WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/TPR/M/156/Add.1 
8 March 2006 
 (06-1029) 
Trade Policy Review Body 
16 and 18 January 2006 Original:  English/Spanish 
                anglais/espagnol                 inglés/español 
 
TRADE POLICY REVIEW 
MALAYSIA 
Minutes of Meeting
 
Addendum  
Chairperson:  H.E. Mr.Don Stephenson (Canada)  
 This document contains the advance written questions, and replies provided by Malaysia.1 
 
 __________________________________________________________________________________  
Organe d'examen des politiques commerciales 
16 et 18 janvier 2006 
 
EXAMEN DES POLITIQUES COMMERCIALES 
MALAISIE 
Compte rendu de la réunion
 
Addendum  
Président:  S.E. M. Don Stephenson (Canada) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses 
fournies par la Malaisie.1 
__________________________________________________________________________________ 
 
Órgano de Examen de las Políticas Comerciales 
16 y 18 de enero de 2006  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
MALASIA 
Acta de la reunión
 
Addendum  
Presidente:  Excmo. Sr. Don Stephenson (Canadá) 
 
 En el presente documento figuran las pr eguntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Malasia.1
                                                      
1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.  WT/TPR/M/156/Add.1 
 Page 3 
 
 
  ADVANCE WRITTEN QUESTIONS BY MEMBERS 
  Written Questions and Comments by Japan 
 
Report by MALAYSIA (WT/TPR/G/156) 
 II. TRADE POLICY DEVELOPMENTS 
 
(1) O
VERVIEW  
 
(Page 7, paragraph 20) 
  In relation to Malaysia’s intention that  it “seeks greater market access under Doha 
negotiations for agricultural produc ts, industrial goods and services”: 
 
1. Please explain the gist of the cooperati on Malaysia has provided to poorer developing 
countries in relation to liberalization of trade in services since the last TPR of Malaysia.   (cf. in light of the question raised by the di scussant in the last TPR of Malaysia, i.e. “how 
Malaysia, as a more developed economy among de veloping countries, viewed cooperation with 
poorer developing countries in the framework of  the Doha Work Programme”, “TRADE POLICY 
REVIEW, MALAYSIA, Minutes of Meeting”, WT/TPR /M/92, paragraph 79, as well as Malaysia’s 
position that “Malaysia was prepared to partic ipate actively and constructively in the WTO 
negotiations on services to promote market access opportunities towards ensuring development of the 
sector”, WT/TPR/M/92, paragraph 95).   
 
2. Please also convey the specific views of Mala ysia, as well as any specific plans, if any, on 
how to cooperate with poorer developing countries in  relation to the liberalization of the trade in 
services in the framework of the Doha Work Programme.  
 (Page 7, paragraph 22) 
 
3. Please illustrate specific examples of Malaysia ’s active promotion of “trade in new and 
emerging markets”. 
 
III. SECTORAL POLICIES 
 (3) S
ERVICES SECTOR  
 
(Page 9, paragraphs 41 and 42, ref. pa ge 94, paragraph 52 of WT/TPR/S/156) 
 4. Please illustrate specific examples of policies in relation to the liberalization of trade in services 
of the sectors referred to in para graphs 41 and 42 (page 9)of WT/TPR/G /156, as well as those referred 
to by the Secretariat as areas to be particularly fu rther exploited (education, tourism, Islamic finance, 
health care, professional and consultancy services as  well as ICT-related and manufacturing-related 
services, paragraph 52 (page94) of WT/TPR/S/156.  (Page 9, paragraph 42)  
5. With regard to relaxation or  elimination of restrictions on market access for mode 3 in the 
construction services sector, please provide Malaysia’s position,  WT/TPR/M/156/Add.1 
Page 4  
 
  (Page 10, paragraph 45) 
 6. Please explain the details of how greater opera tional flexibility will be accorded to offer “the 
ability for foreign banks in Malays ia to establish new branches”.  
 IV. FUTURE DIRECTION AND STRATEGY 
 
(Page 11, paragraph 50)  
7. Please explain specific contents of the “the Third Industrial Master Plan”, “the Ninth 
Malaysia Plan” and “the second phase of Vision 2020” that relate to the liberalization of trade in 
services.  
Report by the Secretariat (WT/TPR/S/156) 
 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
 
(5) T
RADE AGREEMENTS AND ARRANGEMENTS  
 (iv) Trade preferences 
 (Page 28, paragraph 49) 
 8. Concerning the GSTP, is Malaysia particip ating in the negotiations of the GSTP hosted by 
UNCTAD?  If not, please indicate the reason why Malays ia is not participati ng in the negotiations. 
 
(7) F
OREIGN INVESTMENT REGIME  
 
(ii) Legislative framework and procedures 
 
(Page 31, paragraph 64) 
 
 According to the Report by the Secretariat, in 1997 the limits of foreign equity were raised to 
49% in telecommunications. 
 
9. Are the limits of foreign equity of both basic telecommunications services and value-added 
telecommunications services 49% under th e current regulations of Malaysia? 
 
(Page 31, paragraph 64, ref. pages 101 to 102, paragraph 68)  
 The Report by the Secretariat also states that lib eralization of the telecom market in Malaysia 
is limited by an investment cap of 30% for an e quity stake in a Malaysian telecom company, which 
includes a supplier of basic telecom services, valu e-added services, and IT and database services. 
 
10. Please explain specifically the relation between 49% for the limits of foreign equity and an 
investment cap of 30% for an equity stake in a Malaysian telecom company in telecommunications 
services.  Please indicate whether 49% is the limit of foreign equity, instead of the investment cap of 
30%, or whether 49% of 70% (in which the investment cap of 30% is subtracted) is the real limit of 
foreign equity in telecommunications services. 
  WT/TPR/M/156/Add.1 
 Page 5 
 
 
  III. TRADE POLICIES AND PRACTICES BY MEASURE 
 (2) M
EASURES DIRECTLY AFFECTING IMPORTS  
 
(i) Customs issues, trade facilitation, customs valuation and rules of origin 
 (Pages 35 to 36, paragraph 17) 
  Since July 2005, Profit and General Expen ses (PGE) charges have been imposed on the 
import of selected CBU (completely built-up automotive products) in Malaysia, without prior notice.  It has been reported that the rate of PGE char ges is calculated by multiplying 30% (models with 
engines of 1.6 litres or less) or 38% (models with engines over 1.6 litres), to the sales priceor the 
value reached by deducting the profit and general expenses from the market price, depending on the 
report).  It has also been reported that PGE has been imposed due to the Malaysian Government's 
belief that the customs value for some of the assembled cars had been under-declared.   
 
11. Please indicate the details of the PGE charges such  as the law, regulation or other basis of the 
PGE charges, whether such law, et c. has been published, the method of calculation of the rate of the 
PGE charges, the goods which are subject to the PG E charges, and other basic facts concerning the 
PGE charges.  12. Please indicate the specific views of Malaysia on  the consistency of the PGE charges with the 
WTO Agreements, in particular on the following points: 
  From what has been reported, the PGE charges se em to be inconsistent with: Article I of the 
GATT (if the PGE charges are only applied to selected imported CBU of certain Members), Article II of the GATT (if the aggregate amount of customs ta xes and charges exceed the rate of Malaysia's 
Schedule of Concessions) and/or Article III.2 of the GA TT (as an internal tax applied in excess of like 
domestic products).   Furthermore, even if the PGE charges are not inconsistent with Articles I, II and III of the 
GATT, it may be inconsistent with Article VII.2 (a) of the GATT and the Agreement on 
Implementation of Article VII of the GATT 1994 (C ustoms Valuation Agreement) if it does not 
follow the procedures of valuation for customs purposes stipulated therein. 
 
If the laws, regulations, etc. of the PGE charg es have not been published, such situation may 
be inconsistent with Article X.1 of the GATT.   
13. We also request that such inconsistencies be remedied if any inconsistencies exist between the 
PGE charges and the WTO Agreements.  In this  regard, please indicate the specific views of 
Malaysia.  
 
(ii) Tariffs 
 
(Page 37, paragraphs 20 to 21)   Japan supposes that the tariff classification of  Malaysia is harmonized with AHTN (ASEAN 
Harmonized Tariff Nomenclature). 
 14. If Malaysia publicly releases the specific cl assification of items and the explanatory note, 
please indicate the URL of the website.  WT/TPR/M/156/Add.1 
Page 6  
 
  (Page 37, paragraph 23, ref. page 36 Table III.1) 
  According to the Report by the Secretariat,  the bound tariff line of Malaysia remained at 
61.5% in 2005, but Malaysia says it will increase th e binding coverage substantially in the current 
round of negotiations.  In order to promote the pr edictability of tariffs, Japan highly hopes that 
Malaysia will increase the binding coverage. 
 15. In this regard, please indicate the specific plans of Malaysia.  (Page 38, paragraph 25) 
 
 Malaysia maintains high tariff rates applied in such areas as textile goods (average 13.5%) 
and transport equipment (average 18.5%).  Furthermore, Malaysia also maintains high tariff rates, 
from 30% to 50%, on non-boun d goods such as electronic equipment, glass and motor vehicles. From 
the viewpoint of promoting free trade, Japan hopes that such high tariff rates will be improved. 
 
16. Concerning such high tariff rates, please indi cate the time schedule for reducing tariff rates in 
Malaysia.  (Page 38, paragraph 25)  
 On 15 March 2002, Malaysia raised the tari ff rates of 199 steel products such as hot-rolled 
steel products and cold-rolled steel products from 0- 25% to a maximum of 50%.  Although Malaysia 
has room to decide the tariff rates of steel pr oducts which are not bound, such a raise crucially 
prevents trade predictability and the promotion of fr ee trade. Therefore, Japa n hopes that such a raise 
will be repealed. 
 
17. Concerning this raise of the tariff rates of steel products, please indicate the time schedule for 
reducing tariff rates in Malaysia.   (Page 43, paragraph 35)  
18. Concerning the 50% rebate of excise duty for national car manufacturers, please explain the 
coherence to paragraph 2 of Article III of the GATT.   If Malaysia is considering the elimination or 
amendment of such a rebate, please indicate the prospects for it.  
(iii) Prohibitions, quantitative restrictions, and import licensing 
 
(Page 44, paragraph 36)   According to the Report by the Secretariat, th ere are four types of schedules regarding import 
restrictions in Malaysia. 
 
