How does Malaysian government protect small and medium enterprises through custom content Trans-Pacific Partnership Agreement (TPPA)

Trans-Pacific Partnership Agreement (TPPA) is a cross-continental agreements involving 11 countries, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (US) and Singapore. This agreement is still in negotiation since 2010. In Malaysia, about 8 chapters out of 29 are being finalized involving the Competitiveness and facilitate business, small and medium enterprises (SMEs), cooperation and development capacity as well as clear rules.

This agreement aims to establish a win-win situation among member countries and promote economic development of member countries. TPPA agreement is different from other agreements such as the ASEAN platform and others. TPPA agreement is binding and countries who signed the agreement must abide by the contents. If any member countries does not comply with this agreement, it can be brought to justice.

In this agreement has been infused matters related to small and medium enterprises (SMEs). TPPA is the only FTA that has the advantage to the SMEs in which it has a special section for SMEs, which give detailed emphasis on the needs of SMEs. Nearly 4,000 tariffs will be abolished, including the products of export interest to Malaysia such as textiles and clothing, Products of Electrical & Electronics (E & E), Product of Chemicals & Petrochemicals, and Timber based products, food products and rubber-based products. TPPA give a more open market access for exports, particularly SMEs access to four (4) new markets which do not have an FTA with Malaysia before the United States, Canada, Mexico and Peru. SMEs will have the opportunity to participate in global and regional supply chains for more input will be sought from Member States of TPPA to meet the needs of local rules of origin.

The implementation of TPPA also affects small and medium enterprises (SMEs). SMEs such as Oldtown White Coffee, Hup Seng, Mamee, Marrybrown, Julie's, Brahim, Bangi Kopitiam and Ramly has long taken the opportunity of the opening of the market through the FTA to expand their business abroad. About 65 percent of the more than 10,000 tariff codes for the items contained in the Register of Customs (Customs Duties Order) is no longer subject to any import duty. Through the agreement under the Economic Cooperation ASEAN FTA and 13, most of the import tax has been repealed and Malaysian companies including SMEs already compete with foreign companies in the domestic, regional and global.

In this case also, the open market has been benefiting Malaysian companies to increase the value of exports in traditional markets, explore new markets and provide new jobs for local people. Currently, Malaysia has a total of 645,000 SMEs and approximately 18 per cent of this amount has been exporting and participating in global supply chains (global supply chain), including in the field of electrical and electronics (including LED), food processing and beverages as well as medical equipment. However, the Government is aware of the challenges faced by SMEs. The various incentives and assistance was provided to enhance the capabilities and competitiveness of SMEs to compete in the global market.

Therefore, the Malaysian government is committed to continue to assist the development of SMEs, especially in preparing them to remain competitive. Malaysia Plan 11 (2016-2020) giving special attention to the development of SMEs in the SME Masterplan, designed to build the capacity and competitiveness of SMEs, will be fundamental in implementing development programs focusing on four (4) main areas namely productivity, innovation, entrepreneurship and inclusiveness. Various programs and initiatives for SME development has been prepared to catalyse the growth and development of SMEs so that they can increase the capacity and competing well in the global market.

According to Ray Online dated 24 March 2016, the government will organize a capacity building program for small and medium enterprises (SMEs) to improve their capacity in the Trans-Pacific Partnership (TPP). Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed said the program would help SMEs, especially the manufacturing sector, in the face of foreign competition under the trade agreement. According to him, despite the importance and privileges granted to local SMEs covered under TPP, some SMEs in the manufacturing sector may face challenges. There are 645,000 SMEs in the country, and 90 percent were from the services sector. In his view, the majority of enterprises (SMEs) in the services sector covered (under TPP). However, there are 37,000 SMEs in the manufacturing sector and some may face challenges.

Mustapa said he would be chairing a committee meeting in the next two to three weeks to examine the issues raised by SMEs as they are ready to handle the TPP environment. Many SMEs have raised concerns about access to government procurement and fair competition from multinational companies with TPP partners have more opportunities. Trade agreement was signed on February 4 in New Zealand by the trade ministers of the 12 member states of the TPP.

In addition, the Ministry of International Trade and Industry (MITI) will also help 646,000 small and medium-sized enterprises (SMEs) in the country to compete in the open market under the Trans-Pacific Partnership Agreement (TPPA). Its Deputy Minister Datuk Ahmad Maslan said the effort will be implemented thoroughly in the last two years with the cooperation of all agencies under the ministry before the agreement is fully implemented. According to him, all SMEs in the country had two years to prepare for the TPPA.

Furthermore, the capacity should be strengthened through training to become viable and competitive in the market more open. This exercise can be done with the cooperation of the Malaysian Productivity Corporation to improve the production and management of current spending. The Ministry has experienced agency to help SMEs to penetrate overseas markets more effectively after the TPPA executed in 2018. He said his ministry through 46 offices Malaysia External Trade Development Corporation (MATRADE) and 22 officials of the Malaysian Investment Development Authority (MIDA) abroad will help promote their products at the international level.

In addition, SMEs will also be assisted to market their products online via a dedicated website which will be created for each of the participating countries. The website will be connected to the main website for e-commerce or e-marketing, which involves 12 countries. The government will redouble its efforts to help produce more Bumiputera SME entrepreneurs who are successful in this country. He said that at present, only 38 percent of the 646,000 SMEs are owned by Bumiputera and the percentage is small compared with the number of Bumiputeras in the country and 90 per cent of the total number of SMEs that do business in the service sector.

In addition, the government will launch a program to Promote Export Bumiputera (GEB) to help small and medium enterprises (SMEs) to export their products through any free trade agreement signed by the State. Deputy Chief Executive Officer (I) SME Corporation Malaysia (SME Corp), Isham Ishak said it was to prepare for Bumiputera SMEs were mainly in preparation for the Trans-Pacific Partnership Agreement (TPPA) and the ASEAN Economic Community (AEC) at the ASEAN level. He said the program would begin in 2016 with an allocation of RM40 million fund that will be used as grants or loans, to finance the activities of advisory services that accompany it. GEB program is the result of the government's concerns of indigenous SMEs about their fate how to compete in the ASEAN and TPPA, he told Utusan Malaysia here recently. Isham said again, GEB program will involve the cooperation of Majlis Amanah Rakyat (MARA) to identify Bumiputera SMEs from various fields, with a target of 100 Bumiputera SMEs to successfully export their products in the next five years.

He added that Bumiputera SMEs currently do business mostly textiles, services, food and beverages. He also suggested that SMEs are to merge to form a stronger business entities. "Their business has great potential through AEC and TPPA. During this time their products have been exported to the markets of Islamic countries such as Indonesia, Brunei and the Middle East, "he said. SME Corp. an agency under the Ministry of International Trade and Industry (MITI) whose role is to assist local SMEs. Isham explains, he was among the team members Malaysia involved in the negotiations and although the team was led by non-indigenous people, but they never ignore the interests of the indigenous during negotiations. Country managed to get the approval of the other 11 TPPA countries to safeguard the interests of the indigenous in the formation of the agreement reached at the beginning of last month. Isham said, next year SME Corp. The company will launch Bumiputera Improvement Program (BEEP) by offering grants to cover up to 70 per cent Bumiputera SMEs shopping to buy new machinery, advertising and research and development activities.