27 February, 2016
As appeared in TheStar.com.my

BRITAIN is in the throes of an intense national debate on whether or not to remain in the European Union (EU), the decision on which will be made in a referendum on June 23.

The issues involved and the conduct of the debate have a relevance to Asean and Malaysia, even if we may seem distant from them.

British Prime Minister David Cameron has been able to receive an undertaking from the EU the “ever closer union” thrust would not apply to Britain, and that the extensive UK welfare benefits would not be enjoyed by freely-moving EU immigrants, including a four-year moratorium before such immigrants in work could even enjoy supportive family tax benefits.

Even so the Eurosceptics, primarily in his own Conservative party, are not satisfied, and their number has been boosted by outgoing London mayor Boris Johnson – largely seen as a credible challenger to the leadership when Cameron steps down – joining their ranks. Market analysts now give a 40% chance of Britain getting out of the Euro and the pound is taking a bit of a battering because of that prospect.

There might be some self-satisfaction among Asean leaders and officials that the “Asean Way” does not envisage an ever-closer union, let alone a rush towards it. Thus Asean, it would seem, will be spared the kind of member-state stress that Britain feels and the budgetary burden it does not want to continue to bear.

However, it would not be advisable for Asean to be too sanguine, for at least two reasons.

Firstly, it could equally happen that too slow a rate of progress towards greater integration would frustrate some member states which might seek economic and political solace through closer association elsewhere, or just pay lip-service to the Asean community while building a series of strong bilateral or extra-regional relationships.

Asean, in other words, becomes just a fallback, useful but not critical, its centrality among even just member states suspect. Some say this is indeed Asean. So there must be meaningful progress to make Asean meaningful.

Moving sideways is not an option. It would not be particularly wise to be too self-satisfied against the woes of those who seek to go forward.

Secondly, even in the slow-paced Asean way there are laggards who think it is too fast and are looking for any harm to their economy they could attribute to Asean integration. At the same time, some of them would despair over promised benefits not materialising.

On the former score, let us not forget large Asean economies like Indonesia have this feeling that more advanced members are predators of their large and growing markets. While they see opportunities for some of their larger companies they do not see them as compensation enough for the market penetration they will suffer.

If their own smaller companies experience serious difficulties and unemployment rises, Asean should be prepared for the kind of stress in the EU today.

This is why it is so important these small companies, the MSMEs which provide the bulk of employment for the working population, must be provided with the means to compete – finance, technology and knowledge.

Otherwise there will be a strategic threat to Asean integration and its potential reversal, if not disintegration.

On the second score, the less developed Asean economies generally (CLMV – Cambodia, Laos, Myanmar and Vietnam, although Vietnam is increasingly forging ahead and Indonesia wants to be treated less developed but does not want to be so identified), want to see the development gap narrowed.

This is one of the four pillars of the AEC, but if they feel left behind rather than driven forward through Asean they will not see the point of the association.

Already, less developed member countries like Myanmar talk about developmental assistance, like a contribution of 0.7% of GDP by the developed members who surely are not going to buy into this.

There are enough issues therefore to be addressed and anticipated within Asean than to be smug over the travails of Brexit and the future of the EU.

For Malaysia, there is much to be learned from the civilized conduct of some very sharp exchanges in the Brexit debate, from the substantive content of the debate even if passionate, and from reliance on legalities without giving rise to acrimony or threat.

Certainly religion and race do not come into it although there are innuendos about Polish workers, the French and so on. These are British pastimes and the Anglais get as good as they give. Absolutely there is no threat of outbreak of racial clashes, or delirious calls to send the Europeans back, including those descendant from French Huguenots or even Polish Second World War refugees.

There have been attacks on Boris Johnson’s motives in supporting the “Get Out” side, but these were more political and even witty. Obviously his ambition to be Prime Minister came under scrutiny – what an opportunistic person, it is said.

However there was a concession his “move” (as his father unfortunately put it) might have been based on principles, even if of the Groucho Marx kind: “These are my principles. If you do not like them…..I have others.”

Cameron was not spared the whiplash. He was accused of exaggerating the concessions the Europeans made to Britain and, worse, of being a turncoat on membership of the EU, having ridden on the support of Eurosceptics to become leader of the Conservatives in the first place.

Members of his Cabinet supporting the stay-in-EU side were also accused of inconsistency and of being self-serving. There were ministers who wanted Britain to get out but, while there were comments they would have hell to pay if the referendum sustained Britain’s membership of the EU, there were no calls for them to be immediately kicked out of government, or dragged through the streets.

The debate was focused on the substance of the issue at hand.

Certainly two British Asian ministers on opposite ends of the debate received no racial taunts, as could easily have been the case with the one against staying in the EU because, she argued, of the burden European immigrants impose on Britain.

