Although the Trans-Pacific Partnership Agreement (TPPA) has yet to be signed, investors from non-TPPA countries are already making inquiries about moving their manufacturing base to Malaysia, in the hope of entering the United States market.

Malaysia's chief negotiator on the TPPA, J Jayasiri, conceded today that there is no empirical data to support the claim that free trade agreements can help bring in foreign investment, but offered this as an anecdote instead.

“ Even when we were negotiating the TPP, a few investors from non-TPP countries were already making inquiries to locate their manufacturing bases in Malaysia. The reason is they wanted to get into the US market.

“ The rules of origin (under the TPPA) would prohibit them from getting preferential treatment if they are outside the TPP,” Jayasiri said in his keynote address at a roundtable discussion on the TPPA in Kuala Lumpur today.

The TPPA negotiations involved 12 countries along the Pacific Rim - Malaysia, Vietnam, Brunei, Singapore, Japan, Australia, New Zealand, Canada, Peru, Chile, Mexico and the US.

Jayasiri - who is also International Trade and Industry Ministry deputy secretary-general - said a bigger concern for Malaysia would be if Malaysia is left out of the TPPA while Vietnam is part of the trade pact.

Mexico's experience

In that case, he said, the logical choice for manufacturers would to be move to Vietnam instead, including factories that are already based in Malaysia.

Asked about Mexico's experience in a similar trade agreement, the North American Free Trade Agreement (Nafta), Jayasiri said the central American country is now singing praises of it despite misgivings when Nafta was signed in 1992.

He said when Mexican ambassador to Malaysia Carlos Isauro Félix Corona spoke of Nafta at a function several weeks ago, he had told 'a good story' but lamented that it was not picked up by the media at the time.

“The Mexican ambassador himself came and testified that in the beginning it did not work for them. There were concerns.

“But at the end to the day - today - they are one of the leading auto-makers. They are enjoying job creation. They are exporting 1.6 billion cars. That was something that was not there before Nafta,” Jayasiri said.

Nafta is a free trade agreement between the US, Canada, and Mexico.

The US automobile industry is among those that moved to Mexico, under Nafta, to take advantage of the lower wages there.