Free Trade Agreement Malaysia and Japan

Free Trade Agreement Malaysia and Japan: An Overview

In 2020, Japan and Malaysia signed a Free Trade Agreement (FTA) that came into effect on July 1, 2020. This agreement is expected to benefit both countries by enhancing trade and investment flows and creating new business opportunities for their respective industries.

The FTA provides a framework for a comprehensive liberalization of trade in goods and services, investment, and intellectual property rights. It covers a wide range of sectors such as automotive, electrical and electronics, machinery and equipment, and agriculture. In addition, the agreement includes provisions on e-commerce, government procurement, and competition policy.

Tariff Elimination

Under the FTA, both countries committed to eliminating tariffs on nearly 97% of their respective trade in goods. This means that a significant proportion of products that Japan exports to Malaysia and that Malaysia exports to Japan will be duty-free, resulting in cheaper prices for consumers.

For instance, Japan, which is known for its high-quality cars, has eliminated tariffs on a significant amount of its vehicle exports to Malaysia. This is expected to increase demand for Japanese cars in Malaysia and improve the automotive industry`s performance.

Furthermore, Malaysia, which is a major exporter of products such as palm oil, rubber, and electronics, will benefit from the elimination of tariffs on these products. This will increase the competitiveness of Malaysian products in the Japanese market, resulting in an increase in exports.

Investment and Services

The FTA also provides a framework for investment and services. It includes provisions that protect investments and promote transparency, which is expected to encourage more investments from Japanese companies in Malaysia and vice versa.

In addition, the agreement provides for greater market access for service providers in both countries. It includes provisions that improve the transparency and predictability of regulatory procedures, which is expected to facilitate cross-border trade in services such as education, healthcare, and professional services.

Intellectual Property Rights

Another critical aspect of the FTA is intellectual property rights (IPR) protection. The agreement includes provisions that protect the patents, trademarks, and copyrights of Japanese and Malaysian companies in the respective markets. This is expected to encourage innovation and creativity by providing incentives for companies to invest in research and development.

E-commerce

The FTA also includes provisions on e-commerce, which is a growing sector in both countries. It aims to bring about a conducive environment for the growth of digital trade between Japan and Malaysia. The agreement includes provisions on data localization, electronic authentication, and paperless trading.

Conclusion

The Free Trade Agreement between Japan and Malaysia is expected to bring about significant economic benefits for both countries. It provides a framework for comprehensive liberalization of trade, investment, and services. The elimination of tariffs on nearly 97% of trade in goods, protection of investments, and intellectual property rights, and provisions on e-commerce are some of the critical features of the agreement. Overall, the FTA is expected to strengthen the economic ties between Japan and Malaysia and create new business opportunities for industries in both countries.

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