Tarrif elimination under TPP can save RM1.71 billion in construction sector

Tarrif elimination under TPP can save RM1.71 billion in construction sector

KUALA LUMPUR, Dec 3  — The elimination of tariffs under the Trans-Pacific Partnership (TPP) among member states is expected to achieve cost savings of RM1.71 billion from imports of machinery and transport equipment for the construction sector.

“Local contractors are expected to benefit from cheaper imports of machinery and transport equipment, especially from the US and Japan,” according to a PricewatewaterhouseCoopers’ (PwC) study on the ‘Potential Economic Impact of TPP Agreement on the Malaysian Economy and Selected Key Economic Sectors’.

This is part of the TPP cost-benefit analysis studies released by the Ministry of International Trade and Industry and uploaded on its website.

“The TPP countries account for 34% of the total imports of machinery and transport equipment for the construction sector.

“Amongst the TPP countries, the US, Japan and Singapore cumulatively account for supplying about 91% of Malaysia’s import demand for machinery and transport equipment,” it said.

PwC findings also stated that there would be partial liberalisation of government procurement of construction services to increase competition for more specialised contractors.

“TPP participation would require Malaysia to partially liberalise government procurement of construction services above a given threshold value.

“Experience from Malaysia’s private construction sector, which is already fully liberalised, suggests that Malaysia’s general contractors have the capabilities to compete against international contractors, including those from the TPP countries,” it said.

PwC also found that safeguards secured would limit short-term exposure to competition and provide a window of opportunity to strengthen capabilities.

“Safeguards secured under the TPP Agreement would limit exposure to increase competitive pressures in the short term,” it said.

However, PwC, in its findings stated that adoption of rights under the International Labour Organisation Declaration 1998 could increase labour costs.

“Malaysia’s rating is due to restrictions on selected workers in forming or joining a union, limitations or bans on collective bargaining in certain sectors and limitations on rights to strike.

“Construction companies in Malaysia believe that a one-week strike arising from labour issues would significantly affect business revenues,” it said.

PwC said construction firms believed that Malaysia’s participation in the TPP Agreement would raise labour standards to be more in line with the Global Rights Index, and this could increase labour costs.

TPP countries practising stronger labour rights appear to have higher construction costs compared with that of Malaysia, it added.

— BERNAMA

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