Malaysia’s competition law came into force in January 2012. Detailed guidelines on the leniency programme were published in October 2014. Despite the leniency programme being designed based on best practices found in more mature competition regimes and the International Competition Network, the leniency programme has been underutilised in the cartel cases investigated in Malaysia. The underutilisation of the leniency programme could be due to the enforcement agency having too many discretionary powers. Another reason could be the lack of immunisation from civil proceedings. De facto government oversight and spillovers from deterioration in the country’s state of governance in the past could also have affected the public’s perception of quasi-independent commissions. This is reflected in the perceptions of the business community of courts and corruption in the country.

This edited volume has taken a long time to complete. The original plan was to publish an edited volume on the potential impact of the Trans-Pacific Partnership (TPP) Agreement on Southeast Asia based on papers presented in a series of seminars held at the ISEAS – Yusof Ishak Institute in 2016. This plan was put on hold following the uncertainties created by the withdrawal of the United States from the TPP in January 2017. The subsequent signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018 convinced us to resuscitate the book project. Our contributors have had to revise their chapters to take into account, as much as possible, the major changes brought about by the new deal.

We are confident that this volume will continue to be important and relevant in light of the plethora of global political and economic challenges that have emerged in recent times, such as the rise of protectionism, the US-China trade war and the Covid-19 pandemic. We hope that this volume will serve as a useful reference to anyone keen to understand the CPTPP—its nature, evolution and impact.

This book project would not have materialized without our contributors. We thank them for their patience and willingness to reconfigure the chapters after the TPP was transformed into CPTPP. At ISEAS, the support of Director Choi Shing Kwok and Senior Advisor Tan Chin Tiong has been invaluable. We would also like to thank Ng Kok Kiong and Sheryl Sin Bing Peng of the Publications Unit for their help in finalizing and publishing this edited volume.

Overview

The appetite for regional economic integration has waxed and waned over time. Since the failure of the Doha Development Round of multilateral trade negotiations in 2008, countries in Southeast Asia have continued to show interest in greater regional economic integration. This has manifested in several forms and at several fronts—both intra- and inter-regionally. A key initiative that pre-dates the collapse of the Doha Round is the ASEAN Economic Community (AEC), which was formally established on 31 December 2015. It remains a key focal point for regional economic integration for ASEAN member countries. Simultaneously, ASEAN countries have also negotiated the free trade agreements (FTAs) with other countries that already have FTAs with the Association's member countries.

A smaller subset of Southeast Asian nations—namely Brunei, Malaysia, Vietnam and Singapore—and eight other countries from the Asia Pacific came together to participate in the Trans-Pacific Partnership (TPP). Even though the TPP negotiations were successfully conclude and the agreement was signed in February 2016, the United States’ withdrawal from the TPP cast significant doubts on its future. The remaining eleven countries subsequently renegotiated the agreement successfully, resulting in the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March 2018. To date, seven of the TPP signatory countries have ratified the CPTPP, where it has entered into force. Of the four Southeast Asian nations that have signed the CPTPP, only two countries—Singapore and Vietnam—have ratified the agreement; Brunei and Malaysia have yet to do so at the time of writing.

The CPTPP, in its current form and in its earlier manifestation as the TPP, has been touted as a “twenty-first century trade agreement”—a lofty phrase that conveys the agreement's comprehensiveness and its usefulness as a benchmark for all other subsequent trade deals. Despite this, there is clearly no consensus about the impact of the CPTPP in terms of its costs and benefits. To complicate matters, such calculus—as some have argued—extends beyond economics. The political economy of trade agreements is also not confined to domestic politics.Regional geopolitics matter, too. The ongoing trade dispute between the United States and China exemplifies this. This brings us to the goal of this edited volume.

INTRODUCTION

The 14th General Elections (GE-14) in May 2018 witnessed the defeat of Malaysia's ruling political coalition Barisan Nasional (BN) by Pakatan Harapan (PH). Of the 222 parliamentary seats contested, the PH coalition secured 113 seats (52 per cent) compared to BN's 79 seats (36 per cent). BN's defeat was unexpected with most political pundits predicting the continuation of its rule, albeit with a slimmer majority. The BN coalition had governed Malaysia continuously since the country's first general election in 1955 and its independence in 1957. Thus, the election marked the end of one of the longest periods of continuous rule in modern times.

This leads to the question of what accounts for the defeat of BN in GE-14. In other words, what are the factors that can explain the outcome of the election? Did economic factors such as economic growth and inflation play a role in GE-14? Was the change in political regime brought about by the re-entry and active campaigning of the country's former Prime Minister Mahathir Mohamad? Did the party splits in Malay-based parties such as Parti Islam Se-Malaysia (PAS) and the United Malays National Organization (UMNO) contribute to PH's victory in GE-14? Was there a decline in the support of the bumiputra community for UMNO which contributed to BN's defeat?