Just imagine what the exchanges would have been like among politicians in Malaysia. We cannot continue to use the excuse that Britain is a mature democracy and can afford to have political business conducted that way. We are not even talking about democracy. We are talking about civility. We are talking about not stooping down ever so low and so quickly to have a go at someone because of race, or some contrived religious argument, or so many personal and petty unrelated matters. Everything but the subject matter, which requires research and thought.

And if we start talking about convictions, we have to confess most of our politicians have them aplenty of the Groucho Marx kind.

Not once in the Brexit debate, where Cameron declared that remaining in Europe was vital to the economic and political security of Britain, was anyone threatened with being hauled into jail, or of being taken to court, or of having his legitimate business and other interests cleaned out.

If we in Malaysia do not tone down on many of our political propensities, there will be outlets of frustration with means of expression which will not be good for the political stability of our country.

With the video doing the social media rounds of Sarawak Chief Minister Tan Sri Adenan Satem expressing his disquiet with the political discourse in Peninsular Malaysia and his desire not to have anything to do with it, we should sit up and take note of the message coming from what is considered to be a less developed part of Malaysia. Well, certainly not less developed in political wisdom.

And, with the cogent points he made about Sarawak’s rights under the Malaysia Agreement, there is opportunity to discuss outstanding issues in a calm and collected manner, without agitation and accusation.

Let’s take a long, hard look into the political mirror. Malaysia is in absolute need of political change management.

13 February, 2016
As appeared in TheStar.com.my

I was in Vientiane earlier this month and, among other things, formally handed over the Chair of Asean-BAC to Laos, represented by Oudet Souvannavong. From the various meetings and discussions held, it was clear that Laos was committed to follow through with the AEC 2025 Blueprint and the unfinished business of the community pronounced in 2015, last year.

As a co-chair of Asean-BAC this year, I was asked by the Laotian Minister of Commerce and Industry Khemmani Pholsena to continue to be active in pushing forward the AEC agenda.

I indicated of course I would. Asean community-building is not a one-shot matter and every involved party must not be there just to make up the numbers.

After all, as I underlined in my speech at the second post-2015 AEC conference in Vientiane (I had organised the first in Penang last year), we must always improve as well as build on whatever good that has been achieved as we go along.

Last year, Asean-BAC achieved three main things which went beyond words and have strategic significance in respect of various AEC objectives.

The first was establishment of the Growth Accelerator Exchange (GAX) which I had proposed in lieu of the conventional Asean SME Bank to provide finance to the underserved sector which is the backbone of the Asean economy.

I got Asean-BAC to support me to champion this initiative which at one fell swoop achieves the following:

> Gets the private sector to do something about the long-standing problem of access to finance for micro and small and medium enterprises;

> While not a panacea, this form of digital banking would be catalytic as other private sector IT entrepreneurs will also want to get into the fray (I know Alibaba is straining at the leash to sweep into this market, but it would be good to see Asean entrepreneurs have a crack at it as well);

> Conventional banks will not want to see their revenue base shrink and the more nimble will simultaneously expand commitments to the SME sector as well as their digital banking arm (it is generally estimated that digital banking will come to comprise 30% of total banking industry revenues);

> Micro businesses and SMEs will not only gain better access to finance but will, at the same time, obtain it by digital means including through use of smartphones – thus hurdling over the need for brick and mortar bank branches which are absent to fulfill their requirements, and at lower and more competitive cost;

> Apart from e-finance, such electronic platforms can also integrate e-payments and e-logistics which will expand the reach and possibilities for SMEs in terms of both B2B and B2C linkages;

> Asean member states have the opportunity, in real terms, to address at least in part frequently stated strategic concerns: the development gap as SMEs are given the opportunity to expand, especially in the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries where almost the whole of the economies are comprised of such enterprises; and the digital divide, as use of technology in gaining access to finance and the growth of businesses, expands in less developed Asean countries;

> Asean member states will be challenged to facilitate, on a problem-solving basis, issues that could hinder digital access to finance in the neediest segments of their economies, such as e-payments arrangements and cross-border collateral recognition and enforceability – otherwise they would be shown to be only paying lip-service to wanting to close the development gap, the digital divide and so on;

> most strategic of all, development of the micro and SMEs will ensure the success and further progress of the AEC, as there will be less likelihood of backsliding and reversal from loss of employment in the sector – if neglected – which overwhelmingly absorbs most of the working population of the Asean economy.

Thus GAX has within it the seeds of actualizing so many AEC objectives, important words but recorded on paper. The private sector should look at more project driven initiatives that bring strategic benefit in their wake.

The second achievement of Asean-BAC last year was the setting up of AYEC (Asean Young Entrepreneurs Council), with the AYEA (Asean Young Entrepreneurs Association) due to be established by the end of this year.

This is important because the 65% of the Asean population who are under 35 and are entrepreneurs should have a voice all their own to express their ambitions and concerns, and to offer their solutions.

