One Belt One Road paving the way to success


In 2013, Chinese President Xi Jinping proposed building the Silk Road Economic Belt and 21st-Century Maritime Silk Road, which became known as the Belt and Road Initiative.

Countries along the Belt and Road have their own resource advantages, and their economies are mutually complementary. This means there is a great potential and space for cooperation.

Connecting facilities is a priority in implementing the initiative. On the basis of respecting each other’s sovereignty and security concerns, countries along the Belt and Road are improving the connectivity of their infrastructure construction plans and technical standard systems, jointly pushing forward the construction of international passageways, and forming an infrastructure network connecting all sub-regions in Asia, and between Asia, Europe and Africa.

At the same time, China and countries along the way are making efforts to promote green and low-carbon infrastructure construction and operation management, taking into full account the impact of climate change on any construction.

With regard to transport infrastructure construction, they are focusing on key passageways, junctions and projects, and giving priority to linking up unconnected road sections, removing transport bottlenecks, advancing road safety facilities and traffic management facilities and equipment, and improving road network connectivity.

Countries along the Belt and Road are building a unified coordination mechanism for whole-course transportation, increasing connectivity in customs clearance, reloading and multimodal transport, and gradually formulating compatible and standard transport rules, in order to facilitate international transport.

China suggests pushing forward port infrastructure construction, building smooth land-water transportation channels, and advancing port cooperation, increasing sea routes and the number of voyages, and enhancing information technology cooperation in maritime logistics. We should expand and build platforms and mechanisms for comprehensive civil aviation cooperation, and quicken our pace in improving aviation infrastructure.

In this episode, we will see how Belt and Road helps close the distance between people around the world.

The Belt and Road:

http://watchthis.chinadaily.com.cn/video/column/belt-and-road/

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China ready to move into the trade and world leadership vacuum created by the US


 China sends out positive signals

CHINA has sent out stabilising messages to the world on its economic, investment and foreign policies since it convened its two most important annual political meetings (“two sessions”) early this month.

The on-going “two sessions” inevitably attract global attention because China’s policies for the year are announced by top leaders at these meetings held in the imposing Great Hall of The People, to the west of Tiananmen Square in Beijing.

For this year, it is even more crucial for other nations to scrutinise the policies of China at the sessions, held from March 3 to 15, as US President Donald Trump has injected too much uncertainty into the global dynamics.

The world is weighed down by anxiety as Trump, who took office in January, abandons globalisation and advocates the return of protectionism. Hence, nations are looking for leadership from the world’s second largest economy, according to analysts.

The two sessions or lianghui refer to the Chinese People’s Political Consultative Conference (CPPCC) that began its session on March 3 and the annual National People’s Congress (NPC, or Parliament) that started on March 5. The CPPCC is China’s top political advisory body set up by the Communist Party of China (CPC) in 1949 after the CPC, led by Mao Zedong then, won the civil war.

Five years later, the legislative NPC was established.

Steady economic growth

China is expected to grow steadily at 6.5% or higher this year as it continues its restructuring and reforms. Last year, the country achieved growth of 6.7%.

China’s Premier Li Keqiang announced on March 5 that the growth target for this year would be around 6.5%, while he addressed more than 3,000 legislators.

This slower growth target shows China is opting for a steady growth to reduce financial risk from excessive borrowing, according to economists.

Like the rest of the world, China expects to continue to experience global headwinds and uncertainties. Indeed, the premier warned of a far more complicated global picture ahead in light of the threat of protectionism.

Alfred Schipke, an economist from the International Monetary Fund, told the South China Morning Post: “Anything between 6-6.5% will be appropriate. The key is to have sustainable growth.”

For this year, China will have to give its leaders more room to push through some painful reforms to deal with a rapid build-up in debt and over-capacity.

Li said he would tackle state-owned “zombie enterprises” producing more coal and steel than needed. And nationwide pollution, caused largely by heavy industries, has to be addressed to bring back blue skies. His list of China’s difficulties also included laziness of some government officials. But will China’s economy continue to slide?

Global Times, the party mouthpiece of the CPC, has this to say in its frank editorial: “There are many problems in China’s economy at the moment. Given that it is now stable on the whole, we do not fear these problems as they will most likely turn into future opportunities for further development.”

The news portal stated that structural reforms in the Chinese economy had been “comprehensively addressed”.

Many enterprises that are heavy polluters have been shut down. The country no longer helps inefficient enterprises to stay afloat.

The current anti-corruption campaign has curbed improper spending to the extent that businesses in classy restaurants and retail sector are badly hit.

“China’s biggest accomplishments in the past years are that it did not stop to make adjustments in its economic transition. Instead, it adjusted itself while continuing to move forward. Now, society has fully adapted to the new normal in the country’s economy,” said Global Times.

Despite having to tackle its own economic problems, China has sent out a heartening message that it will continue to be the strong engine of global growth. Last year, China contributed about one-third of the world’s economic growth.

