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On 5 September 2004 in Jakarta, Malaysian Minister for International Trade and Industry Dato Seri Rafidah Aziz and New Zealand Minister for Trade Negotiations Hon Jim Sutton agreed that Malaysia and New Zealand would conduct parallel studies on a possible bilateral FTA. This study has been prepared by the Ministry of Foreign Affairs and Trade in consultation with other departments and agencies.
Malaysia is New Zealand’s largest trading partner in ASEAN and our eighth largest trading partner globally. In the year to December 2003, Malaysia was New Zealand’s 10th largest export market, taking $546 million of exports, and our seventh largest import source, supplying $725 million of imports. These figures assume treating the EU as a single market. Malaysia is also a significant market for New Zealand services exports. Tourists and students from Malaysia contributed more than $91 million to the New Zealand economy in 2003, with exports of other commercial services (eg. engineering, research and development) for the same year exceeding $7.8 million. Two-way direct investment appears to be relatively low. At 31 March 2004, Malaysian investment in New Zealand totalled $17 million, while investment by New Zealanders in Malaysia totalled $38 million. However, these figures do not account for indirect investment between Malaysia and New Zealand, eg. investment from New Zealand into Malaysia via Singapore. It is likely that once this is accounted for, the level of investment between the two countries would be higher than official figures indicate.
There is a high degree of complementarity between the two economies. Malaysia’s principal exports are manufactured goods, particularly electronic and electrical goods, while New Zealand’s principal exports are agricultural products.
Like New Zealand, Malaysia is a strong supporter of multilateral liberalisation. It is an active member of the World Trade Organisation (WTO) and the Cairns Group. Malaysia also participates in regional economic arrangements, including the Association of South-East Asian Nations Free Trade Area (AFTA) and Asia Pacific Economic Cooperation (APEC).
Recently, Malaysia has shown increased interest in bilateral trade agreements. It is currently pursuing bilateral FTA negotiations with Japan and India, and undertaking parallel scoping studies on possible FTAs with New Zealand and Australia. It is also part of the ASEAN-wide negotiations/discussions for ASEAN-China, ASEAN-India and ASEAN-Japan FTAs, as well as the ASEAN-Australia-New Zealand FTA and the ASEAN-Republic of Korea FTA. Malaysia has recently concluded a Trade and Investment Framework Agreement with the United States.
New Zealand has a closer economic relations (CER) agreement with Australia and a closer economic partnership (CEP) agreement with Singapore. It has recently concluded negotiations with Thailand and is negotiating a Pacific Three (Singapore-Chile-NZ) CEP. Any negotiations for a bilateral FTA with Malaysia, our top ASEAN market, would support New Zealand’s engagement in the broader ASEAN-Australia-New Zealand FTA process.
As with other FTAs, negotiations with Malaysia could also serve to spur increased awareness, engagement and cooperation between our two countries in economic, social and political terms. An FTA would provide the opportunity to develop the bilateral relationship between New Zealand and Malaysia through sustainable economic development and trade policy, the creation of a framework for pursuing bilateral concerns, and increasing partnership and technology transfer between New Zealand and Malaysian business. This could include strengthening existing mechanisms and establishing new ones to develop the wider economic relationship, as well as for implementation of the FTA itself.
All figures in this study are quoted in New Zealand dollars, unless specified otherwise.
