TRADE POLICY REVIEW: MALAYSIA
16 and 18 January 2006

Concluding remarks by the Chairperson


See also:
> Press release: Economy gains from openness to trade and investment and prudent management


1. The fourth Trade Policy Review of Malaysia has enabled us to improve our understanding of the developments in its trade and related policies since its previous Review in 2001, and of the challenges it now faces. The Government and Secretariat reports, together with Malaysia's responses to Members' questions, have contributed to the transparency of Malaysia's trade policies and practices. Our discussion has clearly benefited from the active participation of the Malaysian delegation as well as from the insightful contribution of our discussant and the numerous interventions by Members.

2. Members welcomed the recovery of the Malaysian economy after the Asian financial crisis and noted that Malaysia has pursued policies aimed at strengthening and diversifying its economy, liberalizing trade and investment, building knowledge-based industries and services, and carrying out structural reforms in key areas, including the financial sector. Exports have increased significantly, supporting real GDP growth and both unemployment and inflation have remained low. Members encouraged Malaysia to continue efforts to ensure that it stays on the path of development and reforms and thereby strengthens its resilience to external shocks.

3. Members appreciated the constructive role played by Malaysia in the Doha Development Agenda negotiations and its varied efforts to achieve progress and consensus. They also noted that, at the same time, Malaysia had been intensifying its bilateral free-trade negotiations with other WTO Members, whether on its own or as part of ASEAN.

4. Members applauded successive steps taken by Malaysia to reduce its average applied MFN tariff rate. However, they expressed some concern that over one-third of tariff lines are not bound, and gaps between bound and applied rates are large, thereby imparting a degree of unpredictability to the tariff. Some Members pointed out that high tariffs, combined with non-tariff measures, limited trade opportunities in significant sectors, such as steel, automobiles and automotive components. In the automobile sector, particular concerns were raised concerning the approved permit system affecting imports and the rebate on excise taxes available to local manufacturers. Some Members noted that Malaysia had become a more active user of anti-dumping measures and was planning to develop safeguard legislation. Members acknowledged Malaysia's efforts to align its national standards with international ones and urged Malaysia to expedite the harmonization of its remaining standards. Clarification was also sought with respect to the array of incentive programmes provided by the Government to many industrial companies as well as to the status of draft competition legislation. Some Members were interested to know of any government plans to make government procurement more open and transparent. Members appreciated that Malaysia has taken steps to strengthen its intellectual property regime and encouraged Malaysia to continue its efforts to improve enforcement.

5. On sectoral issues, Members noted that services are the largest component of Malaysia's economy and one of the key drivers of economic growth, although progress in liberalizing the services sector lagged behind agriculture and manufacturing. Some Members encouraged Malaysia to progressively liberalize its services sectors and to reduce or remove restrictions on foreign ownership, notably through improving its commitments in the context of the current services negotiations.

6. This successfully concludes our Review of Malaysia. Members expressed their appreciation for the oral and written responses to their questions from the Malaysian delegation and looked forward to receiving the few still outstanding. Members clearly value Malaysia's efforts to continue to liberalize its trade regime and trade-related policies, to encourage both outward and inward investment. They also appreciate Malaysia's aim of achieving developed country status by 2020. Given the contribution of the multilateral trading system to the achievement of this goal, I am sure that Members can look forward to Malaysia's continued active support for the WTO and the ongoing negotiations.