Removal of Quantitative Import Restriction or Non-Tariff Barriers;
 Trade Facilitative Measures;
 More liberal, predictable, transparent investment regime, providing a more
conducive environment for investment;
 Improved market access for various commercial and professional services; and
 Cooperation and capacity building.
249 FTAs/RTAs have been notified to WTO and estimated 100 more not notified
or under negotiations.
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IMPORTANCE OF FREE TRADE AGREEMENTS
Complement
liberalization efforts at
the multilateral level in
WTO
Globalisation of Trade
and Investment
First mover advantage
- setting rules
Enhancing
Competitiveness
- Preferential market
access
Creation of bigger
market
More Intense
Competition for FDIs
Ensures Malaysia
remains an important
investment and
production hub
Capacity building &
economic and
technical cooperation
Consumer benefits
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MALAYSIA’s FTAs
 Malaysia has concluded 12 Free Trade Agreements. The FTAs are as
follows:
 ASEAN Free Trade Area (1992 ), ASEAN-China (2004), ASEAN-Korea
(2006), ASEAN-Japan (2008), ASEAN-India (2009), and ASEANAustralia-New Zealand(2009); and
 Malaysia-Japan
(2005), Malaysia-Pakistan(2007), Malaysia-New
Zealand (2009), Malaysia-Chile (2010), Malaysia-India (2011),
Malaysia-Australia (2012), Malaysia-Turkey (17 April 2014).
 Malaysia is still negotiating the TPPA, RCEP.
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HISTORY OF ASEAN
• ASEAN – Association of Southeast Asian Nations.
• Established on 8 August 1967 in Bangkok, Thailand with the objective
to strengthen regional cooperation, promote peace, stability and
economic growth in the region.
• Started with five (5) founding members:
(i) Indonesia;
(ii) Malaysia
(iii) The Philippines;
(iv) Singapore; and
(v) Thailand.
• Membership expanded: Brunei Darussalam (1984), Viet Nam (1995),
Lao PDR (1997), Myanmar (1997) and Cambodia (1999).
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ASEAN COMMUNITY 2015
A. POLITICAL-SECURITY PILLAR (Ministry of Foreign Affairs)
Rules-based Community of Shared Values and Norms, Good Governance, Human
Rights and Adherence to the Principles of Democracy.
B. ECONOMIC PILLAR (Ministry of International Trade & Industry)
Single Market and Production Base, Competitive Economic Region, Equitable
Economic Region and Linkages to Global Economy.
C. SOCIO-CULTURAL PILLAR (Ministry of Tourism & Culture)
Education and Human Resource Development, Science and ICT, Entrepreneurship,
Poverty Alleviation, Social Safety Net, Health, Natural Disasters, Environment,
ASEAN’s Cultural Heritage and Regional Identity.
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ASEAN – BETWEEN 2 GIANTS
CHINA
INDIA
 Manufacturing giant with the lowest
prices
 Infrastructure that lures foreign
investment
 Good distribution of wealth with higher
per-capita income
 Strong technology and service
industry
 Relatively efficient capital market
 Strong private sector and legal
framework
 Younger workforce & growing
population
ASEAN





