JEDDAH, 2 March 2004 — Investment in Malaysia could give Saudi businesses duty-free access to the entire ASEAN region, according to Malaysia’s Minister of International Trade and Industry Rafidah Aziz.
“The only condition is that you must have ASEAN ‘cumulative local content’, which means that if you base the operation in Malaysia and source 40 percent of your local purchase either from Malaysia or the neighboring region, then your product can have access to the ASEAN market duty free,” she told Arab News in an exclusive interview on Sunday.
ASEAN is a virtual free-trade area, where duties on products are mostly zero percent, and never more than five percent, she said.
“That is something that investors in Saudi Arabia should look at seriously,” she said. “We are not talking about a small Malaysian market of 23 million people. The market we provide is ASEAN - more than half a billion people, with reasonable purchasing power,” she said.
Rafidah was keen to highlight Malaysia’s advantages over regional giant China, regarded by many as the most promising market in Asia.
“We know that there is China as a competitor, but China and Malaysia have somewhat different backgrounds. You would be well advised to locate to China if you are in the cheap labor, mass production type of manufacturing. But for manufacturing of high-end products, records have shown that Malaysia is a very competitive location,” she said.
Rafidah welcomed Saudi Arabia’s now-imminent accession the World Trade Organization.
“Malaysia was amongst the earliest WTO members to sign the bilateral protocol of accession with Saudi Arabia. Malaysia welcomes and supports Saudi Arabia’s early accession to the WTO.
“When the accession takes place, it will harmonize the economic environment, (the Kingdom’s) trade regime with the WTO and it will be easier for us to understand the trade regime, because it is different from ours,” she added.
Malaysia and Saudi Arabia can build on the plans of action agreed during the 10th session of the OIC in Malaysia last year, she hopes. The plans include the promotion of economic collaboration through development of science and technology as well as establishing GTPA — gold-based trade payment arrangements — among member states.
Both sides could also benefit from efforts made toward promoting and developing intra-OIC trade via preferential trading arrangements among member countries.
Rafidah professed herself untroubled by the imbalance of trade in favor of Saudi Arabia. “The important thing is the volume of trade,” she said. “As long as that is growing, we are happy.”