RESTRICTED  
  
WT/TPR/G/292  
27 January 2014  
(14-0371)  Page: 1/21  
Trade Policy Review Body  Original: English  
 
TRADE POLICY REVIEW 
REPORT BY 
MALAYSIA  
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Tr ade Organization), the policy statement by 
Malaysia is attached. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trad e Policy Review Body on Malaysia. WT/TPR/G/292 • Malaysia 
 
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  Contents 
1   ECONOMIC DEVELOPMENT .......................................................................................... 3  
1.1   Overview .................................................................................................................. 3  
1.2   New Econ omic Model.................................................................................................. 4  
2   TRADE POLICY DEVELOPMENTS .................................................................................. 6  
2.1   Overview .................................................................................................................. 6  
2.2   Initiatives to Facilitate Trade ....................................................................................... 7  
2.3   Multilateral Trading System ......................................................................................... 9  
2.4   Development in FTAs ................................................................................................ 10 
2.5   ASEAN ................................................................................................................... . 12 
2.6   Asia Pacific Economic Cooperation ............................................................................... 13 
3   SECTORAL POLICIES ................................................................................................. 13  
3.1   Manufactu ring Sector ................................................................................................ 13 
3.2   Agriculture Sector ..................................................................................................... 14 
3.3   Servic es Sector ........................................................................................................ 15 
4   OTHER DOMEST IC POLICIES ..................................................................................... 17  
4.1   Competition Act 2010 ................................................................................................ 17 
4.2   Strategic Trade Act 2010 ........................................................................................... 18 
5   WAY FO RWARD ......................................................................................................... 18  
ANNEX ......................................................................................................................... .. 20 
 WT/TPR/G/292 • Malaysia 
 
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  1  ECONOMIC DEVELOPMENT 
1.1  Overview 1.1.  The economic policies are aimed at bringing Malaysia closer towards its goal of becoming a 
high-income nation that is both inclusive and sust ainable by 2020. This would require higher levels 
of quality investments and boosting private investment in higher value-added industries. Over the 
period under review, the Government remains committed to ensuring the nation's economic growth continues to flourish despite uncertainties and challenges in the global economy. 
1.2.  The Malaysian economy recorded an average GDP growth of 6.1% for the period of 2010 
to 2012. Real gross domestic product (GDP) growth was 7.4% in 2010, decreased to 5.1% in 2011 and increased to 5.6% in 2012. For the first half  of 2013, the growth of GDP was recorded at 
4.3%. For the third quarter of 2013, it was reco rded at 5.0%. By the end of 2013, real GDP 
growth is expected to be 4.7%. In the third quar ter, the higher growth is supported by private 
investment and consumption at 15.2% and 8.2% respectively. The construction sector is expected 
to increase 10.6% followed by the services sector at 5.5%. 
1.3.  The inflation rate in 2010 was 1.7% due to economic stability. Inflation, however, increased 
to 3.2% in 2011 due to higher global commodity  prices, partly attributable to the political 
instability in the Middle East and North Africa (MENA) regions; disruption in domestic food 
supplies; and upward adjustments to administered prices. In 2012, the inflation rate remained 
benign at 1.6%. Between January to October 2013, inflation was recorded at 1.9%.  
1.4.  The labour force increased from 12.3 million in 2010 to 13.1 million in 2012. Unemployment 
rate remained at a relatively low level of 3.0%, with gains in employment coming from mining and 
quarrying sector followed by services sector. 
1.5.  The services sector registered average gr owth of 7.0 % for the period of 2010 to 2012. The 
services sector continued to account for the la rgest share of GDP, accounting for 54.6% of the 
GDP in 2012 compared to 54.1% in the previous year. The sector remains on track to meet the 
targeted goal of 61.0% contribution to GDP by end of Tenth Malaysia Plan (10MP) 2011-2015. 
1.6.  The overall performance of the manufacturing sector improved significantly in 2010 
registering growth of 11.9% compared to a decline of 9.0% in 2009. However in 2011, Malaysia 
faced several challenges where manufacturing output  of electrical and electronics (E&E) continued 
to decline, dragged down by weaker performance of computers and semiconductors production. In 
addition, the consumer-related cluster was also affected by the disruption in the automotive supply 
chain following natural disasters in both Japan and Thailand. This resulted in modest GDP growth 
of 4.7%. The manufacturing sector grew by 2012 at 4.8%. 
1.7.  The agriculture sector recorded growth of 2.4% in 2010 then expanded to 5.8% in 2011. This 
is attributed by higher palm oil output, livestock and other agriculture products. In 2012, the 
sector recorded marginal growth of  1.0% due to price fluctuation of palm oil and rubber. 
1.8.  The construction sector registered a grow th of 11.4% in 2010. The sector growth decreased 
to 4.7% in 2011 due to the contraction in the civil engineering segment. The sector however 
recorded growth of 18.1% in 2012 driven by cons truction projects such as the second Penang 
Bridge, KLIA 2, Sabah-Sarawak gas pipeline and the Melaka regasification terminal.  
1.9.  The mining sector registered negative growth in 2010 and 2011 of 0.3% and 5.5%, 
respectively. In 2012, the sector grew by 1.4%. 
1.10.  Private investments for the period of 2009 to 2012 grew by 59.6%. Private investments 
grew by 47.7% in 2012 compared to 2008. The net foreign direct investment (FDI) grew by 30% 
in 2012 compared to 2008. 
1.11.  Private final consumption expenditure grew at 7.1% per annum for the period from 2010 
to 2012. The contributing factors to this expansion were the healthy labour market, favourable 
income, low inflation, governmental assistance to low and middle income households, supportive 
financing conditions and improved consumer confidence. WT/TPR/G/292 • Malaysia 
 
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  1.12.  Gross National Savings (GNS) remained high, averaging 34.8% of Gross National Product 
(GNP) in 2010-2012, enabling Malaysia to finance its economic activities from domestic sources.  
1.13.  Malaysia continued to record a current acco unt surplus with the reserves position remaining 
strong. At the time of the last Trade Policy Review, the levels of reserves amounted to 
RM 265.3 billion or US$70.2 billion and as of 15 November 2013, the reserves position has risen to 
RM 445.1billion (equivalent to US$136.7billion), sufficient to finance 9.7 months of retained imports and is 3.7 times the short-term external debt.
1  
1.14.  The sustained rates of growth over the past  five years have resulted in the growth in per 
capita income from RM 24,879 in 2009 to RM 26,968 in 2010, RM 29,784 in 2011 and RM 30,856 in 2012 representing an average annual increase of 7.5%.
2 Between January to September 2013, 
the GNI per capita was recorded at RM 30,889.  
1.2  New Economic Model 
1.15.  In achieving Vision 2020, the Government on 30 March 2010 launched the New Economic 
Model (NEM) comprising four key pillars namely Economic Transformation Programme (ETP), 
Government Transformation Programme (GTP), "1Malaysia, People First, Performance Now" 
concept, and the 10th Malaysia Plan 2011-2015. The four pillars of national transformation aims to 
propel Malaysia to become a high income nation which is both inclusiveness and sustainable.  
1.16.  The NEM highlights several key initiatives, such as modernising labour laws, public sector 
reforms, deregulation and liberalisation, as the basis for competing in the global market place. 
Figure A The four pillars of national transformation 
 
                                               
1 Bank Negara Malaysia (Second Quarter 2013). BNM Qu arterly bulletin in Developments in Malaysia 
Economy. Retrieved 10 October 2013 from http://www.bnm.gov.my/files/publication/qb/2013/Q2/p3.pdf . 
2 Economic Planning Unit (2012), EPU Documents in The Malaysian Economy in Figures (2012). 
Retrieved 10 October 2013 from http://www.epu.gov.my/documents/10124/72ac36d7-fe5a-489b-a34c-
a2cb2be073a6 . 1Malaysia 
 
People First, 
Performance Now 
  
 
  
April 2009 10th Malaysia 
Plan 
 
Macroeconomic 
growth targets & 
expenditure 
allocation 
  
June 2010   
 
  
 
Smooth 
implementation of 
government's 
development 
programme 
Economic 
Transformation 
Programme 
(ETP) 
 
