India, Malaysia ink trade pact

New Delhi: India and Malaysia signed a Comprehensive Economic Cooperation Agreement (CECA) today, aiming in the short term to boost bilateral trade to $15 billion by 2015 from $9 billion now. The trade agreement would result in tariff reduction for goods ranging from bananas to basmati rice and easier movement of software engineers and doctors.

The agreement, to take effect from July 1, was signed in Putrajaya city adjoining Kuala Lumpur between commerce and industry minister Anand Sharma and Malaysia’s minister for international trade & industry, Mustapa Mohamed. Malaysian prime minister Mohd Najib Razak was present during the event.

“The India-Malaysia CECA is a comprehensive and ambitious agreement that envisages liberal trade in goods and services and a stable and competitive investment regime to promote foreign investment between the two countries. The goods package under the CECA takes the tariff liberalisation beyond the India-Asean FTA commitments on items of mutual interest for both the countries,” stated an official statement by the ministry of commerce and industry.

This agreement covers trade in goods, services, investment and economic cooperation. Malaysia is a key member in the Association of South East Asian Nations (Asean) grouping, with which India signed a goods agreement in August 2009. A negotiation to have a deal in services with Asean is currently underway.

Asean comprises Malaysia, Indonesia, Singapore, Philippines, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

“We expect the CECA with Malaysia will particularly benefit India’s services sector. As we have not seen much progress in services under the umbrella agreement with Asean, having bilateral deals with member-countries covering trade in services and investment simultaneously with trade in goods is a smart strategy,” said Amit Mitra, secretary general, Ficci.

India is to obtain greater access to Malaysian markets for mangoes, bananas guavas, basmati rice, two-wheelers and cotton garments. In services, professionals can look forward to easier visa norms from several sectors such as accounting and auditing, architecture, urban planning, engineering services, medical and dental, information technology and enabled services, and management consulting services.

Malaysia has also allowed 50 per cent foreign direct investment in construction companies in the deal, benefiting Indian real estate firms looking to venture there, besides enabling greater job opportunities for Indian architects and interior designers.

This is a significant achievement for India as Malaysia has a policy – Bumiputra - which mandates 30 per cent equity participation by local firms.

“Malaysia is one of the major investors in India. It can be a major source for tapping our investment need in infrastructure development projects,” said Ramu S. Deora, president, Federation of Indian Export Organisations.