Roundup on TPPA cost-benefit analysis by consultancy firm PricewaterhouseCoopers (PwC)

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Pic taken from FMT News

Pic taken from FMT News

Source: The Malay Mail Online

Door to stay open to affordable medicine after TPP, study shows

PwC’s report of its analysis on the impact of selected key sectors on Malaysia’s economy showed that generic drugs will not be restricted in the country due to the similarity of the patent terms filed. ― File pic

PwC’s report of its analysis on the impact of selected key sectors on Malaysia’s economy showed that generic drugs will not be restricted in the country due to the similarity of the patent terms filed. ― File pic

KUALA LUMPUR, Dec 4 — Malaysians will not lose access to cheaper generic drugs if the country enters into the Trans-Pacific Partnership (TPP), according to a cost-benefit analysis conducted by audit giant PricewaterhouseCoopers (PwC).

Released today, PwC’s report of its analysis on the impact of selected key sectors on Malaysia’s economy showed that generic drugs will not be restricted in the country due to the similarity of the patent terms filed.

The report added that the development and production of cheaper drugs will also not be affected as they took longer than the five-year data exclusivity term for biologics.

Biologics are drugs made from biological rather than synthetic sources that have revolutionised the treatment of cancer, HIV/ AIDS, Alzheimer’s disease, cardiovascular diseases and autoimmune disorders, among others.

“In conclusion, the key findings indicate that the TPPA obligations do not pose detrimental risks to the future growth of biopharmaceutical manufacturing industry,” the report stated.

“While the obligations are largely similar to the current practice in Malaysia with regards to small molecule drugs, the TPPA impose additional obligations to biologics i.e. on data exclusivity. However, data exclusivity for biologics does not seem to pose challenges as it will take longer than five years for biosimilars to be developed.”

It concluded that patent term adjustments under the TPP only provided for compensations due to delays in patent approvals and marketing applications, adding that issues won’t be a concern because the National Pharmaceutical Control Bureau has fully completed processing the applications last year.

The study also found that the five-year data exclusivity term on biologics would not affect the production of biosimilars ― the generic drug equivalent for biologics ― because manufacturers have in the past taken between six and 13 years to roll them out.

Malaysia currently does not have any regulation on data exclusivity for biologics, which deals with other drug manufacturers’ right to access vital information on test results on the patented creation.

Malaysia’s public healthcare is currently heavily subsidised, and has resulted in widespread dispensation of generic drugs and biosimilars.

Concern first grew over potential price hikes in medicine and a longer wait for generic drugs after a leak in confidential documents over the TPP pointed towards strict enforcement of Intellectual Properties in member countries.

Negotiations over the TPP, which would create the largest trade bloc on both sides of the Pacific Ocean involving 12 countries, have been shrouded in secrecy for years and its contents only unsealed last month.

Malaysia is among the countries involved with the US, Canada, Japan, Vietnam, Singapore, Brunei, Chile, New Zealand, Australia, Mexico and Peru also on the table.

Parliament is expected to debate the TPP early next year.

 

Analysis: Cheaper mobile services, TV subscriptions with trans-Pacific treaty

KUALA LUMPUR, Dec 4 ― The Trans-Pacific Partnership (TPP) will likely lead to lower rates of mobile services and subscription-based television due to more competition, according to a cost-benefit analysis.

The analysis by local think-tank Institute of Strategic and International Studies (ISIS) Malaysia also noted that the Pacific free trade treaty would result in more competitive prices for certain food items and goods with the gradual elimination of import duties, except for other types of products that are subject to price controls.

“The minister may or may not grant licences for foreigners to operate in Malaysia, but the presence of more telecommunication service providers will create a competitive market and the rates are expected to decline,” said the ISIS’ National Interest Analysis of Malaysia’s Participation in the Trans-Pacific Partnership released today.

“An efficient market will ultimately affect taste and preference of consumers, which, in turn, will push cost of living down. However, governments still have room to manoeuvre by seeking exclusions, long transition periods and so forth for certain goods and services,” it added.

According to ISIS, the TPP will not affect the prices of public transport, utilities (electricity and water), housing, essential food items (rice, sugar and flour), tobacco and cigarette products, liquor and alcoholic beverages, and fixed telecommunications lines that are subject to government regulation.

