May 04, 2006
M’sia Provides Ideal Base To Penetrate Asean Market
From Saraswathi Muniappan
TORONTO, May 4 (Bernama) — Bilateral and regional trade and investment liberalisation measures undertaken in the context of Asean complement the opportunities offered by Malaysia’s growing economy, thus providing an ideal base for companies to penetrate the Asean market, International Trade and Industry Minister Datuk Seri Rafidah Aziz said Thursday.
Rafidah said Asean was working towards the establishment of an Asean Economic Community (AEC) by 2020, and when realised, AEC will be a single unified market with freer flow in goods, services, investment, labour and capital.
"Asean thus offers vast trade and investment opportunities for the Canadian business community. Malaysia is an ideal base for operations in Asean," she said at a seminar on "Business Opportunities in Malaysia" in Toronto, Canada.
Rafidah is here leading a 49-member mission comprising representatives from the private sector, her ministry, Malaysia Industrial Development Authority, Malaysia External Trade Development Corporation, state governments of Penang, Perak, Kedah, Sabah and Selangor and Multimedia Development Corp Malaysia.
Besides Toronto, the mission will cover the US cities of San Francisco and Irvine.
The mission aims to inform the Canadian and US business communities about trade and investment opportunities, update them on Malaysia’s economic situation and woo investors.
Similar seminars will be held in San Francisco on May 8 and Irvine on May 10.
Rafidah said the soon-to-be-launched Third Industrial Master Plan (2006-2020) outlined the final strategies towards realising the vision to become a fully developed nation by 2020, aiming to improve Malaysia’s competitiveness and ensure a conducive investment environment.
It also focused on sustaining growth in the manufacturing sector and facilitating growth of the services sectors and with the implementation of these plans, Malaysia is further strengthening its attractiveness as a cost-effective and business-friendly base for trade and investments, she said.
Malaysia’s GDP is expected to grow by six percent in 2006 and the government recently unveiled the Ninth Malaysia Plan (9MP) which saw an allocation of RM200 billion, equivalent to C$64 billion, for development expenditure.
The 9MP emphasises higher value-added activities in manufacturing, services sectors and agriculture and further improvement in the public service delivery system, which will benefit the economy in general and investors in specific, the minister said.
She pointed out that for two consecutive years, research firm A.T. Kearney has ranked Malaysia as the third most attractive destination for offshore services (business process outsourcing), along with India and China.
Multinational companies which have set up such operations in Malaysia included Dell (call centre), BMW and Hong Kong Bank (data centres), Standard Chartered Bank, DHL and Shell (back office operations) and Citibank (back office operations).
To date, seven companies from Canada have set up regional establishments in Malaysia, comprising three operational headquarters, one international procurement centres and three regional offices/representative offices.
Rafidah said there are also opportunities for Canadian companies to tap the Southeast Asian market through the Labuan International Offshore Financial Centre (IOFC).
So far, 42 companies from Canada have established operations in Labuan IOFC, she said, adding that these comprised Bank of Nova Scotia, 40 trading/non-trading offshore companies and one leasing company.
Among the free trade agreements (FTAs) that Malaysia is involved is that with Japan to be implemented by mid-2006 while tariff elimination for goods traded between the two countries is targeted within 10 years, Rafidah said.
For the FTA with Pakistan, an early harvest programme was implemented beginning January 2006, while FTA negotiations expected to be completed by end of this year and scheduled for implementation in 2007, she said.
There are ongoing negotiations with Australia and New Zealand which are expected to be completed by year-end, while negotiations with India is due to start later this year after adoption of the joint study group report on feasibility study of Malaysia-India comprehensive economic cooperation.
A joint study group is undertaking feasibility study on the Malaysia-Chile FTA with the report to be finalised by end-2006 while negotiations on Malaysia-US FTA are due to begin next month and expected to be completed by early 2007.
As for Asean FTA developments, Rafidah said the region has intensified efforts to enhance linkages, especially with major trading partners.
Asean is currently engaged in closer economic partnership negotiations, including FTAs, with major trading partners, she noted.
She said the Asean-China FTA in goods was implemented in July 2005 and an agreement on trade in services and investment was being negotiated and scheduled for completion this year.
The Asean-China FTA is expected to be realised by 2010.
Asean also has on-going negotiations with South Korea, Japan, India, Australia and New Zealand for establishment of FTAs, Rafidah said.
She said the Asean-Korea FTA is expected to be realised by 2011.
"The establishment of these FTAs, particularly with China and India (with combined population of 2.3 billion), offers further market access for Canadian companies located in Malaysia," Rafidah said.
"Malaysia is strategically located in the centre of Asia between two of the fastest growing economies in the world," she added.
Canada’s trade with Asean is still relatively low compared with Asean’s trade with other dialogue partners, accounting for 0.57 percent of the region’s global trade in 2004, Rafidah pointed out.
In 2004, Asean’s exports to Canada increased by 23.1 percent to reach C$3.6 billion from C$3.0 billion in 2003.
Asean’s imports from Canada increased by 26.3 percent from C$2.3 billion in 2003 to C$2.7 billion.
During the January-June 2005 period, Asean’s trade with Canada totalled C$2.6 billion.
Cumulative foreign direct investment (FDI) from Canada from 1995 to 2004 totalled C$730.1 million or 0.3 percent of the total FDI into Asean, Rafidah said.
"Canadian involvement in Malaysia/Asean is still relatively small compared to Canada’s economic strength," she said.