Posts tagged free trade
A new self-certification pilot scheme will save exporters millions of dollars and time on paperwork when it is fully implemented in 2012. The scheme, a cooperation between Customs in Singapore, Malaysia and Brunei, means exporters who satisfy the criteria for locally-produced goods can self-declare their origin and receive a preferential tariff rate when exporting within the Asean region. At present, Singaporean companies must apply for certification every time they make a shipment, costing S$15 (US$11.60) each.
Singapore’s trade with other Asean countries was worth around US$89.65 billion in 2009. Customs says 850 exporters will each save up to S$1.08 million a year under the program, and benefit from increased speed and efficiency.
source & article: Straits Times
Amid the broad statements on free trade and regional economic development from the past weeks’ G20 and APEC gatherings, several smaller-scale negotiations are producing results. One of them is a signed deal between Malaysia and Chile to eliminate tariffs on their respective agricultural and industrial products, starting in the first half of 2011.
Some 6,960 Malaysian products will have immediate free access to the Chilean market with another 668 following in the coming years. Trade between Malaysia and the South American nation reached RM853.7 (US$274 million) in the first nine months of 2010. Malaysian electronics, wood, rubber and chemical products made up the bulk of its RM199.8 million in exports to Chile, while imports from Chile to Malaysia were mostly scrap metal, paper & pulp products, and fruit. Malaysian exporters of manufactured goods like rubber gloves, textiles, aircraft parts, cocoa butter, steel rods and ceramic wares would likely benefit.
The deal marks a new step in free trade between developing and emerging economies, as trade with developed nations begins to stagnate. Chile’s $164 billion economy grew by 7.2% this quarter, driven in part by natural resources in which Chile is abundant, and the government approved $13.3 billion in foreign investment requests last month.
Malaysia has already signed free trade agreements with Japan, Pakistan and New Zealand.
source & full article: Bloomberg/BusinessWeek
Malaysia and India will increase trade and investment cooperation with the signing of the CECA free trade agreement, to come into effect on 1 July 2011.
CECA, or the Comprehensive Economic Cooperation Agreement, should help the two countries meet a trade target of RM 46.5 billion (US$15 billion) by 2015, with infrastructure projects and investment flows playing a large part in the new environment. Indian Prime Minister Manmohan Singh, who is visiting Malaysia this week, says inadequate infrastructure in his country is a constraint on economic development and welcomes Malaysia’s expertise in building and road construction. Other useful targets for CECA-related activities will be the capital market, energy including oil, gas and renewables, and information/communications technology.
Both India and Malaysia have much to offer each other: Malaysia will gain access to India’s enormous market and India can use Malaysia as a gateway to other Asean nations. India is also negotiating a separate regional treaty; the Asean-India Trade in Goods Agreement.
source & article: The Edge Malaysia
It’s looking like a good week for Australian-Southeast Asian cooperation. Not only are rumors flying of Singapore taking over the Australian Securities Exchange (ASX), Malaysia and Australia have concluded an eighth round of discussions on forming a new free trade agreement.
“We are really serious about doing business with Malaysia,” said Tim Harcourt, chief economist at the Australian Trade Commission (Austrade).
Trade between the two countries is around US$13 billion annually and a FTA would provide new opportunities for cooperation, particularly in the services sector which currently stands at $2 billion with a focus on educational services. Australia is interested in forming new partnerships in financial services and has shown a growing interest in Malaysia’s large Islamic finance sector. Austrade says financial services are the largest contributor to Australia’s national output, ahead of mining, manufacturing and agriculture. Total turnover in the sector was over A$100 trillion (US$98.3 trillion) this year and financial institutions’ assets were over A$4.8 trillion. Both Australia and Malaysia had complementary advantages to offer each other and could combine them to develop new opportunities in third markets.
Besides finance, FTA cooperation could also extend to the healthcare, infrastructure and human capital industries. There is already an existing trade agreement between Asean, Australia and NZ but a specific deal between Australia and Malaysia would lead to additional benefits.
source & article: The Star
The Trans-Pacific Partnership (TPP) is a large-scale free trade negotiation that began in March 2010 and its visionaries hope it will one day include the United States and all other members of the massive Asia Pacific Economic Cooperation (APEC) bloc. So far, talks have included the US, Australia, New Zealand, Brunei, Singapore, Chile, Vietnam and Peru. Malaysia announced on 6 October that it too would join in.
Participants are keen to get some larger players on board. Japan’s Prime Minister Naoto Kan last week expressed an interest in joining, and South Korea is also on the wish list. Malaysia’s smaller economy might not be a top priority for the US, but its participation will certainly add value to the group and an agreement would produce benefits at home by eliminating duties on 12.4% of Malaysia’s exports and around 71% of its global trade would receive preferential treatment, according to the Ministry of Trade and Industry. Trade with current TPP participants was worth RM 285.8 billion (US$91.7 billion) in 2009, 28.9% of Malaysia’s total. Trade with the US and Singapore accounted for over 80% of that figure.
