> MALAYSIA'S TRADE POLICY

BY    LOOI YOKE LIN, TANG YAN KEE, NG SIN YEAN

Malaysia’s trade in year 2016 remained resilient despite the uncertainties in the global environment. Total trade increased by 1.5% to reach RM1.485 trillion in year 2016 compared to RM1.463 trillion in the previous year (Minister of International Trade and Industry Malaysia, 2017). To promote trade, Malaysia joined World Trade Organization (WTO), Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC) and Free Trade Agreements (FTAs).

WTO aims to ensure trade between nations flow smoothly, predictably, and freely by promoting global trade with market opening measures, and strengthening of existing or establishing new rules in response to enhance the trading environment all around the world. Malaysia received various advantages from the transparency and predictably trading environment adopted by WTO towards Malaysia's economic growth and development. Trade barriers have been lowered among WTO’s countries which increase the market opportunities for Malaysia's trade. WTO mainly focused in promoting trade on agriculture and Non- agriculture market access (NAMA).

By joining ASEAN, Malaysia able to boost its trade and economic growth which were one of the main objectives from the establishment of ASEAN.  By grouping ASEAN countries into a single market and production base, Malaysian able to enjoy cheaper and various choice of goods and services, not only from Malaysia, but goods at other countries too. ASEAN helps to boost Malaysia export and businesses. Import duties and all form of non-tariff barrier within the ASEAN’s members will be eliminated which simplify trade and helps in expanding investment. The liberalization of labor market with the free movement of skilled labor among ASEAN’s countries enable jobs opportunity to be created and ASEAN constituting the third largest labor force in the world (Zulfakar, 2014). ASEAN members also issued visa-free access to other members which enhance the growth of tourism industry. Therefore, the policy in joining ASEAN benefitted Malaysia a lot as it helped to spur business activity and drive prosperity to Malaysia.

According to Asia-Pacific Economic Cooperation (n.d.), it served to “create greater prosperity for the peoples of the region by promoting balanced, inclusive, sustainable, innovative and secure growth by accelerating regional economic integration”. APEC ensures goods and services, investment and peoples able to move easily across APEC’s countries through standardized regulations, and favorable business climates and procedure. By reducing tariff barrier and differences in regulations among APEC’s members, Malaysia able to boost its trade, which eventually lead to economic growth.  The reduction of trade barrier promotes free flows of goods among APEC’s countries as well as lowering trade transactions costs by 5% from year 2007 to 2010 (Asia-Pacific Economic Cooperation, n.d.).

APEC provide training to members on the software coding and legal issues in establishing own Single Window system. Thus, reducing transactional costs like congestion in government agencies and time taken to issue permits which eventually improve the efficiency in export-import activities. To establish a simpler and faster way for peoples to conduct their business, investment and trade, APEC Business Travel Card (ABTC) was introduced which was used by more than 160,000 travelers among APEC’s countries including Malaysia. This enable Malaysian pre-approved frequent business traveler to use the Business Travel Card to enjoy fast-track entry and exit with visa clearance through special APEC lanes at main international airports of the APEC’s countries. APEC also helped in enhancing competitiveness of small and medium enterprises (SMEs) to be able to participate in global supply chains. (Asia-Pacific Economic Cooperation, 2016).

Malaysia seeks to provide opportunities for Malaysian businesses to expand overseas through FTAs. Thus, it enhances the competitiveness of Malaysian exporters. It improved the market access for Malaysian goods through preferential tariffs and other trade facilitation measures, which benefitted consumers from the increased competition as consumers have more choice with competitive pricing. FTAs help the business by offering lower or zero tariff on exports and imports of goods and components assigned under FTAs. Through FTAs, investor able to move goods freely without much barriers to another country. Malaysia has implemented 7 bilateral FTAs and 6 regional FTAs. The partnership between Malaysia and FTAs’ members contributed 63.1% of Malaysia’s total exports in year 2015 (Ministry of International Trade and Industry, n.d.).

Trade policy was important in promoting economic growth which nowadays developing countries have been increasingly involved in regional and multilateral trade negotiations. Malaysia’s trade policy by participating WTO, ASEAN, APEC, and FTA offers abundant benefits such as able to increase access to economic resources, improved quality of life and production efficiency.