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NZTE tells business: Get ready for Malaysia FTA

National Business Review, New Zealand

1 August 2005

NZTE tells business: Get ready for Malaysia FTA

A free trade agreement with Malaysia is just around the corner and businesses should begin preparing to take advantage of the opportunities it will bring, according to New Zealand Trade and Enterprise (NZTE) Kuala Lumpur Trade Commissioner Jeff Shepherd.

Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi, announced the possible FTA during a visit to New Zealand earlier this year.

The two countries aim to complete the negotiations as quickly as possible, so that implementation can begin in 2006, Mr Shepherd said.

"An FTA will offer our businesses even more opportunities for exporting to Malaysia and we should start thinking about how to cement in the longer-term gains," said Mr Shepherd.

"This involves seeking out high-value opportunities where New Zealand has a competitive advantage, looking at what the demand is in these markets and then linking it with what New Zealand can offer."

An FTA could also help reduce transaction costs to business associated with different standards and regulations, as well as encourage technical cooperation between regulatory authorities to improve quarantine and food safety measures.

Mr Shepherd said government hopes the agreement will promote competition, cooperation in customs issues, and intellectual property protection.

Malaysia is New Zealand’s 10th largest export market and largest ASEAN market. Exports to Malaysia were worth $487 million in the year to May 2005.

Malaysia is increasingly becoming a key international investor in markets such as India and China.

The second round of negotiations with Malaysia was held on 4-5 July in Wellington. Ministry of Foreign Affairs and Trade (MFAT) officials hope to make fast progress with the negotiations and will soon be seeking specific input into New Zealand’s request lists, Mr Shepherd said.

Both Prime Minister Abdullah and visiting cabinet ministers were interested in greater collaboration between the two countries in education and agriculture particularly.

Malaysia is looking to send more government-sponsored students to New Zealand and, in agriculture, Malaysia is interested in training initiatives and other opportunities for New Zealand to assist in the development of its livestock and aquaculture industries, he said.

While tariffs on dairy and other agricultural products which dominate our current exports are low, removal of high tariffs in other areas could open up new opportunities for New Zealand exporters, he said.

Products with potential high tariff barriers include processed wood products such as fibreboard and plywood (20-40 per cent), white-ware (20-30 percent), air conditioners (30 per cent) and road wheels and tyres (30-40 per cent).

On the services side, New Zealand’s key interests in the Malaysian market are tourism and education, and emerging engineering, construction, consulting and communication services.

An FTA could address barriers that restrict business efforts to establish a commercial presence in Malaysia and improve the ability of New Zealanders to participate in a wide range of professions, said Mr Shepherd.

"Overall it will make a big difference," Mr Shepherd said. "New Zealand Trade and Enterprise encourage New Zealand businesses to start planning now in order to get the most benefit when a Free Trade Agreement comes into force."