19. Please indicate the specific views of Malaysia on the consistency of each type of schedule for import restriction in Malaysia, with Article XI of the GATT.   (Page 44, paragraphs 36 to 38) 
 
 It is reported that Malaysia has a quota restricting the number of cars in granting import licenses of assembled cars in order to promote the domestic automotive industry.  Therefore, Japan 
requests that Malaysia should notify the outline of the import licensing system for assembled cars 
immediately to the WTO, in accordance with Ar ticle 5 and 8.2(a) of the Agreement on Import 
Licensing Procedures.   WT/TPR/M/156/Add.1 
 Page 7 
 
 
  20. In this regard, please indicate the specific views of Malaysia. 
  Since 1999, Malaysia has not notified any institution or changes of licensing procedures, under Article 5.1 of the Agreement on Import Licensing Procedures.   
21. Are there any institution or changes of licensing procedures since 1999?  If any, please 
indicate them including the reasons for the ins titution or changes as well as notifying promptly. 
 22. Please indicate specifically which products are subject to non-automatic import licensing.  
 Malaysia has not submitted answers to  the annual questionnaire on import licensing 
procedures under Article 7.2 and 7.3 of the Agre ement on Import Licensing Procedures, although the 
deadline of this year has already passed.  Jap an hopes that answers will be submitted soon. 
 23. In this regard, please indicate the specific prospects.  
 
(3) M
EASURES AFFECTING EXPORTS  
 (i) Export taxes, charges, and levies 
 
(Pages 49 to 50, paragraphs 53 to 54)   In Malaysia, export duties are imposed on ma ny goods including agricultural and fishery 
products. The average rate was 7.8% in 1997and 11.7 % in 2001. Now, the majority is in the 15-20% 
range.  From the viewpoint of balancing rights and obligations between export countries and import 
countries, Japan is concerned about the rise of e xport duties which were not bound and not obliged to 
be reduced in the Uruguay Round.  24. If Malaysia is considering the reduction of export duties or measures to rebalance rights and 
obligations between export countries a nd import countries, please indicate them. 
  In domestic laws and regula tions of Malaysia, export taxes are imposed on goods including 
forest products originating in Peninsular Malaysia, the State of Sabah. However, it is reported that 
special royalties are imposed on export goods instead of export taxes in the State of Sabah.  
Differential special royalties for export goods seem to mean export duties. 
 25. In this regard, please indicate the specific views of Malaysia.  
(ii) Export prohibitions, restrictions, and licensing 
 
(Page 50, paragraphs 56 to 57)   In Peninsular Malaysia, the export of all tree sp ecies except small diameter trees is prohibited. 
In the State of Sabah, there are log export rest rictions which have been  annually limited to a 
maximum of 2,000,000m
3 since 1996.  In the State of Sarawak, it leads to export restrictions that a 
certain rate of production of logs is regulated to be  ensured for the processing within the State.  It 
means not to protect the environment but to promote the domestic industry for the purpose that export of logs are limited against the gene ral promotion of many export goods. 
 26. In this regard, please indicate the coherence to Article XI of the GATT. 
 WT/TPR/M/156/Add.1 
Page 8  
 
  (4) M
EASURES AFFECTING PRODUCTION AND TRADE  
 (viii) Intellectual property 
 
(Page 67, paragraph 116)  27. Please provide information on the status of  plant variety protec tion in Malaysia, and 
Malaysia’s schedule for domestic procedures for c oncluding the International Convention for the 
Protection of New Varieties of Plants (UPOV Convention).   (Page 68, paragraph 117)  28. Please provide Malaysia’s standard of patent ability on naturally occurring micro-organisms. 
 
(Pages 68 to 69, paragraphs 117 to 120)  29. Please provide the list of documents to be submitted to the competent authority that are 
required for the attestation, notarization, authentic ation, legalization or other certification, in the 
course of the application procedure (or other re levant administrative procedures) for industrial 
property rights. In addition, if there are any ex ceptions to such requirements, please provide the 
details of the conditions of such exception.    (Page 68, paragraph 119)  
Japan recognized that Malaysia was preparing the am endments of domestic laws  and regulations to be 
able to conclude the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty in 
early 2005.  However, Malaysia has not yet concluded these treaties.  30. Please explain specifically which parts of the current Copyrights Act do not cover these 
treaties. 
 31. Please provide the Copyrights Act amended in 2003.  (Pages 69 to 73, paragraphs 124 to 128) 
 
32. Concerning the enforcement of the protecti on of intellectual property rights in Malaysia, 
please indicate the following statistical data: 
(a) the status of enforcement for each right  such as trademarks, copyright, patents, 
industrial designs and protection of new plant variety. 
(b) the status of border measures at customs for each originating country. 
 
IV. TRADE POLICIES BY SECTOR 
 
(2) A
GRICULTURE  
 (ii) Trade regime 
 
(Pages 77, Table IV.3)  33. Please explain the reason why the applied tariff rates of the following items are higher than 
bound rate: 
(a) HS0710 (Frozen Vegetables) 
(b) HS2009 (Fruit juices)  WT/TPR/M/156/Add.1 
 Page 9 
 
 
   
(Pages 78 to 79, paragraph 10)   The Report by the Secretariat states that import licences for white sugar are reportedly available only to certain Malaysian sugar refiners. 
 
34. Concerning this point, please indicate more inform ation in detail, includi ng an outline of this 
system and any relevant laws and regulations.  
(3) M
INING AND QUARRYING  
 
(ii) Trade and Investment regime 
 (Page 83, paragraph 26) 
 The Report by the Secretariat states that export duties on most minerals have been abolished. 
 35. Please indicate remaining export duties on minerals, if any. 
 
(4) M
ANUFACTURING  
 (iv) Key subsectors  
 
(Pages 91 to 92, paragraph 47)   With respect to import licensing, there is a system of approved perm its (APs) in Malaysia, 
required for every car manufactured or assembled outside the country. 
 36. In this regard, please indicate the specific view of Malaysia on the consistency with WTO 
Agreements such as Article XI of the GATT, in particular, concerning the following points: 
(a) APs are provided only to certain investors. (b) The quantity of imports is limited to 10% of the size of the domestic market. 
(c) APs to be provided can be sold. 
  It is frequently reported that the Malaysian Government is considering the decrease of the 
numbers of manufactured or assembled cars to be approved for import to Malaysia. 
 
37. Is the Malaysian Government considering such  a plan?  If so, please explain specifically such 
a plan in detail.   
(5) S
ERVICES  
 
(ii) Policy objectives  
(Page 93, paragraph 50) 
 
 The Report by the Secretariat states that in general, the services sector is not yet as open to trade as the agriculture and manufacturing, largely due to restrictions on foreign direct investment, which is 
necessary for the establishment of commercial pr esence, the main mode of delivery for most 
services”.  
38. In this regard, please provide the specific view of Malaysia. 
 WT/TPR/M/156/Add.1 
Page 10  
 
  (Page 94, paragraph 51, including footnote 19)  
 39. Please explain the full demarcation of the ser vices sector among Malaysian authorities (beside 
what is already explained in footnote 19). 
 
(iii) Key subsectors 
 
(Page 94, paragraph 56, ref. page 10, paragraph 43 of WT/TPR/G/156 ) 
 40. As the number of commercia l banks cited here (28) is different from the number of 
commercial banks cited in the report by the Malaysian Government (29, see WT/TPR/G/156, 
paragraph 43 (page 10)), please confirm the correct number.   
(Page 96, paragraph 57) 
 41. With respect to the Malaysian Government’s ai m to raise the percentage of the Islamic banks’ 
assets of the banking sector’s total assets, does this m ean that the Malaysian Government aims to raise 
the ratio of the Islamic banking sector within the banking sector?  If so, please explain the basis (law, 
ordinance, guideline, etc.), substan ce and the rationale of such policy. 
 (Page 101, paragraph 67, footnote 26)   The Report by the Secretariat states in footnote 26 that some industry analysts believe that the Government must eventually distance itself from Te lekom Malaysia, and legislate provisions for local 
loop unbundling, co-location, and interconnections, otherwise Malaysia will not have a competitive 
market for broadband service.  Japan also believes th at in addition to the promotion of deregulation 
and the elimination of restrictive competition activities, the regulation for the dominant carriers is important in order to ensure fair competition and to promote consumers’ benefits in the 
telecommunications market. 
 
42. Is Malaysia planning to provide some regul ations to Telekom Malaysia, such as local loop 
unbundling, co-location, and interconnections?  (Page 101, paragraphs 68) 
 
 According to the Report by the Secretariat, Malaysia made a number of commitments under 
the Basic Telecommunications Agreement but market  access is limited to facilities-based providers. 
 43. In this regard, does the initial offer of Ma laysia (TN/S/O/MYS) improve this point and 
include market access of both facilities-based providers and non-facilities based providers? 
 
 In the initial offer of Malaysia (TN/S/O/MY S), telecommunications services are described as 
based on not the common classification (MTN.GNS/W/120), but the classification of domestic regulation.  Malaysia explains that Network Facility Services providers (NFP), Network Service 
providers (NSP) and Application Se rvice providers which require individual licences, are equal to 
basic telecommunications services and those which require class licences are equal to value-added 
telecommunications services.  44. In this regard, please indicate more detaile d information on the relationship between the 
Malaysian classification (NFP, NSP and ASP) and each subsector of basic telecommunications services and value-added telecommunications services. 
  WT/TPR/M/156/Add.1 
 Page 11 
 
 
  (Page 102, paragraph 70, ref. page 9, paragraphs 33 to 34 of WT/TPR/G/156)  
 45. Please provide Malaysia’s specific plans, if any, for liberalization in manufacturing-related 
services in relation to Malaysia’s aim to diversif y its manufacturing sector (e.g. liberalization plans 
like those referred to in the Report by the Secretariat). 
 