“China’s steady growth has brought in greater demand, investment and products to the world economy … China will help improve global prosperity and regional infrastructure as it pushes its belt and road initiative,” said Wang Guoqing, spokesman for CPPCC on March 3.

More than 100 countries and organisations have joined the belt and road initiative and over 40 of them have cooperation pacts with China, added Wang.

The belt and road initiative, proposed by Xi in 2013, aims to build infrastructure and trade network to link Asia with Europe and Africa along ancient trade routes.

Since 2013, China has financed and gotten involved in projects on aviation, power, rail, road and telecommunications in participating belt-road countries. It is planning to host a belt and road Summit in May that could see China announcing more multi-billion dollar projects to benefit its trade partners and its own economy.

Opening up further

China had also told the world it would open up further and liberalise more sectors to promote trade and investment.

After the opening of the NPC session on March 5, core leader President Xi Jinping reiterated China’s commitment to “open up wider”.

“China will open up like never before. China’s opening door will not close,” said Xi in his report.

“China’s door will open wider, and China will keep working to be the most attractive destination for foreign investment.”

Xi made the remarks while joining in a panel discussion with lawmakers from Shanghai last Sunday, according to the official Xinhua News Agency.

Foreign firms will be able to get listed on China’s stock markets and issue bonds. They will also be allowed to participate in national science and technology projects.

Foreign firms will also be treated as domestic firms in license applications and government procurement, and will enjoy preferential policies like locals under the “Made in China 2025” initiative aimed at modernising the manufacturing sector.

Service industries, manufacturing and mining will be more open to foreign investment.

Ian Yoong, a former investment banker in Malaysia, opines that Xi’s vows to open up and liberalise sectors “shows that China is ready to take over the mantle from the US as the dominant superpower”.

He tells Sunday Star: “The key themes of President Xi and Premier Li’s speeches are globalisation and liberalisation of trade, totally countering President Trump’s plans for the US.

“This is a signal to the world that China is ready to move into the trade and political leadership vacuum to be created by the US.”

Easing tension in South China Sea

For South-East Asian nations, there was some relief when the Middle Kingdom appears to have softened its tone in South China Sea disputes.

In remarks made on March 3, Wang, the spokesman for the CPPCC placed emphasis on “navigational freedom”, which the US has often advocated.

“As a major trading nation and the biggest country along the South China Sea, China attaches more importance than any other country to navigational freedom and security in the South China Sea.”

This stance was starkly different from the hard tone of previous months, during which China warned the US and Japan to stay away from its “own sea”.

China’s recent naval force demonstrations in South China Sea had also unnerved Asean nations.

Observed Panos Mourdoukoutas, a contributor to Forbes magazine: “The shift in China’s tone in the South China Sea disputes comes as a relief for investors in Asian equities.”

But what is more comforting for Asean is that last Wednesday (March 8), China’s Foreign Minister Wang Yi announced that the first draft of a code of conduct (COC) for behaviour in South China Sea disputes has been completed.

He told a press conference: “Tension in the waterway has eased notably.”

Since 2010, China and the 10-member of Asean have been trying to work out a set of rules aimed at avoiding conflicts among nations laying rival claims over the waters.

China, which lays sovereign claim to over 80% of the resource-rich South China Sea through which US$5tril (RM22tril) worth of trade passes every year, has often stated it prefers to resolve disputes via peaceful talks with rival claimants – the Philippines, Malaysia, Vietnam, Brunei and Taiwan.

Wang vowed China would not allow this new stability in South China Sea to be “disrupted and damaged” by outsiders.

There have been sporadic incidents between US and Chinese ships in the South China Sea. Late last year, a Chinese ship seized a US navy underwater drone off the Philippines, but later returned it.

Korean Peninsula crisis

At his press conference, China’s Foreign Minister also addressed the most pressing issue for the region now – the possibility of a war exploding at Northeast Asia.

North Korea recently launched four short-ranged ballistic missile in response to large-scale military drills held by the US and South Korea. It was reported that these launches were aimed at US military bases in Japan.

Wang proposed “double suspension” to defuse the crisis, urging North Korea to suspend its nuclear and missile activities while the United States and South Korea to cease their war games.

Describing the two parties as “two accelerating trains coming towards each other”, Wang said China was willing to be a “railway switchman” to switch the issue back to the right track.

But US Ambassador to the United Nations Nikki Haley promptly responded that the US must see “some sort of positive action” from North Korea, while Cho Tae-yul, South Korea’s UN ambassador, said: “This is not a time for us to talk about freezing or dialogue with North Korea.”

CPC’s Global Times, in its editorial, opined Wang’s solution is “the only way out” to resolve the North Korean nuclear issue peacefully.

The North Korean nuclear issue is not created by Pyongyang alone, it argued.

Although North Korea’s development of a nuclear programme is wrong, Washington and Seoul are the main forces that have pushed North Korea to this path, it added.

