KUALA LUMPUR, Dec 31 — Malaysia may become bankrupt due to the potential multi-billion lawsuits against the government should the country withdraw from the Trans-Pacific Partnership (TPP) after sealing the agreement, former prime minister Tun Dr Mahathir Mohamad warned today.
As Malaysia inches close to signing the trade deal, the 90-year-old who steered the country for 22 years expressed his scepticism over International Trade and Industry Minister Datuk Seri Mustapa Mohamed’s assertion that Malaysia could pull out of the TPP later if it finds the agreement not beneficial.
“Yes indeed we can. But it is not going to be easy and the cost would practically bankrupt us,” Dr Mahathir wrote on his blog.
“In the TPPA agreement companies can sue Government for loss of profit including future profit if Government action results in the loss,” he added, referring to the controversial investor-state dispute settlement (ISDS) provision.
He cited a case in a Latin American country where an American company had sued for loss of future profit after the government had put an end to a mining operation that had caused massive pollution, costing the country several billion US dollars.
He did not specify which “Latin American country” or the mining company.
However, Canada-based Infinito Gold made world headlines in October after it mounted a US$94 million (RM404.6 million) suit against the Costa Rican government at the World Bank’s International Centre for Settlement of Investment Disputes, allegedly for violating a bilateral investment treaty after its operations were shut down for massive pollution.
Infinito Gold filed for bankruptcy earlier this year, but have stated it would continue to pursue the case.
Another case saw Canadian mining giant Pacific Rim initiating a US$301 million lawsuit against the El Salvadoran government after then-president Antonio Saca stopped issuing new mining permits due to the pollution its gold mine caused in the water supply in San Sebastián in 2008.
Pacific Rim was later bought over by Australian-based OceanaGold, which also plans to continue pursuing the lawsuit.
“A decision to withdraw from the TPPA will obviously result in loss of profit and future profits by companies investing in Malaysia or trading with Malaysia,” said Dr Mahathir who retired from government in 2003.
“The withdrawal will involve numerous companies and the purported loss will run into hundreds of billions. The court will not be ours where we can count on sympathy and concern for what will happen to our economy and finances. There is also no way we can pressure or bribe the courts. We will just have to pay the billions.”
He criticised the government for turning a deaf ear to criticisms against the trade deal, and expressed pessimism over Putrajaya taking his opinion into consideration as well.
The TPP is a free trade agreement that has been negotiated by the US, Malaysia and ten other nations as part of the larger Trans-Pacific Strategic Economic Partnership since 2010.
On October 5, Malaysia together with US, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam concluded negotiations on the TPP. The governments must now seek their individual countries’ mandates to sign the deal.
Deputy Speaker Datuk Seri Dr Ronald Kiandee confirmed earlier this week that Parliament will convene for two days starting January 26, during which the Bill on the TPP will be debated and voted on.