“For Malaysia, economic integration and strengthening our economic ties with other countries are a necessity.

“Preferential arrangements such as Trans-Pacific Partnership Agreement, the Regional Comprehensive Economic Partnership and Asean Free Trade Agreements have a critical role in spurring productivity growth, accelerating structural reforms and creating a diversified, competitive and resilient Malaysian economy,” he said in his opening address at the World Bank Conference here yesterday (May 16).

Entitled “The Rise of the South at a Crossroads: A view from East Asia and Latin America”, the forum was jointly organised by the Latin America and Caribbean Chief Economist Office and the Development Research Group in Kuala Lumpur.

According to Sukhdave, while the resilience of Malaysia’s domestic demand in the current challenging environment was a noteworthy achievement, the reduced contribution of the external sector had clearly pushed Malaysia on to a lower growth trajectory.

“Since the financial crisis, Malaysia’s growth has become more dependent on domestic demand and less dependent on external demand,” he said. He added that since 2007, the contribution of net exports to real GDP growth had been negative with the sole exception of 2014.

“Over the longer term, the contribution of the external sector will need to expand to support a healthy and sustainable economy,” Sukhdave said.

He noted that greater economic integration – regionally and globally – could well be one of the more effective alternatives means of creating sustainable growth, as policymakers around the world were running out of ways to boost growth.

“Policymakers have not been successful in generating strong sustainable growth. The traditional tools for nursing the economy back to health don’t seem to be working as well – possibly because of overuse or misuse,” Sukhdave said.

“We have to look at alternative means of creating more sustainable growth. One of those alternatives may be greater economic integration, regionally and globally,” he added.

Sukhdave noted that economic and financial integration, whether regional or global, was already happening, hence it had become increasingly difficult for individual countries to determine their independent path to prosperity.

“While not downplaying the importance of keeping our house in order and the need to promote competitive and transparent economies, it is nevertheless obvious that the fates of economies are increasingly linked to those of others,” Sukhdave said.

Meanwhile, Malaysia’s interests in sensitive areas, specifically the affirmative policy and state-owned enterprises, will not be jeopardised under the Trans-Pacific Partnership (TPP) agreement, said Ministry of International Trade and Industry secretary-general Dr Rebecca Sta Maria.

“We have negotiated a package that took on board our concerns, specifically the affirmative policy and issues related to state-owned enterprises,” she said at a panel discussion on “The TPP as an opportunity for Integration” at the World Bank Conference yesterday.

Sta Maria stressed that the TPP would not result in any member country conceding its sovereignty to another, specifically the US.

Rather, she said the agreement was expected to create more opportunities for growth.

“This is an agreement of 12 parties… there’s nothing about surrendering our sovereignty to another, ” Sta Maria said.

“But in the process of negotiation, each party ensured that their interests are taken on board, ” she explained.