TRADE & COMMERCE

PAKISTAN-MALAYSIA ECONOMIC AND COMMERCIAL COOPERATION

Trade relations between Malaysia and Pakistan can be traced back to 1982 when an agreement on Avoidance of Double Taxation Agreement was signed on 29th May 1982. This was followed by an Agreement on Trade and investment on 5th November 1987. Another agreement on Promotion and Protection of Investment was signed on 7th July 1995. Both countries have also established a Pakistan-Malaysia Joint Commission to deliberate upon issues of common interest. The Joint Commission has met three times in 1997, 2000 and 2004. The fourth meeting of the Joint Commission is expected to be held shortly.

LEGAL AND INSTITUTIONAL FRAMEWORK

Negotiations on a comprehensive FTA with Malaysia commenced in early 2005 when an Early Harvest Programme was successfully negotiated and signed in December 2005. Under EHP, both countries agreed to provide market access to a limited number of products. After implementation of the Early Harvest Programme, both countries carried on negotiations to conclude the FTA Agreement.
Negotiations with Malaysia on a comprehensive FTA go as far back as early 2005 when an Early Harvest Programme was successfully negotiated and signed in December 2005. Under the programme, both countries agreed on a limited market access to a small number of products.
The Comprehensive Free Trade Agreement (FTA) for Closer Economic Partnership between Pakistan and Malaysia was signed on 08th November 2007 at Kuala Lumpur, Malaysia. It went into effect from 01 January 2011.
The Agreement is the first bilateral FTA between two OIC Muslim countries and Malaysia’s first bilateral FTA with any South Asian country.
For trade in Goods, Pakistan has agreed to eliminate tariff on 23% of its current imports from Malaysia. On the other hand, Malaysia will eliminate tariff on 78% of imports from Pakistan
Pakistan has granted market access to Malaysia on basic raw materials, intermediate goods and machinery. Pakistan has secured market access for its core export products like fruits & vegetables, seafood, beverages, confectionary, biscuits, gems & jewellery, cotton yarn, cotton fabric, blankets, bed linen, other home textile products and tents & tarpaulins, medicaments and surgical instruments etc.
In trade in services, both countries have granted WTO plus market access to each other. In the field of computer and IT-related services, Islamic Banking, Islamic Insurance (Takaful), Pakistan has secured 100% equity in Malaysia. Market access in services will boost investment and trade in goods. Mutual Recognition Arrangements are also part of the FTA. These arrangements provide a framework for accreditation of educational institutions and academic programmes to facilitate effective and efficient delivery of services.
The Agreement also contains a Chapter on Investment to facilitate entrepreneurs of both countries. Incentives available to investors from both countries will not be available to those from other countries. The Bilateral Investment Treaty (BIT) signed by Pakistan will have no impact on the investment provisions under the FTA.

BILATERAL TRADE

During 2010, Malaysia was Pakistan’s 25th largest export destination and 5th largest import source. Bilateral trade registered an increase of about 47.90% y-o-y during 2010 and stood at US $ 2.482 billion, with exports from Pakistan amounting to US $ 145.585 million and imports from Malaysia standing at around US $ 2.336 billion.
Bilateral trade data since 2006 is shown below:

PRODUCT -WISE BREAK-UP OF PAKISTAN’S EXPORTS TO /IMPORTS FROM MALAYSIA DURING 2009 & 2010

INVESTMENT SCENARIO

• MALAYSIAN INVESTMENT IN PAKISTAN
  Malaysian investment into Pakistan since 2006-07 is given below:
  
  
  
  Malaysian foreign direct investment in Pakistan has been mainly channelized into financial business, food and oil & gas exploration.
  
  
• PAKISTAN INVESTMENT IN MALAYSIA
  Details of investment by Pakistan into Malaysia are given below:
  
  
  
  The sectors which have attracted investment are listed below:
  
  
  
  

HIGH COMMISSION’S AWARENESS PROGRAMME

The High Commission for Pakistan in Malaysia organizes various events to sensitize the Malaysian business community about the business prospects in Pakistan. Regular interaction with the economic entities, chambers of commerce, business associations and media is maintained. The Mission provides relevant information to them highlighting sectors of interest and possible areas for mutual collaboration. Following is a snapshot of these activities:

INTERNATIONAL INVESTMENT CONFERENCE ON BUSINESS OPPORTUNITIES IN PAKISTAN- 31ST MARCH 2011

On 31 March 2011, the Malaysian Deputy Minister of International Trade and Industry, Datuk Mukhriz Bin Tun Mahathir inaugurated a one-day International Investment Conference on Business Opportunities in Pakistan which was attended by about 200 representatives of the corporate sector of Pakistan and Malaysia.
The Conference was addressed by the High Commissioner of Pakistan to Malaysia, Mr. Masood Khalid, Director General of Malaysian Investment Development Authority (MIDA), Datuk Jalilah Baba , Chairman Board of Investment, Mr. Saleem Mandviwalla and Guest of Honour, Datuk Mukhriz Bin Tun Mahathir.
A video documentary on trade, investment and business opportunities in Pakistan was shown to the participants. This was followed by presentations by Malaysian and Pakistani speakers.
The Conference concluded with a business match-making session between the private sector delegates from Pakistan and Malaysian counterparts in sectors like Agri-business and agro-processing, halal industry, infrastructure, housing, energy and power and ICT and education.