3rd largest economy in Asia & 7th largest in the world
Young and growing middle class
Huge national resources and human capital.
Strong manufacturing base
Favourable investment destination despite increasing
competition posed by other regional groupings / countries.
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WHAT IS AEC?
Single Market and Production Base
•Free flow of goods
•Free flow of Services
•Free Flow Investment
•Freer flow of Capital
•Free Flow of Skilled Labor
•Food Agriculture and Forestry
Integration into the Global Economy
• External Economic Relations
• Global Supply Networks
Cooperation in Other Sectors:
• Transport, Energy, Minerals, ICT,
Tourism, Healthcare, Customs,
Standards & Conformance
•
•
•
•
•
•
Competitive Economic Region
IPR
Competition Policy
Consumer Protection
Infrastructure Development
Taxation
E-Commerce
Equitable Economic
Development
• SME
• Narrowing Development Gap
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FEARS OF AEC
 Opening up of market in ASEAN leading to inflow of goods from neighboring countries,
leading to stiff competition to domestic industries such as iron & steel, automotive,
petrochemical, and rice and agriculture products.
 SMEs are vulnerable to foreign acquisitions and mergers and are unable to compete
with multinationals and imports that are coming in at competitive prices.
 Affecting programs aimed at promoting development of Bumiputera entrepreneur
community.
 Impact on traditional arts & crafts industry.
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FEARS OF AEC
 Influx of foreign services suppliers and skilled workers replacing job opportunities for
Malaysians. Highly paid jobs are perceived to be given to foreigners.
 Displacement of business opportunities for local companies and services suppliers.
 Projects are perceived to be given to companies with foreign interest.
 Limits policy space for government to promote industrial development programme and
social economic re-engineering.
BENEFITS OF INTEGRATION TO ASEAN
2000
2013
609.0
2,412.3
1,172.4
3,748.4
Total Trade (US$ Billion)
812.7
2,472.3
Intra-Trade (US$ Billion)
181.8
612.4
FDI Inflows (US$ Billion)
22.7
111.3
FDI Inflows (% of Global Inflows)
1.6
8.2
Population (Million)
518
626
Poverty Rate1
(% Population Living Below
US$1.25 PPP per capita per day)
25.4
14.9
Infant Mortality Rate
(per 1,000 live births)
35.9
22.4
GDP (US$ Billion)
GDP per capita (US$)
Note: 1 Excl. Brunei, Myanmar & Singapore
Source: IMF, WTO, UNCTAD, World Bank
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BENEFITS OF AEC TO MALAYSIA

Market size more than 20 times: ASEAN accounts for 27% of Malaysia’s Global
Trade, or US$115.9 billion of US$423.8 billion (2013).

Attractive investment location for Malaysian companies: US$5.8 billion (2013).

Huge economic opportunities based on ASEAN’s growth and increasing middle
income population.

Abundant natural resources i.e. oil and gas, timber, minerals, palm oil and rubber.

Opportunities for Malaysia to participate in infrastructure development projects.

Job opportunities for Malaysian professionals and skilled workers.
MALAYSIAN COMPANIES IN ASEAN
MALAYSIAN COMPANIES IN ASEAN
 Launched in 2001.
 The group includes the short-haul
carriers AirAsia Malaysia, AirAsia
Thailand, AirAsia Indonesia, AirAsia
Philippines, and AirAsia India; the
long-haul carrier AirAsia X. All
members of the group except for
AirAsia Japan and AirAsia India are
based in the ASEAN Region.
 Has approximately 130 aircrafts and
employs 10,000 people – Majority of
workforce comprises of people from
different ASEAN countries.
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MALAYSIAN COMPANIES IN ASEAN
 Has operations in 17 countries
including Thailand, Indonesia,
Cambodia and Singapore with total
employees of 42,000.
 Making
cross-border
banking
transactions easier with real-time
funds
transfers
and
cash
withdrawals through ATMs in
countries in which CIMB operates.
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MALAYSIAN COMPANIES IN ASEAN
 Maybank is among the top 5 banks
in South East Asia with total assets
of more than USD 150 billion. It has
an international network of over
2,200 branches and offices in 20
countries,
employing
46,000
employees who serve over 22
million customers.
 In ASEAN, Maybank has branches
in Brunei, Singapore, Thailand,
Indonesia, Cambodia and the
Philippines.
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MALAYSIAN COMPANIES IN ASEAN
• Lifestyle cafe chain in Malaysia
started in 1997 by Dato’ Steven Sim.
• Fastest growing lifestyle cakes and
café chain in the region with over
300 café outlets to date in Malaysia,
Singapore, The Philippines, Thailand
and Brunei.
• Halal certification awarded by
Department of Islamic Development
Malaysia.
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MALAYSIAN COMPANIES IN ASEAN
• Established in 1981.
• The world’s largest Halal Quick
Service Restaurant (QSR) brand
originating from Asia.
• Restaurant chain in Malaysia,
Indonesia and Myanmar.
• Pioneered a number of firsts in the
quick-serve industry.
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ASEAN COMPANIES IN MALAYSIA
Thai Summit Autoparts
PT Rajawali (Hotel)
FPT Viet Nam
TRANS PACIFIC PARTNERSHIP AGREEMENT
(TPPA)
• TPPA had its origins from the (P4) free
trade agreement signed by New Zealand,
Singapore, Chile and Brunei in 2005
which entered into force in 2009.
•
TPPA began with inclusion of the United
States, Australia, Peru and Vietnam in
March 2010. Scope expanded with
inclusion of new issues.
• First TPPA round - Mac 2010. Malaysia
became the 9th TPP member in October
2010.
• Membership in TPPA is voluntary.
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TPPA PROCESS
Stakeholders
Process
Negotiators
Negotiators are constantly negotiating their respective chapters
with various stakeholders
TPP Ministers
TPP ministers have been meeting regularly to resolve key
issues. They will meet next in early December
Engagement
MITI has been continuously engaging with stakeholders and
different interest groups to get their feedback
Cabinet
Cabinet is constantly updated on the TPP process and provides
the mandate to our negotiators
Parliament
The finalized text will be debated in parliament
TPPA : YES OR NO ?
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TPPA: SCOPE AND COVERAGE

