On Jan 26, 2016, the hotly-debated Trans-Pacific Partnership Agreement (TPPA) had been approved. Although some say that it’s not final yet, the majority among the parliamentarians reflects that the adaptation of TPPA most likely will become a reality in two years time.

Should the TPPA is implemented, what are the contingency plans drafted by our government to avoid adverse effects? Especially to face the challenges from the more open market forces, multinational corporations and their so-called Intellectual Property Rights (IPR)? Some fear that local small and medium enterprises (SME) would be taken for a ride by the monster corporations from the mightier member countries of TPPA.

According to Dr Jomo Kwame Sundram, a former Assistant Secretary-General at the United Nations (2005-2015), who is also a prominent Malaysian economist, even the overly optimistic computable general equilibrium (CGE) projections recognise that more trade does not mean more growth.

Besides this, he also had revealed the findings of the United Nations Global Policy Model (GPM), which were released in early January 2016. According to the aforesaid findings, the overall economic gains will be extremely modest for the member countries. It is said that the gain would be less than 3 percent for developing countries even after 10 years of implementation.

However, Yeo Seng Hooi, national secretary of The Small and Medium Enterprises Association, is of the opinion that the capital investment on the intermediate and capital goods among the SMEs would be on an upward trend in the face of better market access after TPPA.

He also strongly advocates that with the rise in investments, the demand for jobs should increase in tandem. This means to say that there will be a better job opportunities for the people.

On the other hand, Yeoh also opined that freer and more open economy with a reduction in non-tariff measures (NTM) should lead to more competitive prices of both finished goods and intermediate inputs. This is clearly indicates that the commodity price would decrease, while the quality increases.

On the contrary, Dr Jomo exposed the shocking findings of GPM that the TPPA would cause employment losses and greater inequality. This could be because of the unfettered entrance of foreign labour. And TPPA could add salt to this by drawing more expatriates to flood into the country to meet the multinational corporations’ demand for expertise.

On the legal front, it is deemed that the TPPA’s investor-state dispute settlement (ISDS) would be a great threat to the country’s sovereignty. It is deemed as such, because TPPA allows the investor country to challenge a nation’s policies and regulations which are detrimental for their profit-making, at the expense of the locals.

Usually these proceedings will be held at a private international tribunal, and this obviously reflects an utter contempt to our country’s legal system.

Impeding innovation and creativity

Apart from the ISDS threat, the TPPA also expected to impede the innovation and creativity of much of the developing countries further, via their extensive exercise of IPR. The IPR is also expected as a major contributor for the rise of medical expenses after the TPPA as we will be cut off access to the much cheaper generic drugs.

However, the people always have an option to get costly medicines at the general hospitals. But is that applicable to all costly medicines? Therefore we strongly hope that the government will absorb the cost of costly medicines.

As the chances to avoid the TPPA are extremely slim, it is indispensable for the government to get prepared to face the economic headwinds that would be generated by the TPPA. First of all, our government must address aggressively the hollow economy conundrum as exposed by Anas Alam Fazli, author of ‘Rich Malaysia, Poor Malaysian’.

According to Anas, we import cheap electrical and electronic components (E&E) from China, assemble them and export the finished products. And it is noteworthy that we hardly manufacture or export our own brands. This implies that if we are to remain at this level, we are hardly going to benefit from the TPPA as our investment in other member-countries of TPPA would be limited despite having lowest tarifs and non-tariff measures.

On that note, our government has to heavily invest to improve the quality of education equally to all the citizens, as suggested by Anas. Adding to this, It is also important to address the ever-increasing brain-drain in the country since the mid-70s. Retaining our local professionals would somewhat alleviate the post-TPPA situation.

Another way is by having policies that reduce the cost of doing business and create better infrastructures for logistics and digital connection. Studies in Nigeria had found that economic growth is positively related to the speed of the Internet connection, whereby the people are well-connected to the world outside and emulate the business strategies applied and proven as effective in the developed countries.

Apart from that, they also could market or sell their products much faster and in a larger scale by using a faster Internet connection.

Recently UN economists have strongly denied that higher exports could translate into economic well-being for a nation. According to them, the economic well-being of a nation depends much on the willingness of that country to undertake long-term investment on know-how, skills, machinery and sustainable infrastructure - failing which it would cause a decline in productivity and eventually drag down living standards of the people.

In Malaysia, long-term investment has been started but the results are still far too little in comparison with the developed nations. According to Unesco, the number of researchers in Malaysia for every million people is 365, well behind Japan’s 5,416, Denmark’s 5,300 and the US’ 4,721. Our PhD holders just crossed the 15,000 mark against our 30 million population.

In a nutshell, to avoid being bullied by the mightier member-countries of TPPA, we should start to work on transforming our human capital to become the equal of theirs. If not, the immediate blow from the TPPA might be unbearable. But that doesn’t mean that our nation will collapse totally. TPPA would be a good training ground for our nation to learn to survive the ups and downs of the global economy.