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Aussie envoy: FTA will stir interest in Malaysia

Business Times (Malaysia)

Aussie envoy: FTA will stir interest in Malaysia

By Rupa Damodaran

July 22 2006

AN AGREEMENT to liberalise trade of goods and services between Malaysia and Australia will help attract more Australian firms to invest in and trade with Malaysia.

"We need the Australian business community to know about investment conditions in Malaysia, and a free trade deal will awaken a much stronger interest," Australian High Commissioner James Wise told Business Times in an interview.

Australia’s bilateral relationship with Malaysia has been fraught with political and cultural difficulties in the past.

However, this bilateral relationship has assumed a "healthy level", particularly after Prime Minister Datuk Seri Abdullah Ahmad Badawi’s visit to Australia last year.

It marked the first official visit by a Malaysian Government head in 20 years.

Free trade talks between Malaysia and Australia have been gaining momentum since they commenced last year. Australia already has a free trade agreement (FTA) with Singapore and Thailand, and is negotiating with China for one.

"In the absence of a FTA, Malaysian firms will continue to pay tariffs for their goods to enter Australia, making them less competitive in the Australian market compared with the same products from Thailand, China, Singapore and the US - countries with which Australia currently has a FTA or is negotiating for one," said Wise.

He added that Malaysian businesses have been losing their comparative advantage, especially in areas like furniture, rubber and packaging, and electrical and electronic products as well as packaging.

Wise described the fourth round of free trade talks between Malaysia and Australia in Kuala Lumpur recently as one with a "good momentum", covering substantial issues including discussions on investments and the services sector.

Unlike the Malaysia-US FTA talks, which has a narrow window for both negotiating parties to conclude, the Malaysia-Australia FTA talks which started in the middle of last year do not have any artificial deadline.

He added that bilateral investments have been trending upwards, with Malaysian investments Down Under currently totalling over A$5 billion (RM13.8 billion) compared with Australian investments in Malaysia, which amount to between A$700 million (RM1.93 billion) and A$800 million (RM2.23 billion).

 source: Business Times