IN February this year, Malaysia and 11 other member countries led by the United States signed a partnership called the Trans Pacific Partnership Agreement (TPPA). However, this agreement might not become a reality.
This is because TPPA which is the brainchild of outgoing US President Barack Obama might not happen as Obama’s term will end by year end.
And both his contenders, Hillary Clinton from the Democratic Party and Donald Trump from the Republicans are both against the TPPA.
But first of all, let us take a look at the TPPA. What is it all about? How does it affect the rakyat?
If we look at global trade between countries, let us say between Malaysia and the US, companies from both countries will have to pay taxes.
As an example, Encik Ahmad from Bangi who wants to buy a Ford from the US will have to pay higher taxes as the car is imported.
But under the TPPA, both Malaysia and the US will eliminate all taxes because TPPA is an agreement which eliminates all trade barriers which will boost business activities between nations.
What this means is that Encik Ahmad will be able to buy the Ford car at cheaper prices as both the US and Malaysia have agreed to eliminate the taxes.
The TPPA also allows Malaysia to to trade with 11 other nations tax free.
When business activities increases, more and more companies can come into Malaysia to set up its operations and in the long run, it will help Malaysians as this will bring jobs and lift their standards of living.
Not only that, Malaysian companies and its will be able to go to the other 11 countries such as in Peru or New Zealand to do their businesses there and this economic activity will also help Malaysians to gain a better living for themselves.
But now that it looks like the TPPA will not happen. What will happen to Malaysia? And what will happen to the rakyat?
A lot of economists said, if Malaysia does not join the TPPA, the country and the rakyat will not be able to share the benefits accorded to member countries and the rakyat will not be able to enjoy the benefits.
Professor of Economics at Sunway University Business School, Dr Yeah Kim Leng said if the TPPA does not take off, its not really a problem and life will go back as usual for Malaysia and Malaysians.
“It will be business as usual for the business community and Malaysians will compete in the international market just as usual.”
Malaysia will just have to continue to forge new trade agreements with other countries and tap new markets.
This include the China’s One Belt One Road initiative which is poised to overtake both the TPPA and the Regional Comprehensive Economic Partnership in driving trade between Malaysia and its trading partners.
However, if TPPA does not take off, then the rakyat will just have to wait for TPP members to resort to Plan B.
And for now, the rakyat will just have to work hard and hope that the government will continue to find ways on boosting our economy.