(Page 104, paragraph 74)    According to the Report by the Secretariat, the private Higher Educational Institutions Act 
1996 permits foreign universities to establish bran ch campuses.  However, the initial offer of 
Malaysia (TN/S/O/MYS) inscribes in mode 3 of hi gher education that “only through a joint venture 
with foreign equity not exceeding 49% and subject to  an economic needs test”.  From the view point 
of promoting the free trade of higher education, the elimination or further deregulation of the 
limitation of foreign equity is encouraged.  
46. Please explain the reason why the limitation of foreign equity in higher education is required 
in the initial offer.  47. Please indicate the prospects, if such a limitation will be improved.  48. Please indicate the specific standards to  be used in the economic needs test 
 
(Page 104, paragraph 75)    The Report by the Secretariat states that Malaysian law does not allow for foreign legal consultancy except on a limited basis in the Labuan In ternational Offshore Financial Center, offering 
services relating only to home country laws, intern ational law and offshore corporation laws of 
Malaysia for offshore clients.  49. Are there any plans to enlarge foreign legal consultancy which is currently admitted in the 
Labuan International Offshore Fina ncial Center, to all areas in Malaysia?  If any, please provide 
detailed information. 
 
(Page 105, paragraph 79)    The Report by the Secretariat states that it h as been reported, but not confirmed, that the 
Government is considering imposing minimum stoc king requirements so that 30% of all goods on 
shelves must be from Bumiptera companies. 
 50. In this regard, please explain the Government of Malaysia’s position.  
 51. Is the Government of Malaysia consider ing such a minimum stocking requirement or a 
similar requirement?  If so, what are the details of such plan? 
 
(Page 106, paragraph 81)    The Report by the Secretariat states that accord ing to the Government, cooperation with other 
international ports will be enhanced through joint ventures and strategic alliances with foreign port 
operators and shipping companies. 
 52. In this regard, please indicate specific examples.  WT/TPR/M/156/Add.1 
Page 12  
 
  53. Does “cooperation with other international por ts will be enhanced through joint ventures” 
mean that maritime auxiliary services (eg. cargo-handling services, container station and depot services) by joint ventures can be provided in Malaysia?  
 
Additional Written Question by Japan 
 
Report by the Secretariat (WT/TPR/S/156) 
 
IV. TRADE POLICIES BY SECTOR 
 
(5) S
ERVICES  
 
(iii) Key subsectors  
(Page 104, paragraph 74)  
 
 With regard to higher education, the Cond itional Initial Offer of Malaysia (TN/S/O/MYS, 
31 January 2005) inscribes “unbound except for students moving abroad including students under 
franchise and twinning arrangements” in the lim itations on market access as Mode 2 of higher 
education (students moving abroad from Malaysia).  Therefore, we suppose that there may be some 
restrictions in Malaysia for students moving abroad such as requiring franchise and twinning 
arrangements.  On the other hand, regarding stud ents moving into Malaysia, the Report by the 
Secretariat states that “According to the Government, there were 51,000 students in Malaysia from 130 countries in 2004”.    Concerning students moving into Malaysia from other countries, are there no limitations in 
Malaysia?  If there are some restrictions in Malaysia, such as requiring franchise and twinning 
arrangements, please indicate them specifically. 
  WT/TPR/M/156/Add.1 
 Page 13 
 
 
  WRITTEN QUESTIONS OF CHILE 
 II. Trade Policy Regime  (7) Investment  
 
Q: Would Malaysia consid er removing foreign equity restric tions, and export requirements in the 
manufacturing imposed during the 1997-98 period, as originally scheduled for December 31
st, 2003? 
 Q: Would Malaysia consider furt hering liberalizing its investment regime by no longer retaining 
a “discretionary authority over the approv al of individual investment projects...”? 
 
III. Trade Policies And Practices By Measures 
 (4) Intellectual Property 
 Q: Does the Geographical Indications Act 2000 permit the co-existence of homonymous terms 
for geographical indications for wines and spirits?  Q: Does the Geographical Indications Act 2000 extend to other agricultural products the 
additional protection granted by article 23 of the TRIPS Agreement only for geographical indications 
for wines and spirits? 
 Q: Is Malaysia planning to ratify the WIPO  Copyright Treaty and the WIPO Performers and 
Phonograms Treaty? When?  
 IV. Trade Policy By Sectors  (5) Services  
 
Q: Would Malaysia consider removing the forei gn equity restriction of 30% on the Telecom 
Industry? 
 
Q: Would Malaysia consider removing the “joint venture” requirement for foreign investment on 
the Health Services sector? 
 WT/TPR/M/156/Add.1 
Page 14  
 
  Questions from Australia 
 
Foreign investment restrictions  
 
 Australia notes Malaysia’s move to fully liber alise equity holdings in all new manufacturing 
projects, allowing foreign investors to hold 100 per cent equity in all investments in new projects as 
well as in expansion/diversification projects, irrespective of the level of exports.   
  Recognising that foreign direct investment pl ays a key role in Malaysia’s economic growth, 
has Malaysia considered extending the same oppor tunities to investors in existing manufacturing 
projects as well as outside of the manufacturing sector? 
 
Transparency 
 
 Australia appreciates the Malaysian Government’s declaration that it is committed to 
improving the transparency of government decision-making and procedures, including greater 
transparency in laws and administrative rulings  covering sectors such as customs, investment, 
intellectual property and standards.  However, th e Government retains considerable discretionary 
authority over the approval of individual investment projects.   Is Malaysia considering increasing transparency in relation to investment policies, procedures 
and incentives outside of the manufacturing sector? 
  Malaysia’s agricultural trade regime is re latively open with low applied tariffs for many 
commodities.  However, the Government also main tains a range of internal management measures, 
such as import licensing for rice, sugar and da iry products.  We would welcome Malaysia’s 
clarification of why these measures are required a nd where details of these arrangements are written 
down for exporters to access.  We would also welcom e advice on whether Malaysia has any intentions 
of increasing the transparency of these arrangement s and of any moves towards their removal.  
 
Competition policy 
  Australia notes with interest that in 2003, Ma laysia notified the WTO that it is preparing a 
competition and fair trade law, with the process expe cted to be completed by the end of 2005.   
  Has Malaysia completed its draft policy?  If not, when does Malaysia expect the policy to be 
finalised? 
 
Third Industrial Master Plan and Ninth Malaysia Plan 
 
 Australia notes that the Malays ian Government is formulating new policy directions under the 
Third Industrial Master Plan and Ninth Malaysia Plan.    
 When are these Plans expected to be released  and what are the likely policy orientations?  WT/TPR/M/156/Add.1 
 Page 15 
 
 
  Questions from Colombia 
 
 In paragraph 10 chapter IV, the report by the Secretariat says:  "A number of agricultural 
products remain subject to import licensing requireme nts, including rice and rice products, sugar, un-
manufactured tobacco, milk, cabbage, coffee, and cereal flours" 
 Could the Malaysian authorities explain the process of import licensing allocation for coffee 
and tobacco? 
 In paragraph 61, Chapter III, the report by the Secretariat says:  "Malaysia has a number of 
free-trade zones for which the policy is overseen by Malaysian Customs.  The zones are established to 
facilitate operations of export-oriented companies, which export all or almost all their products...FIZs 
enable export-oriented companies to enjoy minima l customs formalities and duty-free imports of raw 
materials, component parts, machinery, and equipm ent required directly in the manufacturing process, 
as well as minimal formalities in exporting their fini shed products.  Companies located within FIZs 
must export at least 80% of their production a nd use mainly imported raw materials/components". 
 Could the Malaysian authorities explain what is  foreseen in the legislation when a company 
within a Free Industrial Zone fails to export at least 80% of its production". 
 Is the policy regarding duty-free imports of raw materials, component parts, machinery, and 
equipment required directly in the manufacturing process within a FIZ contingent upon export performance? WT/TPR/M/156/Add.1 
Page 16  
 
  Questions from Hong Kong, China 
 
Banking Services 
(WT/TPR/S/156, P. 95, Para. 55) 
 
1. We note with appreciation that Malaysia has taken substantial steps to strengthen and 
liberalise the financial services sector, and is now in Phase 2 of the 10-year Financial Sector Master Plan launched in 2001.  It is noted that forei gn participation will be reviewed in Phase 3 of the 
Financial Sector Master Plan.  Would Malaysia  provide more details about its measures for 
introducing new foreign competition to th e financial services sector after 2007? 
 
Telecommunications Services 
(WT/TPR/S/156, P. 101 - 102, Paras. 68 - 69) 
 
2. We note that a foreign investment cap of 30% is in place for an equity stake in a Malaysian 
telecom company.  We however learnt that a highe r than 30% foreign ownership might be allowed in 
Malaysia under certain circumstances.  In this regard, would Malaysia please clarify its existing 
regime with respect to the permitted level of fore ign investment in the telecom market?  We would 
also be grateful if Malaysia would brief us on the criteria and procedures for obtaining special 
investment approval?  3. Regarding the limitation for a minimum bumiput era equity participation of 30%, it is among 
those issues that are described in the Secretariat’s report as to “create disincentives to investment in 
the market”.  We would like to know whether Mala ysia has any plan to review its bumiputera policy 
in the near future.   
4. Besides, we note that Malaysia has sought to encourage investment in the telecommunications 
market by guiding investment into the Multim edia Super Corridor (MSC) and providing tax 
incentives to attract multinational corporations.  Wo uld Malaysia elaborate on the eligibility criteria 
for an entity to obtain a MSC status?  Are such entiti es subject to the same foreign equity cap of 30% 
as all other entities?  WT/TPR/M/156/Add.1 
 Page 17 
 
 
  COMMENTS AND QUESTIONS FROM THE EUROPEAN COMMUNITIES 
 
 Doing away with unnecessary external as well as in ternal impediments to trade is vital for the 
promotion of trade and development itself. To this end, the EC should like to pose the following 
questions to Malaysia. 
 