It is often said that Asean would reap the demographic dividend because of the youthfulness of its population.

However, optimal outcomes, whether on the demand or supply side, can only be achieved if this constituency are released and encouraged to play their full part in the economy.

Especially on the supply side, young and innovative entrepreneurs will only realize their potential if their abilities gain full expression.

Through the AYEA, they should have dialogues with Asean leaders and ministers and, importantly, with relevant Asean committees and working groups, especially on IT, e-commerce and the new economy.

They are well ahead of the greying business leaders who have come to dominate, after years of good service mind you, Asean private sector representative bodies like Asean-BAC itself.

This does not mean that wisdom should be eschewed – as indeed evidenced by how Asean-BAC “incubated” AYEC, but the combination is needed between experience and youthful dynamism.

It is interesting to note that among the discussions likely to take place in the Sunnylands Summit between Asean and the US next Monday and Tuesday will be a session on promoting regional prosperity through innovation and entrepreneurship.

President Obama has been very keen on the YSEALI (Young South-East Asia Leaders Initiative) programme, and there is no better way to elevate Asean relations with the US from dialogue to strategic partner than through engaging young entrepreneurs and innovative leaders of tomorrow.

Indeed, from a Malaysian perspective, there will be a delegation of young entrepreneurs and business leaders visiting Silicon Valley just after the Sunnylands Summit, organised by the Malaysia America Foundation vice-president Syed Haizam.

This reaching out for linkages is a test of how actually and progressively strategic the relationship with the US is going to be.

These leaders of tomorrow should, together with their Asean brethren, form a dynamic caucus of young regional entrepreneurial leadership through the AYEA. How dynamic depends on how the AYEA is organised and represented.

But one thing is for sure. Being young, with many years ahead of them, not only will they drive the AEC into the future but also their socialisation will give Asean a bedrock for the realisation of a true community.

Finally, I argued hard through Asean-BAC last year on the need for a better structured and more rigorous collaboration between the official and private sectors. And I am so pleased the officials, ministers and leaders have responded positively. In the AEC 2025 Blueprint it is stated explicitly that such cooperation should be forged. There is an onus placed on Asean-BAC to be more effective and to organize this.

While Asean-BAC must deliver, it is nevertheless real progress that there is this recognition of the need for a collaboration of substance and not just dialogues of form.

In Laos this month, Asean Deputy Secretary General Lim Hong Hin held a discussion with Asean-BAC on how to fashion this cooperation. If Asean-BAC gets its act together, I have every confidence, through the secretariat, private sector representation and participation in strategic committees and working groups can be worked out.

It is however not just Asean-BAC that must get its act together.

All the Asean+1 Business Councils must also cooperate, as must all Asean-focused organisations and expert groups, such as those in the healthcare and agri-food and e-commerce sectors.

It is important for the secretariat to share drafts. For the private sector to understand the need for confidentiality as well as to make positive inputs.

The first order of business is to identify the relevant committee and working groups with the assistance of the secretariat.

For example, while the private sector has been vocal on elimination of non-tariff measures, it is less aware this is best addressed at the Coordinating Committee on ATIGA (Asean Trade in Goods Agreement). There is work to be done.

The deliverables for Laos this year, in form of words, are the following:

> Asean Trade Facilitation

> Asean Regulatory Framework for Food Safety

> Asean Framework on Financial Inclusion

> Enabling environment for SME establishment and development

> Vientiane Declaration on Ecotourism

> Asean Sustainable Tourism Award

> Framework for secretariat development and collaboration

> Masterplan for CLMV development

Asean-BAC’s plan for taking action out of words this year is to establish a logistics link from China through Laos down to Singapore, in the context of the Masterplan for CLMV development, using Laos’ focal CLMV position.

It will be another test of implementation of policy.

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

30 January, 2016
As appeared in TheStar.com.my

Given many present challenges and new commitments, it is time to take a relook

DURING his time as Prime Minister, Tun Dr Mahathir Mohamad introduced the Malaysia Incorporated concept on Feb 28, inspired by the practice in Japan.

The good idea did not always work well in practice as some businessmen took advantage of their close association with the Government – usually the political leaders like Dr Mahathir himself – to ram things down the official throat. There was also the opportunity of enticement that was not always avoided. In time Malaysia Inc became discredited.

However, the need for official and private sector cooperation for the benefit of the economy is perennial. The good and the bad of it depends on the conduct of the parties – as in any association.

Given many present challenges and new commitments it is time to take a relook at how Malaysia Inc could be hard-wired in the interest of the nation.

Of course, Malaysia Inc has not quite gone away even if it may have been left to wander. At the strategic level of the macro economy various bodies exist or are formed to address the broad issues.

Dialogues between the government and private sector take place as a matter of course, whether fixed or ad hoc, like the budget dialogues and those called by International Trade and Industry Ministry.

