PETALING JAYA: Malaysia needs to ensure that its national business ecosystem is ready to support small and medium enterprises (SMEs) and train highly skilled people, thus becoming a high value chain country before signing or ratifying a commercial agreement.

UiTM Sabah political scientist and lecturer Firdausi Suffian said: “We need fewer constraints. (At the same time) we don’t want to be left behind. We want to participate in free trade agreements (FTAs), but we must also proceed with caution.

“Consider the latest coasting trade policy and the subject of the submarine cable. It hinders Malaysia’s economic reform. However, if we consider the interests of the state, the cabotage policy must remain.

He said the government should ensure that foreign-flagged vessels repairing submarine cables can pass their skills on to Malaysian workers.

“Knowledge sharing promotes local capacities,” he said.

Despite aspirations to foster an open economy, some regulations are still needed as state-level interests need to be protected.

“The degree of protection and intervention defines how liberal the economy is. Finally, we cannot rely solely on the internal market. We need to integrate into the global industrial network, ”he added.

Regarding the rapid changes in Malaysia’s political landscape and its impact on Malaysia’s trade relations, he said trade agreements and politics are inextricably linked. While Malaysia’s policies are open and transparent (to a certain extent), political interests have an implicit influence on trade policies.

“We want to take advantage of FTAs. Therefore, we need political instruments that work along the way, especially in line with World Trade Organization (WTO) guidelines.

“One area we should be looking at is the WTO’s most-favored-nation principle, which means treating others equally. Countries are not allowed to discriminate between their trading partners under WTO agreements, ”he concluded.

Firdausi said that if Malaysia aims to enter a high value-added economy, it needs to ensure that its domestic business ecosystem is ready to support SMEs and is also able to nurture a highly skilled labor pool. qualified.

He said SMEs account for 90% of Malaysia’s gross domestic product (GDP) and 65% of the labor market.

“Projections have revealed that our economy will grow next year, but that doesn’t mean we will return to pre-Covid-19 normality. So, are our SMEs ready? Their growth depends on substantial government support, not only financial but also in terms of skilled workers, the global ecosystem and infrastructure.

“Most countries want to improve their own economies as they gradually restart pre-Covid-19 trade relations. When it comes to commerce, there can be zero-sum games and trade-offs. Certain interests can be invoked. Therefore, additional considerations for SMEs are necessary, ”he added.

For example, he said more should be done to prepare the country and its SMEs for the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The 2022 budget announced financial support and the digitization of the sector, but SMEs must be better prepared to be competitive.

The 2022 budget has been allocated this year 332.1 billion RM against 320.6 billion RM as a result of the Covid-19 relief measures. The government expects GDP growth of 5.5% to 6.5% next year, with revenue growth of 5.9% to RM 234 billion.

When signing or ratifying trade agreements, it is good for Malaysia to proceed with caution, although FTAs ​​have their advantages.

Comparing RCEP and the North American Free Trade Agreement (NAFTA), both of which are FTAs, Firdausi said RCEP offers a larger market and has more promise than NAFTA, which includes states. United, Mexico and Canada.

Often, the benefits of these agreements need time to take effect. For example, it took a while for the common effective preferential tariff plan to take effect, but it showed Malaysia’s attention to detail, especially in the automotive sector, he said.

While regional agreements can help individual member countries, the Malaysian government must, at the same time, create an ecosystem for foreign direct investment to bring in skills-based activities, he added.

Leading competition policy, regulatory and economic development economist Keith Boyfield said now is the time to boost brand quality.

“The world needs skills and Malaysia is well positioned to take advantage of the opportunities offered by our digital age,” Boyfield said. “The pandemic has leveled things to some extent. Over time, this will inevitably prompt companies to revise what they consider to be effective practices, ”he added. – Bernama