1. TRADE IN GOODS 
 
− Could Malaysia please indicate if any pro cess of increasing productivity and diversifying 
production is currently being considered  and if so within which sectors?  
− In what way is Malaysia seeking to enha nce a secure sustainable development when 
increasing the manufacturing of goods, i.e. how can  Malaysia ensure adequate protection of 
the environment, while maximizing foreign exchange earnings? 
 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  
 
(ii) Tariffs 
 
 The WTO Secretariats report (WT/TPR/S 156) paragraph 19 it is written that:"...According to 
the authorities, Malaysia will continue to review an d reduce tariff rates in line with its objective of 
achieving a more open and liberal economy, impr oving allocative efficiency, and enhancing the 
competitive environment for domestic industries."  
 
− What are Malaysia’s plans for tariff reduction in those sectors; particularly in the highest 
clothing applied tariffs, noting that the reduc tion of import duties on selected raw materials 
for clothing ( to 5% and 30% from 10% and 35%) ? 
 
 The report of the WTO Secretariat furthermore provides that: “…The proportion of tariffs 
exceeding 15% still accounts for nearly one quarter of  all tariffs (Chart III.2)…. Currently 57.8% of 
Malaysia's total tariff lines are duty free.  The hi gher rates apply to protected sectors and luxury 
products. …  Tariff protection is high for automotives, textiles, clothing and leather , food and 
beverages, and imported goods that compete with local production.  Rates exceed 20% on 16.9% of 
tariff lines; several lines have rates over 100%.” 
− Could Malaysia inform about steps intended to  dismantle the high tariff protection in the 
textiles, clothing and leather sectors? 
 
Tariff barriers, quotas, other duties, fees and taxes 
 According to the report of the WTO Secretar iat: “the Government undertakes regular reviews 
of the tariff structure and tariff rates through annual ad hoc dialogues with major industry players and 
the business community.  The Special Advisory Co mmittee on Tariffs (SACT) under MITI receives 
and considers applications for tariff review, which may then be announced in the annual budget.”   
 
− Would Malaysia consider conduc ting formal consultations with  all stakeholders whenever 
there is a local request for raising tariff barriers or investment barriers? 
− Would Malaysia  commit itself to a specific time schedule for the progressive dismantling and 
eventual elimination of the Approved Permit system, bearing in mind the public statement 
made by the Minister of International Trade and Industry in July 2005 that “the AP system 
was in violation of WTO commitments”? 
 WT/TPR/M/156/Add.1 
Page 18  
 
   Malaysian national car manufacturers have for many years benefited from excise tax rebates 
which are not available on imported cars, incl uding those imported from the European Union. 
According to the WTO Secretariat Report (par agraph 45) Proton and Pe rodua and two locally 
incorporated joint-ventures importing kits receive a 50% tax rebate on excise taxes, not available to 
foreign manufacturers. This measure appears to be in violation of the WTO rules and in particular of 
Article III.2 of the GATT by discriminati ng in favour of domestic production. 
  The EC is pleased to note that in the c ontext of the framework for the new national 
automotive policy, announced on 19 October 2005, Malays ia has indicated that it is dedicated to fulfil 
its multilateral commitments under the WTO rules a nd therefore this implies that the excise duty 
rebates will be withdrawn. 
 
− Can Malaysia confirm that the excise duty rebate benefits for Malaysian national car 
producers will be withdrawn in conformity w ith the WTO commitments of Malaysia, and 
inform from when this will be effective?  
− Furthermore, can Malaysia confirm that all incentives and grants to be introduced under the 
National Automotive Policy Framework, particul arly those linked to exports, will comply 
with the WTO rules? How does Ma laysia intend to ensure that  this indeed does become the 
case?  
 
Foreign investment regime 
 
− Would Malaysia consider establishing a c onsultation mechanism with the business 
community, including the European one, in par ticular when line ministries are considering 
new legislation having an impact on either EU Malaysia trade and investment relation or on 
the domestic business environment? 
− Which economic fields has Malaysia identified to  attract trade related FDI? And in what way 
does the Government plan to attract more FDI? 
 
Free Trade Zones  
 
 The report of the WTO Secretariat (paragraph 50) describes the Industrial Linkage Program 
and the Vendor Development Program for the devel opment of SMEs, including briefly the utilisation 
of Free Trade Zones and other measures. 
− In absence of a New and Full Subsidy Notification pursuant to Article XVI:1 of the GATT 
1994 and Article 25 of the SCM Agreement, could Malaysia please provide more detailed 
information on these programmes and special z ones according to the format G/SCM/6/Rev.1.  
 
Competition policy  
− The EC should like Malaysia to inform about its  intention to enact a general competition law 
and the timeframe foreseen? Also with respect to which institutional arrangements foreseen in 
this respect? 
− How does Malaysia assess the impact on its de velopment because of the lack of such a 
general policy? 
 
2. TRADE IN SERVICES 
  In the view of the EC other crucial sectors for improving development, include those of 
business services and not least telecoms and transport services. Noting the importance of liberalisation of services in promoting development, the EC  should like to ask the following questions.  WT/TPR/M/156/Add.1 
 Page 19 
 
 
  Engineering/construction  
 The report of the WTO Secretariat also descr ibes the presence of the Malaysian Government 
in the economy. Noting the text of the report:  
− Would Malaysia give more precise indications about the mentioned "important government 
shareholdings in the engineering/construction sub sectors”? 
 
Mining and quarrying 
 
 According to the report of the WTO Secretariat the upstream oil and gas industry is controlled 
by Petronas, which is the sole entity with legal title to ownership, explor ation, and production of 
Malaysian crude oil and gas deposits.  
 
− To what extent are other companies entitled to undertake upstream works on a fee or contract 
basis, and what are the criteria for their selection?  
− Which specific restrictions do apply to foreign enterprises? 
 
Energy 
 
 According to the report of the WTO Secretaria t the production by the utilities in particular 
electricity is set to continue as househol d and manufacturing industry demand grows.  
 
− Would Malaysia explain the regulatory framework for the electricity sub sector? 
− How many companies are involved in production, transmission, distribution, and/or supply of 
electricity?  
− Does Malaysia plan to attract foreign investment in that sub sector to cope with the rising 
electricity demand? 
 
Financial Services 
 
 According to the report of the WTO Secretariat Malaysia's financial sector remains one of the 
most restrictive in the world and much of the existing liberalisation remains unbound.  
 
− Is Malaysia planning to make an offer in  financial services in the Doha round?  
 
Transport/Port services 
 
 In the report of the WTO Secretariat (parag raph 81) the importance of Malaysian ports and 
the ambition to strengthen these sectors to become a transhipment hub is underlined. 
 
− Does any specific restrictions apply for foreign investors in activities such as: cargo-handling 
(CPC 741), storage/warehousing (CPC 742), maritime agency services, freeing forwarding /freight agency services (CPC 748 and 749) and for customs clearance services, maritime agency services (e.g. as these activities are de fined in the maritime model schedule)? 
 
3. TRADE FACILITATION 
 
 The EC welcomes the extensive reforms intr oduced by Malaysia, including the introduction 
of systematic risk management and post-audit contro ls. The EC fully supports Malaysia’s objective of 
seeking the introduction of such reforms by trading partners.  
 WT/TPR/M/156/Add.1 
Page 20  
 
  − What implementation challenges has Malaysia faced and how has it overcome them?  
− What are Malaysia’s plans for further Trade Facilitation reforms?  
 
4. GOVERNMENT PROCUREMENT 
 
Referring to the report prepared by the WTO secretariat page 47 and 48. 
 
− From the statistics provided in Table III.4 (par agraph 43), could Malays ia provide us with 
details regarding the tendering procedures used (competitive, limited or direct) and the origin 
of the winning companies (international, local). 
− Are price preferences cumulative (such as 10% because the tenderer is bumiputera + 10% 
because the goods are locally produced)?  
− Has Malaysia considered reducing the value of th e price preferences curre ntly in use over the 
years to come? (Paragraph 44) 
  Paragraph 47 mentions the launching of the second phase of the electronic procurement system (eP) in 2004.  
− How is the project advancing and when will the project be implemented overall? 
 
5. INTELLECTUAL PROPERTY RIGHTS 
 
Counterfeit goods 
 
 The report of the WTO Secretariat states th at: “Trade mark counterfeiting is reportedly 
rampant in Malaysia due to in sufficient enforcement; articles include apparel and luxury goods, 
printer cartridges, plastic container systems, moto r oil, automobile spare parts, household cleaning 
agents, shampoo and skin care items, tobacco, m obile phone batteries, and toys.  Counterfeit 
pharmaceutical products, including drugs with the wrong ingredients and those with fake packaging, 
are of particular concern.  In order to curb pr oduct counterfeiting, an Anti- Counterfeit Task Force was 
established in March 2002.  The task force has help ed to build a closer network among trade mark 
owners, government agencies, and the Ministry of Do mestic Trade and Consumer Affairs.  The report 
furthermore contains a table with actions take n under the Trade Descriptions Act 1972 against 
counterfeit products are detailed in Table III.13. IPR protection is a primary concern of the EU whose 
industry is one of the main targets of counterfeiti ng. The EC has noted that two sectors (clothing and 
leather goods) feature prominently in the Table III.13 bot h in number of cases and in value of seizure. 
 
Table III.13 
Seizure of counterfeit goods under Trade Descri ptions Act 1972, January 2001 to December 2004 
 2001 2002 2003 2004 
Number of cases 1,954 3,171 6,084 3,887 
Clothing 526 611 900 853 
Medicine 9 30 22 28 
Spare parts 10 12 25 35 
Watches 75 76 148 125 
Leather goods 115 150 310 295 
Cassettes/videos 87 28 103 51 
Optical discs 710 1,880 3,878 1,593 
Seizure value (RM)  10,767,739.4 19,341,891.8 23,711,020.5 78,162,987.2 
Clothing 1,076,933.7 587,349.3 4,554,606.3 2,268,088.4 
Medicine 24,779.8 186,392.0 330,673.6 13,271.0 
Table III.13 (cont'd)  WT/TPR/M/156/Add.1 
 Page 21 
 
 
   2001 2002 2003 2004 
Spare parts 132,730.0 28,829.0 230,417.8 19,795,248.0 
Watches 76,321.0 269,117.0 373,427.3 718,590.1 
Leather goods 57,096.0 338,651.4 789,817.4 1,734,669.9 
Cassettes/videos 87,140.6 36,524.5 189,461.3 1,508,936.0 
Optical discs 1,840,445.4 13,299,508.0 7,547,963.3 8,973,819.0 
Source: Enforcement Division, Ministry of Domestic  Trade and Consumer Affairs, Malaysia.” 
 