The TPP improves market access by eliminating and reducing tariffs; removing non-tariff barriers, which are barriers to trade that are not in the form of tariffs like quotas, levies and embargoes; and improving the procedures and control of movement of goods across international barriers, said ISIS.

Imported goods will be cheaper too as import duties for almost 85 per cent of such goods will be eliminated once the TPP comes into force, according to the ISIS analysis.

“Ultimately, consumers will enjoy a wider choice of goods at competitive prices,” said ISIS.

 

More strikes, cost hikes likely with TPP, study indicates

KUALA LUMPUR, Dec 3 — Malaysian employers may face more industrial action by employees along with higher business costs if the country signs the Trans-Pacific Partnership (TPP), consultants PricewaterhouseCooper (PwC) said in its cost-benefit analysis released today.

PwC said Putrajaya would have to amend its labour laws and regulations to fulfil its obligations under the agreement, which would include relaxing the conditions imposed on trade unions that would effectively make it easier for them to go on strike or stop work as a sign of protest.

“Based on the applications for strikes to the Ministry of Human Resource (MOHR), there can potentially be an increase in the number of strikes if the requirements are relaxed,” the report said, referring to the 27 applications for strikes to the Malaysian government in the period of 1999 to 2014.

According to PwC, there were a total of eight reported strikes mostly in the manufacturing sector since 2008, while the MOHR has approved only three applications for strikes since 1999.

Out of the 27 applications, nine were withdrawn, four were resolved through negotiation, while seven were disallowed due to invalid ballots and one was considered an illegal strike. PwC said the eight cases in the two latter categories may be allowed if Malaysia introduces less stringent requirements to match TPP obligations.

To fulfil its TPP labour obligations, Malaysia would have to make various changes including allowing multiple unions in an organisation, allowing workers to be members of multiple unions even in those that are not of the same industry and allowing strikes to be held if consent of a simple majority of union members is obtained, instead of the current requirement for two-thirds majority.

“Most sectors, except the E&E and oil and gas sectors, expressed concerns that these measures could increase the risk of disruptions due to labour disputes, which would in turn increase labour costs and incur revenue and reputational losses,” Pwc said, noting that most firms in the electrical and electronics sector already conform to international labour rights standards and the oil and gas sector’s lower numbers of foreign workers reduces its risk of labour disruptions.

But PwC said that Malaysia would still be able to add on regulations or guidelines to help manage risk of disruptions, citing as example the requirements for adequate notice to be given and the protection of anonymity of votes before a legal strike is allowed.

“While enforcing the labour rights under the 1998 Declaration may seem to increase the cost of business, a joint study by the ILO and the World Trade Organisation (WTO) has found that there is little concrete evidence to support this view. Trade union density and collective bargaining are only one factor amongst many that can have influence on the economic performance,” it concluded.

PwC’s final report on the cost-benefit analysis of Malaysia joining the TPP is titled “Study on Potential Economic Impact of TPP on the Malaysian Economy and Selected Key Economic Sectors” and has been posted on the Ministry of International Trade and Industry’s website.

In a separate cost-benefit analysis report by the Institute of Strategic and International Studies (ISIS) Malaysia, it was noted among other things that Malaysia is obliged under the TPP to protect the welfare of workers, including allowing “free access to and from their workplace” and disallowing the withholding of their wages and passports.

“Malaysia will have better labour standards, which may consequently contribute to economic growth and poverty eradication in the long run,” the report said when commenting on the principle of elimination of forced labour that it said typically exploits the poor and traps them in a poverty cycle.

On October 5, Malaysia and 11 other nations — US, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam — concluded negotiations on the TPP.

Like the 11 other countries that have to get the public to buy-in on the free trade deal, Malaysia has yet to sign and ratify the TPP which will be tabled in Parliament for debate and approval.

 

Saying no to TPP could cost Malaysia up to US$227b, study shows

KUALA LUMPUR, Dec 3 — Malaysia may incur between US$116 billion and US$227 billion in cumulative opportunity cost from 2018 to 2027 if it chooses not to join the Trans-Pacific Partnership (TPP), according to a cost-benefit analysis.

