Published October 27, 2009

Four years in the making, M'sia, NZ sign free trade pact

FTA can give Kiwi businesses access to halal markets

By PAULINE NG
IN KUALA LUMPUR

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MALAYSIA and New Zealand yesterday signed a free trade agreement (FTA) after four years of negotiations.

The agreement represents a 'significant milestone' for the two countries, Malaysia's Prime Minister Najib Razak told reporters in Putrajaya, outside Kuala Lumpur.

Under the agreement, which will take effect next year, Malaysia will progressively scrap import taxes on more than 10,000 products from New Zealand, including paper, plastics and automotive parts, by 2016.

New Zealand, in turn, will scrap import duties on all 7,238 products imported from Malaysia by 2016, including cocoa products, carpets and tyres.

The trade talks which began in May 2005, excludes 89 products deemed 'sensitive' to Malaysia for health, security or moral reasons, Malaysia's trade ministry said in a statement yesterday. These include rice, tobacco and alcoholic beverages.

New Zealand Trade Minister Tim Groser said that the FTA could provide Kiwi businesses with more opportunities to gain access into 'halal' markets by using Malaysia as a base for exports.

Mr Groser was in Kuala Lumpur yesterday with NZ Prime Minister John Key for the signing of the agreement and the launch of multinational company Fonterra's RM25 million (S$10.3 million) plant - lauded as the kind of 'greater investments' that the FTA would encourage.

One of the world's largest dairy product exporters, Fonterra is a major player in the local dairy market, registering RM500 million in revenues in its last fiscal year.

Dairy products currently constitute the bulk or over 60 per cent of NZ exports to Malaysia, its sixth largest market. But Mr Grosner said that NZ businesses were also looking for opportunities in other areas where they have expertise including agriculture, technology and health care.

At a press briefing after the launch of Fonterra's new Dairymas cultured products plant by Mr Key, Mr Groser indicated that one of the benefits of a bilateral agreement with Malaysia could be easier market access to big 'Muslim' markets.

Malaysia is a member of the Organisation of Islamic Countries and a strong promoter of syariah compliant products and services. It has also planned a number of halal manufacturing centres to encourage companies to make products that comply with the requirements of Muslims so as to leverage markets where there are large Muslim populations.

Total trade between Malaysia and New Zealand is in the region of NZ$2.5 billion (S$2.6 billion).