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11 Focus in Continuity: A Framework for Malaysia's Foreign
Policy in a Post-Pandemic World - A Monograph
Likewise, the Malaysian government has Trade policy can play a large role in
accelerated e orts to deepen bilateral enabling this type of economic openness.
economic relationships with other Reducing trade barriers and deepening
countries and strengthen multilateral economic integration creates avenues for
engagement. Malaysia successfully ratified greater trade intensity with our peers from
the Regional Comprehensive Economic across the region – directly reducing the
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Partnership (RCEP) in January 2022 and is cost of inter-regional trade and facilitating
making swift progress in ratifying the greater access to goods, services, and
Comprehensive and Progressive technology. Together, the forces of trade,
Agreement for Trans-Pacific Partnership investment and economic integration have
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(CPTPP). The Prime Minister has also allowed developing countries around the
welcomed initiatives like the newly region to grow richer and more productive.
launched Indo-Pacific Economic After all, it is these global forces that have
Framework (IPEF) and expressed the catalysed the growth and development
potential of mega-regional trade of Malaysian economy over the past
agreements like RCEP and CPTPP to pave six decades – as it has for rapid
way for the creation of the Free Trade Area industrialisation of East Asian economies
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of the Asia-Pacific (FTAAP) – an ambitious like Japan, South Korea, and Taiwan.
trade pact that first appeared 14 years ago
in a joint statement from Asia Pacific Trade, Openness, and Long-term
Economic Cooperation (APEC) trade Economic Development
ministers in 2008. 4
While the globalisation of trade has
How International Trade and Foreign transformed living standards in Asia over
Investment Helps the past few decades, harnessing openness
for economic success is much more
This renewed interest in increasing complicated than it may appear.
Malaysia’s openness to trade and
investment could grease the cogs of For one, unbridled trade and investment
Malaysia’s development in the coming liberalisation can create trade-o s. Even as
decades. Greater international trade and it brings gains on the aggregate level,
investment tends to boost economic trade ultimately creates winners as well
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growth, productivity, employment, and as losers. Better-educated, higher-skilled
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incomes. For developing countries like workers in export-facing industries may
Malaysia in particular, openness to trade see larger gains from trade openness than
promotes inward foreign direct investment lower-educated, lower-skilled workers in
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(FDI) and in turn, creates opportunities for import-competing industries. Likewise,
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technology and knowledge di usion from because the surviving higher-performing
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abroad. In recent decades, the advent of firms tend to pay higher wages, inequality
digitally enabled trade and e-commerce between workers across di erent firms
has magnified these potential gains, gener- can increase.
ating opportunities for small-and-medium
enterprises (SMEs) to access global At the same time, harnessing trade for
markets and participate in global development needs to go beyond
production networks. 12 managing its costs. Experience over the