8 Strategic 
Reform Initiatives 
(SRIs) 
 
March 2010   
 
  
 
New economic model 
– A high income, 
inclusive and 
sustainable nation  
 
 
  
 
Effective delivery  
of government 
services 
Government 
Transformation 
Programme 
(GTP) 
 
6 National Key 
Result Areas 
(NKRAs) 
 
January 2010   
 
  
 
Preservation and 
enhancement of 
unity in diversity Vision 2020  
WT/TPR/G/292 • Malaysia 
 
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  1.17.  GTP was introduced in April 2009. It is an ambitious, broad-based programme of change to 
fundamentally transform the Government into an e fficient and people-centred institution. The GTP 
identified seven National Key Results Areas (NKRAs) to spearhead the Government's transformation namely i.e. reducing crime, fighting corruption, improving student outcomes, 
raising living standards of low-income househol ds, improving rural development, improving urban 
public transport and addressing cost of living.  
1.18.  Among the initiatives to improve accountability and the fight against corruption, the 
Government has legislated the Whistle-blowers Protection Act 2010 and undertaken other reform 
initiatives including Public Service Reforms, the convicted Corruption Offenders Database, Integrity Pact and Corporate Integrity Pledge. The continuous effort by the Government in combatting corruption enabled Malaysia to improve its ranking in the Corruption Perception Index to 
54
th position in 2012 from, 60th position in 2011. 
1.19.  The Government's transformation plan helps to improve the public and investors' perception 
towards Malaysia particularly in the area of transparency and competitiveness. Malaysia's ranking 
on the Trading Across Borders has improved from 29th to 12th in the World Bank Doing Business 
Report 2012. In 2013, Malaysia has further improved competitiveness ranking in Trading Across Borders from number 12
th to 11th. 
1.20.  Malaysia was ranked at sixth position from 12th among 189 economies in the ease of doing 
business, according to the latest World Bank Ease of Doing Business Report 2014. With that recent achievement, Malaysia is now placed in the same league as Singapore, Hong Kong, New Zealand, the United States and Denmark. 
1.21.  ETP was launched on 25 September 2010 as a two-component approach with the first 
component being the National Key Economic Areas (NKEAs) and the second component the Strategic Reform Initiatives (SRIs).  
1.22.  The 12 National NKEAs are represent sect ors where growth will be focused and these 
sectors were identified based on their potential GNI contribution and their multiplier effects across the economy. The 12 NKEAs are: 
i. greater Kuala Lumpur/Klang Valley; 
ii. oil, gas energy; 
iii. palm oil and rubber; 
iv. wholesale & retail; 
v. financial services; 
vi. tourism; 
vii. electronics & electrical; 
viii. business services; 
ix. communication content & infrastructure; 
x. education; 
xi. agriculture; and 
xii. healthcare. 
1.23.  Similarly, ETP also identified six SRIs made up of supportive policies namely in the areas of: 
i. competition, standards and liberalization; 
ii. public finance reform; 
iii. public service delivery; 
iv. narrowing disparity; 
v. government's role in business; and 
vi. human capital development. 
1.24.  The main thrust of the SRIs is to create an efficient, competitive and business-friendly 
environment in Malaysia that will drive Malaysia's global competitiveness and attract valuable 
foreign investment. 
1.25.  The Tenth Malaysia Plan (10
th MP) with the theme "Towards Economic Prosperity and Social 
Justice" contains the new policy directions, strategies and programmes for the period WT/TPR/G/292 • Malaysia 
 
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  between 2011 and 2015. The Plan allocates a tota l of RM 230 billion for development expenditure 
for the five-year period that would enable Malaysia to emerge as a high income nation. The Plan outlined five key strategic thrusts as follows:  
i. transforming Government to transform Malaysia . The role of government will evolve to 
become an effective facilitator in the transf ormation of the economy and provide quality 
services to the rakyat (people); 
ii. create a conducive environment for unleashing economic growth; 
iii. move towards inclusive socio-economic development; 
iv. develop and retain a first-world talent base; and  
v. build an environment that enhances quality of life. 
1.26.  The government has formulated the principles of "1Malaysia, People First, Performance 
Now" concept as a way to overcome the various challenges in achieving Vision 2020, through 
collaboration with the rakyat  (people). The concept outlined three main elements which include: 
i. ensuring fairness to all as the basis of 1Malaysia; 
ii. putting people first by focusing on what they most want and need; and 
iii. ensuring performance now through transparency and accountability. 
2  TRADE POLICY DEVELOPMENTS 
2.1  Overview 
2.1.  Malaysia's trade policy continues to focus on greater integration into the world economy and 
enhancing its global position as a trading nation. Malaysia's trade policy is focused on efforts towards creating a more liberalised and fair international trading environment. While Malaysia 
continues to accord high priority to the rules-based multilateral trading system under the World 
Trade Organisation (WTO), Malaysia is also pursuing regional and bilateral trading arrangements to complement the multilateral approach. Trade polic ies are focused on both internal and external 
improvements to ensure that exports continue to  grow. Domestically, policies are geared towards 
developing high quality and innovative prod ucts, creating brand awareness and consumer 
recognition. Another major step is to diversify the product range to reduce over-reliance on 
electrical and electronic products. 
2.2.  Bilateral Trade Agreements are seen as pr oviding the means to achieve quicker and higher 
levels of liberalisation that would create effective market access to and with trading partners. Many of the bilateral trade agreements are confined to trade in goods, trade in services and 
investment matters. 
2.3.  To ensure export growth remains robust, trade policies are also focused on strengthening 
Malaysia's presence in traditional markets as well as diversifying into non-traditional export 
markets. Malaysia is actively promoting trade in new and emerging markets, such as China, India, 
Middle East, Africa and the new EU members.  With the current focus on promoting the 
development of the services sector, promotional e fforts have been intensified for the export of 
services.  
2.4.  Trade volume recorded RM 1.31 trillion (US$423.9 billion) in 2012, an increase of 3.0% 
compared with RM 1.27 trillion (US$415.6 billion) 2011. Between January to September 2013, trade volume was recorded at RM 1.01 trillion (US$320.9 billion), which was an increase of 2.4% 
compared to the same corresponding period in 2012.  
2.5.  Despite the challenges faced in 2011, expo rts increased to a new high of RM 702.6 billion 
(US$227.5 billion) from RM 697.7 billion (US$228. 1 billion) in the previous year, while imports 
reached RM 606.7 billion (US$196.4 billion) from RM  573.6 billion (US$187.5 billion). For the third WT/TPR/G/292 • Malaysia 
 
