TWN Info Service on Free Trade Agreements

14 February 2007


Rafidah - A Failed US-Malaysia FTA Will Have No Impact on Investment

Minister of International Trade and Industry Rafidah Aziz said failure to conclude the US-Malaysia FTA talks will have no impact on US investments in the country as Americans have been investing in Malaysia even without the FTA.

She also said that there were 58 outstanding issues that were still being negotiated. It is understood that a number of sensitive issues have bogged down negotiations. They are government procurement, services, intellectual property rights, labor and environmental issues.


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Malaysia says failure to reach free trade deal with U.S. will have no impact on investment

The Associated Press
Published: February 13, 2007
(http://www.iht.com/articles/ap/2007/02/13/asia/AS-FIN-ECO-Malaysia-Manufacturing.php)

KUALA LUMPUR, Malaysia: Failure to reach a free trade agreement with the United States will have no impact on investments, Malaysia's trade minister said Tuesday, less than a week after hopes for a deal by July evaporated.

She made the remarks as she released new trade data for 2006, which showed that foreign and domestic investment in Malaysia's manufacturing sector hit a record high.

"The Americans have been here long before we talked about an FTA," Rafidah said. "The FTA is just another bonus if it happens," Trade Minister Rafidah Aziz told reporters.

The fifth round of negotiation that took place last week ran aground after Malaysia refused to budge on its rules for awarding contracts for government projects, which favor ethnic Malay-owned companies.

Asked by a reporter if the failure of the talks will have an impact on investments, Rafidah responded, "Zero."

Other sensitive issues — differences over liberalising Malaysia's services sector, intellectual property rights, labor and environmental issues — have also bogged down the talks.

Rafidah said that foreign investment in Malaysia's manufacturing sector rose 13 percent in 2006 to a record high of 20.2 billion ringgit (US$5.8 billion, €4.8 billion). Manufacturing accounts for nearly one third of the domestic economy and around 28 percent of the labor force.

Rafidah said that last year the petroleum products industry drew 24 percent of total investment, including a 7.7 billion ringgit (US$2.2 billion, €1.8 billion) oil refinery project and a 2 billion ringgit (US$571 million, €476 million) methanol project by two local companies.
A total 10 billion ringgit (US$2.9 billion, €2.4 billion) was invested in the electrical and electronic sector, which accounts for half of Malaysia's annual exports, she said. The top five sources of foreign investment in 2006 were Japan, the Netherlands, Australia, the U.S. and Singapore.

Despite intense global competition for foreign investment, she said "prospects will be very good" this year if the government continues to ensure the business environment remains attractive and competitive.

Washington had hoped to wrap up free trade talks by end of March so the pact could be reviewed by U.S. lawmakers for a Congressional vote before U.S. President George W. Bush's special "fast-track" trade authority expires July 1. That allows him to submit a deal to Congress for a straight up-or-down vote without amendments.

Rafidah said there were 58 outstanding issues that were still being negotiated. A sixth round of negotiations has not been scheduled but she said informal talks were ongoing.