“Now, they want to stop Pyongyang from going ahead, while refusing to reduce the impetus they are giving to North Korea. When they failed to reach their goal, they blame China for not being cooperative enough,” said the editorial.

Despite the negative response to China’s proposal, Global Times opines Wang’s handling of the press conference “displays confidence of the country”.

By Ho Wah Foon The Star

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Reconsider TPPA in public interest


Use the next two years to think about the TPPA and its many implications for present as well as  future generations of Malaysians.

LAST week, Malaysia’s Parliament authorised the government to sign and ratify the 6350-page Trans-Pacific Partnership Agreement (TPPA). Thankfully, as the Minister has emphasised, countries will not need to ratify the deal for about two years, and can withdraw after that, though neither option will be costless. Hence, it is important to use the next two years to have a careful consideration of the TPPA and its many implications for present as well as future generations of Malaysians.

Who gains how much?

Most people think the TTPA is about greater growth from freer trade. Nothing could be further from the truth. Even the overly optimistic computable general equilibrium (CGE) projections, made on methodologically moot grounds, recognise that more trade does not mean more growth. After all, freer trade not only means more exports, but also more imports. Without adequate compensatory mechanisms, nothing guarantees that all will benefit.

The net gains for growth from increased trade are difficult to estimate reliably, and depend very much on crucial assumptions made for modelling. Even the CGE models used for TPPA advocacy acknowledge limited net economic benefits from trade liberalisation. Hence, while the TPPA will result in greater trade, there is no reliable basis for assuming that increased trade will improve economic welfare for all.

More production for export will partly replace production for domestic markets. Exports are less labour-intensive and use more imported inputs than production for domestic markets. Businesses become more competitive by cutting labour costs, negatively affecting income distribution, thus further weakening domestic demand.

Both the USA and Malaysia are among the world’s most open economies, with little more trade to be gained by further reducing tariffs. The TPPA does not address many non-tariff barriers, e.g. the campaign against Malaysian palm oil.

The only US government study of the TPP’s growth effects did not see much growth from increased trade. The World Bank and Peterson Institute studies claimed more significant growth gains from large, but dubious projected increases in foreign direct investment (FDI). But there is no evidence that FDI reliably increases tax revenue, especially with the generous tax incentives offered by the authorities.

Cheap labour

As a middle income country, it will be difficult for Malaysia to compete successfully with Vietnam and other such developing economies on the basis of labour costs for the labour-intensive primary commodity and export-oriented manufacturing envisaged by the TPPA. All this is likely to work to keep Malaysia stuck in the middle income trap.

Yet, despite the exaggerated claims of its advocates, the TPPA provisions for the trade in goods are probably its least dangerous aspects. For example, TPPA provisions for further liberalisation of financial services will undermine national prudential regulation, exposing Malaysia to greater vulnerability from abroad, as if we have not learnt from the 1997-98 Southeast Asian financial crisis as well as the 2008-09 financial meltdown and ensuing protracted Great Recession.

Partnership?

Many ostensible provisions and safeguards in the TPPA have asymmetric implications. For instance, compared to Malaysia, the US federal government has much less scope for discretionary spending compared to its state governments which are, in many instances, larger than many other TPPA economies. Thus, exempting state governments from TPPA provisions, e.g. on government procurement, will have very different implications in the two countries.

Instead of trade, for Malaysia, the TPPA is mainly about greatly strengthening investor rights, including intellectual property rights (IPRs). But stronger IPRs hardly promote research. Instead, most contemporary IPR regimes actually impede innovation, besides undermining public health and consumer welfare by limiting competition and raising prices. The TPPA will thus allow ‘Big Pharma’ longer monopolies on patented medicines, keep cheaper generics off the market, and block the development and availability of similar new medicines.

Corporate interests

The collective drafting of the 6350 pages of the TPPA was ‘assisted’ by over five hundred official corporate advisers to the US Trade Representative (USTR) Michael Froman, greatly strengthening foreign investor rights at the expense of Malaysian business and public interests.

The TPPA’s investor-state dispute settlement (ISDS) system obliges governments to compensate foreign investors for the loss of expected profits in binding private arbitration, even when profits are made by causing public harm.

US corporate interests claim that ISDS is necessary to protect property rights where the rule of law and credible courts are lacking. But instead of reforms to improve the judiciary’s performance and reputation, the TTPA will expose Malaysia to new risks and liabilities.

ISDS provisions make it hard for governments to fulfil their basic obligations such as to protect their citizens’ health and safety, to ensure economic development and stability, and to safeguard the environment.

For example, the world’s most widely used herbicide has been declared by the WHO to be carcinogenic. By banning such toxic materials, with the ISDS, the government would be liable to compensate its manufacturers not to harm our people, instead of forcing them to compensate those already harmed! Thus, the ISDS may even deter the government from banning the substance, putting people at risk.

