Malaysia, Australia FTA In Force

The comprehensive bilateral free trade agreement (FTA) between Malaysia and Australia, a complement to the existing regional agreement between Australia and the Association of Southeast Asian Nations (ASEAN), of which Malaysia was one of the original members, entered into force on January 1, 2013.

Negotiations on the FTA commenced in May 2005 but paused in 2006 to enable both countries to focus on the ASEAN-Australia-New Zealand agreement, and resumed only in August 2009. Negotiations were intensified following an undertaking in March last year by Australia’s Prime Minister Julia Gillard and Najib Tun Razak, the Malaysian Prime Minister, to complete negotiations within a year.

After 11 rounds of negotiations, the FTA was concluded on March 30, and signed on May 22 last year.

The agreement should open up opportunities for exporters and investors across most sectors, as it will guarantee tariff-free entry for 97.6% of current goods exported from Australia to Malaysia, rising to 99% by 2017. For Malaysia, the FTA will allow the same tariff-free entry to Australia as is currently enjoyed by Singapore.

The FTA should also help to diversify the trading relationship by opening Malaysia's services sector to Australian companies. Malaysia has committed to allowing majority Australian ownership of service providers in a range of industries, including telecommunications, insurance, investment banking, education, tourism, research and development, accountancy and mining-related services.

The agreement also provides a framework to further facilitate cross-border investments between Malaysia and Australia through commitments on non-discrimination as well as the protection of investors and investments. This enabling environment should encourage further two-way investments between the two countries.

Australia’s Trade and Competitiveness Minister Craig Emerson said the FTA would further integrate the Australian economy into the fast-growing Asian region. “It builds on the benefits already flowing from the ASEAN-Australia-New Zealand FTA to open up new opportunities for investors and exporters,” he said. “This high-quality agreement reduces trade barriers, increases transparency and provides greater business certainty, making it easier for Australians to do business in Malaysia.”

The FTA with Malaysia is Australia’s seventh FTA, following those in force with Chile, New Zealand, Singapore, Thailand, the United States and the ASEAN.

Jan 1, 2013

Source: Tax News