Stalled Korea-Malaysia FTA on track to be signed next year, visiting trade minister says

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Stalled Korea-Malaysia FTA on track to be signed next year, visiting trade minister says

Published: 28 Nov. 2024, 14:40

LIM JEONG-WON
[email protected]

Audio report: written by reporters, read by AI

Minister of Investment, Trade and Industry of Malaysia Tengku Zafrul Aziz speaks during an interview with the Korea JoongAng Daily at the Shilla Seoul on Tuesday. [PARK SANG-MOON]

A long-stalled free trade agreement (FTA) between Korea and Malaysia is now on track to be signed next year, Malaysia’s trade minister said in a recent interview.

“It looks like there is strong support to ensure that we can sign an FTA soon,” said Tengku Zafrul Aziz, minister of investment, trade and industry of Malaysia, during an interview with the Korea JoongAng Daily at the Shilla Seoul on Tuesday.

While talks between Korea and Malaysia halted in 2019, President Yoon Suk Yeol and Malaysian Prime Minister Anwar Ibrahim agreed in a summit on Monday that the two countries would push forward with an agreement. Tengku Zafrul said the FTA would likely be signed sometime next year — and by the 2025 APEC summit that Korea will host in Gyeongju, North Gyeongsang, at the latest

Tengku Zafrul was visiting Seoul from Sunday to Tuesday to participate in meetings with his counterparts in the Korean government and to engage in events with Malaysian students studying in the country.

Tengku Zafrul also discussed progress in investments secured during last year’s Trade and Investment Mission to Korea, as well as his thoughts on the trade imbalance and collaborations between Korea and Malaysia in high-tech sectors.

The following interview has been edited for length and clarity.

In March 2024, Korea and Malaysia agreed to resume negotiations on a bilateral FTA after a hiatus since 2019. What is the current status of these negotiations and the key areas both nations are focusing on?

Malaysia and Korea have been involved in two multilateral FTAs to improve trade collaboration and partnership between the two countries. We are also seeking a bilateral FTA. Years before, there was a discussion that ended in 2019 because of certain challenges that we faced. But last year, we had a scoping exercise, where we agreed to try to engage again and see how we could address some of the industry concerns. I had a few meetings with my counterparts in Korea, and we have had many meetings so far — five already at the working level to discuss this and another one scheduled for January in Kuala Lumpur. I think we are now about to reach a conclusion — of course, there is a legal process and a parliament process that will have to take place after this. But after the summit between President Yoon and Prime Minister Anwar, it looks like there’s strong support to ensure that we can sign an FTA during the Asean leadership summit or, at the very latest, during the APEC summit Korea is hosting next year. So, I can say that we are on track.

During the Trade and Investment Mission to Korea in March 2023, Malaysia secured 24 billion ringgits ($5.4 billion) in potential investments and 4.24 billion ringgits in potential exports. What progress has been made in realizing these potential investments and exports?

We have been, of course, in constant communication with the companies who have stated their interest in investing in Malaysia. One example that we announced just today is Hyundai Motor. We had discussions during our trade investment mission, and today, they made an announcement after a meeting with the prime minister to open their first-ever assembly plant in Malaysia. There are also various other companies, though usually, when a company commits, it takes one to three years, depending on what level of stage of due diligence they are at and what kind of industry the company is in. At the moment, we are at around an 80 percent success rate in terms of execution, and we have a team that monitors such execution.

The mission highlighted sectors such as electrical and electronics (E&E), environmental, social, and governance (ESG) initiatives, metals, hydrogen and chemicals. Which specific industries or projects have seen the most significant advancements since then?

The most significant advancements, I think, are in the E&E sector, especially in battery technology, where we are cooperating with Samsung SDI and others. At the same time, there has also been significant progress on renewable energy. We are talking about carbon capture and storage, green and blue hydrogen, and solar. These are the areas where we are seeing significant contributions and progress in development. The prime minister has also met with six Korean companies in one-on-one meetings, and he was very happy with the progress and with the frank discussions that he has had with the companies.

Minister of Investment, Trade and Industry of Malaysia Tengku Zafrul Aziz speaks during an interview with the Korea JoongAng Daily at the Shilla Seoul on Tuesday. [PARK SANG-MOON]

Last year marked the 40th anniversary of Malaysia's Look East Policy, emphasizing collaboration with East Asian nations, including Korea. How has this policy evolved, and what future initiatives are planned to strengthen bilateral relations?

Last year, we celebrated 40 years of the Look East Policy, and next year, we will celebrate 65 years of diplomatic relations between our two countries. These are significant milestones, and during the summit between our leaders yesterday, we elevated our partnership to a more strategic one. We have already spoken a bit about business-to-business, but people-to-people is also important, as we want to ensure the future generation continues to understand the importance of this relationship between Korea and Malaysia. President Yoon, in his speech yesterday, actually talked about how Malaysia in the 1960s was more advanced than Korea and how we funded the building of a bridge in Korea. After that, when Korea became more developed, you helped us build the Penang Bridge. The people-to-people tourism is also key, with Korea slowly becoming one of the favorite destination spots for Malaysian tourists and vice versa. The prime minister and I also had the opportunity to meet with Malaysian students who are studying here during our visit and we talked about more collaboration between the universities of our two countries. I think all this will help elevate, strengthen and deepen the relationship between Korea and Malaysia.

In 2022, Malaysia's exports to Korea increased by 43.3 percent to $12.44 billion, while imports rose by 18.7 percent to $13.5 billion. What strategies are being implemented to address trade imbalances and promote balanced growth?

I do not believe in trade imbalances; I believe in total trade. It is not a zero-sum game, and I believe in the comparative advantage of both economies. Korea and Malaysia have their own strengths and competitive advantages. This is where companies can take part in ensuring that trade happens so that, at the end of the day, what we see is a positive spillover to both economies. What we want to see is to ensure that consumers of both countries get the best products at the best price. The bigger picture of trade is it creates engagement between countries, it creates opportunities for companies to do more business, and it is a recipe for peace and stability — because trade promotes prosperity.

Korean companies have shown interest in Malaysia's high-tech sectors, including semiconductors and green technologies. Can you share insights into recent collaborations or investments in these areas?

For semiconductors, this is an area where Malaysia has a comparative advantage in the region in Southeast Asia since we have started to invest in this sector in terms of the infrastructure ecosystem since the 1970s. It has been more than 50 years since the building of this ecosystem in Malaysia, and within these 50 years, many Malaysian companies have evolved into multinational companies in this sector. What we want to do under the new Industrial Master Plan is to make sure that companies based in Malaysia move up the value chain.

Looking ahead, what are the key objectives and milestones the ministry aims to achieve in strengthening Malaysia-Korea trade and investment ties over the next five years?

We have the Industrial Master Plan, as we discussed, and we are accomplishing certain targets in terms of GDP and income for the people. We also have the green investment strategy and the national semiconductor strategy. Our plan is to achieve Malaysia’s status as a high-income nation and also move Malaysia up the value chain in many industries so that we can meet the net zero target of the country for our industries.

BY LIM JEONG-WON [[email protected]]