Multilateralism

Like many other recent bilateral and plurilateral economic agreements, the TPPA has less to do with freeing trade, but instead advances the interests of powerful foreign business interests.

Concluding the TPPA before the mid-December Nairobi World Trade Organization (WTO) ministerial was then used by USTR Froman to try to kill the WTO Doha Round of trade negotiations, apparently also in line with the current European Commission commissioner’s preferences. The negotiation had begun in late 2001, after 9/11, with the promise of rectifying the anti-development and food security outcomes of the previous Uruguay Round following the Seattle WTO ministerial failure.

In spite of their denials, Asean members joining the TPPA have also effectively undermined existing commitments to the Asean Free Trade Area (AFTA) and Asean Economic Community (AEC).

The main US motivation for the TPPA has been to exclude China. At his State of the Union address, President Obama triumphantly announced, “With TPP, China does not set the rules in that region, we do”.

After being blocked from greater commensurate influence in the Washington-based Bretton Woods institutions, broad support for the Asian Infrastructure Investment Bank (AIIB), even from traditional US allies, was a major embarrassment to the US.

Neutrality

The political re-alignment also abandons the late Tun Razak’s commitment to make Asean a ‘zone of peace, freedom and neutrality’ (ZOPFAN), an irony for the host of the last Asean summit.

One may understand why Vietnam, at war with the US until four decades ago, is keen to join the TPPA, to strengthen its hand viz a viz China, but it too will be compelled to pay a high economic price for Uncle Sam’s ‘protection’.

Yet, despite its own problems with China, Philippine President Benigno Aquino Jr chose not to participate in the negotiations. Pre- and post-military coup Thailand, with an economy even more open than Malaysia’s, also chose to stay away. Why?

Singapore’s existing bilateral economic arrangements with the US go much further than the TPPA in line with its own unique strategic considerations. Of course, no serving government leader is going to offend the US by rejecting the TPPA outright.

Misgivings

Already, some other, mainly European governments have privately expressed their dismay at the TPPA provisions as it will weaken their own negotiating positions for the Trans-Atlantic Trade and Investment Partnership (TTIP). It is the US which has secured ‘first-mover’ advantage. It is unclear to most observers what great advantage Malaysia secured beyond some NEP ‘carve-outs’.

Since negotiations ended in Atlanta in October 2015, the minister in the new centrist Liberal Party Canadian government, an experienced former Financial Times editor, has already called for reconsideration of the TPPA provisions.

Australia and New Zealand, the public and parliamentarians are outraged about the onerous investment provisions of the TPPA after a 2016 World Bank report projected paltry gains for them.

Despite touting the TPP in Asia as his main foreign policy priority for 2016, Obama only spent 28 seconds of his hour-long State of the Union address on it, triumphantly announcing, “With TPP, China does not set the rules in that region, we do” (China excluded), making clearly the main US motivation while realising its widespread unpopularity with the American public, including his Democratic Party base. Even the libertarian Cato Institute has denounced the TPP as the tool of corporate lobbyists.

Caution needed

More careful consideration through more informed public discussion of the TPPA’s many provisions can only help the nation.

According to a mid-2015 Pew Research survey, the strongest support for the TPP is in Vietnam, where 89% of the public backed it, while the weakest support was in Malaysia (38%) and the US (49%). The greatest outright opposition was in Canada (31%), Australia (30%) and the US (29%).

Malaysians (14%) were the least supportive of closer economic relations with the US while the most support for deeper economic ties with China was in Australia (50%) and South Korea (47%). Large numbers of Malaysians (43%) and Chileans (35%) wanted stronger commercial relations with both China and the US.

The greatest opposition to the US defence pivot was in Malaysia, where 54% believed it is bad because it could lead to conflict with China.

TPPA not costless

If the TPPA is simply a trade deal, there would be less grounds for concern. Unfortunately, its other provisions will undermine Malaysian development prospects and the public interest in the longer term, with diminished ability for the Government, Parliament and the public to set things right.

Many well-intentioned Malaysians opposed to abuses of various kinds, support the TPPA, hoping that it will somehow eliminate corruption, improve governance and address other problems in the country. Unfortunately, this is merely wishful thinking. The TPPA is not a costless ‘hop-on, hop-off’ option, as some think.

By Dr Jomo Kwane Sunddaram

Dr Jomo Kwame Sundaram was an Assistant Secretary-General in the United Nations system from 2005 to 2015 and received the 2007 Wassily Leontief Prize for advancing the frontiers of economic thought. The views expressed here are entirely the writer’s own.

 
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Support TPPA because Chinese control trade and business in Malaysia?




Hadi: DAP supports TPPA because Chinese control business

PAS President Abdul Hadi Awang accused DAP for supporting the Trans-Pacific Partnership Agreement (TPPA) as the Chinese community controls most of the business in the country.

