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TPPA: Raw Material Export Tax Prohibition may Cripple Malaysian Economy

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PETALING JAYA, 30 July: The prohibition of export taxes on raw materials which would be required in the TPPA free trade agreement between Malaysia and other countries may cripple the country’s economy.

This is because the export tax imposed on raw materials such as fuel and palm oil, generates the downstream industry development to process the raw materials.

Member of Parliament for Kelana Jaya, Wong Chen said, if Malaysia agrees to the prohibition in the TPPA (Trans-Pacific Partnership Agreement), the Malaysian economy will decline until it is only focused on basic farming and export of commodities.

Wong Chen said that the prohibition would create devastating effects on downstream manufacturing sectors such as petrochemicals, wood products, rubber and palm oil.

Those industries contributed RM2.4 billion last year to the national economy and provide thousands of jobs.

“Just like other developing countries, the export tax is used by Malaysia to prevent the export of raw materials that are not processed.

“The aim is to encourage the development of domestic downstream industries that produce additional economic value and generate jobs for Malaysians.

“This tax is very important to promote the local industry,” he said in a press conference at the PKR headquarters this morning.

The TPPA issue received serious attention from Pakatan Rakyat (PR) Members of Parliament who claim that the agreement would give greater rights to foreign investors and can adversely affect the interests of the people.

Wong Chen added that the four industries that will be affected has a combined income estimated at RM225 billion, with oil revenues at RM109 billion, palm oil at RM80 billion and RM18 billion each for rubber and wood.

Wong Chen said although the text of the agreement is still kept secret by the Federal Government, based on Article 2:11 of the Peru-USA FTA, it was mentioned that this agreement does not allow any party to practice or maintain duty items or taxes on goods exported.

He added that PKR will hold talks with wood products, rubber and palm oil sectors in addition to urging the Ministry of International Trade and Industry (MITI) to explain how they would protect Malaysia’s businesses which will be affected by the TPPA.


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