Malaysia and Australia on Tuesday signed a free trade agreement (FTA) that will strip away tariffs and which Canberra hopes will help jump-start negotiations with China, South Korea and Japan.
The agreement inked in Kuala Lumpur will grant Malaysian exporters duty-free entry into the Australian market once the trade deal comes into force in January 2013.
Malaysian trade minister Mustapha Mohamad hailed the deal — which the two sides first began negotiating in 2005 — as “historic”.
“Australian exporters to Malaysia will also be able to immediately enjoy significantly reduced tariffs for goods, reaching up to 99 percent by 2020,” he said at a signing ceremony with Australian Trade minister Craig Emerson.
Australia has several similar agreements, including with Singapore, Thailand and the United States, and bilateral negotiations with China, Japan and South Korea are under way.
Emerson said on Monday he believed the Malaysia deal would act as “an indication to countries like Japan, China, Korea and Indonesia that we are serious about seeking to conclude high-quality FTAs”.
Mustapha said Malaysian exporters of iron, steel, plastic, wood and furniture would see duties ranging from 5-10 percent removed next year.
The deal, the sixth FTA for each country, is the first providing Malaysia with immediate tariff elimination on all exports once brought into effect.
Malaysia is Canberra’s third-largest trading partner in Southeast Asia and 10th-biggest worldwide. Two-way trade in goods and services reached Aus$16 billion ($15.9 billion) in 2011.
The agreement also allows Malaysian investors to participate in Australian private hospital services including massage, homeopathy and traditional medicine.
Malaysia, meanwhile, has agreed to allow 100 percent equity holdings by Australian entities in the Malaysian education and telecommunication sectors, and 70 percent holdings in the Malaysian insurance and investment-banking sectors.
Emerson described the deal with Malaysia, Southeast Asia’s third-largest economy, as “a platinum agreement” in trade liberalisation.
“I know the business community in both countries value this agreement,” he told reporters.
A statement released by his office said the deal “will further integrate the Australian economy with the fast-growing Asian region, benefiting Australian exporters, importers and consumers.”