KL ready to tap potential of regional trade pact

By Rupa DamodaranPublished: 2010/01/01


Businesses in all sectors of the Malaysia economy are ready for full implementation of the Asean-China free trade agreement


Malaysia is ready for full implementation of the Asean-China free trade agreement (FTA) today, Ministry of International Trade and Industry (Miti) secretary-general Tan Sri Abdul Rahman Mamat said.

He said that businesses in all sectors of the economy were ready to be involved in the world's largest trading bloc, which will have 1.9 billion consumers and a combined gross domestic product (GDP) of approximately US$6 trillion (RM21 trillion).

Starting today, China and the Asean-6 comprising Malaysia, Brunei, Indonesia, the Philippines, Singapore and Thailand will realise full implementation of the FTA, with duties on 90 per cent of products eliminated.

Abdul Rahman told Business Times that China's strong economic growth provided opportunities for Malaysia and other Asean economies to increase their exports of goods and services to the Chinese market.



Miti has placed China, with its huge market potential, on its high-priority list to enhance bilateral trade and investment relations.

"China's strong economic growth has, in a way, reduced the impact of the global financial and economic crisis on Asean," he said.

China is Malaysia's fourth largest trading partner, after Singapore, the US and Japan. Trade in 2008 amounted to RM130 billion, or 11 per cent of Malaysia's global trade.

Malaysia's exports to China in 2008 were valued at RM63 billion, accounting for almost one-tenth of the former's global exports.

In the first nine months of last year, trade with China stood at RM89 billion, with exports amounting to RM46.8 billion.

The regional trade pact, however, has caused some worry among Indonesian furniture exporters, who claimed that their businesses were being affected.

Furniture makers in Southeast Asia were still not ready for full implementation of the FTA with China, they said.

The Association of Indonesian Furniture and Handicraft Exporters, or Asmindo, claimed that the FTA would slice the domestic furniture market by up to 50 per cent.

In Malaysia's case, there is no direct competition as there has been no import duty on furniture since 2005 for Asean and Asean-China markets.

According to P. Ravindran, senior director of the Asean economic cooperation division in Miti, no sectors in the country had expressed any such concern so far.

The iron and steel sector had voiced their fears earlier, given that China is a major producer and exports about 70 million tonnes a year.

Miti has embarked on several promotional programmes to tap the China market potential.

Besides trade in goods, Asean and China are also liberalising services. Several sectors have opened up for greater Chinese equity ownership, including architecture, engineering, telecommunications, financial services, education, health and tourism.