Australia and Malaysia are working toward the implementation of a free trade agreement, the first draft of which is due for completion by the end of 2006.
Australia and Malaysia are working toward the implementation of a free trade agreement, the first draft of which is due for completion by the end of 2006.
The negotiations mark a significant step forward, as the two countries put past political differences behind them to cement a major alliance.
Malaysia finds itself in somewhat of a transitional period, moving from a manufacturing focus to a knowledge-based economy.
Cost pressures have resulted in textile products previously made in Malaysia now produced in countries such as Taiwan and Vietnam. At the same time Malaysia is unable to compete on even terms with the awakening giant China, and to a lesser extent India.
This doesn’t mean a lessening of Malaysia’s trade role in the region, however. In fact, Malaysia has rebounded from its financial crisis of 1998 to have the second highest GDP, behind only Singapore, of the ASEAN nations.
Addressing a recent breakfast forum for WA Business News, Australian high commissioner to Malaysia James Wise acknowledged the issues confronting Australian and Malaysian trade, but said concerns over past political tension between the two countries and the growing influence of China in the region were largely unfounded.
“Malaysia is one of the most ‘Australian friendly’ nations in Asia and offers a business environment that is just about more familiar than any other nation in the world,” Mr Wise told guests at the Meet the Ambassadors beakfast.
The evidence of a favourable business environment for Australian companies in Malaysia is strong. Much of Malaysia’s business structure is similar to, or even based on, Australia’s.
This includes a comparable tax system (which includes a soon to be introduced GST), similar company and listing rules, financial reporting and accounting standards.
In addition, infrastructure costs are considered among the lowest in Asia, and the cost of living is affordable.
Throw in a stable, pragmatic government, a sympathetic exchange rate, and the fact that English is the business language of choice, and it all adds up to a fertile business environment for Australian companies.
Other countries seem to agree.
Malaysia’s trade is 200 per cent the size of its GDP, making it the fourth most open market in the world, and it is the US’s 10th largest trading partner.
There are 3,500 Australian companies operating in Malaysia and annual exports total $3.5 billion.
AusTrade and the Malaysia Australian Business Council have worked hard in the business community and also at government level to ensure trade ties between the two nations continue to grow.
The icing on the cake will be the Malaysia Australia Free Trade Agreement, which Mr Wise said would “make what is a very positive trade story between the two nations a compelling one.
“Australia is seeking the elimination of tariffs, improvement in access for Australian professional services, and bilateral investment opportunities from the agreement,” he said.
Western Australian companies with a Malaysian presence include CCK Financial Solutions, which recently signed deals with Malaysian financial institutions for its treasury management software, as reported in WA Business News last week.
Pioneer Credit Management Services has been active in Malaysia since 1999, and managing director Keith John said the business environ-ment was exceptionally positive.
“I would say it is the best country in Asia to expand into. The costs are not as great as some other countries, and the business environment is not as harsh as places like Thailand or Singapore,” he said.
Livestock, food, education and training companies have all enjoyed strong success in the Malaysian market, and Austrade believes there are existing opportunities for a diverse range of products and services, including sandstone blocks, business coaching and pilot training.
