THE Institute for Democracy and Economic Affairs (IDEAS) is a forward-looking think tank that remains entrenched in the spirit of independence that founded this blessed land, particularly inspired by the Vision of Tunku Abdul Rahman, our Bapa Kemerdekaan (Malaysian Father of Independence). I recently had the privilege to interview its Director, Wan Saiful Wan Jan, on contemporary issues, and would like to specifically highlight his views on the Trans-Pacific Partnership (TPP) trade agreement among the twelve Pacific Rim countries, signed by Malaysia on 4 February 2016 in Auckland, New Zealand.
Q: Can you share your point of view concerning the TPP?
Malaysia joined in with the idea during the earlier part of Najib’s premiership. If you remember when he first became PM, the policy idea that he brought with him was quite refreshing – talking about 1Malaysia, and about the New Economic Model. To me these are the two flagship agendas that he had. the New Economic Model spoke about the details of a liberalized economy and the need for us to be part of the global value chain. The TPP is one step towards that. We joined during that earlier time and I think it’s part of the agenda, becoming part of the global chain.
Q: From a consumer standpoint, is it a right move for Malaysia to hop on board?
I think it is the right move for Malaysia to sign. It will create various/different job opportunities for the country. It will help bring in lower-priced product at higher quality, as more people will be able to access them. It will help with the cost of living problem, because when higher quality products are available at a lower price, then they become more accessible to everyone. So to consumers I think the TPP is a good thing.
“I think it’s really insulting that when people go out there to the world and say that Malaysians cannot compete and therefore we should just not be part of the global supply chain. I say this is not true. I think some Malaysian companies might not be able to compete – that is accepted.”
Q: If this is so, why the heated debate?
Of course when you look at the concerns that were raised during the TPP, it is because the Government did not educate the public enough about it. They did not tell the public enough about the benefits of liberalization, or reveal the big-picture story behind the TPP to the population. You cannot ignore that. And I think as a result, that was a lost opportunity, and consequently a mistake that was capitalized upon. Unfortunately, the concerns were not addressed properly – and there are indeed some valid concerns that need to be addressed. But overall in terms of the TPP as an agreement, I think they made the right decision in timing it.
Q: There are real concerns of some things being more expensive. Should consumers be worried?
The reality is the prices of all products go up every year, that is with or without the TPP. It is simply a problem of inflation. And it’s not necessarily a bad thing, because deflation is even worse. Regardless of the TPP, we have inflation, which means the costs of items will go up every year.
Q: With the TPP, many people have been complaining that the price of medicine, in particular, will be more expensive. Is this a viable concern?
Yes, it is true there are concerns about the price of medicines. The price of present medicines will not go up, but what will happen is the patent protection given to certain drugs (for new medicines) will now been extended for some categories, especially what they call Biologics. For Biologics, the patent protection is extended, and as a result of this added protection, the producers will be able to dictate the price for a longer time. Hence if production is less, the price becomes higher. Currently the protection is for about five to eight years. So it’s not really about the pricing becoming more expensive; but rather it is about balancing between encouraging companies to innovate and produce new drugs and making sure the drugs are available to the public. The reality is nobody will put in money and resources to produce new products unless they know they can make back the money. You know 80 per cent of pharmaceutical research actually fails – it doesn’t produce any products – and even from the 20 per cent that succeed, some will be registered and some won’t. So companies need to recoup the cost that they lost in the 80 per cent by selling the 20 per cent and that’s why prices are relatively high when they start selling the products. So that is specifically on Biologics.
But there is another issue about generics and this is where the debate exists. It’s because many people oppose the TPP on public health. They say that generic medicine companies should be allowed to copy the medicines and sell them at a lower price. And they want it to be done immediately. Now if I was an original manufacturer, why would I produce a new product if it was going to be copied tomorrow? The original production is to be given priority. But the antagonists of TTP intentionally ignore or choose to refuse to acknowledge the fact that the price of generics may go down (because generics are not protected like patent; more companies can copy them and the tariff barriers that are being imposed on generics at the moment will be removed by the TPP).
And the vast majority of medicines here is generics (the target is to have them take up to 80 per cent of our medicines in Malaysia). So once the overall the cost tariff barriers are removed, the price will go down (well perhaps not really go down, but that the overall cost of healthcare will not increase as much as people think). So the price of generics is not going to go up more than inflationary rates – and contrary to that it might go down.
“There are those that go to the public and say we must defend the local companies like Proton… And when they finish they get into their Mercedes Benz – so I don’t see where they are coming from.”
Q: What about other aspects of the TPP?
There are other concerns like foreign countries coming in and swarming the country with their products; or that foreign countries will come in and kill off local companies and SMEs.
Q: Does this somehow indicate our incompetency on a global level?
Yes you are right. The root cause is the lack of confidence in ourselves. And there are times when I hear this kind of argument, I feel quite insulted by them. they keep saying that Malaysians cannot compete and so on. You cannot compete – stop telling people that I cannot compete as well! If you don’t have confidence in yourself, then just go to the corner and be quiet. Why are you saying that all of us are unintelligent just like you?
I’m not in the business to protect capitalists or businessmen who want to set up a business. I’m here to talk about the benefits to consumers. So if the businessmen cannot compete, let them close shop. I want to getter better products from Mexico, US, Singapore, Vietnam, etc. at a lower price and I really don’t care where the products come from. If there are those that care about that, then let them continue to buy local products. I don’t really know why suddenly all these activists want to protect the business people (including the uncompetitive businesses) when we really should be thinking about the consumers.
Q: Is Malaysia still a brand leader today in the global domain as it once was?
Concerning brand leadership, right now I think we’re not really showing the world that we can lead. At the time of TAR, we became a founding member of the OIC, a major international organization, and negotiated independence from the British without any bloodshed – again setting a new benchmark for the freedom fighters across the region. We were a leading member who helped found ASEAN. We played a very important role in the Non-Aligned Movement (a group of states which are not formally aligned with or against any major power bloc), we promoted the idea of ZOPFAN (Zone of Peace, Freedom and Neutrality). So there was a lot that we could talk about compared to now.
Last year, we were Chairman of ASEAN, and we completely missed the boat because we were so busy with our domestic scandal. We could have played a much bigger role to shape ASEAN (and even in that we failed to do it well). So there’s a lot of catching up and rectification that needs to be done to reclaim our position globally. It can be done, but we need to solve the internal problems first.
“When it comes to being proud to be Malaysian, the challenge now is when you say Malaysia, people think about corruption, scandal, political problems, etc. But I think that’s temporary. The pride that is to be Malaysian will come back…”
Visit http://ideas.org.my/ to learn more about IDEAS.