Penang Chief Minister Lim Guan Eng claimed that his party was firmly against Malaysia signing the deal as it would purportedly cause nearly 40 per cent of SMEs to close down. — Picture by K.E. Ooi

Accused by PAS of backing TPP for Chinese concerns, DAP insists firmly against trade deal – TPPA not about race or religion, Lim tells Hadi

The Trans-Pacific Partnership will be detrimental to Malaysians by causing prices to increase and killing off small— and medium-sized enterprises, Lim Guan Eng said today when reaffirming DAP’s rejection of the trade deal.

Disputing PAS president Datuk Seri Abdul Hadi Awang’s claim that the Chinese domination of local industry meant that DAP was supportive of the TPP, Lim said that race and religion did not factor into the support or otherwise for the free trade agreement.

The DAP secretary-general claimed that his party was firmly against Malaysia signing the deal as it would purportedly cause nearly 40 per cent of SMEs to close down.

“This is a fact that the federal government has yet to address,” the Penang lawmaker said in a statement released today.

“Malaysians would expect such misrepresentation of DAP’s position or a racially-tinged statement from Umno but for a PAS leader to indulge in such baseless untruths shows that PAS is now not only co-operating with Umno but also adopting Umno’s dirty politics of slander against the DAP,” Lim said.

He pointed out that the TPP is initiated by Umno not by DAP and that the the agreement is led by the United States to restrict China’s influence geo-politically.

“Using Hadi’s logic, then Umno must be Chinese too for initiating the passing of the TPP in Parliament. Why then does Hadi continue to work with Umno and even advice the BN federal government?”

He then told Hadi that he should not be against TPP if he is “so anti-Chinese”, but to support the TPP to oppose China.

Lim also asked why Hadi chose not to criticise Umno for spearheading Malaysia’s involvement in the TPP if PAS were sincere in its opposition to the deal, adding that PAS now appeared to be on congenial terms with the lynchpin of the Barisan Nasional (BN) coalition.

Last week, Hadi accused DAP of agreeing to the TPP because the Chinese control trade in Malaysia.

This is despite the DAP announcing that it would vote against the TPP if Putrajaya could not clarify the impact of the agreement.

Parliament will convene a special session this week to discuss Malaysia’s participation in the TPP.

A rally was held during the weekend to oppose Malaysia’s signing of the free trade deal, although Pakatan Harapan parties such as DAP and PKR were poorly represented.

Hadi ticked off over his narrow views of TPPA

Video:

//players.brightcove.net/4405352761001/default_default/index.html?videoId=4711646954001

KUALA LUMPUR: PAS president Datuk Seri Abdul Hadi Awang (pic right >) has been taken to task for linking support of the Trans-Pacific Partnership Agreement (TPPA) to the Chinese community.

MCA Youth chief Chong Sin Woon chided Hadi for having narrow views of the agreement.

“How can it be of Chinese interest when the agreement includes other nations such as Japan, Canada and the United States?” he asked after opening SMK Cheng Perdana’s Lim Kok Yeong multi-purpose hall here yesterday.

He urged Hadi to “wake-up” to the realities of globalisation where the agreement would benefit the nation as a whole.

“Please don’t use racial lenses to look at everything.

“It is a shame that there are still leaders talking like this even as we are about to become a high income developed nation in four years’ time,” he said.

MCA religious harmony bureau chairman Datuk Seri Ti Lian Ker also said that the TPPA was about trade and should not be turned into a racial issue. It was ridiculous to put a racial tag on trade and commerce, he said, adding that Hadi’s remarks were an attempt to use race or religion for political gain.

In a statement, Ti said he was glad that many Malaysians had woken up to these racial tauntings and the “underhand” move of using the Chinese community as a punching bag or the bogeyman.

He said liberated Malaysians and the educated new generations had moved beyond colour or creed.

Malaysians, irrespective of races, were collaborating in business partnerships and this was a positive trend, he added.

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Make public TPPA cost, says Jomo


http://www.thestar.com.my/business/business-news/2016/01/12/jomo-make-public-tppa-cost/

KUALA LUMPUR: A former senior United Nations official and economist Jomo Kwame Sundaram said that while there are benefits to signing the Trans Pacific Partnership Agreement (TPPA), the cost of such an agreement must also be made known to the public.

He said at the 2016 TPPA Forum organised by the Malaysian Economic Association that gains from signing the TPPA in terms of economic growth were only “very modest” because Malaysia was already an open economy.

“These were also based on very questionable assumptions. Having more trade does not mean more economic growth. You have to note that having more trade may mean you export more but the country will also import more. So the (net) trade gains are very modest and the economic growth (accrued) is very very low,” Jomo said.

“However, there are huge risks involved because this is not just a trade agreement but more of a partnership agreement and most of the other requirements of the TPPA will introduce many constraints on the ability of Malaysia and others to catch up and accelerate growth and to develop the economy,” he said.

He said while there were various models to stimulate the outcome of the TPPA on the country, there was no disagreement among the different models that the increased trade benefit in terms of economic growth were only very modest.

