Innovation key to optimise benefits of RCEP, SMEs told

Small- and medium-sized industries should boost local talent development and adoption of technology, and reduce dependency on foreign labour, says FMM. (Bernama pic)

PETALING JAYA:

Local manufacturers feel the majority of SMEs in Malaysia may face stiff competition from China once a free trade agreement is ratified, but said it will still benefit local companies through technology transfer and higher sales.

Federation of Malaysian Manufacturers president Soh Thian Lai said despite the competition that is expected after the 15 member states ratify the Regional Comprehensive Economic Partnership (RCEP), the country will benefit if proper strategies are employed.

He said while waiting for the ratification, SMEs should boost their local talent development and adoption of technology, and reduce dependency on foreign labour.

“This involves cost. The government, banks and the manufacturers must have an ecosystem to work together,” he said.

He was speaking during a Malaysia-China Chamber of Commerce (MCCC) webinar on the RCEP.

He said Malaysia was not new to competition but some SMEs were not ready as neighbouring countries had cheaper labour. Due to that, he said Malaysia needed to adopt the Fourth Industrial Revolution (IR4.0) to transform into high-value chain industries.

“But there should be commitment from both the government and the private sector. The desire must be there for both government and the private sector to change.”

Soh said Malaysian SMEs could have agreements with Chinese SMEs for technology transfer in telecommunications and other areas.

The RCEP member countries are Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.

The RCEP was signed in November last year and so far China, Japan, and Singapore have ratified it. Malaysia is expected to ratify the pact in the first quarter of next year.

Former ambassador to the World Trade Organisation (WTO), M Supperamaniam said more targeted approaches were needed, especially in the production of goods that are in demand in other countries.

“What products are relevant in which province in China? Do we have product capacity and a coordinated approach?

“We need to have specific programmes with milestones and this needs the involvement of both the government and the private sector,” he added.

Supperamaniam said the RCEP would attract investments due to lower tariffs which would see a lower cost of production.

LatestHeadlines

Innovation key to optimise benefits of RCEP, SMEs told

Manufacturers group says despite the expected competition from the 15-nation trade pact, local companies and the country can still benefit with proper strategies.