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  quarter of 2013, export decreased by 0.2% to RM 524.8 billion (US$167.3 billion) while imports 
increased by 5.5% to RM 481.5 billion (US$153.6 billion).  
Malaysia's external trade 2009–13 
Year Total exports Total imports Trade balance Total trade 
RM bil Growth 
rate % RM bil Growth 
rate % RM bil Growth 
rate % RM bil Growth 
rate % 
2009 552.52 0.0 434.67 0.0 117.85 0.0 987.19 0.0 
2010 638.82 15.6 528.83 21.7 109.99 -6.7 1,167.65 18.3 
2011 697.86 9.2 573.63 8.5 124. 24 12.9 1,271.49 8.9 
2012 702.64 0.7 606.68 5.8 95.96 -22.8 1,309.32 3.0 
2012 
(Jan-Sep) 525.61 0 456.59 0 69.02 0 982.20 0 
2013 
(Jan-Sep) 524.72 -0.2 481.50 5.5 43.21 -37.4 1,006.22 2.4 
Source:  MATRADE.  
2.6.  Malaysia trade balance increased by 12.9% in 2011, but in 2012 the trade balance registered 
a decrease of 22.8%. In the third quarter of 2013,  the trade balance showed further reduction by 
37.4% from the same corresponding period in 2012. 
2.2  Initiatives to Facilitate Trade  
2.7.  Malaysia has been active in implementing trade facilitation initiatives. Among the initiatives 
put in place are:  
National Policy for Development and Implementation of Regulations 
2.8.  The Malaysia Productivity Corporation (MPC) has introduced the National Policy for 
Development and Implementation of Regulations on July 2013. This policy will address the gaps in 
the national-regulatory infrastructure to position Malaysia to meet international best practices in regulations or Good Regulatory Practices (GRP).  Malaysia launched the policy and handbook on 
GRP, in 2013, as an effort to enhance transparency  and predictability of regulatory actions and to 
create a more conducive business climate. Moving forward, efforts to promote Regulatory Impact 
Assessment (RIA) among Ministries and Agencies are done through pilot projects.  
2.9.  Ministry of International Trade and Indu stry (MITI), National Water Services Commission 
(SPAN) and Federal Agricultural Marketing Authority (FAMA) are currently participating in the pilot project. They have been given specific training and guidance to carry out the RIA process. Results 
from these RIA pilot projects will be used as case studies to provide benchmarks, best practices 
and feedback to improve the best practice regu lation handbook and RIA application process. 
Customs modernisation 
2.10.  Customs modernisation process was carried out through a broad strategy with the aim to 
improve the effectiveness, efficiency, transparency and predictability of the customs administration 
and operation. Three main focus areas had been identified namely, capacity building, system 
development and output/outcome development. 
2.11.  Malaysia is currently engaging on a ne w project to improve her Customs transformation 
initiative in order to realise its vision to be a world class Customs administration by the year 2015. 
This will result in catering the latest development on global trading trend as well as improving declaration via the Self-certification mechanism, to balance both trade facilitation and compliance 
in line with the National Single Window (NSW) and ASEAN Single Window (ASW) aspiration. This 
project is called u-Customs.  
2.12.  The Authorised Economic Operator or AEO Programme is an initiative referring to companies 
that have fulfilled the criteria set-forth by the Royal Malaysian Customs Authority, which was 
adopted from the WCO's AEO standard criteria. Should  an operator is accredited as AEO, they are 
entitled to enjoy substantial benefits from the AEO programme such as direct release from 
Customs control for importation, exportation and movement of goods, self-assessed declaration on WT/TPR/G/292 • Malaysia 
 
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  import, export, and movement of goods periodically and deferred payment of duties/taxes via EFT. 
To date, 42 operators have been accredited as AEO and benefited from the AEO programme in Malaysia. 
Export promotion activities  
2.13.  Malaysian External Trade Development Corporation (MATRADE) is an agency under MITI 
that continues to focus on facilitating the export promotion activities of the local business sector through international trade fairs, trade missions, specialised marketing missions and 
business-matching programmes. MATRADE is also actively involved in assisting foreign companies 
to source for suppliers of Malaysian products and services, and is represented worldwide at 40 locations in major commercial cities. 
2.14.  In formulating its export promotion strategy, MATRADE took into consideration various 
factors including the global and domestic macroeco nomic trends, as well as meeting requirements 
of the national economic agenda. MATRADE also consulted industry players to create programmes 
that synergise with their strategies, in particular the selection of markets, sectors and trade 
promotion tools. 
Promotion of investments for manufacturing and services sectors  
2.15.  The Malaysian Investment Development Authority (MIDA) is the principal agency to oversee 
and drive investment into the manufacturing and services sectors in Malaysia. The wide range of 
services provided by MIDA includes providing information on the opportunities for investments, as well as facilitating companies which are looking for joint venture partners. On 18 August 2011, MIDA Act was amended in line with an expansion in its role which includes coordination of all 
investment promotion related activities of all agencies/other entities, and enhancement of its 
function as a one-stop centre for potential investors. 
2.16.  In promoting free trade and business incentives, the government has established five 
economic growth corridors to further develop Malaysia's strategic investments regions. Malaysia's 
five corridors had their very own clear and concise visions, focus and own authority to oversee the developments in their specified region. The five economic regions are: 
i. Iskandar Malaysia in Southern Johor (IRDA); 
ii. Northern Corridor Economic Region (NCER); 
iii. East Coast Economic Region (ECER); 
iv. Sabah Development Corridor (SDC); and 
v. Sarawak Corridor of Renewable Energy (SCORE). 
SME Masterplan 2012-2020 
2.17.  Small and Medium Enterprises (SMEs) consti tute 97.3% of total business establishments in 
Malaysia; the majority are in the services sector (90%), followed by manufacturing (5.9%), 
construction (3%), agriculture (1%) and mining and quarrying (0.1%). On 12 July 2012, the SME Masterplan 2012-2020 was launched. The Masterplan will adopt a new approach to SME 
development in accelerating SME growth through innovation and productivity through its various 
initiatives. 
2.18.  Successful implementation of this Masterplan  is expected to contribute to the increase in 
SMEs' contribution to GDP to 41% (2010: 32%); employment to 62% (2010: 59%); and exports 
to 25% (2010: 19%) by 2020. 
Transformation of the services sector  
2.19.  The Malaysian Services Development Council (MSDC) was established on 16 January 2007 
under the chairmanship of the Minister of Inte rnational Trade and Industry to transform the 
services sector into a globally competitive industry and spearhead the country's economic 
development. Since the services sector cuts across various Ministries, the MSDC functions as a 
platform to monitor, review, discuss and resolve i ssues impacting the development of the services 
sector, with the involvement of stakeholders from both government and industry.  WT/TPR/G/292 • Malaysia 
 
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  2.20.  With progressive liberalisation of the servic es sector, MSDC's task has expanded to include 
monitoring the implementation of the liberalised sectors with regard to regulatory coherence and mitigation of implementation problems that hinder the liberalisation process. Apart from that, the MSDC also provides strategic direction and advise s on capacity building initiatives for service 
providers, as well as promotional programmes for exports and investments in the services sector. 
Investment Committee 
2.21.  Investment Committee Meeting (ICM) established in October 2010 is co-chaired by the 
Minister of MITI and CEO of PEMANDU. The Commi ttee's main focus are to promote and facilitate 
overall investment in achieving the RM 160.3 billion annual investment targets as set out in the ETP. Apart from that, the ICM has been tasked to  monitor and ensure the economic growth target 
of 6% and private investment of 12.8% are achieved. 
PEMUDAH 
2.22.  Malaysia is proactive in facilitating business through a public-private sector special task 
force (PEMUDAH). This body identifies bottlen ecks, propose resolutions and seek timely and 
transparent ways of enhancing public sector de cision-making and service delivery, and private 
sector efficiency together with creating and sustaining a business-friendly environment in an effort to make Malaysia the globally benchmarked preferred place to do business.
3 As a result of these 
continuous engagement facilitated by PEMUDAH, in 2014 Malaysia was ranked 6th in the easiest 
place to do business globally by the World Bank Report on Doing Business. The report measured indicators on 10 areas among 189 economies in the World Bank Doing Business 2014. Malaysia 
was ranked number one for Getting Credit, number four for Protect ıng Investors and number five 
for Trading Across Borders. 
PEMANDU 
2.23.  Performance Management & Delivery Unit (PEMANDU) was formally established on the 
16 September 2009 and is a unit under the Prime Minister's Department. PEMANDU's main role 
and objective is to oversee the implementation, assess the progress, facilitate as well as support the delivery and drive the progress of the Govern ment Transformation Programme (GTP) and the 
Economic Transformation Programme (ETP). 
2.24.  The responsibility for end-to-end delivery of National Key Results Areas (NKRAs) and 
Ministerial Key Results Areas (MKRAs) outcomes rests with the respective ministries, and the success of the National Key Economic Areas (NKEAs) rests with the private sector. PEMANDU has 
been mandated to catalyse bold changes in public and private sector delivery, support the 
ministries in the delivery planning process and provide an independent view of performance and 
progress to the PM and ministers. 
2.25.  In relation to the ETP, PEMANDU has been ta sked with facilitating the implementation of the 
Entry Point Projects (EPPs) and Business Opportunities  (BOs) that have been identified to ensure 
that Malaysia is transformed into a high-income nation by 2020. To allow PEMANDU to carry out its 
responsibilities effectively, it combines the best talent from both the civil service and private 
sector.
4 
2.3  Multilateral Trading System 2.26.  As a trading nation, Malaysia is dependent on international trade and foreign investment 
and places great emphasis on the role of the WT O in ensuring that the multilateral trade system 
continues to contribute towards growth and development. Malaysia continues to participate actively at the WTO in ensuring that trade regulations and measures do not hamper trade and are 
not unduly burdensome and restrictive. Malaysia firmly believes that a rules-based multilateral 
trading system under the WTO is necessary to safeguard the interests of developing countries, as well as ensuring that world trade is conducted in an orderly manner. 
                                               