Particular industry sectoral concerns are also heard and furthered. Industry groups and business organisations form themselves to lobby their cause. Some get very political and others very technical with different levels of success.

Professional bodies too air their views or grievances to expand or protect their turf.

There is thus plenty of occasion for private sector representation with government and officials. This however needs to be taken to the next level of projecting or protecting particular Malaysian interests in specific contexts in a highly globalised world.

It is a pity the TPPA debate got so polarised and became a stick with which to beat the government. This should not however obscure the fact there are some valid contra arguments which could do with closer examination, even if Parliamentary approval has been obtained for the TPPA to be signed.

The test of good government is to engage wider society for the good it wishes to achieve.

The government led by Datuk Seri Najib Tun Razak has been under attack for so long for the 1MDB issue and the huge donation of money that went into Najib’s account that Malaysia is in grave danger of losing the plot.

Malaysia will continue well after Najib. Malaysians – the government, the officials, the private sector and civil society organisations – should look into that future and think about the welfare of Malaysia.

Even if political leaders are distracted and are concerned only with the short-term, governmental institutions must function with a sense of permanence and the strength of great professionalism.

Look at Thailand where the bureaucracy and the private sector and opinion makers have continued to perform despite the frequent and often violent changes of government. That country would have gone to the dogs without them.

With respect to the TPPA, it would be necessary for the bureaucracy in Malaysia to be strengthened by the establishment of a high level committee comprising officials, businessmen and professionals, and functional bodies, to monitor its impact on the Malaysian economy and society at large.

Additionally, given the nervousness caused by the Investor-State Dispute Settlement (ISDS) provisions, it would be a good idea to set up a national technical committee in the Malaysia Inc spirit to simulate situations where the country might be dragged to court or, indeed, where Malaysian investors abroad could protect their interests.

This technical committee could also prepare a calm and collected background paper on the ISDS to get the national mind round it.

A better hard-wired Malaysia Inc machinery should also be formed in respect of the AEC. I can think of at least two worthwhile committees: one to identify opportunities and the other the challenges, particularly for the small and medium enterprises.

From my experience with the Asean Business Advisory Council, I find specific, focused and project work to be of greater benefit than the big ticket meetings – the so-called dialogues – where often the most tangible outcomes are photo shoots with Asean leaders and ministers.

There is a lot of work involved in hard-wiring Malaysia Inc Industry bodies and persons must be truly committed. It is necessary for private sector representative bodies to be strengthened with both financial and human resources.

The internal organisation and processes have to be less political and more technical. It is all too easy – and lazy – to play racial politics also in bodies purportedly of commerce and industry.

On the official side, there is often a rush of meetings which comes in through one door and goes out the other.

There has to be a discipline of detailed record-keeping and scheduling which do not result in good effort being wasted.

I remember many, many hours put in for a report on Malaysian foreign policy and its institutional support, leading up to a meeting chaired by the Prime Minister, with specific decisions made and absolutely nothing followed up after it. That was a couple of years ago.

This kind of waste obviously is not only discouraging but also causes loss of faith in the process of cooperation in a positive Malaysia Inc spirit.

There is thus the unavoidable need for leadership and good management. In Malaysia we want almost entirely to rely on the Prime Minister.

This results in the centralisation and personalisation we all too often complain about. What about the other ministers? What about industry leaders getting together and bringing a strong proposal forward to them? What about top civil servants engaging members of the private sector or civil society with an idea?

We cannot keep mouthing the same points about the economy or social problems – like Malaysia has great economic fundamentals or that we are a model multi-racial society – just to curry favour. It will not solve anything.

Malaysia faces many serious political, economic and social problems. We seem to be stuck with the political, which would certainly ensure we will come unstuck with the economic and social challenges.

We have to address the two latter challenges as well.

The world does not wait on Malaysia sorting out its politics. Indeed the rest of us Malaysians not involved in politics must act, especially those in the private sector, to secure our country.

A strengthening of our increasingly weak sinews through really a quite modest proposal to hard-wire Malaysia Inc would be a good start.

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

16 January, 2016
As appeared in TheStar.com.my

THE Trans-Pacific Partnership Agreement (TPPA) is a huge commitment and it is unsurprising it has engaged enormous public interest. The debate over it, however, will only serve the nation well if is not excitable and emotional, not just alarmist without suggesting means of enhancing Malaysia’s capability, and not purely academic or self-serving.

The excitable and emotional arguments are largely political in nature, another stick with which to beat the government. Too many important national interests are involved for the TPPA to be political football. Statements like exiting the TPPA would bankrupt Malaysia are an alchemy just to stop Malaysia signing it, not a considered argument on the cost and benefit of being a member of the TPP.

Tun Dr Mahathir, who made this remark, has associated Malaysia and bankruptcy all too often that one worries if this is what he wishes on a Najib Malaysia. But Malaysia is not Najib. We are a nation that must make itself compete and survive well into the future beyond the politicians that had led, or now lead us.