TPP participation would also encourage much-needed foreign investment from a wider variety of sources.
Malaysia’s previous attempt to negotiate a free-trade deal with the US faltered in 2007 as Malaysia expressed reluctance to open up its rice market and increase access to government contracts. More recently though, it was part of a China-ASEAN tariff-cutting agreement and is also negotiating independently on a trade deal with the European Union.
Malaysia could see an increase in trade with the European Union soon, once talks on the Malaysia-EU Free Trade Agreement (MEUFTA) get underway in December this year. Prime Minister Najib Razak, in Europe for the 46-nation Asia-Europe Meeting (AEM) announced the beginning of negotiations with European Commission president Jose Manuel Barroso at a joint press conference today.
The EU accounts for 10.8% of Malaysia’s exports and 11.2% of its global trade. EU-based interests have around US$13.6 billion directly invested in Malaysia, making it the highest source of FDI. As well as boosting these figures with a FTA, Malaysia and the EU will also negotiate a Partnership and Cooperation Agreement (PCA), holding dialogs to enhance trade as well as cooperate on political relations, science & technology, health, energy, transport, agriculture, banking, maritime, and other issues. The EU would love to have more access to Malaysia’s auto market, and potentially wants to introduce more ‘European’ standards to the country on issues like investor protection, competition law and sustainability.
According to the EU, a free trade agreement would grow Malaysia’s GDP 8% by 2020. The EU is also making deals with others in the region, such as Singapore, South Korea, Vietnam, India, Japan and Thailand, possibly in an attempt to lessen China’s regional predominance.
A Free Trade Agreement (FTA) will come into effect between Malaysia and New Zealand on 1 August 2010, complementing the existing Asean-Australia-NZ pact. Negotiated since 2005 and signed in October 2009, the agreement will see tariffs on agricultural and industrial products gradually eliminated until 2016, beginning with under-20% tariffs and ending with higher-taxed trade.
Asean is New Zealand’s third-largest export market and the FTA should produce new investment opportunities. Malaysia’s trade with New Zealand was RM3.5 billion (US$1.1 billion) in 2009. Exports (at RM1.9 billion) were mainly electrical and electronic appliances, chemical, processed food & manufactured metals, while imports from New Zealand (at RM 1.6 billion) consisted mainly of food, paper & pulp and machinery.
source & article: Business Times
Europe’s No.2 carmaker PSA Peugeot Citroen has signed another deal with Malaysia’a Naza to produce 70,000 vehicles at its Gurun plant just north of Kuala Lumpur. The French carmaker, already making great gains in Asia, has worked with Naza to produce Peugeot vehicles since 2006 and this latest deal is their third major contract. New Asean trade freedoms promise to open up lucrative opportunities nearby, and the company would like to use its Malaysian base to reach even further into the Pacific region and Africa.
source & article: Sydney Morning Herald (which erroneously mentions Australia as part of Asean)
Finance Ministers from Asean nations met in Hanoi this week to plan further steps toward economic integration.
In their meeting ahead of the 16th Asean Leaders Summit, they pledged to implement the proposed Asean Trade in Goods Agreement (ATIGA) by May 2010, and the Asean Comprehensive Investment Agreement (ACIA) by October.
The agreements are designed to facilitate the free flow of goods, services, labor and investment across the region. Six nations have already eliminated tariffs on 99.5% of tariff lines, while the ‘CLMV’ countries (Cambodia, Laos, Myanmar & Vietnam) have reduced tariffs to around 0.5% on 98.86% of tariff lines, with a view to complete elimination by 2015.
If all goes well, these moves will bring the region closer to the dream of a fully-integrated Asean Economic Community.
Plans to integrate economies have been progressing smoothly in the past decade. Since 2000, Asean intra-trade has tripled, rising from US$166.8 to $458.1. Between 2006 and 2008, foreign direct investment (FDI) from outside Asean rose 8.6%, while FDI within the organization rose 42.6% in the same period.
article & source: Business Times (Malaysia)
Indonesia no longer plans to renegotiate the ASEAN free trade agreement with China (ACFTA) and will instead find ways to assist local industries most impacted by the change.
The powerful Indonesian Chamber of Commerce and Industry (Kadin), however, is still pushing for a delay in the implementation of ACFTA, claiming many manufacturers are not ready to compete with their Chinese counterparts.
Government assistance might take the form of loans and facilities for capacity building some industries. A working committee consiting of representatives from relevant business and economic ministries will also monitor trade developments between Indonesia and China, while China itself has promised “sustainable” and “balanced” trade, saying it will accept more imports from Indonesia should a trade surplus widen.
article & source: The Jakarta Globe