The think tank’s director, Woon King Chai, said based on an engagement session with the minister, Tengku Zafrul Aziz, on Friday, important procedural and analytical gaps remained unresolved.
Woon said the ministry needed to clarify the definition of “state-owned enterprises” under the agreement, signed during the 47th Asean Summit last month.
He said such a definition was important to be clear on its implications for vendor development, local content, and affirmative action programmes implemented by Malaysian government-linked companies and government-linked investment firms.
He said that based on the engagement session with the ministry, it was unclear whether the term “SOEs” referred only to federally owned entities or included state-owned entities.
During the session, he said, when asked about future amendments to the deal, the ministry noted that there was room for discussion with the US, but it did not outline how Malaysia could proceed beyond the ratification process stated in the agreement.
According to Woon, Tengku Zafrul also said no detailed economic-impact projections or studies were undertaken on the trade deal beyond a high-level assessment.
“The minister also confirmed Insap’s analysis that Malaysia’s gains under the deal are modest, limited to RM21.2 billion (US$5.2 billion) or 11-12% of our total exports to the US.
“US exports worth RM54.3-75.2 billion (US$13-18 billion), or equivalent to 65-90% of US trade with Malaysia, will receive preferential or simplified access,” he said.
The think tank recommended that the ministry publish or brief Parliament on the internal economic impact assessment used to guide Malaysia’s position so that stakeholders and legislators can better understand the assumptions and trade-offs involved.
It also urged the ministry to set up a transparent review mechanism with industry as well as small and medium business representatives to identify clauses in the agreement that may require amendments or clarifications during implementation.
Industry concerns
Woon also said the think tank organised a roundtable discussion with public and private representatives, in which the participants raised concerns about the limited net benefit to Malaysia under the deal, with over 60% of Malaysia’s exports to the US already duty-free before the trade agreement.
“The new tariff benefits mainly affect niche sectors such as rubber, cocoa, palm-oil-based items and pharmaceutical products,” he said.
He said there were concerns about the traceability of exports and enforcement mechanisms under the agreement, particularly since all certificates of origin will be issued solely by the ministry.
“Although semiconductors are not covered by the deal, several participants noted that the government’s decision to sign the agreement was motivated partly by a desire to secure future tariff exemptions for this sector through goodwill and alignment with US interests,” he said.
He said these concerns were conveyed to the ministry.