Petaling Jaya, 9 August 2022 – The Malaysian Plastics Manufacturers Association (“MPMA”) fully supports Malaysia’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) as manufacturers of plastics products are expected to gain from the elimination of tariffs as well as gain new market access for the industry. MPMA would therefore like to call on the Government to expeditiously ratify the CPTPP so as to enable the plastics industry in Malaysia to reap the benefits that would accrue under this agreement.
MPMA’s President, Datuk Lim Kok Boon, said that Malaysian plastics manufacturers stand to gain from the elimination of tariffs and new market access for plastics products. “The Cost and Benefit Analysis (“CBA”) studies released by the Ministry of International Trade and Industry (“MITI”) recently have shown favourable outcome for the manufacturing sector, including plastics,” added Datuk Lim.
The CBA studies show that CPTPP countries account for 28.2% or RM11.2 billion of Malaysian plastics exports (both primary and non-primary forms) in 2019. Presently, Malaysian exports face tariff up to 15%, which adversely affects the competitiveness of Malaysian manufacturers for key products exported to CPTPP countries such as plastics films and sheets. With CPTPP, these tariffs will be eliminated by 2034 across all CPTPP countries,” elaborated Datuk Lim.
Datuk Lim anticipates that CPTPP will open market access to Canada, Mexico and Peru for plastics exporters. All these three countries are net importers of plastics products. Tariff for plastics products will be eliminated immediately from a maximum of 6.5% for Canada upon Malaysia’s ratification, while the 15% tariff for Mexico and 9% tariff for Peru will be reduced gradually over a period of 10 years.
Datuk Lim further highlighted that the CBA studies also show that CPTPP can widen the sourcing channels for raw materials at competitive prices which will benefit the plastics sector. Demand for plastics finished products including halal certified plastics products is expected to increase in coming years driven by greater demand for food and beverages packaging. There are also growing applications in the construction sector.
“Elimination of tariffs for plastics raw materials under the CPTPP is expected to reduce the cost of these materials, which would alleviate cost pressure faced by the plastics manufacturers in recent years due to increases in energy and labour costs,” said Datuk Lim. “Traditionally, the European Union, Japan, Australia and Singapore are our main export destinations. With the elimination in import tariff and non-tariff barriers, it will increase the price competitiveness of the country’s export of plastics products and would open up greater export opportunities to CPTPP countries, including new market access to Canada and Mexico,” added Datuk Lim.
It is critical that the plastics industry in Malaysia stay ahead of the curve given the rapid pace of technological advancement, and in this regard, it is imperative that the plastics industry has access to the latest in technology and innovation. The CPTPP has established an institutional mechanism for technology and innovation related cooperation and capacity building activities that would facilitate plastics companies in Malaysia to pursue collaboration in the field of technology and innovation as well as to increase the level of automation of their operations in line with Industry4WRD and Industry 4.0. This will enable these companies to achieve consistent quality in their output, increase efficiency and lower reliance on labour, particularly low skilled foreign labour.
The CBA has clearly shown that the CPTPP will give the Malaysian plastics industry greater market access and provide the platform for companies to upgrade their products and services, and enhance their competitiveness. Based on the very favourable benefits that would accrue to the Malaysian plastics industry, which would in turn have a positive impact on the Malaysian economy, MPMA would like to appeal to the Government to ratify the CPTPP as soon as possible.