The analysis by accounting firm PricewaterhouseCoopers (PwC) also projected that Malaysia’s non-participation in the Pacific free trade agreement would incur a cumulative GDP loss of US$9 billion to US$16 billion within the same period, as the country would not be able to gain from the elimination of tariffs together with a reduction of non-tariff measures from 25 to 50 per cent in prospective TPP member countries.

“Notably, the cumulative opportunity cost of non-participation in the TPP would be USD 116-227 billion over the 10-year period,” said PwC’s Study on Potential Economic Impact of TPP on the Malaysian Economy and Selected Key Economic Sectors released today.

Opportunity cost was defined as costs incurred plus benefits foregone.

Non-tariff measures are trade barriers that are not in tariff form, such as embargoes, quotas, levies, sanctions and other restrictions.

The PwC analysis said Malaysia’s participation in the TPP was projected to achieve a cumulative GDP gain of US$107 billion to US$211 billion from 2018 to 2027, assuming that all tariffs are eliminated and non-tariff measures are reduced by 25 to 50 per cent across the 12 prospective TPP member countries.

The report added that Malaysia’s participation in the TPP was projected to raise GDP growth by 0.6 to 1.15 percentage points in 2027.

“While Malaysia’s non-participation in the TPP would incur a relatively negligible decline in GDP growth of 0.02-0.03 ppt in 2027, the opportunity cost to growth would be significantly larger at 0.62-1.18 ppt,” said the report, using the “ppt” initials for percentage points.

According to the PwC report, Malaysia also stands to lose US$7 billion to US$13 billion in investment from 2018 to 2027 due to a diversion of foreign investment away from the country if it opts out of the TPP, but is projected to see increased investment by an additional US$136 billion to US$239 billion in that period if it joins the agreement.

“The textiles sector will register the largest increase in investment growth in 2027, followed by the construction and distributive trade sectors,” said PwC.

On the political aspect, local think-tank Institute of Strategic and International Studies (ISIS) Malaysia’s cost-benefit analysis of the TPP said some US lawmakers may put pressure on their government on select issues if Southeast Asia’s third-largest economy opts out of the Pacific trade bloc.

“While executive-to-executive relations may not be dramatically affected, especially given the desire of both sides to strengthen defence cooperation, a rejection of the TPP is likely to be seen by at least some members of the US Congress as an act of partiality towards China.

“This could incentivise US legislators to continue pursuing Malaysia on alleged issues such as human trafficking, currency manipulation and environmental degradation,” ISIS said.

ISIS also noted that without the TPP, Malaysia would not be motivated enough to liberalise the economy and was unlikely to undertake economic reforms.

 

Malaysian builders predict lower profits with higher labour standards under TPP

Reuters pic taken from MMO

Reuters pic taken from MMO

KUALA LUMPUR, Dec 3 — The Malaysian construction industry believes profits will dive due to the expected rollout of higher labour standards when the country signs the Trans-Pacific Partnership (TPP) agreement, a cost-benefit analysis by consultancy firm PricewaterhouseCoopers (PwC) has shown.

PwC provided data showing that Malaysia is currently among nations with the lowest rating for their compliance to collective labour rights, and noted that the country would be obligated under the TPP to adopt rights under an International Labour Organisation declaration in 1998 that would possibly drive up labour costs.

“Construction companies in Malaysia believe that a 1-week strike arising from labour issues would significantly affect business revenues.

“Construction firms believe that Malaysia’s participation in the TPP would raise labour standards to be more in line with the Global Rights Index, and this could increase labour costs,” the consultancy firm said in its report released today.

Citing the International Trade Union Confederation’s (ITUC) Global Rights Index, PwC showed that Malaysia is ranked in the lowest group in cluster 5 where there is “no guarantee of rights”, while other countries who negotiated in the TPP were placed in cluster 2 which covers “repeated violation of rights” (Japan, New Zealand), cluster 3 for “regular violation of rights” (Singapore, Australia, Chile, Canada) and cluster 4 where there is “systematic violation of rights” (Peru, Mexico, US).

“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,” it said.

The report also featured an international construction cost comparison by consultancy firm EC Harris in 2013, which had used UK as the benchmark at 100 for the total cost range that covers site labour cost, construction materials, machinery and equipment use.