It has been asserted also that the TPPA would cause Malaysia to lose its sovereignty. Malaysia alone among the 12 set to sign it? Lose sovereignty to whom? The US? All 11 surrendering their sovereignty just like that? Vietnam, after over two generations spilling blood for its freedom and still now struggling against Chinese over the South China Sea claims? Singapore, so jealously guarding its sovereignty in the last 50 years after separation from Malaysia?

What utter nonsense this assertion is. It is in the exercise of its sovereignty that Malaysia is entering into this agreement, with obligations and privileges, challenges and opportunities, and associations in a bloc which represents 40% of the world economy.

The study by the Institute of Strategic and International Studies (I must declare my interest as a director, but I had absolutely no involvement in the study) concludes the Malaysian national interest is served by signing the TPPA which underpins the great openness of the Malaysian economy and underlines Malaysia’s continued commitment to that openness. It would be worthwhile for sovereignty-phobic critics of the TPPA to read the report on the International Trade and Industry Ministry (Miti) web-site.

I would expand to say the TPPA makes geopolitical sense for Malaysia as it introduces an American presence of balance in the region, not against, but with China. It is never any good for small countries when one major power dominates. They should be adept at engaging both powers in a positive sum relationship, as Singapore does so well.

PKR president Dr Wan Azizah Wan Ismail said last Tuesday the opposition party would not support the TPPA because it is geopolitical. Yes, it is also geopolitical. What about it? How does the PKR want Malaysia to sit between China and the US? What exactly does the opposition want?

I am reminded of an old dictum about opposition in parliament: to propose nothing, oppose everything and to turn out the government. However, as I said, the TPPA is a great event. It is too important for the country to be a play-thing of party politics.

There had been grave concerns expressed about how the TPPA would wipe out national policies on bumiputras and SMEs, state-owned enterprises and government procurement – part of what the PWC cost-benefit study commissioned by Miti calls the “”thematic issues” – but after these concerns were well (some say too well) managed through higher threshold levels and extensions of time, the aim moved to the fact the TPPA has overwhelmingly more chapters on issues not related to trade.

This is very true. It covers qualities, standards and principles of good governance, transparency, accountability and incorruptibility in extenso. What is the problem? Do we want bad governance, opaque and unaccountable systems, and corruption? It cannot but be a good thing that associated countries are being moved in the direction of higher standards and better quality rule.

Then, comes the question why do we have to rely on an “external” regime to improve ourselves and, sometimes in the same breath, the assertion the TPPA cannot solve all Malaysia’s governance issues in any case.

So, which and what is it? It has never been the contention that the TPPA is a one-shot panacea for Malaysia’s political, social and economic problems. But it is a jolly good start and boost. And it is, furthermore, freely sought by Malaysia, in the exercise of its sovereign right. The TPPA will assist in the injection of higher disciplines and standards of governance as well as of justice – such as for workers through acceptance of International Labour Organisation requirements (not unknown in this country as the electrical and electronic industry already conform but not extensively enough practised in other sectors).

There are a number of obligations Malaysia has undertaken, especially through the United Nations system, which it has not always fulfilled, like with the Universal Declaration of Human Rights. With the TPPA, Malaysia will not easily escape obligations it has made – another good discipline.

However, depending on the extent and complexity of the obligations, it can also expose Malaysia to means of legal redress that could be overwhelming. There is therefore merit in the fear expressed that the TPPA, through Chapter 9 on Investment, could place Malaysia at risk under the Investor State Dispute Settlement (ISDS) provisions in the second section of that chapter.

It would be wrong nevertheless to say Malaysia would be taken to the cleaners each time, based on a historical analysis of how big business have been hauling governments to court or arbitration – and winning big.

The score for governments winning is 37% of the time, which may not be too comforting. While there is a point to be made about governments keeping to their legal commitments and not moving goalposts, as happens all too frequently with Latin American governments which have lost substantially in frequently cited cases, there is the feeling that big business, particularly Americans, are testing and bending the rules, if not the arbitrators.

Miti has argued there are sufficient provisions in the TPPA to limit and inhibit big business alacrity for legal redress, as in time accorded for other means of settlement to be used and as in provision for the TPP Commission under Chapter 27 to interpret the agreement. However, given the risk factor, it would be a good idea for Miti to organise a small caucus of legal experts, business leaders and government officials to go through the whole gamut of dispute settlement provisions and interpretation under the TPPA with an emphasis on the ISDS.

The PWC cost-benefit study notes in consultant fashion the ISDS “may increase cost to the Government” which includes I would suggest direct loss, professional and proceedings cost and also administrative preparedness. It is the last, I would venture, that the government should give a lot of attention to as Malaysia has to improve legal administrative capability.

