Malaysia (Commonwealth Union)_ The entry of the United Kingdom into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is anticipated to yield significant advantages for Malaysia’s palm oil sector, as suggested by an analyst. Notably, Malaysia’s successful endeavor to persuade the UK to eliminate its existing palm oil tariffs from the present rate of 12% immediately upon joining the pact is poised to boost exports to the UK. This development was emphasized in a former report by SPI Asset Management’s managing partner, Stephen Innes.
According to reports, in 2022, bilateral trade between Malaysia and the UK surpassed the remarkable figure of US$7.3 billion (RM33.4 billion), with the UK boasting a trade surplus of approximately US$786 million (RM3.5 billion). Furthermore, the Malaysian Palm Oil Board (MPOB) is optimistic about a 3.7% surge in palm oil exports, projecting a total of 16.3 million tonnes for the current year, driven by sustained demand from importing nations. According to Innes, “The UK is not self-sufficient in food production; it imports 48% of the total food consumed, and the proportion is rising. Therefore, as a food-trading nation, the UK relies on imports.” This underscores the significance of Malaysia’s palm oil industry in fulfilling the UK’s import needs.
According to Malaysian news sources, Dr. Mohd Afzanizam Abdul Rashid, Chief Economist and Head of Social Finance at Bank Muamalat Malaysia, affirmed that the UK’s CPTPP inclusion is expected to foster bilateral trade and investment. This is primarily attributed to the prospect of enhanced cost-effectiveness in conducting business following the UK’s accession to the pact. Mohd Afzanizam also raised the possibility of China joining the CPTPP, thus expanding the pact’s reach into the global economy. He said, “The CPTPP offers greater exposure to the global economy, and it could potentially involve China as it is also in the process to be part of the pact”.
Notably, the United Kingdom stands out as the inaugural European nation to join the CPTPP since its inception in 2018. The CPTPP encompasses fellow G7 members such as Canada and Japan, long-standing UK allies like Australia and New Zealand, and also includes Brunei, Chile, Malaysia, Mexico, Peru, Singapore, and Vietnam. According to Innes, it remains a subject of scrutiny to what extent this development will substantially bolster the UK’s economic growth. Given the UK’s significant emphasis on services within its economy, there is potential for export benefits in that sector. However, as Innes explains, the UK’s strategic alignment with the CPTPP may be more helpful in strengthening supply chains, potentially leading to cost efficiencies in domestic imports.