− Do the Malaysian authorities particularly the Enforcement Division envisage cooperation 
with the EU and its Member States authorities both in prevention and against counterfeiting?  
− How does Malaysia intend to significantly reduce the production and trade in of counterfeit 
goods? Has it adopted a national strategy to this effect, and if not does it intend to do so, also 
targeting these sectors where counterfeiting continues to be of a significant nature?  
 6. TRADE POLICY STRATEGY  Trade policies 
 
− How is the issue of trade being dealt within Ma laysia’s national strategies? Are the strategies 
based on the possibilities for advancing the count ry’s development objectives in the context 
of increasing globalization through trade? 
 
The EC considers that the WTO and multilateral liberalization is the most certain way for 
small and medium sized countries to promote their interests.  
 
− How does Malaysia judge the relative importan ce and weight of bilateral/FTA policies and 
further development of the WTO system in term s of its own trade and development needs?  
− How does Malaysia see the development of its tr ade policies in the context of the multilateral 
system? 
 
Malaysia is a developing country with high grow th and great development perspectives. Other 
countries in the global trading system are less fortunate.  
 
− Has Malaysia introduced arrangements aimed at increasing the integration of the least 
developed countries in the global trading system , e.g. through schemes in creasing the market 
access of these countries? How does Malaysia  assess the development prospects of these 
countries?  
 
Malaysia has benefited greatly from the adop tion of autonomous liberalisation measures.  
 
− How does it intend to continue fostering its growth and development? Through further 
autonomous measures, and in case which? 
 
Malaysia has in the context of the autonomous  measures further opened its market, but it has 
also further streamlined its customs administration.  
− How does Malaysia assess the development impact of the streamlining of its customs 
administration and are there import lessons to be noted by other countries in the WTO? 
 WT/TPR/M/156/Add.1 
Page 22  
 
  Regional Trade Agreements 
 
− Malaysia is part of ASEAN and seems to pursue  further FTA’s with countries in the region. 
How does Malaysia intend to ensure that its FTA’s continue to promote economic growth and 
development, not least when considering the transparency for economic operators? 
− FTA’s which do not cover substan tially all trade and which are not sufficiently ambitious can 
have adverse consequenc es for trade. How will Malaysia ensure that does not become the 
case? 
− Would Malaysia give public access, for example through the MITI website, to all the contents 
of FTA’s signed FTAs by Malaysia? 
 
Sustainable development  
The EC welcomes Malaysia’s emphasis on su stainable economic growth and sustainable 
development. Looking at the overall policies of  Malaysia:  
− What plans does Malaysia have for adoption of policy strategies in order to enhance 
sustainable development? Does the issue of trade and sustainable development fit into 
Malaysia’s overall development strategies? 
 
The importance of linking trade with sustaina ble domestic policies, and in particular 
employment related matters and core  labour standards, was confirmed last year by the Final Report of 
the World Commission on the Social Dimension of Globalisation.   
− How does Malaysia assess the conclusions in th e report, and does Malaysia intends to follow 
up the various programmes which have been implemented to increase employment and 
address challenges related to social adjustment? 
  How does Malaysia assess the possibilities fo r increasing trade and development while 
ensuring environmental sustainabilit y? Does Malaysia currently have a specific plan addressing this?  WT/TPR/M/156/Add.1 
 Page 23 
 
 
  Questions from the United States of America 
 
Trade Policy Regime:  Framework and Objectives 
 
Trade Agreements and Arrangements  
 
1. As noted in paragraph 25 on pages 21 and 22 of the Secretariat Report, Malaysia is in the 
process of negotiating bilateral FTAs with Japan, Au stralia, New Zealand and Korea.  ASEAN, of 
which Malaysia is a member, is negotiating re gional FTAs with those same countries.   
 
a) What will the relationship be between Ma laysia’s bilateral FT As and Malaysia’s 
participation in ASEAN’s regional FTAs?   
 b) Will the ASEAN FTAs subsume the Malaysian FTAs?    
c) Will the bilateral FTAs contain additional preferential treatment not included in the 
regional FTAs?   
 Trade Agreements and Arrangements – Bilateral Agreements
 
 2. The description of the Malaysia- Japan FTA in footnote 17 to paragraph 46 on page 28 of the 
Secretariat Report noted that “Malaysia’s automobile industry was the focal point of negotiations.”   
The paragraph further indicated that the agre ement between Malaysia  and Japan “abolished most
 
(emphasis added) tariffs between the two countri es by 2015.”  Article XXIV of the GATT requires 
that FTAs eliminate tariffs on “substantially all the trade” between parties.     
a) What does Malaysia mean by “most tariff s”?  What percentage of trade and tariff 
lines will be duty-free in 2015 as a result of the FTA? 
 b) Are any sectors excluded from tariff -elimination under the FTA?   c) When will Malaysia and Japan notify their FTA to the WTO? 
 
Trade Policies and Practices by Measure 
 
Measures Directly Affecting Imports – Tariffs – Other Charges Affecting Imports
 
 
3. Paragraph 35 on pp. 43 and 44 of the Secr etariat Report stated that “Imports are generally  
(emphasis added) treated in the same way as dom estically produced goods and services as regards 
indirect taxes (sales tax, excises).  The main  (emphasis added) exception is the 50% rebate of excise 
duty for national car manufacturers, which cons titutes a substantial non-tariff barrier.”   
 
a) Please identify other imported goods subjected to sales and excise taxes at rates 
different from those applied to domestically-produced goods. 
 b) Does Malaysia have plans to eliminat e the discriminatory excise duty rebate for 
national car manufacturers and any other produc ts identified in its response to this 
question? 
 WT/TPR/M/156/Add.1 
Page 24  
 
  Measures Directly Affecting Imports – Prohibitions , Quantitative Restrictions, and Import Licensing
 
 4. Paragraph 38 on page 44 of th e Secretariat Report advised that Malaysia has not filed an 
import licensing notification since 1999.  Paragraphs  36 and 38 of the Secretariat Report identified 
many goods which Malaysia appears to be subjec ting to non-automatic import licensing procedures. 
 
a) Please provide further information on the specific goods for which Malaysia requires 
a non-automatic import license to enter the country.   
 b) Please describe the process for obtaini ng non-automatic import licenses, including 
any fees associated with issuance and the average time between application and 
issuance. 
 c) Does Malaysia issue import licenses to foreign persons or entities?  
d) Is there an appeals process if an a pplication for a non-automatic import license is 
denied?  If so, please describe it. 
  5. The Secretariat Report noted in paragraph 37 on page 44 that Malaysia requires auto, truck, 
and motorcycle importers to possess a MITI-approved import permit.   
a) Please describe the process for obtaining these permits, including any fees associated 
with issuance and the average time between application and issuance. 
  b) Does MITI issue these import permits to foreigners?   
c) In the interest of transp arency, when does Malaysia intend to provide the WTO with 
updated, comprehensive replies to the Import Licensing questionnaire? 
 Measures Directly Affecting Imports – Government Procurement
 
 6. Paragraph 44 explains that Ma laysia “intends to maintain its  requirement for all government 
agencies to procure supplies and services from local sources.  International tenders will be invited 
only if goods and services are not available locally.”     
a) How are preferences for local suppliers administered?   
 
b) How are foreign suppliers able to know wh en they are eligible to participate in a 
tender?  
   
c) Does Malaysia have a framework and a ti meline to join the GPA, or, to otherwise 
increase government procurement e ligibility for foreign suppliers? 
 
7. Paragraph 46 discusses the legal and regul atory framework.  In this framework: 
 
a) Are technical specifications in the tender documentation expressed in terms of 
performance and functional requirements,  rather than design or descriptive 
characteristics? 
 
 b) Is preference given to open source softwa re applications over proprietary applications 
in government procurement?  If yes, coul d you please explain and provide applicable 
laws and regulations manda ting this requirement? 
  WT/TPR/M/156/Add.1 
 Page 25 
 
 
  8. Paragraph 47 explains that the Government introduced an electronic procurement (eP) 
system.   a) What is the operational status of the electronic procurement system and what 
information is presently available on the system (tender documents, award 
information, etc.)?   
 
b) Is this system available to the public, or does it require user registration and/or 
payment of a fee for access?   
 
Measures Affecting Exports – Export Taxes, Charges, and Levies
 
 9. Referring to paragraph 54 on page 50 of the Secretariat Report, Malaysia has maintained an 
export duty on palm oil reportedly to discourage exports and to encourage downstream processing in 
country.  The Secretariat Report states in Table III.8 that the export duty on palm oil is 0 -30 % 
depending on price per ton;  and 10% to 30% for crude palm oil based on tonnage. Further reports 
indicate that Malaysia has exempted or forgiven e xport duties on crude palm oil destined to overseas 
Malaysian-owned or invested refining plants.    
a) Please provide further details of Malaysia ’s export tax policy for palm oil.    
 
b) Please explain in detail the policy and crite ria for the tax-free export of crude palm 
oil.   
 c) How much crude palm oil is allowed to be  exported tax-free or at reduced rates on an 
annual basis?   
 
d) Are there plans to increase this amount in the future? 
 Measures Affecting Exports – Duty and Tax Concessions
 
 10. Paragraph 60 on page 51 of the Secretariat advised that Malaysia did not provide its system of 
calculating duty drawback for this Trade Policy Review. 
 
a) Please describe the system Malaysia  uses for calculating duty drawback. 
 
b) When will Malaysia notify its duty drawback program(s) to the WTO Committee on 
Subsidies and Countervailing Measures? 
 Measures Affecting Exports – Free Trade Zones and Other Measures
 
 11. According to paragraph 61 on page 51 of th e Secretariat Report, companies located in Free 
Industrial Zones (FIZs) must export at least 80% of their production.  Paragraph 63 noted that 
enterprises operating in the zones do not receive preferential income tax treatment. 
 
a) Please indicate the tax incentive program s identified in Tables III.9 and III.10 on 
pp. 60-62 of the Secretariat Report for which firms located in FIZs qualify. 
 
b) Please identify the operation of these programs for which firms located in FIZs 
qualify, application procedures,  and the eligibility requirem ents to receive benefits. 
  WT/TPR/M/156/Add.1 
Page 26  
 
  Measures Affecting Exports – Export Finance, Insurance, and Guarantees
 
 12. In paragraph 66 on page 52, the Secretariat Report stated that “tax  incentives for exporters 
including double deductions in respect of expenses fo r:  overseas advertising and travel, supply of free 
samples abroad, promotion of exports, maintain ing sales offices overseas, and research on export 
markets.  There is a single deduction for export promotion; eligible expenses are the cost of quality 
certification, patents, websites, and hosting potential export customers.”    
Please provide further information on each of the programs identified above.  Specifically, 
please provide details explaining how these progr ams operate and information regarding the 
eligibility requirements for co mpanies to receive benefits. 
 
