DJ UPDATE: Malaysia, Australia Sign Free-Trade Agreement
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-- Malaysia, Australia sign long-delayed free trade agreement
-- Trade agreement to come into force at start of next year
KUALA LUMPUR (Dow Jones)--Malaysia and Australia signed a free-trade pact Tuesday, highlighting a growing trend among Asian nations to strengthen regional trade ties to bolster growth amid dwindling demand from their traditional market strongholds in the West.
The signing of the agreement, which follows negotiations that stretch back to 2005, marks Malaysia's sixth bilateral free-trade agreement after it sealed similar pacts with countries including Japan, New Zealand and India. The agreement is scheduled to come into effect on Jan. 1, 2013.
The pact will scrap all tariffs on Malaysian exports to Australia and in return, Australian exporters will enjoy a tariff reduction of up to 99% by 2020. Some of the reductions given to Australia haven't been granted to any of Malaysia's other FTA partners.
"Under the accord, Australia will be as well-positioned in the Malaysian market as Malaysia's closest trading partners in Asean, and in some cases better," Australia Prime Minister Julia Gillard said in a statement.
Separately, Malaysia Minister of International Trade and Industry Mustapa Mohamed said trade between Malaysia and Australia is likely to show "significant improvement" in the years ahead. "This is because of the dramatic opening up of access to exporters from both sides that this agreement offers," he added.
Malaysia will also allow Australian companies to hold 100% of the equity in private higher-education services and telecommunications companies, and up to 70% of insurance and investment banking firms once the agreement is in effect, Mustapa said.
Australia said it would allow Malaysian participation in hospital services and help Malaysian companies set up traditional and complementary medicine services.
The bilateral trade pact "gives Australia a head start in capitalizing on Malaysia's future economic growth," HSBC Bank Australia Chief Executive Paulo Maia said in a statement.
Australia, whose nearly AS$1.5 trillion economy is about six times larger than Malaysia's, is among the Southeast Asian country's 12 largest trading partners, with total trade amounting to US$12.40 billion at the end of 2011. Malaysia was Australia's 10th-largest trading partner in 2011.
-By Jason Ng, Dow Jones Newswires; +603-2026-1233;
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