MAFTA monsoon opens new trade routes

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William de Cruz

AUSTRALIAN businesses should hitch their sails to the “monsoonal winds” of the free trade agreement with Malaysia, and maximise investment and trade potential with Australia’s third-largest trading partner in Asean.

Pushing the case for newly unfettered access on the other side of the Straits of Malacca is the NSW chapter of the Australia Malaysia Business Council, which hosted a forum for its members and guests on 9 April, at Sydney’s Grace Hotel.

The NSW chapter’s Ian Jordan harked back centuries in his opening address, when traders came to Malaysian shores to seek ivory, camphor, sandalwood, spices and perfume. “I’ve travelled the Straits many times myself,” Jordan said, and added: “Now that MAFTA is in place, the monsoonal winds of our economic times are helping modern traders to again look to Malaysia as a wonderful opportunity to make large profits.”

He wasn’t exaggerating, and a veritable Aladdin’s cave of statistical treasure was unveiled by Austrade commissioner Chau Duncan at the event.

Two-way merchandise trade between the two nations was worth MR54.9 billion ($A17.2bn) in the financial year 2011-12, according to Australia’s Department of Foreign Affairs and Trade (DFAT). Australian exports to Malaysia were worth MR16.2bn ($5.1bn) in the period.

During that time, two-way investment between the nations totalled MR62.6bn ($A19.6bn), as Australia pumped MR18.2bn ($A5.7bn) in a nation that recorded up to 5.5 per cent GDP growth in 2012, while much of the developed world lurched from financial crisis to crisis.

Malaysia’s tourism and education sectors were standouts in terms of actual people crossing the transoceanic divide – 21,587 Malaysians had been enrolled in Australian educational institutions as of last year, and 262,700  Malaysian tourists brought their spending power to Australia in 2012 alone, a period that recorded 8.9 per cent growth for Malaysian tourism in Australia.

Keeping in mind that Malaysia’s middle-class is a fast-expanding consumer group, the potential for Australian businesses keen to test the waters is as enticing as the next best surfing wave in Bell’s Beach. Consider: GDP per capita in Malaysia stood at MR29,391 (A$9200) in 2011, and is targeted to hit MR45,450 (A$14,226) by 2020, matching the World Bank standard for high-income status, a phenomenal growth forecast exceeding 50 per cent in just under a decade.

A guest at the AMBC forum, no doubt weighing the benefits of future membership, has a comforting story for the less than intrepid, who might view the new Malaysian frontier as  a bit more than just exotic. Sydney-based Marvin Wickramasinghe from Sri Lanka visited Kuala Lumpur recently. “Nobody asked me if I was Muslim, Christian, Buddhist, Hindu or anything.”

The world-weary traveler added: “I have never had such an experience in any other country.”

Wickramasinghe sings of his ‘true’ Malaysia: “From the taxi driver to the strangers I met in business, they literally embraced me.”

He speaks of “a gentleman who came up to me and just introduced himself at a restaurant I was dining at alone”.

“He said to me, ‘You look like a foreigner’.

“We got to talking and he eventually took me golfing and introduced me to his business circle. He knew what I was there for, but not once did he ask me what might be in it for him.”

Wickramasinghe stayed at the same hotel on his return trip to Malaysia. “They recognised me and welcomed me back to ‘my home’.”

Today, the Sydney-based entrepreneur is on the verge of consolidating the Security Monitoring Centre (SMC) in Malaysia. The business will seek to enter as a third party into established contracts between individuals, or businesses, and security agencies.

SMC will bring to Malaysian security agencies the value-added benefit of being able to offer their clients a monitoring and response centre for emergency calls and alarm-activated situations; in partnership with SMC, a ‘small’ agency with, say, only security guards, may offer clientele centralised monitoring as an added service.

Avnesh Ratnanesan, a Western-trained medical practitioner with a new-found focus on ‘harmonising bioenergy for health and wealth’ in Sydney, is a member of AMBC NSW.

The council, the Malaysian says, “has helped me better understand opportunities in Malaysia for my two organisations”, Divinity Wellness Institute, which is in holistic healthcare, and Araya Pictures, which is in digital video production.

Ratnanesan cited the recent MAFTA forum in Sydney as an example. “It has not only raised awareness of preferred industry sectors for collaboration, but also connected us with real decision-makers who can facilitate collaborative partnerships with government and Malaysian businesses.

“It’s also great to have friendly drinks with other Malaysians and those that have affiliations with Malaysia, as it provides a connection to  politics, current trends, food and similar common interests.” (Footnote for the wealth-health connection: Malaysia’s spending on healthcare contributes 5 percent of GDP.)

Apart from healthcare, or ‘health tourism’ as it is referred in a list of 12 National Key Economic Areas (NKEAs), the Malaysian government has also identified oil, gas and energy; palm oil and rubber; financial services; tourism, Malaysia’s fifth-largest industry; business services; accounting; electrical and electronics sector; and the wholesale & retail sector for special attention.

Elsewhere, there are urbanisation, education and related services; communications and infrastructure; agriculture and the very hinterland of the Klang Valley itself, on the southwestern side of peninsular Malaysia, which is to that nation what NSW might be to Australia under the slide-rule of some bean-counters.

Under MAFTA, 97.6 per cent of Australia’s exports immediately became tariff-free, and in four year’s time it will cover nearly all exports.

Australian wine-growers will be able to cultivate new growth sectors with the banner of “most favoured nation” status under MAFTA.

But all is not as well as it could be, if some global watchdogs are to be considered arbiters of business accountability and transparency. Some publicly available numbers may be as depressing as the hitherto impressive economic statistics: a recent Transparency International index on corruption perceptions rated Malaysia well ahead of Thailand, Indonesia and Vietnam, but well below Singapore. However, considering the island state to the south of Malaysia is now being referred to as the new Switzerland in terms of global banking practice, the TI index may not be saying much at all. Nevertheless, for both sides of those equations, perceptions are perceptions.

On the other hand, Malaysia’s administration under Prime Minister Najib Razak is quick to admit to the long-festering problem, and is rising to the challenge.

While “business transparency remains an ongoing challenge for Malaysia,” as commissioner Duncan said in a slide-presentation at the forum, the government has set up an agency to tackle the problem; long delays to hear court challenges may also be cut substantially with new special courts.

Both tantalising and turn-off in parts, Malaysia is nevertheless the place to go in the coming years, as far as AMBC NSW is concerned.

The council, along with its sister organisation in Malaysia, MABC – and the formidable backing of Austrade, the Consulate of Malaysia’s various sector-specific desks in Sydney, the Malaysian Investment Development Authority (MIDA) and the Malaysia External Trade Development Corp (Matrade) – could well be the ferryman at the latest channel for Australian businesses wanting to have a go in Malaysia, and on to Asean.

Ushering user-friendliness into the MAFTA document is also on the Austrade agenda.

The commission will soon make available for online users a tariff finder for the free-trade agreement, similar to the program employed for the trade pact Australia enjoys with New Zealand.

It will allow Australian and Malaysian businesses to type in a Harmonised Commodity Description and Coding System title – the dummy’s guide would refer to it as the HS code – to help unravel all that MAFTA may offer in tax benefits to particular sectors.

AMBC’s Jordon says Australian businesses may now only be benefiting from about 20 per cent of all that MAFTA has to offer, and vice-versa for Malaysians, and AMBC NSW is trying to make it easier for businesses to maximise potential with the FTA.

The newly invigorated NSW team today is building a youthful council that will leverage new mediums, such as social media and the breadth of the internet, to reach out and better serve members.

To think, all you need do is catch the wind, and make the most of that MAFTA monsoon.

* All currency figures were valid on 11 April 2013 and economic statistics were provided courtesy of Austrade. William de Cruz is a freelance Malaysian journalist operating in Sydney.

http://www.dfat.gov.au/fta/mafta/factsheets/MAFTA-the-benefits.html