13. Although not mentioned in the Secretariat Report, the United States understands that 
Malaysia also provides tax exemptions to comp anies that demonstrate increasing exports.   
 
a) If this program in fact exists, please describe its operation, its specific benefits, and 
the eligibility requirements for firms to qualify for the benefits. 
 b) Are firms located in FIZs eligib le for benefits under this program? 
 Measures Affecting Exports – Export Promotion
 
 
14. Paragraph 67 on page 52 of the Secretariat Repor t stated that, “the Malaysian External Trade 
Development Corporation (MATRADE) is Malaysia's  official trade promotion agency, working to 
help Malaysian companies enter the internationa l market and to connect overseas businesses with 
reliable suppliers of Mala ysian products and services.” 
 
Please provide information regarding the speci fic types of assistance provided under this 
program, the magnitude of the benefits, and th e eligibility requirements for companies to 
receive those benefits. 
 Measures Affecting Production and Trade – St andards and other Technical Requirements –
 
Development of Standards  
 15. Paragraph 71 on page 53 of the Secretariat Re port indicated that 3.2% of Malaysian standards 
are compulsory.  The Secretariat advised in para graph 74 on page 54 that the Malaysian authorities 
have endorsed the wider adoption of Malaysian sta ndards as mandatory standards to protect consumer 
health and safety and the environment. 
 
Please describe the process of advance public comment Malaysia employs when developing compulsory standards. 
 Measures Affecting Production and Trade – Taxation and Tax Incentives – Tax Incentives
 
 
16. Tables III.9 and III.10 on pages 60-62 list an extensive array of indirect and direct tax 
incentives available to manufacturing firms.  
The United States requests that Malaysia no tify the programs in these lists to the WTO 
Committee on Subsidies and Countervailing Measures as soon as possible. 
  WT/TPR/M/156/Add.1 
 Page 27 
 
 
  Measures Affecting Production and Trade – Government-Linked Companies  
 17. The United States welcomes the Malaysia n government’s efforts to reform the 40 
Government-Linked Companies (GLCs) that contri bute more than half of Malaysia’s GDP.  We 
would appreciate more details on these important policies. 
 
a) Please define more precisely the key performance indicators (KPI) that GLC 
managers will be required to meet. 
 b) Have all GLCs adopted KPI and perfo rmance-linked compensation (PLC) programs 
as indicated in paragraph 98 on page 64 of the Secretariat Report? 
 c) The Secretariat Report mentioned that Malaysia intends to separate regulatory 
functions from the GLCs that possess regulatory authority.  What steps have been taken so far to implement policy and do th e authorities have a timeline for completing 
this process? 
 d) What transparency requirements must GLCs meet to demonstrate to shareholders and 
the public that they are operating acco rding to commercial principles? 
 Measures Affecting Production and Trade – Intellectual Property – Overview of IP Laws and 
Regulations – Trade Marks  
 18. With respect to para 118 on page 68 of the Secretariat Report, can a trademark owner file an 
infringement claim if registration was not renewed?   Can the trademark owner reinstate a lapsed 
trademark registration and file an infringement claim for loss during the period between lapse and 
reinstatement of the registration?  Does Malaysia believe that the requirement to renew registration 
acts as a disincentive to counterfeiters?  Measures Affecting Production and Trade – Intellectual Property – Overview of IP Laws and 
Regulations – Geographical Indications  
 
19. Referring to paragraph 122 on page 69 of the Secretariat Report, the Geographical Indications 
Act of 2000, and the Trade Marks Act of 1976, it is unclear whether earlier esta blished trademarks are 
protected from confusingly similar and later in tim e geographical indications, as required by Articles 
16(1) and 24(5) of the TRIPs Agreement.  In other words, the principles of priority and exclusivity 
between trademarks and geographical indicat ions do not appear to be addressed in 
Malaysia’s Trademark/GI law.  
 
How does Malaysia's law prevent the protection/ registration of a later in time geographical 
indication if it is confusingly similar with an earlier established trademark? 
 Measures Affecting Production and Trade – Intell ectual Property – Intellectual Property Right 
Infringement and Enforcement Issues  
 20. Referring to para 124 on page 69 of the Secr etariat Report, does Malaysian law grant rights 
holders the option to elect in an infringement case between compensation for actual damages and 
statutory damages?  If so, when during the enforcement proceedings, must the right holder choose 
between the two? 
 WT/TPR/M/156/Add.1 
Page 28  
 
  Measures Affecting Production and Trade – Intell ectual Property – Intellectual Property Right 
Infringement and Enforcement Issues – Piracy  
 21. In para 126 on pp. 69-70, the Secretariat Re port cited International Intellectual Property 
concerns that overproduction of optical discs in licensed and unlicensed production plants is leading 
to significant exports of pirated materials.   
 
a) In addition to the actions identified in Box III.1 and Table III.12, what steps is the 
Malaysian government taki ng against unlicensed production of optical discs?    
 
b) Have the authorities closed any unlicensed  plants?  Does the law give the authorities 
the right to revoke the license of and close an optical disc plant if it is discovered to be producing pirated products? 
 
c) Is the government actively inspecting op tical disc plants for production of pirated 
material? 
 Measures Affecting Production and Trade – Intell ectual Property – Intellectual Property Right 
Infringement and Enforcemen t Issues – Counterfeit Goods  
 22.  Footnote 42 on page 72 of the Secretariat Report indicated that Malaysia’s Court of Appeal has 
ruled that enforcement officials must obtain a Trad e Description Order to conduct criminal raids when 
the counterfeit product seized is not identical to th e trademarked original.  The United States agrees 
with those Members that view this ruling as comp licating enforcement of the Trade Mark Law.   
  a) Has the government appealed this decision to a higher court? 
 
b) Does the government intend to amend the Trade Mark Act of 1976 to allow criminal 
raids when counterfeit product that is not identical to the original is seized? 
 
Trade Policies by Sector 
 Agriculture – Trade Regime
 
 23. In paragraph 10 on page 79, the Secretaria t Report states: "Malaysia's food standards and 
labeling regime, in particular the halal trade regime, has also cause d concern among foreign exporters.  
One issue seems to be the accreditation of foreign ab attoirs in cases where the Malaysian Department 
of Islamic Affairs (JAKIM) does not recognize a nother country's halal approval and accreditation 
programme for meat; this creates uncertainty fo r foreign exporters of some processed foods." 
 
What steps are being taken by Malaysia to  recognize products approved as halal in other 
countries that follow the Codex halal guid elines, thus providing national treatment? 
 
Agriculture – Policy Objectives for the Sector
 
 24. Referring to para 20 on page 82 of the Secret ariat Report, the United States understands that 
in April 2005, Malaysia’s Ministry of Fina nce announced that under Malaysia’s National 
Biotechnology Policy, approved biotechnology compani es will be eligible for various tax incentives.  
The program will be administered by the Malaysia n biotechnology corporation. The actual package of 
tax incentives accorded to a given biotechnology comp any will be customized based on the merits of 
the project.   WT/TPR/M/156/Add.1 
 Page 29 
 
 
  Please provide further details regarding the t ypes of incentives that will be provided to the 
Malaysian biotech industry under the National Bi otechnology Policy.  In particular, please 
provide information regarding the eligibility requirements for companies to receive these 
benefits.   
 
Manufacturing – Objectives for the Sector  
 25. The aerospace industry is mentioned in para  31 on page 85 of the Secretariat Report as a 
sector for potential future growth.    
Given this goal, has Malaysia considered join ing the Agreement on Trade in Civil Aircraft? 
 Manufacturing – Key Subsectors – Automobiles
 
 26. Referring to paragraph 45 on pa ge 91 of the Secretariat Report, Malaysia’s recently released 
National Automotive Policy Framework sets the goals of the government for promoting the Malaysian 
auto sector.  The framework suggests that new in centives will be made available to enhance the 
competitiveness of automotive manufacturers in Malaysia.      
Please provide further details regarding the t ypes of incentives that will be provided to the 
Malaysian auto industry under the National Au tomotive Policy Framework.  In particular, 
please provide information regarding the magn itude of the benefits and the eligibility 
requirements for auto manufacturers to receive these benefits. 
 Services – Key Subsectors – Financial Services
 
 
27. The U.S. notes that Malaysia has had in place a Financial Sector Master Plan since 2001 
which envisions financial sector (banking, insurance,  securities, other financial services) liberalization 
by 2007.  We understand that Mala ysia has made a lot of progress in strengthening its regulatory 
system to help underpin such liberalization.  Neve rtheless, we have very little evidence that Malaysia 
has taken concrete steps towards uniform liberalization.    
What additional steps does Malaysia have pla nned to meet its 2007 dead line that will advance 
true market opening - that is, granting new licen ses to any applicant that is able to meet 
Malaysia's prudential standards, including the establishment of new companies and not just 
forcing small stake investment in exis ting, non-competitive local companies? 
 WT/TPR/M/156/Add.1 
Page 30  
 
  Questions of the Republic of Korea 
 
 
Question 1 (WT/TPR/S/156, pages 47-48, paras 43-47)
 
 
Malaysia is not a member of the GPA and it currently uses government procurement policy as 
one of the means to secure domestic public po licy purposes.  In the Malaysian government 
procurement market, foreign companies are not given a fair opportunity to take part in the bid on their 
own and thereby are compelled to participate jointly  with domestic companies.  What plans does the 
Malaysian government have to render the procur ement procedures more fair and transparent, 
including becoming a member of the GPA?  
 
