KUALA LUMPUR: Malaysia is heading in the right direction by signing several free trade greements (FTA) with recognised Asean member countries as well as bilateral partners as one of the best ways to open up foreign markets for Malaysian exporters.
After a series of negotiations from October 2010 and an initial agreement in April 2016, the European Union (EU) and Malaysia signed the EU-Malaysia Partnership and Cooperation Agreement (EU-MY PCA) during the inaugural Asean-EU Commemorative Summit in Brussels on Dec 14, 2022, a significant milestone in the history of the EU-Malaysia relationship.
The agreement lays the ground for mutually beneficial cooperation in multiple policy areas – environment, transport, trade and employment to name a few.
Valid for five years, this agreement is in recognition of the importance of the cooperation between EU and Asean member countries as well as it will serve to enhance cooperation and diversify relations in areas of mutual interest.
The EU-MY PCA will pave a promising path towards recommencing discussions on the EU-Malaysia Free Trade Agreement (MEUFTA) which covers 16 areas spanned more than 13 working groups, which include market access for goods, services, investment, intellectual property rights and sustainability development.
The PCA further complements and strengthens current partnership and cooperation in the areas of trade and investment, energy, transport, agriculture, finance and maritime, among others between the EU and Malaysia.
Negotiations for the MEUFTA reached an impasse in 2012 upon the exhaustion of options and the consensus was to resume when a fresh mandate or flexibilities become available to both sides.
MEUFTA is a preferential trading agreement expected to facilitate the free movement of goods, services and investment between Malaysia and the EU, the largest economic bloc.
Based on statistics released by Malaysia’s Ministry of International Trade and Industry (Miti) in mid-2020, trade with the EU in July 2022 rose by 14% year-on-year to RM17.04 billion, depicting 6.7% of Malaysia’s total trade.
The first seven months of 2022 recorded an increase of 22.8% to RM124.53 billion compared with the same period in the year before, characterised by higher exports of electrical and electronic products, as well as manufactures of metal and palm oil-based products. Similar positive growth can be surmised with the MEUFTA in place.
Meanwhile, Eurocham Malaysia – the chamber representing EU businesses, has jointly formed a task force with the Federation of Malaysian Manufacturers (FMM) to facilitate the process of reviving the dialogue with the EU.
It said they will continue to support and combine efforts with FMM to continuously work towards enhancing Malaysia’s position as an attractive destination for foreign direct investment.
In the context of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Malaysia has become the ninth out of 11 countries to ratify the agreement. The other signatories are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam.
Eurocham Malaysia supports the ratification of the CPTPP, as “we believe it will continue to bring further development into the country through its increasing trade and investment opportunities.
The EU is the fifth largest trading partner of Malaysia (after China, Singapore, South Korea and the US), accounting for 7.4% of the country’s total trade in 2021.
Eurocham Malaysia applauds the ratification of the CPTPP and advocates for the government to follow through with the agreement. The impact of the CPTPP will be multi-fold, potentially boosting Malaysia’s standing as a global trading economy with total trade expecting to see an expansion to RM3.4 trillion in 2030 according to MITI. European companies will in turn find Malaysia more attractive as a hub for trade and investment activities.
