India, Malaysia ink landmark trade pact

India and Malaysia on Friday signed a landmark pact that paves the way for freer flow of trade in goods and services, besides enhanced investment and economic cooperation between the two countries. 

The Comprehensive Economic Cooperation Agreement (CECA) was signed by Commerce Minister Anand Sharma and his Malaysian counterpart Mustapa Mohamed and witnessed by Prime Minister Najib Razak and several leading captains of industry from both sides.

"The CECA will usher in a new era of much deeper economic cooperation. Indian Premier Manmohan Singh is very supportive of this and a very good friend of Malaysia," Najib said while standing behind the two seated ministers after the pact was inked.

The CECA marks a new era in bilateral ties, with both the ministers calling the agreement a vehicle that would serve to enhance trade and investment flows and encourage freer movement of goods, services and professionals between India and Malaysia.

India was Malaysia's 13th largest trading partner in 2010, with exports amounting to USD 6.5 billion and imports at USD 2.4 billion.

Indian investments in Malaysia were valued at USD 15.9 million, mostly in scientific and measuring equipment, fabricated metal products, furniture and fixtures.

This is the second trade pact India has signed in the past three days.

Sharma inked a trade pact with Japan on Wednesday before flying in Kuala Lumpur Thursday night.

The two countries envisage that with the CECA in place from 1^st July, 2011, bilateral trade will accelerate and touch at least USD 15 billion by 2015.

"The agreement is an ambitious one encompassing services, investment and trade and opening up various sectors for investment opportunities," Sharma said at a press conference after inking the deal.

"The modest trade bilateral target of USD 15 billion by 2015 is doable and can happen sooner by the signing of CECA," Sharma said.

He said Indian business houses have invested in the petroleum, synthetics, railways and IT sectors in Malaysia and the two countries were also working on projects in third countries.

He stressed that Asia was today the hub of economic activity and noted that the integration of Asian economies would help in realizing developmental objectives.

The Malaysian trade minister said there were two factors which would push the CECA to greater heights -- the direct impact of tariff reductions and the excitement and feel good factor between the two countries.

The two ministers noted that signing of the deal would also facilitate the movement of skilled professionals.

Malaysia has also agreed to higher FDI by Indian companies in the construction services and IT sectors.

Mustapa said the negotiators had helped produce an agreement that had nine times more on the positive list than the negative list.

The Malaysian minister emphasized that India was a very important country for Malaysian businessmen, with trade between the two goings up to USD 9 billion this year.

He said the impact of the CECA would extend beyond just trade and investment, projecting a huge increase in tourist arrivals.

The CECA is seen as adding value to the existing Asean-India FTA by subjecting more products to tariff concessions and advancing the timelines for reduction or elimination of tariffs.

Officials said the agreement also contains more trade facilitation provisions that will enable exporters to comply with rules of origin requirements.

The pact also has provisions that will allow joint ventures between Malaysia and Indian services companies in sectors like healthcare, telecommunications, retail and environmental services.

The agreement also includes a dedicated chapter on Movement of Natural Persons, an area that has been negotiated by Malaysia for the first time ever, which will facilitate the temporary entry of installers and contractual service suppliers, independent professionals and business visitors from India into Malaysia and Malaysia into India.

The CECA also contains provisions to encourage strategic partnerships and to enhance collaborative ventures in areas such as infrastructure development, human resources development, science and technology, creative industries and business facilitation.

The decision to explore the feasibility of comprehensive economic cooperation between Malaysia and India was taken during a visit to India by former Malaysian Premier Abdullah Badawi in 2004.

          Feb 18^th, 2011

Source: ddinews.gov.in