NZ Malaysia FTA signing in Kuala Lumpur Pt 2
Monday 26 October 2009 was a historic day for Malaysia – New Zealand relations. 10 years of trade negotiations culminated in the official signing of the Malaysia New Zealand Free Trade Agreement. A group of 45 businesspeople from New Zealand, coupled with another 15 or so New Zealanders residing in Malaysia accompanied Prime Minister John Key to Malaysia for this historic event. I had the privelege of joining the NZ delegation to Kuala Lumpur. The irony is I am Malaysian and KL is my hometown, and it felt a little weird being on the other side. Nevertheless it was an amazing experience being part of this momentous occasion.
Free Trade Agreements are highly beneficial for New Zealand. Relatively speaking, New Zealand is already a very free country, with few tariffs and trade barriers, making it very easy for foreign businesses to do business in NZ. However, the same is not true for most other nations.
Many countries impose significant tariffs on imported goods, and have convoluted non-tariff barriers designed to protect domestic industries from foreign competition. This is why it is easy for NZ to sign up to a free trade agreement because these agreements most definitely result in net gains for NZ businesses. The real difficulty is in convincing foreign nations to give up long standing tariffs. The Kiwi trade negotiators have very few bargaining chips to play with, a key reason why I have a lot of respect for these guys.
This is why I’m unhappy with the negative people who complain that FTAs are useless and are merely tools for select few businesses to make more money. The reality for exporters is that because of this FTA, tariffs for kiwifruit exports to Malaysia will go from 15% to 0%. Fonterra will see liquid milk quotas increasing significantly to 2.1m litres p.a., and a reduction of the 20% inquota tariff for liquid milk to 0%. Considering Fonterra’s market share in Malaysia for the adult milk category is 77% and 80% in prenatal dairy products, this is a huge win.
Education institutions can secure 70% shareholding (up from 49% currently) in Malaysian-domiciled joint ventures by 2015. Fran O’Sullivan (who was in Malaysia with the trade delegation) discusses benefits for NZ education providers in her 28 October editorial “Malaysia the key to unlock other doors“.
Ultimately, the Malaysia NZ FTA is all about enhancing already strong and long enduring ties between the two nations. As politics and economics are so intertwined,
the partnership of two nations via the FTA symbolises the mutual commitment of both parties.
As I have never been on a New Zealand trade delegation signing an FTA, this trip was a real eye-opener for me. NZTE and MFAT did a great job putting the programme together. We certainly enjoyed the ride in the PM’s motorcade. The 60-strong trade delegation were put in two coaches, behind the PM’s car and security detail (probably half the cars carried security personnel). I sat behind the bus driver and could see the speedo hitting the top speed of 120 kmh, the driver struggling to keep up .
Knowing KL traffic, it’s amazing to see the motorways cleared, with the entourage going from KL to Shah Alam in record time. They even sent an ambulance along to accompany the motorcade. My guess is this is because they don’t want any delay in despatching medical assistance should anything happen to visiting heads of state. We managed to visit the new Datacom office in Bandar Utama and the new Fonterra yoghurt factory in Shah Alam, had lunch and got back to KL Hilton within 4 or 5 hours. Under normal traffic conditions, driving time alone would already take that long. The other bonus for me personally is to have received a dinner invitation from the Malaysian Prime Minister (extended to all visiting New Zealand delegates). Had I stayed on in Malaysia and not moved to NZ, I don’t know when I would receive a dinner invite from the Malaysian PM’s office. The other interesting irony is that I received a New Zealand Prime Ministerial invite before the Malaysian one (18 months ago, to celebrate the signing of the China NZ FTA).
Malaysia and New Zealand have strong historic links dating back to the 1940s with New Zealand soldiers helping Malaya fight the communists, and students from Malaysia arriving in New Zealand in the 1950s and 60s under the Colombo Plan.
Several New Zealand Army officers served in Malaya while on secondment with British units from 1949. New Zealand became more directly involved in the Malayan Emergency operations in 1955, following its decision to contribute forces to the British Commonwealth Far East Strategic Reserve. In total, 1300 New Zealanders served as part of a Commonwealth force including army, air force and navy.
The Colombo Plan was a plan for Cooperative Economic Development of South and South East Asia and was conceived at a meeting of Commonwealth Foreign Ministers held in Colombo, Ceylon (now Sri Lanka) in January 1950. All aid was given on a bi-lateral basis and the negotiations were conducted between the donor and the receiving government. No conditions or strings were attached to any aid provided and there was no expectation of a return by the donor country.
More than 300,000 recipients benefited from this scholarship during the period 1951-1989. Scholars were trained in Australia, Canada, Japan, New Zealand and United Kingdom. Many New Zealand graduates are now in senior and influential positions within the government and private sectors in Malaysia.
During the KL trip, I took two of the New Zealand delegates to the Petronas Twin Towers. On the way there, we stopped at the mosque behind KLCC as they were fascinated with the architecture. It was almost midnight, and we bumped into 3 security guards at the mosque. They were very friendly and asked me in Bahasa (Malay language) where the guests are from. I said New Zealand. They immediately smiled and were very friendly, even asking if we wanted to take photos inside the mosque. They knew the All Blacks (it would be difficult to find one Malaysian who doesn’t recognise this most famous of Kiwi brands), and one of them mentioned Jonah Lomu. My Kiwi friends were most impressed with the Malaysians they have met, and were very keen to explore what can be done in Malaysia. This is why I am optimistic that Malaysia New Zealand relations will go from strength to strength.