“There will be increased trade but the benefits in terms of economic growth will only be realised only after 10 years and some countries may not even benefit in terms of growth,” Jomo said.

Jomo also said that there will be some impact on local companies that will face challenges because there will be fewer constraints on international companies.

However, the chief negotiator from the Ministry of International Trade and Industry Datuk J Jayasiri said that there will be gains for small and medium enterprises (SMEs) if they have enough capacity.

“SME Corp is helping in the upgrade of local SME’s capabilities while Matrade is promoting SMEs extensively to capitalise on the opportunities overseas,” Jayasiri said.

Jomo said that there should be an objective discussion on the matter noting that the gains were being described in such as way that the benefits were being presented without talking about the cost.

“We need to go into any deal with our eyes wide open and to be fully aware of the risks and cost as well as the potential benefits and the likelihood of achieving those benefits. So we have a slightly one-sided picture of what we do get from the TPPA,” he said.

“For people to say that we can pull out of this TPPA after six months of being in it is very deceptive. That is not the way the world works and is a very naive assumption. Say if somebody here doesn’t swim we cannot throw him into the deep end of the pool and say he will learn how to swim,” he added.

On another matter, Jayasiri said that Malaysia will be able to maintain export duties that will be imposed from the TPPA.

“For us in the Ministry, we feel that any market opening measures mean that exporters will have opportunities to go into new markets. If markets are closed it will be difficult for exporters to go into those countries,” Jayasiri said.

“Say if we are out of the TPPA, and our competitors are in the TPPA then it means our exporters will be at a disadvantage so it means we have to be in the TPPA to enjoy the preferential treatment through this,” he added.

By Daniel Tan The Star/Asia News Network

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TPPA debate will continue although concluded


http://player.cntv.cn/standard/cntvOutSidePlayer.swf
Video: http://t.cn/RyEoAkLv http://english.cntv.cn/2015/10/09/VIDE1444344482352696.shtml

FINALLY, the negotiations on the Trans-Pacific Partnership Agreement have concluded. But that’s not the end of the story.

It will be many more days before the text is made public. Until then, there will still be so many questions unanswered.

Enough is known, from media reports and some leaked texts and analyses, to make some preliminary comments.

Firstly, trade is only one part of the TPPA. As important, or more important, are other issues including investment, intellectual property, government procurement, state-owned enterprises, labour and environment.

These other issues are at the heart of the country’s socio-economic structures and policies.

On these issues, the TPPA may have problematic elements for Malaysia. The Malaysian negotiating team has been fighting to lessen the adverse impacts of the main proposals.

It says it won concessions. But what these are, whether they are enough, and the effects are still not clear. What is clear is that “policy space” (a country’s freedom to formulate its own policies) would be very significantly narrowed as a result of the TPPA.

On intellectual property, the blow is perhaps the most obvious. Most patents filed in Malaysia are owned by foreigners. So when patent laws are made stronger, it will benefit foreigners who are the patent holders.

The enhanced monopoly given to patent holders will have adverse effects on Malaysian consumers who will have to pay higher prices and Malaysian companies which cannot make or import generic versions during the patent term.

The renowned medical group, Doctors Without Borders (MSF), condemned the TPPA as the “worst trade agreement for access to medicines”. Patients and treatment providers in developing countries will be the TPPA’s big losers as it will raise the prices of medicines by extending the monopolies enjoyed by the big drug companies and further delaying price-reducing generic competition, according to MSF.

The term of the patent may be lengthened (by adding time taken to register the medicine or approve the patent). Data exclusivity is to be granted for five years (or possibly for more than that, for the new drugs known as biologics), during which the generic companies are not allowed to rely on the test data of the originator firm.

On investment, the TPPA opens the road for foreign companies to be treated as well or better than locals, thus giving them rights of entry and ownership, and free transfer of funds, while prohibiting the host state from imposing performance requirements such as local content, technology transfer and joint ventures.

The TPPA also contains the investor-state dispute settlement system (ISDS), which enables foreign investors to sue the Government in an international tribunal.

Changes in government policies can lead to claims that this is unfair treatment and the foreign investor can ask for compensation for loss of expected future profits.

According to press reports, the TPPA has some safeguards such as diluting the ability of companies to make frivolous claims. Exactly what these are, is not known. The ISDS in any case remains intact as a powerful tool for foreign investors and puts Malaysia in a defensive position.

On government procurement, the space that Malaysia has had to make policies on how the Government does its procurement will be curbed. The preferences given to locals will now give way to national treatment for foreign companies.

Malaysia has been negotiating for more exceptions in terms of the “threshold” of level of expenditure or project value where preferences for locals can still be given, and an exception for bumiputra policy. Details of the final agreement are still not known.

On state-owned enterprises (SOEs), the TPPA will impose disciplines and rules on how these SOEs operate, the subsidies they can or cannot get, and their need to be non-discriminatory when purchasing materials (they cannot give preference to local companies).

