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Japan, Malaysia agree on FTA to open up Malaysian auto sector

Channel NewsAsia, Singapore

25 May 2005

Japan, Malaysia agree on FTA to open up Malaysian auto sector

TOKYO : Japan and Malaysia reached an agreement Wednesday on a free-trade agreement (FTA) that will open up a major new market for Japanese automakers as Kuala Lumpur agreed to lift tariffs on Japanese cars within 10 years.

Japanese Prime Minister Junichiro Koizumi and his Malaysian counterpart Abdullah Ahmad Badawi signed off during a Tokyo meeting on the FTA outline hashed out in weekend negotiations in Kuala Lumpur.

"The two leaders agreed to expedite work in finalizing the text of the (FTA) so as to enable it to come into force as early as possible," a joint statement said.

The major sticking point that was resolved was on letting Japanese automakers to enter the market in Malaysia, which has historically tried to build its domestic auto industry.

The agreement said Malaysia will immediately, as of the formal signing of the FTA, eliminate tariffs on knocked down auto parts for Japanese carmakers in Malaysia.

It will completely eliminate tariffs on Japanese finished cars by 2015, "starting with the larger ones," the joint statement said.

Under the deal, "Japan will offer cooperation to the Malaysian autos and auto parts industry to strengthen its competitiveness," it said.

Japan entered its first FTA only two years ago with Singapore. Japan’s second free trade deal went into force in April with Mexico, seen as a gateway to the US market.

Japan has also reached a draft agreement with the Philippines on a bilateral free trade deal, which would allow Filipino nurses and careworkers to work in Japan. Negotiations are also under way with Thailand.

 AFP /ct