We have been caught short many a time on details and record-keeping which has lost us a number of international cases. If we add to this English language capability which has deteriorated, the ISDS exposure could become larger than it already is. So government and administration have to improve. And thus so many fears because we feel we are so inferior and not prepared.

We are not that inferior but we must be better prepared. This applies of course particularly in the competition for markets which the TPPA opens up.

Here economists are having a merry old time arguing about what exactly are the real economic benefits of the TPPA. This is not unknown among economists, only one of whom in my knowledge, predicted the 2008 financial market crash and subsequent economic crisis. Indeed the Queen of England, when opening the New Academic Building of the London School of Economics in November 2008, had asked all those many economists there why none of them saw the crash coming. (They were lost for words and the Queen was not amused: worth at that time about £320mil, the Queen had lost £25mil in a personal investment portfolio).

So on to economists and their little battles over what they never get right. There is the contention now that the PWC cost-benefit study was wrong to base its TPPA economic benefits conclusions on the CGE (Computable General Equilibrium) model which is wanting and inaccurate. There is a Tufts university study based on a UN model which contends the economic benefits of the TPPA are very small, with a very interesting finding of negative effects on growth, employment and income distribution in the U.S. – the usual suspect and prime mover of the TPPA.

The PWC study on the other hand finds the net gains to the overall Malaysian economy of the TPPA are a higher GDP by US$107bil-US$211bil in the period 2018-2027 and additional investment of US$136bil-US$239bil. It reports a narrower trade surplus impact in 2027 of 4.3%-5.2%.

The study however underlines there will be adjustment costs to firms from increased competition and cross-sectoral TPPA obligations. In other words, a lot depends on what firms do in open markets: there are opportunities and challenges. There are details of course on which sectors are likely to benefit the most and which will be under threat. The study has also been made available on the MITI web-site.

Another independent recent study by the World Bank also found positive economic benefits for Malaysia from being involved in the TPPA.

Importantly, the FMM reports that 62% of export growth is because of reduced trade barriers (The PWC study sees over 90% of economic gains are driven by reduction on non-tariff measures by 25%-50%).

Whatever the models and assumptions, how much Malaysia benefits economically from the TPPA depends on what our firms do. They have a good export growth track record. And there are four new export markets in countries with whom Malaysia has no FTA that will be opened up, three of them really sizeable markets: the US, Mexico and Canada. However Malaysian firms also have to adjust domestically against imports.

The economists and writers, some ideologised against big business, can pontificate and go on about this and that model, but it is the doers that matter. Malaysian firms and the Malaysian people have to step up the challenge.

In such a detailed and comprehensive as well as a demanding and complex agreement such as the TPPA, there will be fear and trepidation. But remember, everyone is bound by it, including the U.S. (where there also exist so many fears and doubts which would not arise if it were all for America)

It is not just the TPPA that demands we are agile and competitive. There is already the AEC. The RCEP is slotted to be in place by the end of this year. Asean countries are negotiating a free trade agreement with the EU. The FTAAP (Free Trade Area of the Asia Pacific) will come.

It is the fear of competition which is mainly driving criticism of the TPPA. But there is really no where to hide. As one of the world’s most open economies, Malaysia is already in the mix. We can and must compete.

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

2 January, 2016
As appeared in TheStar.com.my

AT the start of every new year, there usually will be reflection on the last one just gone by, to learn from and build on it, and to resolve to do better.

In the past year, the Asean community has been pronounced. But there are detractors. Does it really exist? What exists?

There are national preoccupations that take priority. In four Asean member states there will be new or realigned political leadership. Political challenges are faced by all Asean countries, in different shades of the existential.

At different levels of threat, there are economic headwinds caused by depressed commodity prices, slower growth in China and increasing interest rates. While the Asean economic community has been pronounced, with all the potential of a single economy, each member state faces its particular challenges on its own to avoid social stresses and political consequences.

So what difference does the Asean community make?

The first thing to remember is that Asean does not displace the individual nation-state. Each member state has chosen not to subsume any part of its sovereignty to a larger Asean institution or entity. Certainly in respect of internal affairs the principle of non-interference is sacrosanct. Therefore it would be misplaced to expect Asean to make a direct difference in the solution of the many challenges its members states will face in 2016.

However, all these problems could become more numerous and complicated if there was no Asean. For example, Asean cooperation makes it more difficult for terrorist groups to conduct their acts of violence within or outside individual countries. Clearly, abetment of internal insurrection has pretty well been absent as Asean grew and became member states seeking to be a community for peace, development and prosperity.

It is also often contended that if there was no Asean, the level of non-regional foreign interference would be so great as to divide South-East Asian states, even set them at loggerheads with one another.

This point is salient when we consider the situation in the South China Sea where four Asean states have territorial claims together with China (and Taiwan). How this matter is resolved – and with what level of extra-regional involvement – is something that affects the whole region and not just those four countries.

