* Minister vows to protect state firms, ethnic preference policies
* Sees pact opening up new markets, from Canada to Peru
* Says Malaysia’s failure to join TPP will benefit competitors
* (Adds comments by Malaysian critic)
July 28 (Reuters) - Malaysia’s trade minister vowed to safeguard state-owned enterprises and policies favoring ethnic Malays in a Pacific trade deal, as he hit back at domestic critics of the pact.
Mustapa Mohamed said the Trans-Pacific Partnership would scrap tariffs on goods ranging from electrical products to palm oil and open up new markets with countries not subject to existing bilateral trade deals, such as the United States, Canada, Mexico and Peru.
Mustapa, who is attending talks in Hawaii this week aimed at finalizing the 12-nation deal, tackled concerns the agreement would undermine Malaysia’s right to manage state-owned enterprises (SOEs) and policies of preferential treatment for ethnic Malays and other indigenous people, known as bumiputra.
“Malaysia is seeking flexibilities for our SOEs ... to enable them to continue with their developmental roles,” he said in a statement on Tuesday, pointing to Malaysian state investor Khazanah Nasional Bhd and state energy firm Petronas.
“On government procurement, Malaysia is safeguarding (bumiputra) preferences by ensuring that the current (bumiputra) and (small- to medium-enterprise) preferences will be maintained.”
Malaysia’s top 20 government-linked firms have a market capitalization of 431.1 billion ringgit ($113 billion). Ethnic Malays made up the bulk of their 225,050 employees in 2014.
In a detailed statement, unusual for the trade ministry, Mustapa rejected criticisms made about the TPP’s impact on access to affordable medicines and said U.S. rice exports to Malaysia would remain at a “minimal level.”
Malaysian critics of the pact range from activists to opposition lawmakers and even influential former prime minister Mahathir Mohamed.
Activists say it would drive up medical costs, as its provisions would curb access to generic medicines. It would also affect rice businesses in Malaysia, they have said.
“It is a cosmetic statement,” Mohammad Nizar Mahshar, chief executive of one of the protesting groups, the Malay Economic Action Council, said in response to Mustapa’s statement.
“They’re talking about empty promises where we can’t see the real content.”
Failing to join the TPP would come at a cost of potentially losing foreign investment to other countries and late entry would not give Malaysia the same ability to shape the rules, Mustapa said.
“We will also lose out to our competitors, who will be part of the (TPP) and enjoy preferential access to the TPP markets,” he added. ($1=3.8130 ringgit) (Reporting by Trinna Leong in Kuala Lumpur; Writing by Krista Hughes in Lahaina, Hawaii; Editing by Clarence Fernandez)