The aim of this essay is to empirically examine economic and non-economic factors that determined the outcomes of the 2018 election. GE-14 was different from previous elections in Malaysia in that it involved regime transition, namely, the end of dominant party rule. As such, although the economic voting model is used to investigate the determinants of electoral outcomes in Malaysia, attention is also paid to factors identified in the empirical literature on the end of dominant party rule.

The outline of the rest of this chapter is as follows. The next section frames the research problem by reviewing the literature on economic voting as well as the end of dominant party rule. This is followed by qualitative discussions on the economic conditions and political changes leading up to GE-14 in Malaysia. An econometric analysis of the determinants of electoral outcomes is carried out in the subsequent section. The final section concludes.

Introduction

Electronic commerce, or e-commerce, has become increasingly important globally. Based on UNCTAD's (2017) estimates, the value of global e-commerce was estimated to have reached US$25 trillion in 2015. Of this, US$7 billion are cross-border Business to Consumer (B2C) e-commerce. Using trade data from the World Bank, cross-border B2C accounts for only 0.04 per cent of total global exports. If we assume that the volume of Business to Business (B2B) e-commerce is nine times larger than that of B2C, e-commerce's share of global trade was 0.4 per cent in 2015. Though cross-border e-commerce is still a small portion of global trade, its share is likely to increase significantly in the future. Aliresearch (2016) estimates that global cross-border e-commerce will increase at an annual rate of 27.3 per cent during 2014–20.

The rising importance of e-commerce in global trade is also reflected not only in the inclusion of e-commerce related provisions in trade agreements but the increasingly more detailed coverage of such provisions. Of the 275 regional trade agreements (RTAs) in force and notified to the World Trade Organization (WTO) as of May 2017, 75 RTAs (27.3 per cent) explicitly addressed e-commerce (Monteiro and Teh 2017). More than 60 per cent of the RTAs that have entered into force between 2014 and 2016 contained e-commerce provisions (ibid.). The evolution of e-commerce provisions is also related to the evolution in e-commerce itself. Technological changes have been major drivers of this. Finally, e-commerce provisions in trade agreements also have important implications for domestic policies such as competition policy.

This chapter aims to examine the nature and evolution of e-commerce related provisions in trade agreements. The outline of the chapter is as follows. Section 2 discusses how e-commerce is contextualized within trade policy. Section 3 examines how e-commerce chapters in trade agreement have evolved and the factors driving these changes. Section 4 discusses some of the implications of these provisions for competition. Finally, Section 5 concludes.

Contextualizing E-commerce in Trade Policy

The starting point for placing e-commerce within the context of trade policy is the definition of e-commerce. What is e-commerce and how is it related to cross-border trade in goods and services?

E-commerce markets have grown significantly within ASEAN in recent years. According to a report by AT Kearney in 2015, retail e-commerce has a total market size of US$7 billion in the six largest economies within ASEAN (AT Kearney and CIMB ASEAN Research Institute 2015). Currently, Singapore, Malaysia, Thailand, Indonesia, Vietnam and the Philippines all generate less than 4 per cent of their retail sales online (UNCTAD 2015). This is low in comparison with other e-commerce markets such as the Republic of Korea (16 per cent) and China (7 per cent), which suggests that there is room for further growth in e-commerce (CCCS 2017). In a more recent report, Google and Temasek (2018) estimated that the Southeast Asian internet economy reached $72 billion in gross merchandise value in 2018. Growth potential in e-commerce and internet-based operations in ASEAN is tremendous, given that the number of internet users in the six largest economies in ASEAN has risen from 244 million in 2015 to 283 million in 2017. The number of internet users in the region is projected to continue to grow at an annual rate of 17.7 per cent until 2020 (CCCS 2017).

The rapid growth of e-commerce markets in the region has brought about significant benefits to both consumers and businesses. From the perspective of consumers, they benefit from an increased access to a greater variety of goods and services via e-commerce platforms. From the perspective of businesses, they benefit from access to new markets, reduced barriers to entry, and operational cost savings (CCCS 2017).

Despite the growth and benefits of e-commerce, there are challenges that could hinder the growth of e-commerce in ASEAN. In order to realize the full potential of the e-commerce market in ASEAN, improvements are required in terms of technological infrastructure, and in the regulatory and legal environment in which e-commerce firms operate across ASEAN.

In terms of the technological infrastructure development in ASEAN, many ASEAN member states still lag behind in global rankings in terms of the speed, efficiency and reliability of their internet services despite significant investment in their technology infrastructure (International Telecommunication Union 2016).