TPP to boost Malaysian textiles

Malaysia’s textile division will grow by at least 30 per cent, thanks to a surge of investment when the Trans-Pacific Partnership (TPP) agreement comes into force, according to Rebecca Chiang, executive director, Malaysian Knitting Manufacturers Association (MKMA). The trade deal’s ‘yarn forward’ rule makes it mandatory to use TPP member-country produced yarn for TPP-made textiles in order to be covered by the agreement’s market access benefits, and it means “downstream garment exporters need to consume local or TPP country’s fabrics, which will definitely benefit Malaysian knitters,” says Chiang. Malaysia has proven to be the most enthusiastic TPP signatory country – on January 27, the Malaysian parliament endorsed the deal, while many other national assemblies have yet to debate the agreement. The USA, the lynchpin of the TPP deal, is an important market for Malaysia’s garment and textile exports: Malaysia currently ranks number nine in the list of top exporters to the US for woven men’s shirts and number 22 in the list of exporters of knitted men’s shirts, according to an analysis on the impact of TPP on the Malaysian textile and apparel industry undertaken by the MKMA. However, in terms of total exports of textiles and apparel products to the US, Malaysia ranks number 26.

But with the TPP, Malaysia’s exports will increase. The association predicts “72.9 per cent textiles tariff lines, constituting 36.44 per cent of total exports [by TPP member countries] to the USA, will see duty elimination upon entry into force of the agreement.” Without the TPP, only 11 per cent of tariffs or 0.9 per cent of total exports in these countries would be duty free. Among Malaysia’s major apparel exports to the US are men’s and boys’ cotton shirts; knitted or crocheted cotton jerseys; pullovers; cardigans; cotton T-shirts; singlets; and knitted or crocheted other vests. And with the TPP agreement two major products [dresses and shirts] are given duty free status upon entry into force – an exclusive offer by the US to only Malaysia and Vietnam. Meanwhile, total investments [in all sectors] in Malaysia due to the TPP are projected to surge, according to the MTMA statement.