3 Viewed at: www.pemudah.gov.my/documents/10124/37722/PEMUDAH+Booklet.pdf . 
4 Viewed at: http://www.pemandu.gov.my . WT/TPR/G/292 • Malaysia 
 
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  2.27.  Malaysia will continue to push for the early conclusion of the Doha Round of negotiations as 
it offers vast benefits not only to the global trading community at large, but also in enhancing trade among developing countries. 
2.4  Development in FTAs 
Bilateral agreements 
2.28.  Since the last review, Malaysia has signed  and implemented 6 FTAs, in which 4 are bilateral 
and 2 are regional. 
2.29.  The Malaysia-Chile Free Trade Agreement (MCFTA) entered into force on 25 February 2012. 
Under the MCFTA, which is Malaysia's first FTA with a Latin American country, Malaysia and Chile undertook the first tranche of tariff reduction or  elimination at 89% and 90% of the tariff lines 
respectively upon entry into force of the Agr eement with two more tranches scheduled for 2014 
and 2016 respectively. By 1 January 2016, duties on 98%  of tariff lines will be eliminated by Chile; 
and for Malaysia, 98% of the tariff lines will be eliminated while tariff for 525 tariff lines (representing 5% from the total lines) will be reduced and capped at 5% duty by 1 January 2016. 
2.30.  Malaysia and Australia concluded negotiations on the Malaysia-Australia Free Trade 
Agreement (MAFTA) on 30 March 2012. MAFTA is a comprehensive agreement comprising 21 chapters encompassing trade in goods, services and investment as well as economic 
cooperation. It also covers intellectual property rights, e-commerce and competition policy. MAFTA 
marks another important milestone in Malaysia-Australia economic relations, complementing the already established ASEAN-Australia-New Zeal and FTA (AANZFTA). Under MAFTA, Australia 
eliminated 100% of its import tariffs upon entry into force of the agreement on 1 January 2013, 
while Malaysia will progressively reduce or eliminate import tariffs on 99% of its tariff lines 
by 2020.  
2.31.  Malaysia and India established the Malaysia-India Comprehensive Economic Cooperation 
Agreement (MICECA) on 24 September 2010 and subsequently the agreement came into force on 
1 July 2011. MICECA is a comprehensive agreement that covers trade in goods, trade in services, investments and movement of natural persons . Both the MICECA on Goods and Services have 
gone through the examination process under the Committee on Trade and Development on 
16 September 2013 and Committee on Regional Trad e Agreements (CRTA) of the WTO on 16 and 
17 September 2013 respectively. 
2.32.  Malaysia and New Zealand concluded a bilateral FTA (MNZFTA) on 30 May 2009. The 
agreement was signed on 26 October 2009 and ente red into force on 1 August 2010. MNZFTA is a 
comprehensive agreement covering trade in goods, services, investment and economic 
cooperation. Under the agreement, New Zealand will liberalise all of its 7,288 tariff lines (100% of 
total tariff lines) via full elimination by 2016 while Malaysia offers to progressively reduce and 
eliminate tariff on 10,293 tariff lines (or 98.8% of total tariff lines) by 2016. MNZFTA also addresses non-tariff measures, in particular tec hnical barriers, including stringent SPS measures. 
The MNZFTA has gone through the examination process of the CRTA of the WTO on 
10 September 2012. 
2.33.  Malaysia is also in the midst of negotiating the Malaysia-Turkey Free Trade Agreement 
(MTFTA) and Malaysia-European Free Trade Agreement (MEUFTA). The MTFTA negotiations were 
launched on 31 May 2010 and cover market access and cooperation chapters. The MEUFTA 
negotiations which commenced on 6 Dec 2010 is a comprehensive FTA covering 13 working groups which include market access for goods, services, investment, competition policy, intellectual 
property rights, government procurement as well as sustainable development issues covering 
labour and environment.  
Regional trade agreement 
2.34.  Malaysia continued to benefit from its membership in the Association of South East Asian 
Nations (ASEAN). The ASEAN Free Trade Area (AFTA) is now in place with ASEAN Member States reducing and eliminating intra-regional tariffs through the Common Effective Preferential Tariff WT/TPR/G/292 • Malaysia 
 
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  (CEPT) Scheme for AFTA. The CEPT Agreement has been superseded by the ASEAN Trade in Goods 
Agreement (ATIGA) which entered into force on 17 May 2010. 
2.35.  The new Agreement sets out strict disciplines in implementing the commitments and 
obligations in ASEAN towards elimination and reduction of import duties and removal of Non-Tariff 
Barriers (NTBs). The Agreement also provides for enhanced transparency in the concessions 
granted and a strong legal framework that will enable ASEAN to realise the free flow of goods in the region, with a view to establishing a single market and production base by 2015. 
2.36.  On the external front ASEAN has been strengthening ties with all its FTA partners namely the 
US, Russian Federation, the EU, Korea and China. Work is on-going to review the ASEAN-Korea FTA and ASEAN-China FTA to take into consideration acceleration of tariff reduction and elimination on products placed in the sensitive tracks. 
2.37.  Economic relations between ASEAN and the EU  were further intensified and strengthened with 
the launch of ASEAN-EU FTA in May 2007. A Joint Committee comprising senior officials was established to work on the modalities, work programme and timelines for the FTA. Six Expert 
Groups were set up for Services and Establishment/ Investment, Rules of Origin, Sanitary and 
Phytosanitary (SPS) Measures, Technical Barriers to Trade (TBT), Customs and Trade Facilitation, 
and Dispute Settlement. 
2.38.  ASEAN-Australia-New Zealand (AANZFTA) came into force on 1 January 2010 to enhance 
awareness among the business communities of the two regions. It is a comprehensive and single-understanding economic agreement that opens up and creates new opportunities for the 600 million people of ASEAN, Australia and New Zealand which have a combined economic output 
of US$2.65 trillion via a platform of a more liberal , facilitative and transparent market access and 
investment policies among the signatories to the Agreement.
5 
2.39.  ASEAN and The People's Republic of China (PRC) signed the Second Protocol to Amend the 
Agreement on Trade in Goods of the Framew ork Agreement on Comprehensive Economic 
Cooperation between ASEAN and China at the 17th ASEAN Summit in October 2010. Many 
Capacity-building initiatives were implemented under the ASEAN-China Cooperation Fund such as 
the Forum on SME Development. ASEAN and the PRC are working towards simplifying customs 
procedures, and enhanced cooperation in inspection and quarantine technical standards. 
2.40.  The 13th ASEAN-Korea Summit in Hanoi in October 2010 adopted the new Plan of Action to 
Implement ASEAN-Korea Strategic Partnership for Peace and Prosperity 2011–2015. The Summit 
also renewed its commitment to increase the two-way trade to US$150 billion by 2015 with full 
implementation of the ASEAN-Korea FTA (AKFTA) in 2010. An MoU between the Government of Malaysia (MITI) and ROK (Korea Customs Service) on Governing Mutual Administrative Assistance 
and Cooperation in Origin Certification and Verification under the Agreement on Trade in Goods 
was signed on 15 November 2010. 
2.41.  The Second ASEAN-Russia Summit adopted the Joint Statement in October 2010 to deepen 
and strengthen the dialogue mechanism between ASEAN and Russia. The Leaders have tasked the 
ASEAN and Russian Economic Ministers and officials with developing a comprehensive economic cooperation roadmap to enhance ASEAN-Russia c ooperation in industry, SME development, R&D 
and private sector engagement. 
2.42.  One of the key initiatives pursued in 2010 was the ASEAN Economic Ministers mission to 
Seattle and Washington, USA from 3 to 8 May 2010. The mission was successful in raising the profile of the region among political and business leaders and research institutions in the USA. 
ASEAN Ministers met with several key leaders including the United States Trade Representative. 
Several areas of collaboration were identified including trade facilitation, trade and finance, collaboration between EXIM Banks in ASEAN and the USA, and a Government-business dialogue. 
Besides the mission to the USA, the ASEAN Economic Ministers also met with business leaders 
from U.S.-ASEAN Business Council in Danang, Viet Nam in August 2010. The Export and Import Bank of the United States signed a co-operation  MoU with the chambers of commerce and industry 
of Malaysia, the Philippines and Singapore. 
                                               
