Pakistan and Malaysia signed a comprehensive Free Trade Agreement (FTA) to give boost to their economic relations. Lieutenant General Tahir Mahmud Qazi (Retd), Pakistan''s High Commissioner to Malaysia and Rafidah Aziz, Minister of International Trade and Industry (MITI) signed the agreement on behalf of their respective governments.
Among others, Shahid Bashir, Joint Secretary and Abdul Qadir Memon, Deputy Secretary Ministry of Commerce were also present on the occasion. The FTA for closer economic partnership between the two countries was approved by the cabinet on November 6 and was signed in Kuala Lumpur, Malaysia.
The agreement is the 1st bilateral FTA between two OIC member Muslim countries, said official handout issued by the Ministry of Commerce here on Monday. It said the agreement was Pakistan''s first comprehensive FTA incorporating trade in goods, trade in services, investment and economic co-operation and Malaysia''s first bilateral FTA with any South Asian country.
This Agreement will provide a strong foothold to Pakistan in the Asean region and help Pakistan achieve summit level partnership with Asean. The negotiations with Malaysia on a comprehensive FTA started in early 2005, the press release added. The early harvest was successfully negotiated and signed in December.
2005 during the visit of Prime Minister Shaukat Aziz to Malaysia in which, both the countries provided market access to a limited number of products. After the implementation of the early harvest, Pakistan''s negotiating team under the leadership of the Ministry of Commerce and comprising all the stakeholder ministries continued the negotiation to conclude the agreement.
Exports from Pakistan were being subjected to higher tariff in Malaysia as compared to similar goods exported from Asean member countries. Resultantly, Pakistan was losing market in Malaysia for its core export products. This agreement would provide a level playing field to Pakistani products in Malaysian market.
The FTA is a timely initiative by the Government of Pakistan to secure market for its export products in Malaysia and deepen the economic and trade relationship with an important member of the region, the press release added.
For trade in goods, Pakistan will eliminate tariff on 23 percent of the current imports from Malaysia while Malaysia will eliminate tariff on 78 percent of imports from Pakistan.
Pakistan will reduce tariff on palm oil by 10 percent MOP on January 1, 2008 however, there will be no reduction on the rates of sales tax/Federal excise duty levied at 15 percent and withholding tax charged @ 2 percent on the imported palm oil.
Pakistan has given market access to Malaysia on basic raw materials, intermediate goods and machinery. Pakistan has obtained market access for its core export products like fruits and vegetables, seafood, beverages, confectionery, biscuits, gems and jewellery, cotton yarn, cotton fabric, blankets, bed linen, other home textile products and tents & tarpaulins, medicaments and surgical instruments.
In trade in services, both countries have provided WTO plus market accesses to each other. In the field of computer and IT related services, Islamic Banking, Islamic Insurance (Takaful) Pakistan has secured 100 percent equity in Malaysia.
Market access in services provided by both countries will impact positively on investment and trade in goods. Mutual recognition arrangements are also apart of the FTA. These arrangements will provide a framework for accreditation of education institution and academic programme and facilitate the effective and efficient delivery of services.
The agreement also contains a chapter on investment to facilitate entrepreneurs of both countries. The incentives available to both countries will not be available to investors from other countries and the bilateral investment treaty signed by Pakistan will have no impact on the investment provisions under the FTA.