21 WGs, covering 29 Chapters
 Goods
GP
 Rules Of Origin
Competition (SOE)
 SPS
IPR
 TBT
Labor
 Customs
Environment
 Trade Remedies
Capacity Building
 Services
Horizontal Issues
 Non-conforming Measures
 SME Development
 Financial Services
 Regulatory Coherence
 Telecommunications
 Competiveness and
Business Facilitation
 E-commerce
Legal And Institutional
 Temporary Entry
 Investment
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“Malaysia is a nation dependent on an open economy and is
committed towards preserving free and fair trade”
“Malaysia has voiced its concern that the deadline to
conclude the TPP negotiations by year end is not realistic”
“We will not sacrifice our national interests”
YAB Prime Minister
8th October 2013, Bali
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TPPA: OPPORTUNITIES FOR MALAYSIA
• Maintaining Malaysia’s position as a high value-added manufacturing hub and
quality investment destination.
• Duty free trade with four new FTA partners - Canada, Mexico, Peru and the US.
• The successful conclusion of the TPP will form a huge duty free market of 800
million people with a combined GDP of US$27.5 trillion.
• Greater market access for Malaysian products and services and inflow of foreign
investments will be a catalyst in driving Malaysia’s economic transformation
agenda.
• As a member of TPPA, Malaysia will also be able to increase our participation in
the regional supply and value chains and facilitate access for Malaysian products
and services into bigger markets.
• Capacity building through technical cooperation, sharing information and best
practices.
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TPPA: MARKET ACCESS OPPORTUNITIES
• Expand market access through tariff elimination/reduction and elimination of non-tariff
barriers.
• Example: US tariffs for Textile 2.6-32%, Shoes 45%, Palm Products 4.6%, Plywood
8%, Processed Vegetable Palm Oil 12.3 cents per kg or 8% and electrical &
electronic 2-18% .
• TPPA preferential rules mitigates loss of GSP in Canada (1/1/2015).
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TPPA: FEAR AND CHALLENGES
 National
sovereignty
 Beyond traditional trade issues (Environment,
Labour, GP, SOE)
 US Factor…
 Secrecy of the negotiations?
 Bumiputera & SME companies?
 Limits policy space?
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TPPA: FEAR AND CHALLENGES
Lead to higher cost of medicines?
 High commitment under IPR Chapter?
 Foreign companies be able to sue Government?
 Lost of job opportunities?
 Threat to local SMEs / Local businesses to
shutdown?
 Local farmers affected? Rice?

INTEREST OF THE NATION WILL BE PRESERVED
Parameters
Constitution of Malaysia
Rights of State Governments
Major National Policies
National Interest
‘Malaysia will negotiate TPP on our terms’
Nothing is agreed until everything is agreed!
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CONCLUSION
• Yes we need to open up, but on our
terms.
• On balance pros more than cons,
must benefit the people.
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