Malaysia vows to protect state firms, bumiputra policies in TPP deal

LAHAINA (HAWAII) — Malaysia’s International Trade and Industry Minister Mustapa Mohamed vowed to safeguard state-owned enterprises and policies favouring ethnic Malays in a Pacific trade deal, as he hit back at domestic critics of the pact.

Mr Mustapa said the Trans-Pacific Partnership (TPP) would scrap tariffs on goods ranging from electrical goods to palm oil, as well as open up new markets with countries not subject to existing bilateral trade deals, such as the United States, Canada, Mexico and Peru.

Mr Mustapa, who is attending talks in Hawaii this week aimed at finalising the 12-nation deal, tackled concerns that the agreement would undermine Malaysia’s right to manage state-owned enterprises (SOEs) and policies of preferential treatment for ethnic Malays and other indigenous people, known as bumiputra.

“Malaysia is seeking flexibilities for our SOEs ... to enable them to continue with their developmental roles,” he said in a statement on Tuesday, pointing to Malaysian state investor Khazanah Nasional and state energy firm Petronas.

“On government procurement, Malaysia is safeguarding (bumiputra) preferences by ensuring that the current (bumiputra) and (small and medium-sized enterprise) preferences will be maintained.”

Malaysia’s top 20 government-linked firms have a market capitalisation of RM431.1 billion (S$155 billion). Ethnic Malays made up the bulk of their 225,050 employees last year.

In his statement, Mr Mustapa also emphasised that Malaysia would not be signing the TPP pact during this week’s ministerial negotiating meeting, as each negotiating party will need to go through its domestic clearance processes before a final decision to sign and ratify the agreement is made.

He also rejected criticisms of the TPP’s impact on access to affordable medicines, and said US rice exports to Malaysia would remain at a “minimal level”.

Malaysian critics of the pact range from activists to opposition lawmakers and even influential former prime minister, Dr Mahathir Mohamed.

Activists say it would drive up medical costs, as its provisions would curb access to generic medicines. Critics also claim that the pact would affect rice businesses in Malaysia.

Failing to join the TPP would come at a cost of potentially losing foreign investment to other countries, and late entry would not give Malaysia the same ability to shape the rules, Mr Mustapa said. “We will also lose out to our competitors, who will be part of the TPP will and enjoy preferential access to TPP markets,” he added.

He said that after five years, the negotiations are nearing conclusion and, at this stage, countries need to make hard decisions. “As in all negotiations, there are concessions that need to be made,” he said.

“I urge Malaysians to keep an open mind on the TPP and acknowledge that while there are costs, there are also benefits to the country,” he said. AGENCIES