The advocates of the SOE chapter seem to want to curb the advantages that SOEs may have, and enable the foreign companies to more effectively compete and take some of their market share. Malaysia has also been fighting for exceptions for some of its SOEs. The final outcome of this is not yet known.

Investment policy, government procurement, SOEs and access to medicines are right at the heart of Malaysia’s political economy and socio-economic structures.

Policies that have been at the centre of the country’s economic and political development have now to be defended as exceptions and flexibilities, and there is a limit to what the other TPPA partners will accept.

The chapters on these issues are bitter pills to swallow and the debate will continue on whether they are worth swallowing.

The direct trade aspects of the TPPA should have such enormous benefit that they more than offset the disadvantages of the other issues. Otherwise, why join the TPPA?

However, Malaysia’s tariffs are on average higher than those of the United States, the main country with whom we do not yet have a Free Trade Agreement.

If tariffs go to zero through the TPPA, Malaysia will thus have to cut its tariffs by more than the US. Whilst we may gain extra exports through the TPPA, we will also have to import more. There is no guarantee that the TPPA will lead to a better trade balance, and there could be an opposite result.

The debate on the TPPA will intensify now that the negotiations have ended. The text should be made available as soon as possible, so that the discussions can be based on the agreement itself. After the TPPA, it will take another two years for the agreement to be ratified and come into force.

Thus, the TPPA is not a “done deal” and the real debate may only be beginning now. It is unfortunate that till now the text is not available.

BY MARTIN KHOR

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.

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Malaysia and China set trade target of RM511bil, usher new era of strategic partnership


Xi_NajibChinese President Xi Jinping (L) and Malaysian Prime Minister Najib Razak jointly meet the press in Kuala Lumpur, capital of Malaysia, Oct. 4, 2013. (Xinhua/Zhang Duo)

PUTRAJAYA: Malaysia and China have set an astounding bilateral trade target of US$160bil (RM511bil) by 2017.

Datuk Seri Najib Tun Razak and President Xi Jinping discussed this at a closed-door meeting at the Prime Minister’s office here yesterday.

The two leaders also discussed a five-year economic and trade programme and agreed to elevate the current cooperation between both countries into a comprehensive strategic partnership.

Najib and Xi said this in a joint statement issued after the meeting.

Last year, the bilateral trade volume between the two countries reached US$94.8bil (RM303bil).

This makes Malaysia China’s top trading partner among the Asean countries for the fifth consecutive year.

Najib said Xi expressed keen interest in seeing Chinese companies participate in Malaysia’s high-speed rail (HSR) project, the China-Malaysia Qinzhou Industrial Park and the Malaysia-China Kuantan Industrial Park.

“We also would like to see more trade between the countries settled in the renminbi and ringgit,” he said, adding that the information on this should be disseminated to the private sectors of both countries.

Najib said Xi indicated some new areas of cooperation between the two countries, which included information and communication technology, biotechnology, science and space technology.

“We agreed to step up our cooperation in law enforcement, combating transnational crime, cyber security, as well as stronger and deeper military cooperation,” he said.

Najib added that Malaysia would be opening a Consul-General office in Nanning while China would open similar offices in Kota Kinabalu and Penang.

“Malaysia also fully supports Xi’s suggestion, which he made in Indonesia, for the establishment of an Asian Infrastructure Investment Bank which would certainly help in the development of Asean,” he said.

The Prime Minister hoped that the project to develop the Malaysian campus of the Xiamen University, its first outside China, would become a reality in near future.

Najib added that he was also looking forward to visit China next year, at the invitation of the Chinese government and Xi, to celebrate the 40th anniversary of the Malaysia-China diplomatic ties.

Earlier in the morning, Najib and Xi and their spouses attended a welcoming ceremony at Dataran Parlimen in the presence of the Yang di-Pertuan Agong Tuanku Abdul Halim Mu’adzam Shah and Raja Permaisuri Agong Tuanku Sultanah Hajah Haminah Hamidun.

Sources: The Star/Asia News Network

Xi’s visit ushers in new era in China-Malaysia ties

Chinese President Xi Jinping left Kuala Lumpur Saturday after concluding his first state visit to Malaysia, which helps usher in a new era in China-Malaysia relations.

During his stay in Malaysia, Xi met Supreme Head of State Abdul Halim Mu’adzam Shah and Prime Minister Najib Razak, and attended a China-Malaysia economic summit. He also witnessed the signing of a series of cooperation agreements.

Both sides agreed to upgrade bilateral ties to a comprehensive strategic partnership, and make efforts to expand annual bilateral trade to 160 billion US dollars by 2017. The first Chinese university outside China, Xiamen University Malaysia Campus, will also be set up in the Southeast Asian country.

The visit by President Xi marks another great leap forward of bilateral relationship between Malaysia and China.