JOINT REVIEW COMMITTEE UNDER MALAYSIA-PAKISTAN CLOSER ECONOMIC PARTNERSHIP AGREEMENT (MPCEPA)- 12TH SEPTEMBER 2011

The first meeting of the Joint Review Committee of the Malaysia- Pakistan Closer Economic Partnership Agreement (MPCEPA) was held in Kuala Lumpur on 12th September 2011. The Malaysian delegation was led by Y.Bhg. Datuk Dr. Rebecca Fatima Sta Maria, Secretary General, Ministry of International Trade and Industry (MITI) whereas the Pakistani delegation was led by Mr. Zafar Mahmood, Secretary Ministry of Commerce, Government of Pakistan.
Secretary General MITI welcomed delegates to the inaugural meeting of the Joint Review Committee. She noted that FTA had had a positive impact on bilateral trade but there was further room to strengthen economic relations. She hoped that the Committee would comprehensively deal with all issues impeding the growth of trade and investment between Malaysia and Pakistan.
Secretary Commerce thanked Secretary General MITI for hosting the first meeting of the Joint Review Committee. He concurred with her that bilateral trade had witnessed steady growth since the implementation of the FTA but it was still below the potential. The trade deficit of Pakistan vis-a-vis Malaysia had also widened drastically which was being viewed with concern by Pakistan. He singled out import of rice and halal meat from Pakistan as the two important measures to restore the balance of trade.
In the technical negotiations that followed, both sides undertook a comprehensive review of the performance of FTA with a special focus on customs procedures, concessions under trade in goods and services, preferential treatment to products and issues relating to the establishment of sub-committees for trade and goods, investment and services. Both sides agreed to hold the next meeting of the Joint Review Committee in Islamabad next year.

PAK-MALAYSIA BUSINESS FORUM- 13TH SEPTEMBER 2011

A Pakistan-Malaysia Business Forum was held in Kuala Lumpur on 13 September 2011 with the joint support of the Trade Development Authority of Pakistan (TDAP) and the High Commission for Pakistan in Malaysia. The event, which drew nearly 130 leading Malaysian businessmen for a day-long exchange of business ideas, served as an ideal opportunity for productive networking and business matchmaking. The sectors represented in the Business Forum were textiles, rice, pharma, surgical instruments, seafood, fruits and vegetables. There were 7 companies from Pakistan which attended the Forum.
The Forum was addressed by the High Commissioner for Pakistan to Malaysia, Mr. Masood Khalid, Secretary Commerce, Mr Zafar Mahmood and Guest of Honour, Dato’ Mukhriz Mahathir, Deputy Minister of International Trade and Industry.
The Inaugural Session was followed by a Press Conference which was attended by the representatives of local press and electronic media. This was followed by presentations by Malaysian and Pakistani speakers. In their presentations, they briefed participants about the salient features of the FTA, duty concessions available under the agreement and the potential to enhance trade, investment and business relations between the two countries especially in power and energy, education, IT, infrastructure development, construction, housing, real estate development, horticulture, agriculture and livestock.
The Forum concluded with a business match-making session between the private sector delegates from Pakistan and their Malaysian counterparts in sectors like rice, surgical instruments, pharma, palm oil, fruits and vegetables, seafood and textiles. The businessmen from Pakistan voiced satisfaction with the b2b session and expressed confidence that preliminary negotiations would soon mature into concrete business deals which would benefit both countries.

MALAYSIAN PARTICIPATION IN EXPO PAKISTAN 2011

The 6th edition of EXPO Pakistan 2011 was organized by the Trade Development Authority of Pakistan (TDAP) from 20-23 October, 2011 at the Karachi EXPO Centre. Around 500 foreign visitors from 52 countries attended the event and 400 Pakistani exhibitors set up their stalls. A distinguishing feature of the exhibition was the participation of Chinese and Japanese companies which set up their Pavilions. TDAP arranged 1650 b2b meetings between buyers and Pakistani exhibitors-cum-manufacturers. Foreign buyers placed orders worth USD 517 million and signed 15 Memoranda of Understanding on this occasion.
The Commercial Wing organized participation of 56 Malaysian businessmen and entrepreneurs in the EXPO. A detailed programme was chalked out for them. The Malaysian delegation was the largest international contingent at EXPO. The delegation, led by Haji Abdul Malik Qasim, the State Minister of Penang, attended a number of b2b meetings with their Pakistani counterparts. The delegates made a number of contacts with Pakistani exporters and expressed satisfaction with the arrangements made by TDAP and the Commercial Wing of the High Commission.

OTHER ACTIVITIES

• Visit of the Secretary Board of Investment, Government of Pakistan to Kuala Lumpur in November 2009
• Participation of 6 Pakistani companies in the exhibition organized by the NAM Institute for the Empowerment of Women (NIEW).
• Participation in the World Islamic Economic Forum (WIEF) Exhibition- 18-20 May 2010 at the Kuala Lumpur Convention Centre (KLCC).
• Participation in the Muslim Biz World 2010- 4-6 June, 2010 at the Putra World Trade Centre (PWTC)
• Participation in the Malaysia International Halal Showcase (MIHAS) - 24-26 June, 2010 at the MATRADE Exhibition and Convention Centre
• Participation in the INTRADE Malaysia 2010- 9-11 November 2011 at the MATRADE Exhibition and Convention Centre (MECC).
• Participation of 10-member trade delegation from Pakistan in Malaysia International Food and Beverage Trade Fair (MIFB) - 13-15 July 2011.
• Visit of a 10-member Dates’ delegation from Pakistan- 17-21 July 2011.