5 Viewed at: http://aanzfta.asean.org/ . WT/TPR/G/292 • Malaysia 
 
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  2.43.   The ASEAN and India Services Agreement and ASEAN India Investment Agreement have 
been concluded and w ill enter into force on 1 July 2014. Howeve r, negotiations are still on-going to 
complete the ASEAN-JAPAN Services and Investments chapters for incorporation into the ASEAN-Japan Comprehensive Economic Partnership Agreement. 
2.44.   Meetings for Regional Comprehensive Econ omic Partnership (RCEP) were held on May and 
September 2013. Three Working Groups on Goods, Services and Investments have been finalised with the third meeting is to be held in Malaysia on January 2014 to discuss on ROO, IPR, 
competition policy and other sub-workin g groups on Customs, SPS and TBT. 
Multilateral 
2.45.  Malaysia is among the 12 negotiating countries involved in the Trans-Pacific Partnership 
(TPP) negotiations. The other 11 countries are Au stralia, Brunei Darussalam, Canada, Chile, Japan, 
Mexico, New Zealand, Peru, Singapore, United States and Viet Nam. Malaysia joined the 
negotiations at the 3rd round on 5 October 2010.  
2.46.  The Government views TPP as an important initiative to expand market access 
opportunities, enhance Malaysia's competitive advantage, build investors' confidence through 
providing predictable and transparent investment regime to foreign investments and build capacity through the Agreement. The TPP will also allow Malaysia to be an integral part of the deepening 
economic integration taking place within the Asia Pacific region that would enable Malaysia to 
engage in a more concrete way with trading partners such as the United States, Canada, Mexico and Peru, with which Malaysia have yet to have  any structured framework of trade agreements. 
2.47.  In the long run, the TPP will bring benefits of lower cost of goods and more efficient 
production by taking advantage of the compet ition and economies of scale. The successful 
conclusion of the TPP will form an unprecedente d market of 793 million people, with a combined 
GDP of US$27.5 trillion. This far surpasses the limit ed domestic market of 29.5 million people and 
a GDP of US$300 billion in Malaysia. With the TPP, Malaysia aims to open up new market 
opportunities and horizons for Malaysians to go on the offensive and take advantage of the international market place. 
2.5  ASEAN  
ASEAN Economic Community (AEC) 
2.48.  On regional integration, the priority for Malaysia and the other ASEAN Member States has 
been to continue with the implementation of the ASEAN Economic Community (AEC) Blueprint 
measures aimed at creating a highly integrated and competitive region. Since its implementation 
in 2008 up to July 2013, ASEAN has collectively implemented 79.5% of the AEC measures. Over the same period, Malaysia has achieved an implementation rate of 88% of the 331 AEC measures. 
ASEAN member States are exerting efforts to implement all the measures by 2015. 
2.49.  The key challenges faced in implementing the outstanding AEC measures are the timely 
ratification of ASEAN agreements/protocols which affect their entry into force, alignment of 
regional initiatives to domestic laws and regulations and domestic constraints in the 
implementation of regional and country-specific commitments. 
2.50.  Malaysia will Chair the ASEAN Summit in 2015, the year the AEC will be realised. Hence, 
Malaysia's Chairmanship is critical in ensuring the priority initiatives for the AEC are in place and 
that economic integration will be seamlessly continued beyond 2015. Towards this end, ASEAN has 
recently commissioned two studies, one jointly by East Asia Economic Research Institute (ERIA) and Rajaratnam School of International Studies (RSIS) and another from Institute of South East 
Asian Studies (ISEAS) to propose potential frameworks for deepening integration in the future. The 
recommendations will build upon current  deliverables in the AEC Blueprint. 
ASEAN connectivity 
2.51.  Malaysia has been in the forefront in advocating that ASEAN expedite work towards 
identifying and removing NTBs. The initiatives taken include re-alignment of the ASEAN NTMs WT/TPR/G/292 • Malaysia 
 
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  database with the new UNCTAD classification and the establishment of an interagency body at the 
national level in each ASEAN Member State. 
2.52.  Besides removing NTBs related to trade in  goods, ASEAN is also working towards removing 
barriers and restrictions in trade in services. This liberalisation initiative is undertaken 
progressively under the ASEAN Framework Agreement in Services (AFAS) in ten packages starting 
from the First Package in 1995. The liberalisation covers 128 services sub-sectors, which includes air transport, financial services, transport and logistics, business sector, construction, tourism, 
recreational facilities, hotels theme parks, restaurants, retail and wholesale distributive trade, 
healthcare, private hospitals and medical care and consulting services. So far, ASEAN has implemented eight packages altogether, and the last two packages to be completed by 2013 
and 2015 respectively. Under the 8
th AFAS Package, signed by ASEAN Economic Ministers 
in October 2010, Malaysia has offered 96 sub-sectors. In addition, ASEAN has also signed 
7 mutual recognition arrangements in engineerin g, accountancy, architect, surveying, dental, 
nursing and medical care to complement the liberalisation initiative by further facilitating the 
movement of professionals in the services sector. 
2.53.  Malaysia, together with other ASEAN members, has been continuously exerting efforts to 
operationalize the ASEAN Single Window (ASW) for speedier Customs clearance. Malaysia together 
with 6 other ASEAN countries have successfully  tested the ASW Gateway connectivity for the 
exchange of ATIGA Form D and ACDD using test da ta and progress are made to establish the legal 
framework for implementation of the ASW. 
2.6  Asia Pacific Economic Cooperation  
2.54.  Malaysia continues to participate actively in APEC activities in order to strengthen its trade 
and investment linkages, as well as technical and economic cooperation. In 2012, APEC accounted for 76.3% of Malaysia's total trade. 77% of Malaysia's total exports went to APEC economies and 
75.5% of Malaysia's total imports were from APEC  economies. In terms of FDI contribution, APEC 
contributed 51.3% of Malaysia's FDI. In the manuf acturing sector alone, FDI from APEC economies 
amounted to RM 9.9 billion or 47.4% of total investments in 2012. 
2.55.  Through collaboration with APEC economies, Malaysia seeks to facilitate trade, investment 
and reduce the cost of doing business. Among the measures adopted are reduction in tariffs and NTBs, simplifying business regulations, making information on measures affecting business operations in services trade more easily accessible through business-friendly databases, further 
enhancing business travellers' mobility through th e APEC Business Travel Card (ABTC) scheme, as 
well as enhancing supply chain connectivity across the border by improving logistics and transport networks. Key initiatives in the area of trade facilitation to address supply chain issues include the 
operationalization of the Authorised Economic Operator (AEO) and undertaking Time Release 
Study (TRS) to improve the performance of the logistics supply chain. 
2.56.  To further improve the business environment, APEC has identified priority areas for 
regulatory reforms based on the World Bank Ease of Doing Business indicators. These include 
starting a business, access to credit, trading across borders, enforcing contracts and dealing with permits. Malaysia also participated actively in the finalization of the Environmental Goods List and is committed to implementing the commitmen t by 2015. In addition, in 2013, Malaysia 
participated actively to improve the investment climate and facilitate public-private partnerships in 
infrastructure development and investment in the Asia Pacific.  
3  SECTORAL POLICIES 
3.1  Manufacturing Sector  
3.1.  During the review period, the manufacturing sector continued to remain as one of the major 
contributors to economic growth. However, after decades of being Malaysia's primary growth 
engine, the manufacturing sector is undergoing tr ansformation and restructuring. The country is 
moving from resource-based economy to high technology, knowledge-based and capital-intensive industries such as medical devices and green technologies. ETP has identified manufacturing-related NKEAs that require focused development and support. It aims to build up 
higher value-added subsectors such as LED lighti ng, solar panels and generic drug manufacturing. WT/TPR/G/292 • Malaysia 
 