That is why the South China Sea disputes have become the touchstone of the contention Asean keeps disturbing outside interlopers out and the region together. In 2016 – if there is to be any belief in the Asean political community – the absolute minimum must be the conclusion of the binding code of conduct in the South China Sea, as presaged in the Declaration of Conduct with China in 2002.

However, if China continues with establishing the series of fair accompli through reclamation and other works while dragging its feet on the code of conduct, there has to be an Asean Plan B in 2016 on the involvement of the United States in the South China Sea disputes. That conversation some individual Asean states – like Singapore – have already had but has to be developed at the group level when Asean holds its summit with the Americans in California on Feb 15-16. (And not just for everyone to spend the time checking on progress of the Star Wars Theme Park in Disneyland).

Asean now has a strategic partnership with the United States. It has to work out in 2016 what this means. It has also, more immediately, to have that Plan B clear in the head. Otherwise we can look forward to a messy US-China struggle and the end of stability in the region which the Asean community is supposed to preserve.

Asean foreign ministries need to get moving in 2016 not only because of the deteriorating situation in the South China Sea. There is also the real danger of deep division being exposed this year under Lao PDR chairmanship which might be overly influenced by China – and then have the division accentuated when the Philippines takes the chair in 2017.

That Asean nightmare must be avoided. The community will crack before it is fully formed.

If protected what is promised will begin to be experienced, even if not to the fullest extent. However there is work to be done in the first year of the Asean community to give an experience of being Asean to the common man. Many now laud the existence of Asean lanes at airports. It will not be a giant leap this year to make them available at ALL points of international entry in ALL Asean countries.

There are many other simple steps that should be taken in 2016 to give that Asean experience to the common man. It does not take much to have the Asean Business Travel Card given that there is already the Apec Business Travel Card among six Asean members states in Apec. Issue a supplementary card? Call it Asean instead of Apec? Anyone got a handle on this?

There are a few other simple propositions which I have enumerated ad nauseam in these columns. A good start to 2016 is to get cracking on them: Asean food stalls, cafes, boutiques, internships. Who has been put in charge to drive these things? It would not be a sovereignty-threatening move.

We are here talking about very simple measures in the context of the people-centred and people-oriented Asean community, made much of in its pronouncement and in Vision 2025. We are not even approaching issues such as greater protection of human rights and better governance which, realistically, would not be something to be expected in 2016, or at the near end of the Asean community.

But let me reflect finally on the Asean Economic Community (AEC) which has received the most attention among the three community pillars. AEC Vision 2025, as with the other pillars, sets another marker, but it should not be used as another date that pushes out the moment of truth.

Former Indonesian Trade Minister Gita Wirjawan, when speaking at the Asean Business and Investment Summit in November, related how when he first attended the Asean Economic Ministers Meeting (AEM) he had asked if having the AEC in 2015 meant at its start, in the middle of the year or at its end. Everyone sheepishly finally settled on Dec 31, 2015.

This instinct, to push out, and then to rush towards a minimalist end, is Asean. Apologists say this is the way Asean does not break up. But this is the way also Asean could crack up. Like against urgent issues such as the South China Sea disputes. Like with a young Asean population that is less patient and more enjoined with one another through social media as well as fast information flows.

Asean cannot continue to always push dates out and work like mad at the end of a period. Vision 2025 therefore must start in 2016. What was not achieved at the end of 2015 must be addressed at the start of 2016, not towards the end of 2025.

The AEC Vision 2025 talks about the non-tariff barriers (NTBs) that remain. Asean Economic ministers committed to the Asean Business Advisory Council (Asean-BAC) that there will be a concentration on at least four sectors to remove the significant NTBs. This is supposed to be achieved in 2016. Let the work begin.

The role of the private sector is also supposed to be enhanced to drive the AEC integration process. This also has to be worked out at the start of 2016, including the strengthening of Asean-BAC and the involvement of well-resourced Asean and non-Asean business organisations.

As the dust settled at the end of the 27th Asean summit this recent last year, it felt rather like everyone packing up at the end of the school year, and then going away. There usually is a hang-over and a lot of scratching about as the new year starts. In Asean’s case, it should not be allowed to be as the new ten years start.
Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

12 December, 2015
As appeared in TheStar.com.my

THEY will be quick, big and such populist hits that befit the man of action Donald Trump says he will be as President. There will be no messing about and he will be going for the jugular.

First, his Muslim-bashing, popular with American rednecks, will drive more Muslims into the arms of the Daesh and other groups who will point to their victimisation and brainwash them into lone wolf or group acts of terror.

Although it will still be a tiny fraction of the world’s over 1.6 billion Muslims, there will be an undoubted increase in the number of such outrage all over the globe. Americans will not be spared unless the US can effectively withdraw itself into a kind of fortress America which one sometimes feels is where Trump wants to drive his country – the country that invented globalisation!

