Business Opportunities in AEC, RCEP and TPP · 2018-03-08 · CLMV : 90.86 % tariff lines...

Disclaimer: This document is for information purposes only, and does not constitute legal advice

Business Opportunities in AEC, RCEP and TPP

Strategic Negotiations Division

Ministry of International Trade & Industry

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Disclaimer: This document is for information purposes only, and does not constitute legal advice Disclaimer: This document is for information purposes only, and does not constitute legal advice

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Malaysia, an open economy, with a small domestic market, needs to look beyond our borders for trade, investment and economic growth…


Malaysia has implemented 13 FTAs:

Preferential market access to 18 countries…

TPPA:

14th FTA

+4 new FTA

Partners

Mexico

BRUNEI VIETNAM INDONESIA LAOS

THAILAND

CAMBODIA

MYANMAR

SINGAPORE PHILIPINES

BIL

ATE

RA

L FT

As

ASEAN +

ASEAN10

KOREA JAPAN AUSTRALIA

NEW ZEALAND

INDIA

CHINA

TURKEY

PAKISTAN

CHILE

TPP

United States.

Canada

Peru

MALAYSIA

BRUNEI


AEC 2015: What Have We Achieved?

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Goods (ASEAN Trade in Goods Agreement)

96% of goods traded in the region are duty-free: ASEAN -6 : 99.20 % tariff lines eliminated; and

CLMV : 90.86 % tariff lines eliminated (remaining lines by 2018)

Services (ASEAN Framework Agreement on

Services)

9 AFAS Packages: Liberalisation of 101 subsectors; foreign equity up to 70%

Focus on trade facilitation initiatives and reduction of non-tariff barriers (NTBs)

8 MRAs – Engineering, Nursing, Achitectural, Medical Practitioners, Accountacy, Dental, Surveying Qualifications, Tourism Professionals

MNP - Business/Corporate Visitors

9 packages for air transport (e.g : open skies , single aviation market, aircraft repair & maintenance, aircraft leasing, cargo handling)


AEC 2015: What Have We Achieved?

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Integrated financial system Progressive liberalization of Financial services and capital market integration (e.g: Banking

Integration Framework, operational flexibilities, insurance).

Signed 6 AFAS Financial Services liberalization packages.

Integrated ASEAN Liberalization of passenger and cargo air transport services - Open Skies Policy and ASEAN

Single Aviation Market

Global ASEAN Linkages FTAs with Dialogue Partners

Investment (ASEAN Comprehensive Investment Agreement)

ACIA - investment liberalization, protection, promotion and facilitation – provides business confidence.

FDI flows to ASEAN from 2013 to 2015 reached US$374.5 billion.


Regional Comprehensive Economic Partnership (RCEP)

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10 ASEAN Member States China Japan Korea India

Australia New Zealand

Global Scale

• 30% of Global GDP. • More than 3.3 billion people (almost 50% of world population). • Biggest set of producers and consumers. • Growing economies in Asia & Oceania. • Connected through ASEAN +1 FTAs. • Top economies in the world (China-2,

Japan-3, India-10, Australia-13, South Korea-15, Indonesia-16, Thailand-30, Malaysia-36).

• Collective ASEAN is the 7th largest economy in the world.

Disclaimer: This document is for information purposes only, and does not constitute legal advice Disclaimer: This document is for information purposes only, and does not constitute legal advice 7

Tapping Opportunities in AEC & ASEAN FTAs

• The world economic situation remains volatile and recovery in global trade is still slow.

• IMF has continued to revise global economic growth downward from 3.4 per cent in January 2016 to 3.2 per cent in April 2016 and now to 3.1 per cent, and growth is only expected to increase marginally to 3.4 per cent in 2017.

• ASEAN is among the fastest growing region and projected to grow by 4.5% in 2016 and 4.8% in 2017.

• ASEAN has to look at its own internal market to generate growth.

• Cambodia, Lao PDR, Myanmar, Viet Nam and Thailand (CLMVT) – new concept that is developing based on the huge potential these countries offers – rich in resources, labour force (150 million) and are having the highest GDP growth in ASEAN.


• E-commerce: The proportion of the ASEAN population using the Internet rose from 12.6% to 25.8% between 2009 and 2014. Currently e-commerce only contributes less than 1% of total retail sales in ASEAN.

• Global Value Chains (GVCs) play a vital role in enhancing economic integration and liberalising trade. GVCs provide ASEAN with the opportunity to take on a more ambitious policy agenda and become a more integral part of global trade.

Good Governance: ASEAN recognizes the need to continue engaging the various stakeholders to build a more dynamic AEC 2025 for greater transparency in the public sector and in engaging with the private sector; and Enhance engagement with the private sector as well as other stakeholders.

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AEC 2025 New Focus Areas


Our Agenda in ASEAN

ASEAN must stay the course and move forward with the deepening of economic integration:

Removal of barriers, including NTBs, red tapes and unnecessary regulations and other restrictive behind-the-border rules and regulations.

Harmonization or alignment of standards in

line with international norms. Restrictions on foreign equity ownership and

control.

Restrictions on professional requirements which impede the movement of skilled workers and professionals around the region.

