According to the research arm of sovereign wealth fund Khazanah Nasional Bhd, Malaysia stands to gain more from its RCEP partners than its TPPA partners, as the RCEP market is geographically more relevant to Malaysia and this is important in terms of managing the transaction costs for businesses and investors.

“The RCEP deals with our direct neighbours, hence, it is more relevant to us,” KRI managing director Datuk Charon Wardini Mokhzani told reporters at the launch of the institute’s inaugural publication called The State of Households.

The RCEP and TPPA are two “mega” FTAs in which Malaysia is currently participating in negotiations.

In the report, KRI noted that with China and South Korea committing to greater tariff liberalisation for goods in the RCEP, Malaysia would be able to have greater market access for its local production.

It also said the RCEP would encourage more foreign direct investment (FDI) for Malaysia from China and Japan, thus reversing the shrinking trend in FDI stock from the two countries.

In addition, KRI said the RCEP was expected to complement Asean’s efforts in becoming a single production base, thus ensuring that Malaysia would be on the investment radar of investors.

KRI chairman Tan Sri Nor Mohamed Yakcop, nevertheless, clarified that Malaysia was not against the TPPA.

“The TPPA is still being considered ... we will be looking at the final terms of the FTA to see how it can benefit Malaysia,” Nor Mohamed explained.

Source: bloomberg.com