 Question 2 (WT/TPR/S/156, pages 92-106, paras 48-81)
 
 
In Malaysia, communication, construction and international marine transport services are 
provided only through a representative office, regional office, or locally incorporated joint-venture 
corporation with Malaysian indivi duals or Malaysian-controlled cor porations or both.  Further, 
aggregate foreign shareholding in the joint-ve nture corporation should not exceed 30 per cent.  
Moreover, distribution services are not committed.  What plans does the Malaysian government have 
to mitigate the above-mentioned service related rest rictions and to commit on distribution services?   WT/TPR/M/156/Add.1 
 Page 31 
 
 
  Written Questions from the Separate Custom s Territory of Taiwan, Penghu, Kinmen and 
Matsu  
 
 
Secretariat Report WT/TPR/S/156 
 
II. TRADE POLICY REGIME  (3) D
EVELOPMENT AND ADMINISTRATION OF TRADE AND INVESTMENT POLICY  
 
(p. 19, para. 13)   Prior approval for foreign investment in the fo rm of acquisitions, merger s   and takeovers is 
required when foreign investments exceed 15% or in aggregate 30% of voting rights or shareholder 
funds.   
 
Does Malaysia have any plans to relax the require ments pertaining to voting rights, shareholder 
funds, and ownership control, with a view to fostering foreign investment? 
 
(7) F
OREIGN INVESTMENT REGIME  
 
(i) Recent developments 
 (p. 29, para. 55) 
  The Government of Malaysia is seeking to pr omote FDI in export-oriented manufacturing as 
well as in capital-intensive and high-tech industries. We are one of the major sources of investment to Malaysia, but we have received some complaints 
from our investors with respect to shortages in the labour market. 
 
Considering that a stable and steady stream of labo ur is essential to attracting the above-mentioned 
types of FDI, does Malaysia have any plans to addr ess the problem of labour shortages by relaxing 
restrictions on the entry of foreign labour and streamlining application procedures?   
(ii) Legislative framework and procedures  
(p. 31, para. 62)   We note that companies investing in Malaysia  subject to export conditions can now apply for 
MIDA approval to sell products in the do mestic market under certain conditions.  
 
It would be appreciated if Malaysia could please pr ovide more detail regarding the substance of these 
export conditions, as well as an  explanation of how these conditions , together with the approval 
scheme to sell domestically, conform to the TRIMs Agreement, in particular paragraph 2(c) of the 
Annex?  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 (2) M
EASURES DIRECTLY AFFECTING IMPORTS  
 
(i) Customs issues, trade facilitation, customs valuation and rules of origin 
 WT/TPR/M/156/Add.1 
Page 32  
 
  (p. 35, para. 13). 
  Malaysia and Thailand are working jointly to develop shared customs control on their 
borders, including the use of joint documentation.  Could Malaysia please elaborate further on the deta ils of the joint documentation and the mechanism 
being considered for the shared the customs contro l?  We are particularly interested in knowing 
whether both Customs administrations have already  been electronically exchanging clearance data 
for imported/exported goods and, if this is the case,  could Malaysia also elaborate further on exactly 
how the system operates? 
  
(v) Government procurement 
 
(p. 47, para. 44).  
 Malaysia has participated in the WTO Working Group on transparency in government 
procurement, but is not a party to the plurila teral WTO Government Pr ocurement Agreement; it 
intends to maintain its requirement for all govern ment agencies to procure supplies and services from 
local sources.    
a) As the third largest foreign investor in Mala ysia, we are particulally interested in knowing 
whether Malaysia has any plans to accede to  the WTO Government Procurement Agreement? 
 b) Furthermore, is the subject of government pr ocurement a part of any of Malaysia’s free trade 
agreements with other trading partners? 
 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
 
(v) Government-linked companies (GLCs) 
 
1. (p. 64, para 98)   
 
 In 2004, the GLCs were put under the overs ight of the Government's investment arm, 
Khazanah, which will seek to turn th em into market-driven entities. 
 
We are interested in knowing whether the budge t, employment and operating plans of Khazanah's 
holdings, as listed in Table AIII.3, are subject to surveillance by the legislative body of Malaysia? 
 
2. According to Table AIII.3 of the Report, some of Khazanah shareholdings by sector and 
company are quite low (e.g. Maxis Communications Bhd  2 ％, YLT Power International Bhd 0.01 ％).  
 
a)  How does Khazanah exercise control or influence the operation of these enterprises? 
   b)  What is the exact role of Khazanah in the privatization policy? 
   
c) For those companies, for example, in which K hazanah already holds a significant share, are 
there any plans for furt her privatization? 
  WT/TPR/M/156/Add.1 
 Page 33 
 
 
  (vii) Competition policy 
 
1. (p. 65, para 106)    We see from the report that, in 2003, Malaysia notified the WTO that it was preparing a 
competition policy and fair trade law; the process wa s expected to be completed by the end of 2005. 
   
a) Could Malaysia please provide an update on progress to establish a competition policy and 
to enact a fair trade law? 
 
b) What will be the status of the Fair Trade  Practices Commission.  Will it, for example, come 
under the authority of the Cabinet or a Mini stry, and how will its neutrality be ensured? 
 
2. (p. 66, para. 111)   
 The Energy Commission Act 2001 provides for the Energy Commission to promote and 
safeguard competition and to prevent the misuse of  monopoly or market power.  However, it is our 
understanding that the three State-owned utilities in  Malaysia dominate all energy generation and 
distribution markets through a system of vertical-integration.  
Could Malaysia therefore please expla in further what steps it is planning to take in order to ensure 
the transition into a competitive market for the energy sector?  
 
(viii) Intellectual property   
 
(p. 69, para. 124)   
 
Malaysia has made determined effort s to improve the enforcement of    intellectual property rights.   
 
Have any special measures been fo rmulated by the Malaysian Customs Administration to protect IPR 
at the borders
？ If so, how are these  
measures implemented? 
 IV. TRADE POLICIES BY SECTOR  
(3) M
INING AND QUARRYING  
 (iii) Foreign participation in the oil and gas sector  
1. (p. 84, para. 27) 
  The Malaysian Government welcomes foreign investment in its energy and mining sector.  However, as a result of the long-term trend of declin ing oil reserves, Petronas, the State-owned oil and 
gas company, has embarked on an interna tional exploration and production strategy. 
   
Is this move likely to have implications for Mala ysia’s national mineral policy or any impact on the 
oil industry?  If so, please provide details.  WT/TPR/M/156/Add.1 
Page 34  
 
  2. (p. 84, para. 27) 
  Majority foreign equity participation of up to 100% is permitted in  projects involving 
extraction or mining and processing, but mergers and acquisitions are subject to FIC approval and, in 
determining the percentage, three criteria are considered. 
 
We would appreciate knowing the reason for the re quirement for FIC approval?  In addition, could 
Malaysia please describe exactly how the three criteria are used to determine the percentage of stock 
holdings that apply to foreign participation, and how  the fair treatment of foreign investment can be 
ensured? 
 3. (p. 84, para. 28) 
  Although the upstream market of the gas industr y in Malaysia, such as exploration, has been 
opened up to foreign participation, Petronas remain s the sole pipeline gas supplier on the downstream 
side. 
 
Given this situation, does the Malaysian Go vernment have any plans for opening up the gas 
industry’s downstream market to foreign participation?  (4) M
ANUFACTURING  
 
(iv) Key subsectors 
 
1. (pgs. 90-92, paras. 42-47)   
 
 It is our understanding that a “National Au tomotive Policy Framework” has recently been 
announced by the Government of Malaysia designe d to promote the Malaysian automotive vehicle 
industry.  
Could Malaysia please elaborate? 
  2. (pgs. 90-92, paras. 42-47)   
  Malaysia protects its local car manufactu rers from foreign competition by overseeing a 
system of approved permits (APs), whch acts as a quota by restricting the total number of automobiles 
that can be imported in a given year relative to the size of the domestic market.  In our view, this is 
inconsistent with Article 11 of  GATT 1994 (General Elimination of Quantitative Restrictions).  
  In addition, Proton and Perodua, plus two lo cally incorporated joint ventures assembling 
imported kits, receive a 50% tax rebate on excise taxes, not availabl e to foreign manufacturers.  In our 
view this measure is inconsistent with Article  3 of GATT 1994 (National Treatment) and the WTO 
Agreement on Subsidies and Countervailing Measures. 
 
Will Malaysia consider amending these measures to bring them into compliance with WTO 
Agreements?  
 
(5) S
ERVICES  
 
(iii) Key subsectors 
  WT/TPR/M/156/Add.1 
 Page 35 
 
 
  1. (p. 95, para. 55) 
  Malaysia’s Financial Sector Master Plan ( FSMP) is aimed at building competitive domestic 
banks.   
 
In terms of liberalization, what is the current status of the FSMP?   
 
 The FSMP defers the introduction of new foreign competition until after 2007.   Can Malaysia 
say how soon after 2007 it expects this introduction to take place? 
 2. According to our understanding , Malaysia maintains certain r estrictions on the operations of 
foreign banks, in such areas as setting up branches or subsidiaries in Malaysia, hiring employees for certain services, conducting 12-month trade finance business, onshore currency exchange and 
import/export foreign exchange remittance business. 
 
Does Malaysia have any plans to relax these types of restictions on the operations of foreign banks? 
 
3. (p. 100, paras. 64, 66)  
  The Malaysian government has announced that foreign participants will be allowed to own 
100% equity in futures brokers, futures fund managers, and futures trading advisers.    
 