Even his Republican rivals cannot countenance his declaration of war against the religion of Islam for the work of the very few, as has indeed always been the case by any group from any religious denomination or background.

A couple, who are Muslims, open up and kill in California – and it becomes Trump’s populist war against all Muslims. Would he do the same against all Gulf War veterans because one of them masterminded the Oklahoma City bombing in April 1995 which killed 168 people?

Yet those Republican rivals of his do not go so far as to say they will not vote for him should he win their party’s nomination despite the clear prejudice he holds. It is best therefore not to underestimate the threat posed by Trump.

Samuel Huntington’s clash of civilisations will be unleashed, even if not in the form the late scholar had envisaged, as it would really be one between the uncivilised.

What would happen to the one per cent of Muslims in the American population one wonders. Will they be incarcerated, like the Chinese and Japanese were in the past? And for how long, as this would be a war without end.

Would Muslim voices in the US, like that of Fareed Zakaria, be shut up? Aljazeera shut down? Halal restaurants and mosques? End of guarantee of freedom of religion in the American constitution? Certainly no more Muslim tourists and interaction with the US.

Trump’s attitude towards Muslims is deeply offensive. It already causes damage even if he does not become president. It highlights once again the double standards on acts of terror and value of life which have always characterised Western response to Muslim death and suffering.

There was never such Western establishment responses to the horror of the Sabra and Shatila massacres over two days in September 1982 when up to 3,500 Muslim men, women and children were tortured and killed by the Christian Phalange in Lebanon as the Israeli defence forces watched grippingly.

Never mind the three so-called Gaza Wars during the time Barack Obama has been President of the US, starting with a slap in the face operation in 2008-09 just as he was sworn in. War they may have all been called but essentially the Gazans were sitting ducks against Israeli aerial bombing and artillery.

These memories etched in blood remind Muslims of unconscionable killing which does not elicit a response anywhere near any massacre in the West. The balance of loss and suffering is very much against the Muslims. It is a cause of how misguided Muslims are driven to terror even if never a justification for it.

Now Trump comes along to underline it all. He is opening up so many wounds that would endanger the lives of everyone, including Americans at home and abroad. His bigotry knows no bounds as he widens the schism. His proposal to ban Muslims from America is only the smallest part of it.

The second Trump predilection – kicking the Chinese in the arse – will as sure as hell only heighten tension between China as the rising and the US as the status quo, even if not declining, power.

Indeed the most likely outcome will be American isolation and China’s greater influence, starting in the Asia-Pacific region. It would undo the little good President Obama might have achieved with his rebalance strategy and drive countries in South-East Asia in particular into China’s arms.

They will have no choice when they see in the White House an American president who is bigoted, recalcitrant and isolationist. They will see more clearly the future. How China has risen economically and will rise militarily.

China’s per capita income – with all that huge population – doubled in just one decade after Deng Xiaoping set it on the course of modernisation whereas it took Great Britain nearly six decades to do so after the Industrial Revolution and the US five decades to do the same after its Civil War.

Fiscal tangle

China will become one of the most powerful economies in the world and will overtake the US as the world’s wealthiest nation, though not immediately on a per capita basis. But, more importantly, it is not in the kind of fiscal tangle the US is in, and is expanding its military capability exponentially.

Leaders in the field of strategic studies like Hugh White of the Australian National University see this Chinese grip when he noted Asia cannot continue to change economically without changing politically and strategically. A Trump bellicose or absent America will only cause Asian nations to turn more favourably towards China.

American analysts – like Robert Kaplan – foresee and portend a China that can more than match the US militarily. Describing it as China’s Caribbean, he sees almost a natural course of events leading to recognition of Chinese suzerainty in the South China Sea.

Without any intelligent countervailing strategy such as the “pivot” Obama has been trying to fashion, and only with the bigoted berating of a President Trump, America’s contest with China for influence in Asia will be lost.

But finally, more than anything else, a President Trump will spell the end of respect for American leadership in the world and the loss of its soft power.

The fact that the American system – the Republican Party – can throw up somebody like him as a serious presidential contender is a disgrace, and is testimony particularly to how low Republicans can stoop.

They have spent the best part of the last eight years trying to negate the election of a black president and, in pursuit of their prejudice, have been willing to harm American national interest. They have sabotaged government at home and foreign policy abroad. In his campaign Trump is only carrying on along this sickening path.

If this lowest of the low of leadership is what America has to offer, it is not something the world will want to look at. All other hyperbolic expressions will ring hollow. Human rights and dignity? Good system of government and governance? Constitutional guarantees? Maybe better – certainly less hypocritical – what Kaplan described as China’s “low-calorie version of authoritarianism.”

The kind of America Trump will lead will no longer attract the best and brightest, or produce them. American dynamism will be lost. It will survive of course, even if it looks inwards. But it will decline in the world.

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.