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  3.2.  The external environment continued to be affected by global economic uncertainty in 2012, 
dampening demand for manufacturing products. Factors such as the sovereign debt crisis in Europe, the US fiscal cliff and the stagnant economy in Japan had an impact on the export performance of manufactured goods. Despite thes e challenges, the manufacturing sector grew 
steadily at 4.8% in 2012, a significant increase from 0.8% in 2008. Manufacturing contributed 
24.9% to GDP growth in 2012, making it the second largest contributor after services. 
3.3.  As Malaysia transforms itself into a high income nation, focus is on promoting quality 
investments. Due to global uncertainty in 2012, most sub-sectors registered a decrease in 
investments, particularly transport equipment, ch emicals and chemical products and petrochemical 
products. MIDA approved a total of 804 manufacturi ng projects valued at RM 41 billion in 2012 
compared with 919 manufacturing projects with investments of RM 62.8 billion in 2008. Of this 
total, RM 20.8 billion were from foreign investme nts, while RM 20.2 billion were investments from 
domestic sources. Malaysia's manufacturing sector growth is projected to reach 4.9% in 2013 as global demands pick up. Emphasis will be given to promoting both domestic and foreign 
investment.  
3.4.  The Government is committed to transform th e automotive industry in Malaysia to become 
the production hub in the ASEAN region by 2020. A review of the National Automotive Policy (NAP) 
is being undertaken to enhance the policies and measures in meeting the objectives set in the 
NAP 2006 and NAP Review 2009 as well as to prepare the local industry towards meeting the latest challenges and requirement of the global automotive industry.  
3.2  Agriculture Sector  
3.5.  Malaysia has identified agriculture sector as one of NKEA under ETP.
6 This sector emphasises 
on providing rural employment, uplifting rural incomes and ensuring national food security.7 
3.6.  Under this programme, the Government envisi ons a transformation of agriculture sector from 
fragmented and small scale farms to integrated, clustered and large scale agribusiness, production 
centric to market driven and low to higher va lue add products by 2020. In 2012, the agriculture 
sector contributed 7.3% or RM 54.8 billion to GDP. 
3.7.  The 10 year National Agrofood Policy  was approved by the Malaysian Cabinet on 
28 September 2011 and was launched on 14 January 2012. It focuses on improving the efficiency of agro-food industries along the value chain. There are 7 strategies outlined under the NAP: 
i. ensuring national food security; 
ii. increase the contribution of agro food industry; 
iii. completing the value chain; 
iv. empowering human capital; 
v. strengthen the activities of R&D, innovation and the use of technology; 
vi. creating the environment for private sectors led businesses; and 
vii. strengthening the delivery system. 
3.8.  The NAP also emphasised on food safety and nutrition by implementing Good Agricultural 
Practices (GAP), Good Manufacturing Practices (GMP), Hazard Analysis and Critical Control Points (HACCP). This implementation will be grad ually expanded to all Permanent Food Production 
Parks and Aquaculture Industrial Zone before extending to other commercial farms.  
3.9.  The Malaysian Quarantine Inspection Services (MAQIS) was established in 2011 under the 
Ministry of Agriculture and Agro-Based Industry as a Department to provide integrated services 
relating to quarantine, inspection and enforcement at entry points, quarantine station, quarantine 
premises and certification for the import and export of plants, animals, carcasses, fish, agricultural 
                                               
6 National Key Economic Area. Viewed at: www.moa.gov.my/web/guest.nkea-sektor-pertanian . 
7 Economic Transformation Programme: A Roadmap For Malaysia- Chapter 15 pg.513. WT/TPR/G/292 • Malaysia 
 
- 15 - 
 
  produce, soil and microorganism including inspecti on of and enforcement relating to food and for 
matters related to it. MAQIS aims to: 
i. ensure that the Nation agriculture indu stry is free from pest, diseases and 
contaminations towards plants, animals, and fish by quarantine activities, inspection and 
a more effective enforcement; 
ii. ensure that plants, animals, carcasses, fish , agricultural products, soils, microorganism 
and food that are imported to and exported from Malaysia comply with the health 
aspects of human, animals, plants and fish and food safety by written enforcement laws 
that are related to entry points, quarantine stations and quarantine premises; 
iii. assist exporters in issues pertaining to market access and to comply with the 
requirements of the importing country through integrated services; and  
iv. improve the delivery service to customers by using more efficient and integrated 
sources.8 
3.10.  Halal Industry Development Corporation (HDC) which was set up on 18 September 2006 
has been tasked to further boost the Halal agenda in terms of standards development, branding 
enhancement as well as commercial and industry development. The Department of Islamic Development Malaysia (JAKIM) has developed the Malaysian Protocol for the Halal Meat and 
Poultry Productions as a clear guidance in the produc tion of halal meat and poultry. The protocol is 
intended to support the implementation of Malaysia's requirements for halal meat, poultry and their products. This protocol is applicable to all establishments producing halal meat, poultry and their products including those intending to export to Malaysia under the Animal Act 1953 
(reviewed 2006). 
3.3  Services Sector  Autonomous liberalisation  
3.11.  During the period under review, the services sector continued to be the main contributor to 
the GDP. In 2010, the services sector remained the largest contributor to Gross Domestic Product (GDP) with a share of 53.2%. Non-government services contributed 46% to GDP, while 
government services contributed 7.2%. Total investment in the services sector was valued at 
RM 36.74 billion for 2010 while trade in services wa s recorded at RM 207.2 billion. The GDP share 
for services sector in 2011 and 2012 were 54.1% and 54.6% respectively. In 2013, the GDP for services sector was 54.9% (Jan-Jun). Total investment in the services sector was valued at 
RM 70.40 billion in 2011 and RM 122.91 billion in 2012 while in 2013 (Jan-Jun), it was valued at 
RM 58.1 billion. Trade in services was recorded at RM 227.5 billion (2011), RM 248.0 (2012) and 
RM 127.7 (Jan-Jun 2013). 
3.12.  On 7 October 2011, in the 2012 Budget Speech, the Government announced further 
liberalisation of 18 service sub-sectors in 2012, with the aim of attracting foreign investment. This initiative is an addition to the 27 services sub- sectors that were autonomously liberalised in 2009 
and reported in the previous review. These 18 su b-sectors included courier services, technical and 
vocational secondary education services, technical and vocational secondary education services for 
students with special needs, skills training services, departmental stores and speciality stores, incineration services and accounting and taxation services. These services sub-sectors were 
identified as having high economic impact that support and serve as enablers to Malaysia's 
Economic Transformation Programme. 
3.13.  Additionally, this initiative would also contribute to creating a dynamic and competitive 
business environment, particularly for services sub-sectors that act as the main enablers for a 
sustained economic growth. With the liberalisation of  this second tranche of services sectors, the 
Government envisages stronger growth in the key sectors through expansion or collaboration 
between local and foreign services suppliers. This will in turn promote a competitive and conducive 
environment for local service providers to gain knowledge and expertise while tapping into the 
                                               