“In fact, the achievements of the visit are well beyond my expectation. It’s a miracle that so many achievements have been made within such a short period of time,” said Tan Khai Hee, secretary general of Malaysia-China Friendship Association.

Upgrade of bilateral ties

During their talks on Friday, Xi and Najib agreed to upgrade bilateral ties to a comprehensive strategic partnership.

“China highly values its relationship with Malaysia, which is taking the lead in China’s relations with ASEAN members,” Xi said, urging the two sides to enhance strategic cooperation to make their relationship a fine example in the region.

ASEAN stands for the Association of Southeast Asian Nations, which consists of Malaysia and nine other Southeast Asian countries.

Xi said the upgrade to a comprehensive strategic partnership will draw a more “beautiful” blueprint for bilateral ties.

For his part, Najib said his country hopes to enhance the comprehensive strategic partnership with China.

“China is a trustworthy friend of Malaysia,” he said. “Our bilateral relations enjoy vast prospects.”

The single most significant achievement of Xi’s visit is of course the upgrade of the bilateral relationship to comprehensive strategic partnership, which China only accords to its most valued neighbors and friends, said political analyst Oh Ei Sun, a former political secretary to Najib.

While the economic collaboration will continue to prosper in gigantic leaps, the comprehensive nature of the relationship will see more technological, cultural and educational exchanges, which are crucial for the ever closer relationship between the two countries, he said in an interview with Xinhua.

Win-win cooperation

China has been Malaysia’s biggest trading partner for the last four years, while Malaysia has been China’s largest in the 10-member ASEAN for five years in a row.

Two-way trade soared to a record high of 94.8 billion dollars last year, while trade in the first seven months of 2013 jumped 14.9 percent to 59.72 billion dollars.

The Qinzhou Industrial Park in China and the Kuantan Industrial Park in Malaysia, noted Xi, should be built as flagship projects of investment cooperation between the two countries.

Beijing encourages Chinese enterprises to participate in the development of northern Malaysia and the high-speed railway construction linking Kuala Lumpur and Singapore, which will promote regional inter-connectivity, said Xi.

When addressing more than 1,000 business people and officials at the China-Malaysia Economic Summit on Friday, Xi proposed that the two countries boost bilateral trade and investment, deepen cooperation in the sectors of finance, agriculture and fishery, and jointly improve regional cooperation.

The Chinese president and the Malaysian prime minister witnessed the signing of the five-year program for economic and trade cooperation, which emphasizes the sharing of knowledge, technological resources and investment in the service of sustainable economic development and maps out mutually beneficial initiatives.

The two leaders have set an ambitious target that by the end of the fifth year of this program, bilateral trade between China and Malaysia will hit 160 billion dollars.

The program covers many areas of cooperation, including agriculture, energy and mineral resources, information and telecommunication, manufacturing, infrastructure, engineering, tourism, logistics and retailing.

Pheng Yin Huah, president of the Federation of Chinese Associations Malaysia, said the program shows that China values its relations with Malaysia and President Xi wants more Chinese businessmen to invest in Malaysia.

“I believe that Malaysia and China will have more exchanges in politics, business and education,” he added.

Regional cooperation

During his visit to Malaysia, Xi called for further cooperation between Asian countries.

Although Asia remains the most dynamic and promising region in the world, Asian countries still face the arduous tasks of developing economy and improving people’s livelihood amid lingering impact of the international financial crisis, Xi said.

He called on Asian countries to focus on development, carry forward the all-in-the-same-boat spirit of unity and cooperation, and jointly safeguard the long-term stability and development in Asia.

“China supports ASEAN’s leading status in East Asia cooperation, and is happy to see Malaysia play a bigger role in the region,” Xi said.

Najib said Malaysia also stands ready to advance the development of ASEAN-China relations and promote peace, stability and prosperity in the region.

“Whether on bilateral trade relations or international efforts to build a more sustainable global economy, we are strongest when we work together,” Najib said.

In an interview with Xinhua prior to Xi’s visit, the Malaysian leader said that as a founding member of ASEAN, Malaysia stands ready to contribute to stronger China-ASEAN ties.

“Not only is China a dialogue partner with ASEAN, but it’s also an integral part of the East Asia summit,” he said.

“Because of that, the relationship between China and ASEAN is very important and continues to grow particularly in terms of trade and China’s involvement in major infrastructure projects in the whole region,” he added.

While in Indonesia, the first leg of Xi’s maiden Southeast Asia tour since he assumed presidency in March, Xi said China and ASEAN countries should work for win-win cooperation, stand together and assist each other, enhance mutual understanding and friendship to increase social support for bilateral ties, and stick to openness and inclusiveness.

Differences and disputes should be properly handled through equal-footed dialogue and friendly consultation for the overall interests of bilateral ties and regional stability, he said.

Xi arrived here Thursday and left the city Saturday for the 21st informal economic leaders’ meeting of the Asia-Pacific Economic Cooperation to be held in Bali, Indonesia. –  Xinhua

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