22 May 2012
Malaysia-Australia Free Trade Agreement (MAFTA): All Malaysian exports to Australia will be tariff-free from 1 Jan 2013 onwards
The tariff for all Malaysian products entering Australia will be eliminated once the Malaysia-Australia Free Trade Agreement (MAFTA) comes into force on Jan 1, 2013, after both countries have completed their necessary domestic procedures.
On its part, Malaysia will progressively liberalise duties for 10,295 tariff lines or 99 per cent of its goods by 2020.
This is the first FTA that Malaysia will be getting immediate tariff elimination on all products from an FTA partner, said Minister of International Trade and Industry Datuk Mustapa Mohamed at a press conference after signing the MAFTA with Australian Minister for Trade and Competitiveness, Dr Craig Emerson, here today.
Mustapa pointed out that under the ASEAN-Australia-New Zeland Free Trade Agreement (AANZFTA), Australia committed to eliminate all tariffs only by 2020.
Malaysian producers and exporters will be in a better position to compete in the Australian market especially for items such as iron and steel products, plastics, apparel and clothing and wood products as Australia imposed 5-10 per cent duties on some of them, he said.
MAFTA is the sixth bilateral FTA for Malaysia after similar agreements with Japan, Pakistan, New Zealand, Chile and India.
The MAFTA talks began in May 2005 and were concluded on March 30, 2012 after 11 rounds of negotiations.
There was a pause in negotiations in 2006 with both parties focusing on the AANZFTA, and resumed in August 2009, but the real momentum picked up in March 2011 when Prime Minister Datuk Seri Najib Tun Razak met with his Australian counterpart Julia Gillard and they agreed to conclude negotiations within a year.
Among the 357 tariff lines that Malaysia will progressively eliminate by 2020 are fruits, chemicals and chemical products, automotive vehicles and upstream iron and steel products.
Another 87 tariff lines, comprising products which are sensitive to Malaysia, are in the exclusion list, and these include weapons, tobacco and alcoholic beverages.
In the services sector, Malaysia offers up to 100 per cent foreign equity holdings in private higher education by 2015.
Mustapa pointed out that in higher education, there are three Australian branch campuses in Malaysia including Monash University which has Australian ownership of 45 per cent.
In the telecommunications sector, Malaysia will allow Australian companies to own 100 per cent equity for Application Service Provider licences, and 70 per cent for network service provider and network facility provider licences.
He said Australia owns 51 per cent of network services provider Reach Bandwith Sdn Bhd.
In the financial sector, Malaysia allows Australian companies up to 70 per cent equity in insurance company and investment bank as well as corporate advisory and financial planning companies.
In investment advisory companies, Malaysia allows Australian companies to own 100 per cent equity.
Malaysia also allows a higher number of Australian expatriates with senior managerial and specialist skills in the banking, insurance and capital market sub-sectors.
Meanwhile, Australia's offers cover a commitment to allow Malaysian participation in hospital services and hospital support services, and to facilitate Malaysia's participation in providing traditional and complementary medicine services (Malay massage, homeopathy, Ayurveda and traditional Chinese medicine).
In addition, Malaysia and Australia have agreed to undertake economic cooperation in automotive, tourism, agriculture, e-commerce and clean coal technology programmes.
The text of the MAFTA as well as schedules of goods and services offers are available on the Ministry of International Trade and Industry's website at www.miti.gov.my
Overall, Mustapa expects significant improvement in bilateral trade and investment between Malaysia and Australia.
He pointed out that last year trade volume between the two countries increased 11 per cent to US$12.4 billion, and by 28 per cent in the first quarter of this year alone.
On the investment side, he said realised Australian investments in Malaysia's manufacturing sector totalled US$773 million at the end of 2011, while Malaysian investments in Austrlia totalled US$4.3 billion.