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Third World Network (TWN)
Consumers’ Association of Penang (CAP)
Sahabat Alam Malaysia (SAM)
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Likely impact of US/EU FTAs on Malaysian SMEs
Online Publication Date: 11 July 2008
Executive summary
Free trade agreements (FTAs) between developing countries are usually narrower in scope and less extensive in the depth of their liberalisation. As North-South FTAs are more extensive, they can have greater negative impacts on development.
Malaysia is currently negotiating an FTA with the USA and the European Union (EU). This paper looks at the likely impact of these FTAs on small and medium enterprises (SMEs) in Malaysia. It finds that the goods, services, investment, government procurement and intellectual property chapters are likely to have negative effects on SMEs.
It also notes that it is unlikely for SMEs to be able to effectively benefit from the FTA. As the Third Industrial Master Plan (IMP3) notes, SMEs are less able to capitalise on market opportunities brought about by globalization as a result of their limited technical and financial capabilities. It also highlights that the lack of technical expertise is due to human resource shortages. If this takes some time to rectify (either by increasing the number of university and technical college places, or training sufficient people with the right experience), it will be a long time before SMEs can benefit from the market opening under an FTA.
For further information about the likely impact of the Malaysia-U.S. FTA on other sectors of the Malaysian economy and society, please see http://www.ftamalaysia.org/article.php?aid=156.
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