PUTRAJAYA, July 4 — Malaysia is committed to the Trans-Pacific Partnership Agreement (TPPA) with the US, Datuk Seri Najib Razak said today even as reports warn the Southeast Asian nation may fall under China’s receding economic wave.
The prime minister however, gave an assurance that Malaysia will only sign the trade deal if the terms are favourable to it.
“We have always stated that we want the TPP, but on our terms,” he said when asked whether the projected slowdown in China will add pressure on Malaysia to seal the TPP deal.
In a report this week, international business daily Financial Times warned Malaysia’s economic growth may unravel if China’s economy slows faster than expected.
Citing Moody’s Investor Service, the newspaper said China’s breakneck economic growth is already slowing with the first quarter of 2014 registering the slowest growth in 18 months.
In recent months the possibility of a banking crisis in China, caused by a poorly regulated shadow banking sector, has muddied the economic outlook for the country.
Data from the Statistics Department shows that China is Malaysia’s biggest trading partner. Total trade between the countries reached just over RM200 billion in 2013, a 12.5 per cent increase from the previous year.
Should China’s manufacturing-heavy economy falters, its demand for Malaysia’s exports will fall away. The sharper the slowdown, the bigger the potential dent on Malaysia’s exports.
Negotiations over the controversial Pacific trade deal have not been smooth sailing with Malaysia and a few other countries opposed to several provisions in the deal that would outlaw generic drugs and affirmative action policies, among other issues.
Talks with countries on both sides of the Pacific Ocean involved in the dead have started and stopped in spurts since it was mooted in 2005.
Negotiations, which stalled last year, resumed yesterday in Ottawa, Canada and are scheduled to continue till July 12.
Despite the looming China crisis, Najib, who is also finance minister, set a lofty target of 9.3 per cent annual growth for Malaysia’s small and medium enterprises (SME), in a bid to bump up the sector’s contribution 41 per cent of the country’s gross national product (GDP) by 2020.
He acknowledged that it will be a “massive challenge” to raise growth figures for SMEs by nearly 50 per cent, but put his confidence in the government’s startegy of increasing innovation, productivity and knowledge enhancement.
“It is a tall order, a huge challenge... we have to ramp it up, we cannot remain at 6 per cent anymore, we need to reach 9 per cent. We don’t know when, but we will try to achieve that as soon as we can,” he said.
From 2006 to 2013, the SME sector grew at a rate of 6.3 per cent and last year accounted for 33.1 per cent of Malaysia’s GDP. It is projected to grow at a rate of between 5.5 and 6.5 per cent in 2014.
Najib added that Malaysia will push for greater focus on SMEs when it assumes the chairmanship of the Association of Southeast Asian Nations (Asean) next year, stressing that this is the only way to negate the vulnerabilities of ASEAN member states if they were to go it alone.
He admitted that there are still issues of protectionist policies and rising economic nationalism among Asean members, but noted that it is only by taking advantage of the region’s size that they can go toe-to-toe with the world’s superpowers.
“Asean on our own, we won’ t have the strength. But collectively we have a population of about 620 million and a GDP of US$2.3 trillion, and that means we have the advantage of size,” he said.
