Malaysia trade deal a significant step towards economic integration with Asia

New Zealand last week signed a Free Trade Agreement (FTA) with Malaysia which promises to deepen ties with our eighth largest trading partner and export market worth over $1 billion.

Led by Prime Minister John Key and Trade Minister Tim Groser, a large New Zealand delegation arrived in Malaysia’s capital Kuala Lumpur in late October for a full programme of trade-related business events, the highpoint of which was the FTA signing.

“The FTA is a significant step forward in our relations with Malaysia, and further evidence of our economic integration with Asia” said Prime Minister John Key in Kuala Lumpur at the signing ceremony on 26 October.

According to Trade Minister Tim Groser, who with his Malaysian counterpart signed the 1,500-page agreement, “by 2016 to all intents and purposes there will be zero tariffs on trade between the two countries.”

In addition to the FTA signing, the Prime Minister and business delegation attended the official opening ceremonies at the expanded facilities of New Zealand’s largest IT services company Datacom and Fonterra, for its new production line of consumer goods. Later in the day, Memoranda of Understanding for three prospective commercial ventures between New Zealand companies and their Malaysian partners were exchanged.

Building on the commercial focus of the visit, Prime Minister Key gave the opening address at a business seminar for Kiwi companies wanting to establish themselves in Malaysia. He told the audience New Zealand had to lift its exports as a percentage of GDP and that Asia was the best place to target that growth. New Zealand’s ratio of exports to GDP is 30 percent, compared with Malaysia’s which exceeds 100 percent.

The visit also included an official meeting and dinner between Prime Minister Key and Malaysia’s Prime Minister Datuk Seri Najib Tun Razak. The two leaders’ relationship was described by senior political aides as having “excellent chemistry.”

International trade issues were the focus of an address by Trade Minister Tim Groser to Malaysian business leaders and commentators at the Asian Strategic Leadership Institute on Tuesday.  Minister Groser said that, although not complacent, he was basically optimistic about the future of trade liberalization, which he saw as a megatrend of which the Malaysia/New Zealand FTA was and important component.

This was one of the largest New Zealand business delegations to travel overseas in recent years, and New Zealand High Commissioner to Malaysia David Kersey said it was very gratifying to see such a high level of support from the business community for the FTA.

- by Rebecca Needham

Rebecca Needham is a New Zealand freelance writer currently based in Kuala Lumpur, Malaysia.  She has a background in Asian trade and economic affairs, having worked as a policy analyst for the Ministry of Foreign Affairs and Trade.

Read more:

Read an assessment of the current economic and political landscape in our Newsroom.

Read a recent Action Asia Insight article on Kiwi high-tech companies finding niche markets in Malaysia