IT took seven years, including the gap years as a result of the time-out taken to work on the Asean Australia New Zealand Free Trade Agreement, and 11 rounds of talks, but on Tuesday Malaysia and Australia finally signed a free trade accord. In this regard, it is pleasing that both countries fast-tracked efforts to resolve the differences and deal with the sticky issues that were slowing down the negotiations. Significantly, the deal that ends tariffs on all Malaysian exports to Australia and more than 97 per cent of Australian goods sold in Malaysia from Jan 1 next year liberalises duties faster than the 2020 target under the Asean Australia New Zealand FTA.
Moreover, this makes Malaysia the third country after New Zealand and Singapore to be granted duty-free access to Australia. Malaysia will also allow Australian companies to totally own education institutions and telecommunication enterprises and 70 per cent stakes in insurance firms and investment banks. In return, Malaysian enterprises will have access to homeopathy, traditional medicine and other sectors in the Australian healthcare industry.
As it is, Australia is Malaysia's 12th largest trading partner and Malaysia is Australia's 10th largest trading partner. Two-way trade jumped by 6.1 per cent to RM34.0 billion last year and surged by 28 per cent in the first quarter of this year. In addition, Australian investments in Malaysia in manufacturing, mining and other sectors are estimated at US$46 million (RM145 million) and Malaysian enterprises hold investments worth US$2.5 billion in Australia. As such, the FTA is to be welcomed as opening up the Malaysian economy to Australian competition has been reciprocated by the access that is gained by Malaysian companies to the Australian market. Since the pact would substantially reduce barriers for goods and services trading and open up vast opportunities for bilateral trade and investment between the two countries, the expectations are that trade and investment levels will be given a big boost.
Certainly, Australia, whose economy is about six times larger than Malaysia's and which is expected to grow at a faster pace than most of the developed countries in the Organisation for Economic Co-operation and Development this year and next year, is a vital export destination that offers significant growth opportunities. In this respect, the government is on the right track in entering into a bilateral agreement with Australia. It is particularly timely given the challenges posed by the eurozone crisis and the stuttering global recovery. However, a lot remains to be done by business and industry to actualise the tremendous potential for additional trade and investment.
Read more: Bolstering trade ties - Editorial - New Straits Times http://www.nst.com.my/opinion/editorial/bolstering-trade-ties-1.87061#ixzz1w7Co3sgB