Concluding remarks by the Chairperson

The eighth Trade Policy Review of Malaysia has enabled us to deepen our understanding of developments in Malaysia's trade and related policies since the previous Review in 2018. The review has benefitted from the constructive and informative participation of the delegation of Malaysia, led by H.E. Mr. Datuk Isham Ishak, Secretary General of Ministry of International Trade and Industry, the insightful remarks of our discussant H.E. Ambassador Mr. Alparsian Acarsoy, Permanent Representative of Türkiye to the WTO, and comments made and issues raised by the 37 delegations that took the floor during the meeting. I would also like to thank the delegations that submitted advance written questions.

Members commended Malaysia for its resilient economic growth and long-term development trajectory. Following a year of negative economic growth in 2020 due to the COVID-19 pandemic, the Malaysian economy returned to its strong growth trajectory of the pre-COVID-19 period in 2021. Members expressed appreciation for the wide-ranging reforms adopted by Malaysia in different policy areas. These include in particular the Eleventh Malaysia plan (2016-2020) and the Twelfth Malaysia Plan (2021-2025), which aim at resetting the economy, strengthening security, improving wellbeing and inclusivity as well as advancing sustainability. Other important policy reforms adopted by Malaysia and mentioned by several Members pertain to the digital economy, investment, and labour reform. Attention was also drawn to the significant role of small and medium-sized enterprises in the Malaysian economy and to Malaysia's success in developing a diversified manufacturing sector. Members stressed the critical role of trade in Malaysia' economy, as evidenced by the very high ratio of trade to GDP.

Members appreciated Malaysia's commitment to the rules-based multilateral trading system. Malaysia has fully implemented the Agreement on Trade Facilitation since June 2021. Its active participation in the Joint Statement Initiatives (JSI) in E-commerce, Investment Facilitation for Development, and MSMEs was highlighted. Members welcomed Malaysia's support for the Declaration on Trade and Women's Economic Empowerment, and its chairmanship of the Committee of Participants on the Expansion of Trade in Information Technology Products, and the Working Groups on Trade and Transfer of Technology and Trade, Debt and Finance. Malaysia's role as a co‑sponsor of the proposed TRIPS waiver to allow the equitable access to vaccine, therapeutics, and diagnostics for the COVID-19 pandemic was also noted. 

Members encouraged Malaysia to: participate in the JSI on Services Domestic Regulation, the work of the Trade and Environmental Sustainability Structured Discussions (TESSD), and move forward to ratify the Agreement on Fisheries Subsidies. Some Members invited Malaysia to join the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). Many Members urged Malaysia to submit outstanding notifications. Some Members expressed their concern about the discrimination that foreign suppliers face when trying to access to the public procurement market, and encouraged Malaysia to join the WTO Agreement on Government Procurement.

Malaysia has concluded free trade agreements with 16 countries, including nine ASEAN countries, and the FTA coverage ratio in its total trade amounted to 67.3% in 2022. Some Members congratulated Malaysia on the entry into force of the Regional Comprehensive Economic Partnership (RCEP) Agreement, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Some welcomed Malaysia's participation in the Indo-Pacific Economic Framework (IPEF).

Members were encouraged by Malaysia's continued efforts to streamline its fully automated customs procedures through its National Single Window. They appreciated that almost all of Malaysia's tariff lines carry ad valorem rates, more than half of the tariff lines are duty-free on an MFN basis, and around 80% of tariff lines are bound. The simple average applied tariff rate fell from 7.5% in 2017 to 7.1% in 2022. However, Members also noted that Malaysia still applies non-ad valorem duties for 119 tariff lines, and tariff escalation remains. Malaysia was urged to convert the non-ad valorem rates to ad valorem ones, and reduce its tariff escalation. Malaysia was encouraged to review and reduce non-tariff measures such as non-automatic import licensing, and to consider liberalizing its rice importation system that is currently monopolized. Some Members were impressed that Malaysia had reviewed over 400 non-tariff measures, and were interested in learning more about the outcomes of the review. While appreciating Malaysia's aim to become a hub for halal products, some Members sought clarity regarding sanitary and halal certification requirements. Some Members applauded Malaysia's recent accession to the Madrid Protocol, the Marrakesh VIP Treaty, and the Budapest Treaty, and encouraged it to continue review its legislation to ensure a robust IPR system.

In the area of investment, Members highlighted the considerable development towards a more business and trade-friendly environment, through the setting up of the one-stop centre for business registration and licensing in 2020, and the approval of the National Investment Aspirations Policy in 2021. Members also noted that in addition to foreign equity caps in a number of services sectors, Malaysia has a set of discriminatory domestic policies that negatively affect FDI. They encouraged Malaysia to continue to improve its business climate and further liberalize foreign investment restrictions, including in the areas of telecommunications, tourism, and financial services.

At the sectoral level, Members recognized Malaysia's various policies and initiatives to accelerate technology adoption with the aim of increasing efficiency and productivity in agriculture, manufacturing, and services activities for Malaysia's economy and trade. In agriculture, Malaysia was welcomed in its active role in advancing agricultural trade reform as a member of the Cairns Group. On the energy sector, several Members commended Malaysia's efforts to support a low‑carbon economy and its ambitious plan to achieve net zero carbon emissions by 2050. However, Malaysia continues to provide subsidies to the energy sector. Some suggested Malaysia to implement a subsidy rationalization programme. Members also expressed their concerns on the Approved Permit (AP) policy in the automotive sector.

Other areas of interest to Members include: Malaysia's lack of predictability and transparency in business licensing; rationale for the import prohibition of certain products; government-linked companies; industrial policy; policies on the operation of foreign companies; export subsidies and local content; alignment of domestic standards with international ones; requirement to obtain international circulation permit on cross-border road transport; regulatory discretionary powers in the services sector, including financial services; and Islamic finance.

Many Members stressed the importance of their bilateral trade and economic relationship with Malaysia. In this regard, they pointed to ongoing or recently finalized negotiations on trade and/or investment agreements, and identified specific sectors or policy areas in which they saw potential for further development of their relationship with Malaysia.

Malaysia has received about 342 written questions, out of which 155 questions were submitted within the established deadline. Prior to this meeting Malaysia provided written answers to all questions submitted within the established deadline. Regarding all other outstanding and follow-up questions, Malaysia is expected to provide its responses within one month, when this Review will conclude.