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  • Writer's pictureYB Wong Chen

TPPA Myth Busting, Winners and Losers


There are two prevailing myths about the TPPA. The first myth is that it is important to be part of TPPA to get a first mover advantage. The second myth is that the TPPA will miraculously increase foreign direct investments and save the country from economic lethargy. I wish to address these two myths now. Myth number one is interesting because in my previous press conference, contents of the PwC report reveals that the economic benefits from signing the TPPA are not significant. So there is in fact no economic advantage from being a first mover but more advantage by observing on the sidelines.

As for the second myth that FDI will increase, that sadly is also untrue. Any serious investor contemplating a major investment decision will consider the following primary factors; land availability, quality of labour, democracy and governance, infrastructure, banking environment, taxation, and impartial judiciary. Whether or not a free trade agreement exists is not a primary investment decision factor. Malaysia is now struggling to stop capital flight of foreign and domestic investors. We will be able to attract much more investments from resolving the 1MDB, corruption and governance issues than by signing the TPPA. We must step out of this siege mentality that we need foreign intervention to resolve our own problems.

Another common question posed to lawmakers is who are likely be the winners and losers of TPPA. According to the PwC report, the three sectors that are likely to have setbacks from the TPPA are (a) oil and gas, (b) palm oil and (c) construction. These are the so-called losers that will face challenges. The three winners are (a) electrical and electronics, (b) textiles, and (c) automotive.

However, when we look at these winners and losers in terms of their size and from national income perspective, it is clear why overall, Malaysia’s national economic interests will not benefit from signing the TPPA. The concept of national income is the measure of all domestic output and net income from abroad by domestic Malaysian companies.

Oil and gas, palm oil, and construction, the losers are the very significant source of national income for Malaysia. The electrical and electronic industry, a winner, on the other hand is primarily controlled and owned by foreign companies operating in Malaysia. Whereas the textile industry is domestic but an insignificant contributor to our GDP and therefore any benefits it gets from TPPA has minimal macroeconomic impact. The only true Malaysian winner is the automotive components industry which is mostly Malaysian owned. The irony is this industry originated from the protectionist policies that gave rise to Proton. Now the TPPA sets to eliminate protectionist policy options.

I wish to emphasise, as per my press conference on the 6th of January 2016, that the TPPA overall macroeconomic gains are insignificant. I urge again to the MITI Minister to stop pretending that this is a matter motivated by economics and international trade. I reiterate that political and geopolitical considerations are driving the TPPA agenda. Therefore, the PM and the Foreign Minister must answer to the public why we are pursuing the TPPA for a few lousy dollars.

YB Wong Chen Member of Parliament for Kelana Jaya 8 January 2016


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