15 Jan, 2015
Dhaka, KL may ink FTA deal by June next year
Malaysian Trade Minister tells FE
S M Jahangir
Malaysia’s International Trade and Industry Minister Mustapa Mohamed has expressed the hope that Dhaka and Kuala Lumpur (KL) would sign a Free Trade Area (FTA) agreement between Malaysia and Bangladesh by middle of next year, lending an impetus to trade and investment between the two countries.
"A meeting will be held in Kuala Lumpur in March next as both the sides have agreed to resume negotiations on the proposed FTA. Hopefully, we will be able to reach a deal within a year", Mr. Mustapa Mohamed said Monday in an exclusive interview with the FE during his recent visit to Bangladesh.
The Malaysian minister, who led a 10-member high-powered delegation, arrived in Dhaka on January 12 on a two-day official visit.
Mr. Mustapa said relevant Malaysian official agencies have already held a few discussions on the FTA deal issue and the outcome has been positive.
He said: "Now it is the job of both sides to begin negotiations and conclude the same within a shortest possible time to strike a deal.
He, however, said the reduction of tariffs, trade facilitation and economic cooperation would be the prominent features of the proposed FTA.
Both the governments will have to rationalize their respective tariff structures for creating a win-win situation for their economies, said the Malaysian Minister.
A priority focus of the proposed deal would be on trade facilitation by bringing about necessary changes to the relevant rules and regulations, he said.
Mr. Mustapa also maintained that another important component of the FTA would be to widen economic cooperation between Malaysia and Bangladesh.
He said once the proposed FTA deal is inked, it will certainly give a boot to the bilateral trade and economic relations between Malaysia and Bangladesh.
Several months back, Dhaka sent a proposal to Kuala Lumpur for signing an FTA between the two sides.
About the existing bilateral trade and investment situation, Mr. Mustapa estimated the aggregate volume of Malaysian investment in Bangladesh at around US$ 3.0 billion.
At present Malaysian entrepreneurs have made investment in sectors like telecom, power and Islamic banking, he said, adding that now they are willing to invest in some other areas namely infrastructure and construction, electrical and electronics, hospitals and tourism.
The minister, however, observed that some factors, including a congenial business environment, adequate infrastructure, access to credit and policies regarding repatriation of profits, would determine the prospects of future Malaysia’s investment in Bangladesh.
"The government of Bangladesh wants more Malaysian investment and our entrepreneurs are also interested to invest here. But it all depends on how the Malaysian entrepreneurs find the business opportunities here are favourable to make new investments," said the minister.
When his attention was drawn to bilateral trade between Bangladesh and Malaysia, Mr. Mustapa said the balance of trade is in favour of Malaysia despite the fact Bangladesh’s exports to Malaysia have recorded a significant rise in recent times.
Citing figures, he said Bangladesh’s exports to Malaysia rose to $145 million in fiscal year 2013-14 from $90 million in FY 2012-13 while Malaysia’s exports to Bangladesh declined to $1.20 billion from $1.60 billion during the period.
Mr. Mustapa also identified Bangladesh’s narrow base of products as the key challenge to boosting its exports to Malaysia.
Malaysia needs to import a lot of products like motorcars, electrical and electronics components, which Bangladesh does not have.
"So, there is no immediate possibility of a remarkable rise in Bangladesh’s exports to Malaysia," said the international trade and industry minister.
About the agreement on hiring Bangladeshi workers by Malaysia under a government to government (G to G) arrangement, Malaysian High Commissioner Nolin Othman, who was present during the interview, supplemented that the recruitment would take place based on a ’demand and supply’.
A joint taskforce between the governments of Malaysia and Bangladesh is working on the issue, she mentioned, adding Malaysian employers had already recruited over 8,000 Bangladeshis against initial target of 10,000.
Responding to the alleged mistreatment of some Bangladeshi workers, the High Commissioner said sometimes, it might happen for those, who enter Malaysia and work there without valid documents.
Both the Minister and the envoy, however, said the government of Malaysia is against such ’maltreatment’, if there is any, and committed to taking such issues seriously.
About connectivity, specially air links between Bangladesh and Malaysia, the minister said now 49 flights are operating in a week against only one flight just a decade ago.