Further liberalization in trade in services to

attract more investments from outside and inside the region.

Access to finance, technology and human

capital.


AREAS ASEAN EROPEAN UNION (EU)

GDP US$2.6 trillion US$18.3 trillion

GDP Per Capita US$4,130 US$18,399

External Trade Maintain National MFN Import Duty Common External Tariff

Trade Policy Individual National Policy Single EU Wide Policy

Single Currency National Currency Common Currency (Euro)

Capital Movement Freer Free

Movement of Labor Only Skilled Workforce Free Movement of Labor

Authority Retain National Sovereignty unless agreed under the ASEAN Agreements. Adherence to ASEAN Charter. ASEAN Secretariat – Legal entity only to manage the Secretariat

EU Brussels vested with wide Authority to Decide: •European Central Bank •European Parliament •European Court •European Legal System •European Competition Policy

The Institutions


12 TPP Countries…

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World GDP

Duty-free market of

800 million people

Total GDP: USD$

27.5 trillion

Malaysia’s Trade with TPP

Countries (2015)


Cooperation and Capacity Building

identifying areas for cooperation and capacity building, including for

SMEs.

Governance and Transparency

strengthening good governance and addressing corruption.

Standards

setting a new standard for global rules and disciplines to facilitate

businesses

Market access

eliminate or substantially reduce barriers to promote and facilitate

trade among TPP countries.

TPPA: 21st Century FTA


Key Benefits to Malaysia

• Preferential market access for our exports to TPP markets: 4 new preferential markets - Canada, Mexico, Peru and United States;

• Government Procurement – access to TPP markets, especially US access to US market (US$ 560 billion per year);

• Investment flows – job creation, technology,

• New rules - standard bearer for global trade;

• Rules of Origin – Potential to develop auto parts and components industry for export; and as inputs for regional supply chain – palm oil products, rubber products, E&E and chemical products.

• Enhancing digital trade – facilitating e-Commerce transaction

• Business facilitation – temporary entry; capacity building; customs procedures

• Integrating SMEs into global value chain;

• Good governance - transparency; anti-corruption; enforcement of international environmental and labour laws;

• Consumer choice – more options with competitive prices

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SMEs & Global Supply Chain

• Dedicated chapter to support the growth of SME :

creation of public website to provide on-line exchange of information to

assist SMEs;

establishment of TPP SME Committee to provide platform to share best

practices; and

undertake capacity building programmes to help SMEs integrate into the

global supply chain

• SMEs will continue to enjoy preferential treatment in GP and purchases by SOEs

(40% of annual budget).

• Increased investment in Malaysia will open up opportunities for SMEs to provide

goods (parts & components and inputs) for global supply chain and involve in

supporting services (eg. transport, security, catering, maintenance).

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Import Duty Elimination %

Country

Offers on Import Duty Elimination (%) (TPP)

Current Duty Free %

(MFN)

Entry into force (TPP)

≤5 years (TPP)

5≤10 years (TPP)

More than 10 year/

tariff-caps (TPP)

1 Australia 48 93.04 6.82 0 0.13

2 Brunei 77 92.03 0.34 7.52 0.10

3 Canada 72 94.86 2.45 1.45 1.26

4 Chile 0 95.07 2.19 2.63 0.10

5 Mexico 59 76.99 2.62 18.14 2.25

6 New Zealand 59 94.61 1.82 3.13 0.44

7 Peru 70 80.72 4.91 5.52 8.85

8 Singapore 100 100 0 0 0

9 United States 41 89.64 4.27 2.72 3.36

10 Vietnam 32 65.83 23.79 8.16 2.23

11 Japan 41 87.40 3.16 5.40 4.04

12 Malaysia 65 84.71 8.55 5.84 0.90


Exports to TPP Product Country Current Import

Duty (Before TPP)

% Duty Eliminated (EIF TPP)

Export Value in 2014

(US$ Million)

Electrical & Electronic Products

US Canada Mexico Peru

3-5% 5-11% 5-15%

9%

99.8 100 88.5 64.3

11,138.0 308.2

1,148.7 39.0

Rubber Products US Canada Peru

2.4-14% 5-15.5%

9%

97.2 92.5 92.3 80.9

1,238.2 84.6 8.5

Palm Oil Canada Mexico Peru

11% 4% 9%

100 75.4 100

17.9 2.2 1.5

Transport Equipment US Mexico

5% 5-15%

83.5 79.7

292.9 20.5

Wood Products including Plywood

Japan 6-10% 50% reduction of import duty at

EIF

1,103.4

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Tariff Elimination: Petrochemical, Chemicals & Plastics Products

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Country

Range of

MFN

Import

Duty (%)

Entry Into Force

(%)

Less Than 5

Years

(%)

6 to 10 Years

(%)

More Than 10

Years

(%)

Canada 2-15.5 100 - - -

Mexico 5-30 89.1 0.6 10.3 -

Peru 9 99.4 - 0.6 -

US 0.03-12.6 92.7 6.1 1.2 -


50% of our plastics exported to TPP Markets

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No Products

Exports to

TPP Countries

(RM Billion)

Exports to ROW

(RM Billion)

% of Exp. to TPP / ROW

2014 Jan-Sept

2015 2014

Jan-Sept 2015

2014 Jan-Sept 2015

1. Chemical and Chemicals Products

13.7 11.0 51.4 40.6 26.6% 27.1%

2. Petroleum Products

36.4 18.0 70.4 39.6 51.7% 45.4%

3. Plastics Products 5.9 4.7 11.9 9.3 49.6% 50.5%

TOTAL 56.1 33.7 133.7 89.5

41.9%

37.6%


Opportunities for Petrochemical, Chemicals & Plastics Products

• Export growth into Mexico (MFN up to 30%) could be expected as it currently

imposes high tariffs for plastics and chemicals & chemical products.