8 Viewed at: http://www.maqis.gov.my/ . WT/TPR/G/292 • Malaysia 
 
- 16 - 
 
  latest technological development and know-how through exposure and synergistic collaboration 
with their foreign partners or service suppliers. 
3.14.  To complement the liberalisation initiatives, the Government undertook reviews of domestic 
laws and regulations governing the sub-sectors such that they are coherent and streamlined and 
contribute towards smooth implementation of the liberalisation objective. The government also 
conducted regular, capacity building programmes for services providers, as well as export and investment information sharing sessions to stakeholders and undertook continuous improvements 
on services data collection and analysis.  
Financial services sector  
Banking and insurance sector 3.15.  The Malaysian financial sector continues to remain resilient with domestic financial stability 
preserved since the last review. The introduction of the Financial Services Act 2013 (FSA) and the 
Islamic Financial Services Act 2013 (IFSA) which came into force in June 2013 together with related amendments made to the Central Bank of Malaysia Act 2009 in 2013 have further 
strengthened the regulatory and supervisory framework for the financial system in Malaysia. The 
new legislations also provide greater clarity and transparency in the implementation and 
administration of the law; a clear focus on Shariah  compliance and governance in the Islamic 
financial sector, strengthened business conduct an d consumer protection requirements as well as 
strengthened provisions for effective and early supervisory intervention.  
3.16.  The Financial Sector Bluerprint 2011-2020 (Blueprint) builds on the achievement of the 
previous Financial Sector Master Plan (FSMP), where the Blueprint moves beyond the sector-based 
approach in the FSMP, to a more integrated approach that reflects a financial sector that has 
increasing linkages between the various sub-sectors in the financial system. The Blueprint envisages a more significant role of the participants in the financial system towards realizing the 
vision of a more competitive, dynamic, inclusive, diversified and integrated financial system. There 
are nine focus areas under the Blueprint to further advance financial sector development while ensuring financial stability is preserved at all times; (i) effective intermediation for a high 
value-added, high income economy; (ii) develo pment of deep and dynamic financial markets; 
(iii) financial inclusion for greater shared prosperity; (iv) strengthening regional and international financial integration; (v) internationalization of Islamic finance; (vi) enhancing regulatory and supervisory regime to safeguard the stability of the financial system; (vii) electronic payments for 
greater economic efficiency; (viii) empowering consumers; and (ix) talent development for the 
financial sector. 
3.17.   Since the last review, progressive liberalisation of the domestic financial sector has also 
contributed to the further diversification of the financial system, with growing foreign presence in 
the banking , insurance and takaful  sector. As of October 2013, out of 43 commercial banks (both 
conventional and Islamic), 25 banks are fu lly foreign-owned. In the insurance and takaful  sector, 
22 out of 55 institutions are foreign owned. Moving forward, as outlined in the Blueprint and as 
legislated in the FSA 2013 and IFSA 2013, policies on foreign investments in the financial sector through the issuance of new licenses or the acquisition of equity interests in Malaysia will be guided by two key considerations, namely prudential criteria and the "best interest of Malaysia 
criteria."  
Capital market sector 
3.18.  Guided by the first Capital Market Masterplan (CMP 1), Malaysia has liberalised its capital 
market over the past decade through facilitating international fund-raising, listings, participation, 
access and investments abroad. Under the Capital Market Masterplan 2 (CMP 2) which was 
launched in April 2011, the future growth of Malaysia 's capital market will increasingly be shaped 
by internationalisation strategies aimed at maximising international participation and 
strengthening the ability to build scale and take advantage of business opportunities.  
3.19.  CMP 2 forms part of the collective and coordinated efforts to invigorate the Malaysian 
economy through expanding the role of the capital market in financing the country's development. 
The growth strategies as outlined in CMP 2 are intended to create a conducive environment to WT/TPR/G/292 • Malaysia 
 
- 17 - 
 
  foster a more diverse and innovative intermed iation environment and to nurture new growth 
opportunities. CMP 2 also outlines governance strate gies to ensure robust regulatory oversight and 
active shareholder participation to enhance confidence in the integrity and soundness of Malaysia's 
capital market. In tandem with the growth object ives, CMP 2 provides equal emphasis to achieving 
governance objectives to ensure Malaysia's capital market continues to be well-regulated with 
participants strengthening their capabilities and professional standards and exercising a strong 
sense of responsibility towards the interest of their customers. 
3.20.  The Security Commission (SC) is cont inuously working to strengthen cross-border 
transactions with other jurisdictions. Amongst others, several key initiatives have been undertaken 
under the ASEAN Capital Markets Forum (ACMF) as part of the regional capital market integration 
plan, which was endorsed by the ASEAN Finance Ministers in 2009.  
3.21.  Foreign equity participation in the capital market continues to be further liberalised under 
CMP 2. In 2011, the SC had fully liberalised restriction on foreign ownership in stockbroking 
companies. With this latest liberalisation measure, all existing foreign equity restrictions in the 
capital market have been lifted with the exception of unit trust management companies which 
remained at 70% and credit rating agencies at 49%.  
3.22.  Since the 1997 financial crisis, corporate governance reform has been a priority and 
continues to be a priority for Malaysia. This is evidenced by the fact that corporate governance 
continues to feature prominently in CMP 2, as it forms part of the governance strategies that were 
outlined therein. The CMP 2 recommends that the e ffectiveness of corporate governance regulation 
be strengthened through broad-based approaches to promote greater stewardship, more active 
shareholder participation and strengthen gate-keeping accountabilities. 
3.23.  The SC released the Corporate Governance  Blueprint (Blueprint), a five-year plan which 
seeks to further improve corporate governance standards in Malaysia. The Blueprint is aimed at 
strengthening self and market discipline, and promoting the internalisation of corporate 
governance culture. Subsequently, the Malaysian Code on Corporate Governance 2012 was 
introduced, which marked the first major deliverable following the Blueprint.  
3.24.  In the Corporate Governance Watch 2012 Repo rt, Malaysia has improved its ranking in the 
Asia-Pacific region by advancing to the fourth spot, two notches up from the sixth position it held 
in 2010. The Report is the result of a survey  undertaken by the Asian Corporate Governance 
Association in collaboration with CLSA Asia-Pac ific Markets (ACGA-CLSA). The biennial Corporate 
Governance Watch reports on the corporate governance landscape of 11 Asian nations since 2000. 
3.25.  The report attributed Malaysia's improvem ent in corporate governance ranking to amongst 
others, the publication of the 5-year Malaysian Corporate Governance Blueprint 2011 and the fact 
that Malaysia is one of the few markets in Asia that undertook a major overhaul of its code of 
corporate governance, bringing the standards expected of boards of directors in line with 
international standards. The report also marked an improvement in terms of corporate governance 
culture in Malaysia, and observed that companies seem to be taking more interest in improving 
corporate governance practices, and in contrast to two years ago (2010), it is companies rather 
than the government that seem to be making more of a difference in the country's corporate 
governance landscape.  
3.26.  CMP 2 will continue to guide the development of Malaysia's capital market for the next ten 
years following the conclusion of CMP 1 while addressing the challenges of this decade and 
transforming the competitive dynamics of the capital market.  
4  OTHER DOMESTIC POLICIES 
4.1  Competition Act 2010 4.1.  The Competition Act 2010 (CA 2010) is in line  with the Prime Minister's 2010 unveiling of the 
New Economic Model, which aims to double Malaysia's per capita income by 2020 through the 
utilisation of eight Strategic Reform Initiatives (SRIs), one of which being competition.  WT/TPR/G/292 • Malaysia 
 
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  4.2.  The Competition Act 2010 is enforced by the Malaysia Competition Commission (MyCC) and 
has been in force since 1 January 2012. The Act provides a regulatory framework against market manipulation and cartel practices. The Act is in tended to promote a competitive environment and 
give foreign investors more confidence in the country's business practices. 
4.3.  The CA 2010 regulates commercial activities within or outside Malaysia, which have an effect 
on competition in any market in Malaysia through the prohibition of anti-competitive agreements and the prohibition of the abuse of a dominant market position.  
4.4.  Activities not covered by the Competition Act 2010 are : 
i. activities which involve an exerci se of governmental authority; 
ii. activities carried out pursuant to the principle of solidarity; and 
iii. purchasing of goods or services not intended for resale or re-supplying. 
4.5.  Commercial activities regulated under the Communications and Multimedia Act 1998 and the 
Energy Commission Act 2001, however, is not subject to the Act. 
4.6.  Enterprises found to have infringed the prohibitions of the CA 2010 may be subject to 
financial penalties of up to 10% of the enterprise 's worldwide turnover for the period during which 
the infringement occurred. 
4.2  Strategic Trade Act 2010  
4.7.  The Strategic Trade Act (STA) 2010 was approved in June 2010.  The enactment of STA is in 
tandem with Malaysia's commitment to implement the United Nations Security Council Resolution 1540 (UNSCR 1540). The Act aims to curb the proliferation of weapons of mass 
destruction (WMD) through control over exports, tr ansits, transhipments and brokering of strategic 
items.  Malaysia is the second country in ASEAN to have a comprehensive export control law in 
place. 
4.8.  The Strategic Trade Secretariat (STS) was established in MITI as the focal point for the 
implementation of the STA 2010. During the initia l stage of its implementation, the efforts were 
focused on conducting awareness programmes to major exporters and industry associations through seminars, workshops, briefings as well as via traditional mass media and internet. The 
programmes are still on going and have now become more specific to assist traders in 
understanding the applicability of the STA 2010 and to  facilitate the industry to comply with the 
Act. 
4.9.  The on-line permit application system has been introduced to keep abreast with the rapid 
charging business environment and to provide ea sier access and sharing of data by the Royal 
Malaysian Customs via the Customs Information System. The Secretariat also interacts and consults with the enforcement and other relevant Government agencies frequently to ensure that 
the STA 2010 is implemented in a consistent and transparent manner. It is a commitment of the 
Secretariat to facilitate trade without compromising  on the responsibility of the trading community 
and the authorities to safe and secure trade. 
5  WAY FORWARD 
5.1.  The Government of Malaysia will continue its commitment to give full efforts and strength 
towards achieving a high-income advanced economy by 2020. This will be translated by the strategic thrusts which have designated under the 10
th MP to realise the targets. In 2014, the 
Malaysian economy is expected to improve supported by robust domestic demand and positive 
improvements in external sector as the export pr oducts is expected to be more competitive. The 
Government will continue to further strengthen the economic and trade integration through 
liberalisation on the multilateral, regional and bilateral levels, while the private sectors will 
continue to spearhead growth. WT/TPR/G/292 • Malaysia 
 
