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Malaysia committed to Asean-China FTA

The Star, Malaysia

Malaysia committed to Asean-China FTA

Mukhriz: There will be some period of adjustment needed

19 January 2010

KUALA LUMPUR: The Malaysian government is committed to the regional free trade agreement (FTA) with China that came into force on Jan 1, although some parties have expressed concerns the trade liberalisation agreement would hurt local manufacturers.

“There are some valid concerns expressed by various parties, but the FTAs are just getting into gear and there will be some period of adjustment that needs to take place,” Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir said yesterday.

The Asean-China FTA (ACFTA) came into effect on the same day of the full implementation of the Asean Free Trade Area at the start of the year.

Under the ACFTA, more than 9,000 products imported from China to Malaysia are duty-free while China will reduce tariffs on more than 7,000 products from Asean. Besides manufactured goods, the agreement also covers services and investment.

Last week, Indonesia was reported to have submitted a request to maintain certain tariff lines that were supposed to be cut under the ACFTA to protect certain domestic industries.

Meanwhile, Mukhriz suggested local manufacturers take advantage of the country’s recent trade liberalisation pacts by exploring new business opportunities.

One area that Malaysian businesses could exploit was to “value-add” on imports from China and re-export the products to other countries.

To achieve this, Malaysian manufacturers would need to add at least 40% local content to qualify the product as made-in-Malaysia.

“Manufacturers must go beyond repackaging. To remain competitive they need to be able to add significant value to the product,” Mukhriz said.

By cutting down on trade barriers, the Government hopes to attract new investments especially in areas of high technology and capital intensive industries.

“Competition for foreign direct investment is stiff, and at the same time we want to attract the right investments to make full use of our educated workforce,” Mukhriz told a press conference at the 5th Asia Europe Alliance for paperless trade meeting.

The event was organised by Dagang Net Technologies Sdn Bhd, a subsidiary of Time Engineering Bhd and the operator of the Malaysia National Single Window system for trade facilitation.