In its highlight of selected TPP nations, the report showed Malaysia’s average construction cost as ranging from 39 to 49, against the higher costs of the US (77-120), New Zealand (90-121), Singapore (101-120), Japan (107-137), Australia (103-160).

“TPP countries practising stronger labour rights appear to have higher construction cost compared to Malaysia,” PwC said in its comment on the data.

In its analysis of the overall impact on the construction industry in Malaysia, PwC said the TPP has a “neutral” impact as there are both positive and negative consequences for this sector.

PwC’s final report on the cost-benefit analysis of Malaysia joining the TPP is titled “Study on Potential Economic Impact of TPP on the Malaysian Economy and Selected Key Economic Sectors” and has been posted on the Ministry of International Trade and Industry’s website.

On October 5, Malaysia and 11 other nations — US, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam — concluded negotiations on the TPP.

Malaysia has yet to sign the TPP — the full text of which was released publicly on November 5.

On August 13, Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said that after the TPP text goes public, each country will have to go through its own domestic process over 90 days to get the public to buy-in on the deal.

For Putrajaya, that means finalising and releasing cost-benefit analyses — conducted by PwC and the Institute of Strategic and International Studies (ISIS) Malaysia — and also tabling the agreement text in Parliament for debate and approval.

Malaysia will not be part of the TPP even if it gets cold feet after signing by choosing not to ratify the agreement, Mustapa had said.

 

Report: Petronas set to gain ‘very little’ from TPP

AFP pic taken from MMO

AFP pic taken from MMO

KUALA LUMPUR, Dec 3 — National oil giant Petronas will extract only marginal benefits from the Trans-Pacific Partnership (TPP) should Malaysia sign on, said a report by consultancy firm PricewaterhouseCooper (PwC) released today.

PwC noted that Petronas mostly exports to countries that are not part of the free-trade deal, adding that there are currently no or close to zero taxes imposed on its products that are sold to TPP member countries.

“The potential gains to Petronas from lower trade barriers are expected to be minimal. 74 per cent of Petronas’ exports are to non-TPP countries.

“In addition, a significant portion of Petronas’ export to the TPP countries already incur zero tariffs. For example, 60 per cent of Petronas’ export of liquefied natural gas (LNG) are destined to Japan at zero tariffs,” it said in its cost-benefit analysis of Malaysia’s signing of the TPP.

Among other things, TPP contains measures to boost trade and access to consumers in member countries, including reducing import taxes for products or services supplied by member nations.

Although the TPP would give Petronas and other Malaysian firms more protection over their investments abroad, Pwc pointed out that only five out of 12 countries where the state oil firm’s investments are located as of 2013 are involved in the TPP.

Noting that Petronas’ licencing and registration system was aimed at backing the government’s policy to boost Bumiputera participation in the oil and gas sector, PwC said safeguards in the TPP terms will allow Petronas to continue its nation-building activities and to give preference to local companies.

Over the years, Petronas has increased the award of contracts for goods and services to majority Bumiputera companies from only roughly 30 per cent of contract value in the 1980-1985 period to over 70 per cent as of last year.

With the TPP, however, Petronas will only be allowed to give preference to Malaysian firms to a maximum threshold of 40 per cent of the contract for downstream activities, and will also have to cap its award of contract in upstream activities at 70 per cent in the first year before scaling it back to 40 per cent by the sixth year of inking the deal.

PwC said Petronas’ data on its 2014 award of overall contract award of 70 per cent to majority Bumiputera companies does not make a distinction between firms that were given preferential treatment and those who were capable of winning open tender bids on merit.

“In the event that the current award of local preferential treatment exceeds the respective maximum thresholds, some Malaysian firms in the O&G sector will likely face greater direct competition from foreign participation,” it said.

In the face of greater competition due to the TPP, some of the local firms may face “consolidation” during the transition period in order to build up their capabilities and remain competitive, PwC said, referring to a process which may include firms being merged together or acquired.

PwC’s final report on the cost-benefit analysis of Malaysia joining the TPP is titled “Study on Potential Economic Impact of TPP on the Malaysian Economy and Selected Key Economic Sectors” and has been posted on the Ministry of International Trade and Industry’s website.

Malaysia has yet to sign and ratify the TPP, which the country had finalised on October 5 after years of negotiations with 11 other nations — US, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam.