A free trade agreement between Japan and Malaysia took effect Thursday July 13, 2006 , enabling the two countries to scrap tariffs on essentially all industrial goods and most agricultural, forestry and fishery products within 10 years.
To signify the launch of the FTA, the two nations held the same day their first joint committee meeting at the Japanese Foreign Ministry’s Iikura guesthouse in Tokyo to discuss operational procedures on the implementation of the FTA.
Japan was represented at the meeting by Economy, Trade and Industry Minister Toshihiro Nikai, Minister of Agriculture, Forestry and Fisheries Shoichi Nakagawa, Foreign Minister Taro Aso and Finance Minister Sadakazu Tanigaki. Malaysia’s delegation was led by International Trade and Industry Minister Rafidah Aziz.
Japan and Malaysia signed the bilateral FTA in December following nearly two years of negotiations. Malaysia is the third FTA partner for Japan following Singapore and Mexico.
The Japanese and Malaysian ministers issued a joint press statement to mark the FTA’s entry into force, which called the FTA a "solid basis for the strategic partnership between Japan and Malaysia."
The ministers from both nations "shared the view that the (FTA) will contribute toward enhancing the cross-border flow of goods, services and capital between Japan and Malaysia...enable both countries to make the most of their economic complementarity."
For example, Kuala Lumpur will remove tariffs on finished passenger cars with engine displacements above 2000 cc by 2010 and smaller vehicles by 2015. It will also immediately abolish tariffs for completely knocked down auto parts for Japanese carmakers assembling vehicles in Malaysia.
For farm products, Tokyo will immediately eliminate tariffs on Malaysian imports of tropical fruits like mangoes, mangosteens, durians, papayas and rambutans.
The accord will cover not only trade in goods, but also services trade, intellectual property right protection, investment rules, competition policies, business facilitation and cooperation projects for personnel training in Malaysia.
Japanese manufacturers would benefit from the FTA as it will boost their competitiveness by lowering parts procurement costs in Malaysia, while Malaysian local industries would also gain from Japan’s cooperation programs stipulated in the accord, according to Japanese officials.
Under the partnership, Japan will accept 1,000 trainees over the next 10 years from relevant Malaysian institutions for human resources development in such areas as agriculture, education and information technology. A total of 24 programs are set to be implemented immediately now that the pact has entered into force.
In 2005, Japan’s exports to Malaysia totaled $12.6 billion and imports from the country stood at $14.8 billion, according to the Japanese government.