Malaysia is one of Asia's biggest employers of foreign labour. But recently, cases of deaths, abuse and forced labour have come to light. What is going on? Who is protecting these migrant workers?
It’s important, therefore, that there should be balance in the views expressed
and to understand that we have so much to gain than to lose in signing this FTA
with our largest trade partner.
<P>The average tariff of our two countries is
generally low, and with or without an FTA trade will continue to grow.</P><P>However
there are products from Malaysia that attract high duties when entering the US
like textiles (up to 14.7% duty); apparel (up to 28%); shoes (up to 48%); and
ceramic tableware (up to 25%).</P><P><B>Expand RM1 trillion trade threshold and
employment</B></P><P>In addition, Malaysian products currently cannot enter their
government procurement programmes, as Malaysia is not a signatory to the WTO Government
Procurement Agreement nor do we have an FTA with the US.</P><P>This means that
even in products that we are competitive in, such as electronic products, wooden
furniture and rubber gloves, we are excluded from the US$250bil (RM877bil) government
procurement market. An FTA will allow us to participate in this market.</P><P>Furthermore,
our textile and garment industries are currently exporting RM3bil a year to the
US.</P><P>With an FTA, duty free access is expected to double to RM6bil and in
doing so, will create an estimated 20,000 new jobs.</P><P>If other competitive
products are included, Malaysia would be creating more jobs and expanding national
economic activities, exports and incomes.</P><P><B>FTA will give Malaysia regional
advantage in investments</B></P><P>The export expansion and job creation will
not end here. Many other textiles and garments manufacturers from other countries
may wish to relocate to Malaysia to take advantage of this zero duty, leading
to further employment opportunities.</P><P>Over time it will not only be factory
workers, but executives, managers and even fashion designers from local institutions
of higher learning, who will benefit from the growth of this sector.</P><P>In
terms of Foreign Direct Investments (FDI), an FTA will certainly prompt additional
US factories to relocate here to take advantage of our lower costs to re-export
products back to the US free of duty, or for export to Asean countries and other
countries with which we have signed FTAs, like China and Japan.</P><P>For an American
company that is looking at re-locating its operations in Asia, the first port
of call will be a country where there is an FTA, as it provides certainty in terms
of tariff, as well as in the rules and security of investments.</P><P>Generally,
foreign trade and investments tend to increase after an FTA is signed.</P><P>This
has been Malaysia’s experience with the signing of the Economic Partnership
Agreement with Japan in 2006, as already evident in the five-fold jump in FDI
in the last six months of 2006.</P><P>In tandem with higher investment, employment
and other economic opportunities will increase.</P><P>So a successful conclusion
of an FTA would lead to faster growth in trade and investments for Malaysia and
provide the nation a three to five year lead-time ahead of our neighbours with
respect to free market access into the US.</P><P><B>FTA will not hurt Malaysian
padi farmers</B></P><P>Some fears have been expressed that an FTA would lead to
cheap subsidised US rice entering the country, which would hurt our padi farmers.
The reality is the US prices for long grained rice are much higher than that of
their competitors like Thailand and Vietnam.</P><P>In any case, we are already
an importer of rice to supplement our own production.</P><P>Malaysia is not self
sufficient in rice, and there is no clear advantages in being self sufficient
if we can buy cheaper rice from other countries.</P><P><B>An FTA will not stop
production of generic drugs</B></P><P>There was also an expressed fear that generic
drugs will no longer be available after the signing of the FTA.</P><P>Drugs, which
are already off patent, can continue to be produced generically and be available.</P><P>One
area of contention is the Data Exclusivity (DE) period that can extend beyond
the patent term. Proprietary drug companies have contested the use of their clinical
data in the marketing approval of generic drugs by local regulatory authorities.</P><P>Our
position is that originators of intellectual properties know that there is a time
limit of 20 years for them to be the sole beneficiaries of their inventions.</P><P>This
period was deemed appropriate for innovators to recoup the cost of R&D. In
the determination and protection of public health, the country should have recourse
to compulsory licence and government use order, with or without an FTA.</P><P><B>Malaysians
want greater transparency</B></P><P>Another issue that has been raised by NGOs
and others is the alleged loss of national “sovereignty” if we were
to accede to the US request for greater transparency in our government procurement.</P><P>We
should be prepared to be transparent about the way we conduct business and not
be hesitant to put it into a trade agreement. </P><P>Transparency is not an affront
to national sovereignty. If we continue to resist, it is like saying “No
transparency please, we’re Malaysian.”</P><P><B>US has margins of preferences
like Malaysia</B></P><P>As to government procurement and preferences, the US government
itself has a system of preferences for small businesses.</P><P>For contracts below
a certain level, small businesses are given a margin of preferences of 6% to 12%
to assist them in tenders over the larger companies.</P><P>Likewise, there are
Malaysian Treasury circulars, which also lay out very clearly the margin of preferences
which a Bumiputra company can enjoy for different levels of tenders.</P><P>A properly
negotiated FTA will allow the affirmative action programme to continue in a transparent
manner.</P><P><B>Malaysia’s competition principles already in place</B></P><P>Another
contentious issue is the request for a Competition Policy to be in place in the
free trade agreement and our difficulty in tabling that for negotiation by the
ministry concerned.</P><P>We have been talking about competition policy for Malaysia
for the past 10 years and certain basic principles of competition policy can be
tabled.</P><P>These principles have already been incorporated through the Malaysia
Multimedia & Communications Act 1998 which, among other things, promotes a
freer competitive telecommunications industry where no big player can use its
dominance in an anti-competitive manner.</P><P>It is partly because such rules
were enacted that Malaysia is having a more competitive telecommunications sector.
