Malaysia Trade and Economic

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Malaysia Trade and Economic

Malaysia is New Zealand’s eighth largest trading partner (by value) and ninth largest export market. Both countries face a similar challenge to move economic activity up the value chain. To this end, New Zealand firms are seeking to develop higher value added services partnerships in education and training, sustainable agricultural technology, biotechnology research, specialised ICT applications, creative content industries, and sustainable tourism growth.

Bilateral trade with Malaysia reached NZ$2.70 billion for the year ending June 2008. New Zealand’s merchandise exports to Malaysia were NZ$854.7 million (previous 12 months: $582.8m). Over the same period New Zealand’s merchandise imports from Malaysia were NZ$1.84 billion (previous 12 months: $948.1m).

Milk and cream (NZ$379 million) remained New Zealand's largest export to Malaysia in the year to June 2008. Other key exports included crude oil (NZ$74m), baking products ($53m), butter ($32m), and sheep and goat meat ($26m).

Petroleum products continue to represent a significant share (one third) of imports from Malaysia. In the June 2008 year, crude oil and oilcake imports totalled NZ$501 million and NZ$112 million respectively. Other significant imports were television receivers ($161m) and computers ($108m). In 2007 imports were further boosted by a one-off purchase of offshore oil rig heavy machinery.

These figures understate the value of our commercial relations with Malaysia, as a proportion of New Zealand exports enter Malaysia via Singapore. More significantly, they do not recognise the significant activities of New Zealand services suppliers in Malaysia. NZTE sources noted Malaysian tourists to New Zealand in 2007 numbered nearly 20,000. The worth of these visitors to the New Zealand economy has been valued at $55 million. The Ministry of Education estimates the worth to our economy of the Malaysian tertiary studying in New Zealand as $80 million. New Zealand consultants are also active in providing services in the engineering, biotechnology, software and ICT, management and education/training sectors.

Investment is another aspect of the New Zealand/Malaysian economic relationship. About 20 New Zealand companies have significant investments in Malaysia covering a wide variety of sectors, including food/food technology, ICT and telecommunications, electronics, software, information technology, and building products. Malaysian businesses have invested in the hotel and property sectors, forestry, fisheries, and food processing in New Zealand as well as in a major consultancy group. Business Councils are established in New Zealand and Malaysia.

The trading relationship is underpinned by cooperation at the official level. A bilateral Trade Agreement between New Zealand and Malaysia was signed in 1997, and entered into force on 1 January 1998 and bilateral Free Trade Agreement negotiations were launched in March 2005. While both countries were working towards concluding negotiations at the sixth round (held in April 2006), agreement had not been possible on the outstanding issues then. Following discussion during Prime Minister Clark's visit to Malaysia in 2006 and the conclusion of AANZFTA negotiations, the seventh and eighth rounds of negotiations on the Malaysian FTA took place in September and November 2008. Positive progress was made at these meetings, including in areas New Zealand considers are important to ensuring that a high quality and comprehensive agreement can be reached. A ninth round of negotiations is being planned for February 2009. Background information on this process can be accessed at www.mfat.govt.nz.