Pakistan Malaysia free trade agreement.
The FTA between Pakistan and Malaysia for Closer Economic Ties was approved on November 6, 2007 and signed two days later by Mr. Tahir Mahmud Qazi, Pakistan's High Commissioner to Malaysia and Her Excellency Rafidah Aziz, Malaysia's Minister of International Trade & Industry (MITI) in Kuala Lumpur. The agreement, "Malaysia Pakistan Closer Economic Partnership Agreement" (MPCEPA) came into effect on January 1, 2008.
The FTA allows both countries to secure markets for their exports whilst strengthening the economic and trade relationships. It was agreed that Pakistan will eliminate tariffs on 43.2% of the imports from Malaysia by 2012 whilst Malaysia will do the same on 78% of imports from Pakistan. Under the FTA, the lower import tariff enjoyed by Malaysian palm oil products has been providing a cost advantage for the Malaysian palm oil industry since 2008. Pakistan, the second largest importer of palm oil after China, has provided a preferential import tariff discount of 15% since 2010. Malaysia now ranks among Pakistan's top ten trading partners.
The bilateral trade between Pakistan and Malaysia amounted to $2.11 Billion in 2012, of which exports from Pakistan contributed $252.89 Million while imports from Malaysia were around $1.86 billion, mainly attributed to palm oil imports. While the Pakistani business community has long stressed on the need to improve the trade balance by increasing exports, concerted efforts are needed. Key areas that are already identified for Pakistani exporters to tap include non-basmati rice, halal food products and frozen seafood given the sizeable demand and the fact that Malaysia imports such products from neighboring countries.
The MPCEPA also covers liberalization of trade in services along with trade in goods. Pakistan has offered 60 percent foreign equity participation in all sectors. There are no restrictions on the number of Malaysians employed per organization. Professional services, construction, engineering services, education and telecommunications are sectors of particular interest to Malaysia. Both countries have provided market access to each other. Pakistani businesses can have 100% equity in computer and IT related services, Islamic Banking and Islamic Insurance in Malaysia. Such market access to services is not yet utilized to good effect but presents a great opportunity. Another attractive avenue allows for affiliations and accreditations of educational institutions in the two countries.
The MPCEPA provides an outline to facilitate investment between Pakistan and Malaysia through the most-favored nation treatment whilst providing protection to investors and their investments. The two have also mutually agreed to cooperate in important economic areas such as Health, Tourism, Construction and Telecommunication.
It is not just direct trade. Tremendous scope exists to establish Joint Ventures in various industrial sectors including ship breaking, pharmaceuticals, palm oil refining, food processing, sports goods and construction sectors, to name a few. The Malaysian Consul General Mr. Abu Bakar Mamat has proposed that Pakistan can use Malaysia as a central point for market access to the ASEAN countries and enjoy distribution of Pakistani products to ASEAN or the Far East countries as Malaysia is a signatory of the ASEAN free trade agreement.
The FTA has started to provide benefits but both countries are far from realizing its full potential. A comprehensive strategy is needed for Pakistan to gain access not only to Malaysia but also to the ASEAN markets. The strategy need just not be trade focused. Pakistan must make the full use of Malaysia's experience and expertise in bolstering our human capital and physical infrastructure.
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|Title Annotation:||PAKISTAN / MALAYSIA / FTA|
|Comment:||Pakistan Malaysia free trade agreement.(PAKISTAN / MALAYSIA / FTA)|
|Date:||Jun 1, 2013|
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