It is easy to see how the public is benefiting from all the deals and special
programmes that the various telephone companies are offering. </P><P><B>GLCs must
be included in competition policy </B></P><P> </P><P>We understand that one possible
reason for the reluctance to table the competition policy could be that the Government
may want to exempt GLCs from a competition policy. </P><P>This position is not
acceptable to the Malaysian private sector as the GLCs are already big companies,
a significant part of the corporate sector, and certainly do not merit this concession.
</P><P>With the transformation of GLCs, they will be in a better position to operate
in a competitive environment without any special concessions. </P><P><B>A more
competitive and vibrant services sector </B></P><P>There were also comments about
how our services sectors will be swamped with an FTA. Those services sectors that
have shown resilience were those that opened up earlier, for example, in the accounting
profession, the big four in the world are already in Malaysia, staffed and partnered
overwhelmingly by Malaysians, some of whom have been posted overseas to high positions
where they give world class service. </P><P>In addition, other Malaysian accountants
have set up links with other accounting firms elsewhere and have also been successful.
It may be useful to point out that Malaysia is a signatory to the General Agreement
on Trade in Services (GATS). </P><P>The same can happen to our other services
as the nation begins to find its respective niches in a globalised environment.
</P><P>A more competitive and vibrant service sector will have spin-off effects
for the rest of the economy. </P><P>Malaysians will benefit from a more open and
efficient services sector given a more competitive service industry. </P><P><B>Adapt
and adjust to reap economic benefits together </B></P><P>In a free trade agreement
one must be prepared to adapt to some adjustments in the immediate term to reap
the benefits for the rest of the economy as a whole. </P><P>We are heartened to
read from the statement of the secretary of the Bar Council that they are considering
opening up the legal services, having found that five years into the FTA with
the US the Singapore legal profession has yet to be swamped by US lawyers. </P><P>Similarly
the lawyers in turn would be able to have access to lower logistics and financial
costs as the rest of the services sector becomes more competitive. </P><P><B>The
time pressure </B></P><P>The time to act is now. The US Congress, being controlled
by the Democrats is less likely to sign an FTA with any country soon. If we miss
this window of opportunity, Malaysia would have lost an opportunity to gain access
to the biggest economy in the world over other countries. </P><P>An interesting
viewpoint from the global political platform is that the US looks upon Malaysia
as a well-managed and moderate Muslim-majority country, which it is keen to collaborate
with. </P><P>The Prime Minister has already built a good relationship with the
US Government and Malaysia’s standing in the world and among Islamic nations
would be further enhanced.</P><P>In short, the successful conclusion of the FTA
with US will be in line with Malaysia’s national economic policies to further
expand the economic cake and create wealth for the country through an increase
in FDIs, employment opportunities, tourism and enhanced regional competitiveness.</P><P>The
successful conclusion of the Malaysia-US FTA would expedite the country’s
progress in achieving developed nation status by 2020.</P><P><B>DATUK YONG POH
KON, </B></P><P><B>President,</B></P><P><B>Federation of Malaysian </B></P><P><B>Manufacturers
(FMM)</B></P>
<P><I>Source: http://thestar.com.my/news/story.asp?file=/2007/3/17/focus/17173113&sec=focus</I>
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