• With the implementation of the TPP, Mexico is expected to provide new

opportunities to the local chemical and plastics sector by increasing potential

market access from the entry into force and over 10 years elimination of import

duty.

• The 100% elimination at entry into force by Canada will increase opportunities for

local players in the petroleum products, plastics and chemicals & chemical

products sectors. Malaysia exported RM182.8 million of these products to Canada

in 2014.

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e-Commerce

• The e-Commerce Chapter is to facilitate trade in

services, goods and investment through electronic

transmission. Main obligations undertaken by Parties in

electronic commerce are:

i. No imposition of customs duties on electronic transmission

ii. Free flow of cross border transfer of Information by

Electronic Means subject to applicable domestic policies,

laws and regulations.

iii. No imposition on location of computing facilities or utilising

local computing facilities as a condition for investment

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Government Procurement

Agencies that are SUBJECTED to TPPA GP Chapter

Agencies that are NOT SUBJECTED to TPPA GP Chapter

• Federal Govt.: all ministries and several agencies of the ministries

• Statutory bodies: 4 under MITI • Market Access for covered entities

but subject to threshold

• Federal Govt.: several agencies of the ministries

• Statutory bodies: all except 4 under MITI

• State Govt.: all • Local authorities: all • Govt. Companies: all

Exclusions for Specific Entities

KDN: Security considerations KPKT: Program Perumahan Rakyat MOE: Uniforms, text books and milk and food programmes for pre-school and school children MOA: Procurement and distribution of inputs for agro-food production


State Owned Enterprise (SOE) Rationale: To create a level playing field when SOEs having an advantage through

governmental assistance or preference competes with private entities.

Key Obligations:

i) adherence to commercial consideration and non-discrimination in sales and

purchases;

ii) avoidance of non-commercial assistance (subsidies) that cause adverse effects

on TPP Parties;

iii) transparency

Main Flexibilities:

o Exemption for SOEs with turnover below SDR 500 million (RM 2.5 billion) for

5 years, after which the threshold will be SDR 200 million (RM1 billion);

o Sovereign Wealth Fund (Khazanah), Development Financial Institutions (Bank

Pembangunan, SME Bank) and Public Funds such as EPF, LUTH, KWAP are

exempted;

o Preferential purchases from bumiputera / SME/ Sabah / Sarawak entities up to

40% of annual budget of SOE.

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Labour & Environment

• The objective is to adopt and maintain international standards. o Labour – commitment is based on ILO

Declaration 1998.

o Environment – commitment is based on 3 Multilateral Environmental Agreements- Montreal Protocol, Marine Pollution and CITES.

• Trade and investment should not be at the expense of lowering environmental standards and labour rights.

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Strong IP protection in TPP – to promote innovation, creativity and technology transfer.

• Commitments include copyright extension ( from 50 to 70 years); acceding to international treaties; geographical indications; patent protection; border enforcement;

• Commitments on pharmaceutical: Patent term adjustment; patent linkage; data protection.

• Patent protection in TPPA are no different from Malaysia's current regulations. Our laws provide patent protection for 20 years and 5 years of data protection for chemical drugs. Commitment to grant 5 years data protection for biologics .

Intellectual Property

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WAY FORWARD

• Government: o Amendments to legislation and ratification;

o Intensive outreach to business community and other stakeholders; and

o Capacity building –SMEs and Bumiputera enterprises.

• Private Sector:

o To have a right perception of the TPPA;

o To explore the opportunities; and

o Be ready for the challenges.

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Disclaimer: This document is for information purposes only, and does not constitute legal advice

Please visit www.miti.gov.my for the legal texts of the TPPA, a summary of the Agreement, FAQs and other

useful material.

Thank you

Menara MITI No. 7, Jalan Sultan Haji Ahmad Shah, 50480 Kuala Lumpur, Malaysia

Tel: 603-8000 8000 | Fax: 603-6201 2337 | Email: [email protected] | Website: www.miti.gov.my

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http://www.miti.gov.my/


Government Procurement Thresholds

Procurement that is offered under Malaysia’s market access with value that is equal or exceeds the following thresholds are open up for participation of TPP suppliers:

Note: Thresholds are quoted in IMF Special Drawing Rights (SDR). Value in RM is for comparison purposes only and subject to exchange rates. SDR 1 = RM 5

Business Opportunities in AEC, RCEP and TPP · 2018-03-08 · CLMV : 90.86 % tariff lines...

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