The Trade Policies Of Malaysia

South East Asia is the center of the trade and the Malaysia is one of the trade hubs of the Asia. Malaysia stands as a developing country for its long standing commitment to maintain a relatively open trade and investment policy regime. Under the virtual free trade regime the protection regime is characterized and the trade policy regime includes the high degree of dispersion. The Malaysian trade policies have changed many times after the independence in 1957 according to the financial conditions of the country.

Trade policies of Export

Export is an important part of international trade. After independence, Malaysia’s main export item were Rubber and Tin contributing of 60% and 12% respectively in total export of Malaysia. After independence it has made many changes and diversifies his country in agriculture as well as in manufacturing sector too. Trade policies were promoted with fiscal incentives; to develop this free trade zones and the export processing were created by which foreign investment can be attracted. In year 1994 Malaysia’s manufactured goods reach 77.4% of all Malaysian exports and the same year Malaysia has joined the world trade organization (WTO). During the period of 1997-2003 Malaysia maintains a trade surplus despite the world financial crisis. The exports of Malaysia have increased up to 80% after the independence that shows the incredible growth of the country (trade chakra, 2008).

Trade policies of import

Under the current import trade policy of Malaysia, a specific import licenses are required for certain controlled items like as for importing plants, motor vehicle, tin ore, firearms and explosives, some pharmaceuticals, soil samples and certain food stuff. On heavy construction equipment iron and steel products a restrictive licensing regime has been charged. This custom terrify regime is based on Harmonized Commodity Description and Coding System of goods classification. A higher duty is charged on luxury items like liquor and cigarettes and generally the duties are 2% to 60% and the average tariff level of 15%.malaysia also prohibits some corrosive chemicals and all items from Yugoslavia and Israel (allMalaysiainfo, 2010).

Trade policies for FDI

Malaysia is one of the most successful countries in the Asia in attracting foreign direct investment. FDI is also plays a vital role in developing the export of Malaysia. Some of the earlier major investment in electrical and electronics industries has made many changes in the export market of Malaysia. Malaysia has always endeavor the competitiveness of FDI determinants and for this many instruments has been set up. The foreign direct investment in Malaysia has set up that at least 10% of the total equity can be hold by a non-resident investor in a resident company (Trade chakra, 2008).

Major Export-Import Trading Partners

Sr. no. Major Trading Partners Export Trade Value Import Trade Value

United States 27M 15.5M

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Singapore 22.5 M 14.5M

Japan 13 M 16.5M

China 11M 15M

Thailand 8M 6.9M

Hong Kong 7.4M 3M

Korea 5.6M 6.3M

India 4.8M —

TABLE: 1 Major Countries (Michigan state university, 2010)

The above table represents the major trading partners of the Malaysia. Malaysia export near about $27 million to US which is the highest in comparison to other countries and on the other hand it imports more from Japan which is near about $16.5 million.

Major Export-Import Trading Products

Sr. No. Products Export trade value Import trade value

Palm oil 4.4M —-

Crude oil 7M —-

Non crude oil 6M 5.5M

Electronic integrated circuits 33.3M 24M

Petroleum gases 6.4M —-

Computer & office machines parts 15.4M 5.8M

Computers, printers and storage units 19.2M 3.3M

Cell Phones etc. 7.9M 2.19M

Motor vehicle parts —- 1.59M

Transistor and semiconductor devices 5.6M 3.24M

TABLE: 2 Major Products (Michigan state university, 2010)

Malaysia export many products but some major products like electronic items, computers, petroleum products etc. last year Malaysia has exported electronic products near about $33.3 million and total import near about $50 million.

US FDI in Malaysia

Malaysia is a developing south East Asian country. There are lot many companies who invest in Malaysia. They choose the Malaysia because it emerges as a developing country. In year 2008 US foreign direct investment in Malaysia was US$13.3 billion in 2008 compared to US$8.4 billion in 2007 which shows a near about 50% increase in FDI inflows (Norton, 2007).

Some US based companies who made investment in Malaysia

McDonald

McDonald is one of the top fast food restaurant chains in US. McDonalds has opened his first restaurant in Malaysia in year 1982 at Jalan Bukit Bintang, Kuala Lumpur, Malaysia (McDonalds, history, 2008). It currently has 184 stores in Malaysia. McDonald Malaysia is planning to invest RM300 million to open new stores and remodeled 45 others till the end of year 2011 from this RM80 million will be spend this year to open 20 new stores and to remodeled 15 others. The last year sales was more than RM800 million (Seong, 2009).

Agilent Technologies

Agilent technologies is a world’s premier company it works in close collaboration with the engineers, scientists and researchers in Malaysia to meet the communications, life sciences and electronics.

Dell

Dell is a computer manufacturing company. It has started his worldwide operation in many countries and came in Malaysia after seeing a lot many opportunities of business in there. Dell set up a manufacturing and distribution unit in Penang and Kuala Lumpur in 2007. On March 29, 2008 Dell Corporation made a commitment to invest in Malaysia with second retail partnership with Fosa marketing Sdn. Bhd (SC cyber world, 2008).

Malaysian FDI in US

Malaysia has also invested in Us like as Us invested in Malaysia. In year 2008 Malaysia has invested $395 million in US which goes down near about 20% in comparison to year 2007. There are not many companies who invested in US but there are some who invested in US (Norton, 2007)

Companies who invested in US

Crowne Plaza Hotel

Crowne plaza hotels are a five star hotel chain which now has opened his gate worldwide. This is the major company who invested in US at large. Crowne plaza hotel is a Naza group of companies (crowne plaza, 2010).

Aves Labs Inc.

It is a biotechnology company providing custom polyclonal antibodies and custom peptide synthesis for life sciences worldwide. It is situated in Tigard, Oregon, US.

Sapico Freight Company

International logistics services (ILS Inc.)

Think out consulting group

Trading Blocs

Trading blocs are the intergovernmental associations that manage and promote the trade activities for specific regions of the world (Bliss, 1994). Malaysia is the member of the two trading blocs APEC and ASEAN.

Asia pacific economic cooperation (APEC)

APEC was established in 1989. It is a premier forum to formulate the trade, economic growth, investment and cooperation in the Asia-pacific region. The good thing about the APEC is that to be a participant of the APEC you don’t require any kind of treaty obligations and this is the only nongovernmental organization that operates on the basis of open dialogue, non-binding commitments and equal respect to all participating countries. The main of this organization is to reduce the tariffs and other trade barriers across the Asia pacific region or countries. It has 21 members in all it referred to as “member Economies” which accounts for about 43.7% of world trade (the APEC region trade and investment, 2008). The other member countries are Australia, Singapore, Thailand, Brunei Darussalam, Chile, Viet Nam, republic of china, Hong Kong China, Mexico, New-Zealand, Chinese Taipei, Republic of Korea, Papua New Guinea, Peru, United States of America, The Republic of Philippines, The Russian Federation, Japan, Canada and Indonesia (the APEC region trade and investment, 2008).

Association of Southeast Asian Nations (ASEAN)

ASEAN was established on 8th august 1967 in Bangkok, Thailand basically it was founded by the south East Asian countries to accelerate the social progress, economic growth and the cultural development in that particular region. The main aim of this organization is to take the effective utilization of their agriculture and industries and also the expansion of trade among the member countries. There are ten members of this organization named Thailand, Brunei Darussalam, Indonesia, Cambodia, Myanmar, Laos, Vietnam, Philippines and Singapore (Sisingamangaraja, 2009).