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  5.2.  Firms will also be encouraged to adop t and comply with international standards and 
requirements on quality, safety and environment to improve market access for their products and services.  
5.3.  Whilst strengthening the multilateral tradin g system and further liberalising trade through 
multilateral negotiations, the Government of Malaysia is also actively pursuing regional and 
bilateral trade policies to achieve additional trade liberalisation through FTAs with its main trading partners. For those regional and bilateral FTAs that are under negotiations, the Government will 
make best effort to conclude them in due course as targeted by all parties. 
5.4.  By taking into account the global and region al developments, the Government of Malaysia will 
be undertaking the ecosystem approach to promote the development of the services sector as the 
next engine of growth and accelerating the shift to high value-added, high technology, knowledge-
intensive and innovation-based industry. The manufac turing sector will continue to remain as one 
of the leading contributor to growth. WT/TPR/G/292 • Malaysia 
 
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  ANNEX 
Malaysia's five economic growth corridors 
Corridors Iskandar 
Malaysia NCER ECER SDC SCORE 
Authority Iskandar 
Region Development Authority (IRDA) Northern 
Corridor Implementation Authority (NCIA) East Coast 
Economic Region Development Council 
(ECERDC) Sabah 
Economic Development and Investment 
Authority 
(SEDIA) Regional 
Corridor Development Authority (RECODA) 
Location/areas 
of coverage  State of Johor, 
Southern 
Peninsular 
Malaysia States of Perlis, 
Kedah, Penang 
and Northern 
Perak States of 
Kelantan, 
Terengganu 
and Pahang, 
as well as the 
district of 
Mersing in 
Johor Sabah Sarawak 
Focused 
sector/industry  Education 
Financial 
Healthcare ICT & creative industries Logistics Tourism Agriculture 
Human capital 
Development Infrastructure Manufacturing Tourism Agriculture 
Education 
Manufacturing Oil & gas Petrochemical Tourism Agriculture 
Green 
Technology Human capital Infrastructure Manufacturing Tourism Aluminum 
Glass 
Marine Engineering Metal-based Oil & gas Timber-based 
Tourism 
Aquaculture Livestock Palm oil Tourism 
Factsheet of Malaysia 
 Jan – Sep 
2013 2012 2011 2010 
Population (mil) Citizens 
Bumiputera Chinese Indians 
Others 
Non-citizens 29.7 
27.3 18.5 
6.6 2.0 
0.3 
2.4 29.3 
27.0 18.2 
6.5 2.0 
0.2 
2.4 29.0 
26.6 18.0 
6.5 1.9 
0.2 
2.3 28.6 
26.3 17.7 
6.4 1.9 
0.2 
2.3 
Population growth (%) 1.3 1.3 1.3 1.8 
Labour Force (mil) (as at Aug 2013) 14.1 13.1 12.7 12.3 
Unemployment rate (%) (as at 
Aug 2013) 3.1 3.0 3.1 3.3 
Employment by sector (%)(as at Q2 2013) 
Services Manufacturing Agriculture Construction 
Mining & quarrying  
 
60.4 16.5 13.0 
9.5 
0.6  
 
60.1 17.5 12.6 
9.1 
0.6  
 
60.6 18.1 11.5 
9.2 
0.6  
 
59.1 17.7 13.6 
9.1 
0.5 
Consumer Price Index (%)  
Malaysia 
Peninsular Malaysia 
Sabah 
Sarawak  
1.8 
1.8 
1.9 
1.5  
1.6 
1.6 
1.7 
1.8  
3.2 
3.3 
4.7 
2.6  
1.7 
1.8 
1.6 
1.5 WT/TPR/G/292 • Malaysia 
 
- 21 - 
 
   Jan – Sep 
2013 2012 2011 2010 
Industrial Production Index 
(2005=100) 
Overall 
Mining Manufacturing Electricity  
 
114.7 
88.6 
125.2 136.5  
 
112.9 
88.3 
123.1 129.9  
 
108.6 
87.5 
117.4 123.6  
 
107.1 
93.9 
112.2 121.2 
External trade (RM bil) 
Export 
Import 
Total Trade 
Trade Balance  
524.7 
481.5 
1,006.2 
43.2  
702.2 
607.4 
1,309.6 
94.8  
694.5 
574.2 
1,268.8 
120.3  
638.8 
528.8 
1,167.7 
110.0 
Balance of payment (RM bil) – (Net) Current account 
Goods 
Services 
Income Transfer Capital  
21.1 
69.1 
-11.3 
-25.3 -11.5 
0.0  
57.3 
125.6 
-14.0 
-36.0 -18.2 
0.1  
97.9 
149.4 
-8.4 
-22.0 -21.1 
-0.2  
88.1 
134.7 
1.7 
-26.5 -21.8 
-0.2 
Financial account -5.3 -23.0 23.3 -19.8 
Overall balance 17.3 3.9 31.0 -0.8 
Gross domestic product (GDP)  
GDP in current prices (RM bil) 
Agriculture 
Mining & quarrying 
Manufacturing 
Construction 
Services 
Plus import duties  
719.0 
66.4 
71.8 
172.0 
30.1 
370.6 
8.0  
931.5 
94.8 
97.7 
228.0 
34.9 
473.0 
10.2  
852.7 
103.0 
103.7 
220.7 
26.9 
411.5 
8.7  
766.0 
81.1 
100.0 
200.0 
24.8 
374.0 
7.6 
Real GDP growth rate (%) (as at Q3 2013) 
Agriculture 
Mining & quarrying 
Manufacturing Construction Services 4.3 
 
2.1 
1.7 
4.2 
10.1 
5.9 5.6 
 
1.0 
1.4 
4.8 
18.1 
6.4 5.1 
 
5.8 
-5.5 
4.7 4.7 7.0 7.4 
 
2.4 
-0.3 
11.9 11.4 
7.4 
International reserves (RM bil) (as 
at Sep 2013) 
Reserves to GDP Ratio (%) 
Reserves as month of retained imports 
(as at 31 Oct 2013) 444.5 
 
45.0 
9.7 427.2 
 
45.4 
9.5 423.4 
 
47.9 
9.6 328.6 
 
41.2 
8.6 
Total External Debt (RM bil) (as at Q2 2013) 
Medium & long term 
Short term 
Debt service ratio (%) 306.6 
 
186.3 
120.3 
10.4 252.8 
 
159.8 
93.0 
10.1 257.4 
 
153.6 
103.8 
10.4 227.1 
 
147.7 
79.4 
7.5 
Banking institutions (RM bil) (as at 
Sep 2013) 
Total deposit 
Total loans  
 
1,493.9 
1,191.4  
 
1,408.30 
1,108.00  
 
1,300.4 
1,003.5  
 
1,140.8 
883.6 
Commercial banks interest rates (%) (as at Sep 2013) 
Saving deposits BLR  
 
1.01 6.53  
 
1.03 6.53  
 
1.15 6.53  
 
0.94 6.02 
Gross national saving (% of GNP) 
(as at Q3 2013)  30.0 32.7 34.6 34.1 
Source:  Department of Statistic Malaysia; Central Bank of Malaysia; MATRADE.  
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