Will Malaysia consider reflecting this change in its Schedule of Special Commitments on market 
access?  
4. (p. 103, para. 73)    
 As indicated, the Malaysian government is rela xing immigration conditions for the entry of 
foreign medical specialists, therapists and patients in  order to further increase the contribution to the 
economy made by so-called “health tourism”.   
 
It would be appreciated if Malaysia could provide us with details of the revised regulations 
concerning immigration requirements in this respect. 
 
5. (p. 105, para. 79)  
 
 The report mentions that, in addition to th e introduction of more stringent Guidelines on 
Foreign Participation in the Distributive Trad e Services, the Malaysian government may be 
considering imposing minimum stocking requirements on hypermarkets so that 30% of all goods on 
shelves must be from Bumiputera companies.    Can Malaysia please confirm whether it has definitely  decided to implement the said measure and, if 
so, provide further details of the requirem ents and the expected implementation date? 
 WT/TPR/M/156/Add.1 
Page 36  
 
  PREGUNTAS PRESENTADAS POR LA ARGENTINA 
 
Pregunta 1:   En el item III (1) -Políticas y prácticas comerc iales, por medidas – Introducción-, el informe 
menciona que además de aplicarse prohibiciones a las importaciones por razones de seguridad 
nacional, religiosas o ambientales, Malasia aplica varias medidas no arancelarias en frontera sin 
mencionar cuáles son. Podrían enunciar cuál es son esas medidas y en qué consisten? 
 Pregunta 2: 
 
 En el punto II (7) (iii) – Régimen de políti ca comercial: marco y objetivos- Régimen de 
inversiones extranjeras- Incentivos- el informe me nciona que Malasia tiene  un número considerable 
de medidas  destinadas a promover el desarrollo de  determinados sectores. Podría enunciar cuáles son 
esas medidas y sobre qué bases se otorgan. 
 
Pregunta 3:    En el item III (3) (vi) -Políticas y prácticas co merciales, por medidas- Medidas que afectan a 
las exportaciones- Financiación, seguros y garantías de las exportaciones - el informe hace referencia 
a la existencia de un Programa de  Refinanciación de los Créditos a la Exportación por el cual se 
otorgan facilidades en la financiación y garantí as sobre exportaciones. Podrían brindar información 
acerca de cuáles son los sectores beneficiados por este sistema?  Pregunta 4:  
 En el punto III (2) (ii) (e) -Políticas y prácticas comerciales, por medidas- Medidas que 
afectan directamente a las importaciones- Arancel es- se menciona que Malasia está considerando 
imponer tarifas fuera de contingente (“out-of-quota ra tes”) a aves de corral y productos lácteos entre 
otros. Podrían brindar mayor explicación y el criterio que será adoptado para su aplicación? 
 Pregunta 5: 
 
 En el punto III (4) (i) (c) -Políticas y prácticas comerciales, por medidas- Medidas que afectan 
la producción y el comercio- Normas y otros requisi tos técnicos- en el item sobre certificación halal 
se menciona Malasia está interesada en convertirse en un centro de alimentos halal, en tal sentido ha 
desarrollado su propia certificación. Podría Malasia explicar si su certificación es similar a la de otros 
países musulmanes y en caso negativo en qué difier e? Qué pasaría si el producto tiene certificación 
halal y el establecimiento que lo produce no la tiene y viceversa?  WT/TPR/M/156/Add.1 
 Page 37 
 
 
  QUESTIONS FROM NEW ZEALAND  
 
1. Unbound tariff lines (WT/TPR/S/156, p.viii, para 9) 
 
 The Secretariat notes that over one-third of Malaysian tariff lines remain unbound, and many 
bound and applied rates have a c onsiderable gap between them. This naturally creates a degree of 
unpredictability for traders. What targets has Malays ia put in place, and what targets does Malaysia 
intend to put in place, in respect of binding unb ound lines and narrowing th e gap between bound and 
applied rates?  2. Import licensing (WT/TPR/S/156, p.44, para 38) 
 
The Secretariat reports that Malaysia still subj ects 27% of its tariff lines to import licensing, 
which has remained largely unchanged during the period of review. Non-automatic import licensing 
can, like unbound tariff lines, create a degree of uncer tainty for traders. Transparency as to licensing 
processes and availability of licences is important. Wh at is Malaysia doing to increase transparency in 
regard to import licensing? WT/TPR/M/156/Add.1 
Page 38  
 
  Questions from the Government of Canada 
 General Comments 
 
 Canada thanks Malaysia for the comprehensiv e presentation of its approach to standards, 
conformity assessment and regulation. We also tha nk Malaysia for the use of the internationally 
accepted format for designating the degree of ali gnment of national standards to international 
standards (Table III.5). This action promotes tran sparency.  Further, we acknowledge Malaysia's 
general relatively high level of alignment of national standards w ith international standards and a 
commitment to increasing the rate of a lignment as new standards are published.  
  
 There appears to be no indication of whethe r any Malaysian standardizing body has accepted 
Annex 3 of the TBT Agreement (Code of Good Practice).   
Report by the Secretariat (WT/TPR/156)
 
 
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraph 69: 
  
1. Canada requests that Malaysia provide more details on the National Standards Strategy and 
Action Plan, in addition to the website address to locate the electronic edition. 
  
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraph 70: 
  
2. Canada notes that “Malaysia is also active in  negotiating mutual rec ognition agreements with 
several APEC economies based on guidelines estab lished by the governing international bodies.”  
Could Malaysia please clarify by indicating specifi cally whether this denotes a reference to APEC 
MRAs or other MRAs? If this is a reference to APEC MRAs, please indicate which ones.   
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraphs 71 and 74: 
  
3. Concerning the reference to “compulsory standa rds”, is there a distinction between these 
standards and standards referenced in regulation?   4. What proportion of Malaysian standard s is referenced in regulation? 
 
5. How does Malaysia plan to increase the numbe r of standards referenced in technical 
regulations?   6. What is Malaysia’s policy on adopting fore ign standards to meet national regulatory 
requirements?  Is there a policy on equivalency?    
 
7. Despite a large number of areas subject to th e adoption of mandatory standards (listed in 
paragraph 74), Malaysia seems to  have made little progress in making greater use of standards in 
regulation. What steps are being taken to prom ote the benefits of voluntary standards among 
regulators? 
   WT/TPR/M/156/Add.1 
 Page 39 
 
 
  Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraph 72: 
     
8. Regarding the development of na tional standards, what role do stakeholders such as consumer 
groups and other non-private sector stakeholders play in this process? 
 
9. Could Malaysia please provide more details on how tax incentives and other measures are 
used to encourage participati on in standardization activity? 
 
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraph 73:    
10. In Table III.5, although the number of food a nd agriculture standard s has increased (from 
2001-2005), the actual number of international sta ndards being adopted has decreased. How might 
this be explained?  Moreover, there are two a dditional areas where the adoption of international 
standards remains low relative to the total number of Malaysian standards: civil engineering and 
construction, and road vehicles. What are the r easons for the lower adoption rates in these areas? 
  
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraph 75: 
  11. Could Malaysia please provide more informa tion on the relationship between DSM and the 
Minister of Science, Technology and Innovation, w ith respect to accreditation criteria and procedures 
which must be approved by the Minister?    
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(i) Standards and other technical requirements, Paragraph 78:   
12. In Malaysia's experience, which MR As have worked well and why?  
 13. We note that reference has not been made to certain voluntary arrangements such as IAF or 
the IECEE CB Scheme when others are mentioned (PAC, APLAC, ILAC).  Could Malaysia outline 
the extent to which its regulatory author ities utilize all of these arrangements?    
 
Report by the Secretariat (WT/TPR/156)
 
 Part III. Trade Policies and Practice by Measure,  (4) Measures affecting Production and Trade, 
(vii) Intellectual property rights, Paragraph 117:  
 Canada notes that amendments incorporated in  2003 into the Malaysian Patents Act of 1983 
include, inter alia , “updating the provision on compulsory li cences in compliance with Article 31 of 
the TRIPS Agreement”.    
14. Could Malaysia provide some examples of the updated compulsory licences? 
 15. Would Malaysia consider taking advantage of  the implementation of paragraph 11 of the 
General Council decision of 30 August 2003 on the implementation of paragraph 6 of the Doha 
Declaration on the TRIPS Agreement and Public  Health, as agreed on December 6, 2005? 
 
 Canada notes that “protection of confidential test data is not provided for under current laws. 
Presently, pharmaceutical and agricultural chemical t est data are protected under the Official Secrets 
Act 1972”.   WT/TPR/M/156/Add.1 
Page 40  
 
  16. Could Malaysia please provide further info rmation on its legislative protection of 
pharmaceutical and agricultural chemical test data?  
Part III. Trade Policies and Practice by Measure,  (4) Measures affecting Production and Trade, 
(vii) Intellectual property rights, Paragraph 118: 
 
17. Canada understands that “trade mark protection is not limited in  time provided registration is 
renewed and use continues”. Could Malaysia provi de more information on the terms of protection 
granted under its trademark legislation?  Part III. Trade Policies and Practice by Measure,  (4) Measures affecting Production and Trade, 
(vii) Intellectual property rights, Paragraph 119:  
 
18. Canada notes that “an amendment to the Copyrights Act 1987 in the year 2000 provides 
protection for performers with a view to comply ing with the TRIPS Agreement.” Could Malaysia 
provide more information on the scope of  protection conferred to performers? 
 
Part III. Trade Policies and Practice by Measure,  (4) Measures affecting Production and Trade, 
(vii) Intellectual property rights, Paragraph 122: 
 
19. Could Malaysia please elaborate on the type of protection provided by its Geographical 
Indications Act 2000?  For example, is protecti on provided for all goods in accordance with the 
TRIPS Agreement (Article 22)? Could Malaysia give more information on its system of protection?  
 20. In addition, what type of protection is provi ded for wines and spirits  (Article 23)? Could 
Malaysia please indicate approximately how many GIs are currently protected under this legislation?  Report by the Secretariat (WT/TPR/156)
 
 Part IV. Trade Policies by Sector, (5) Services, (iii) Telecommunications services, Paragraph 67.  
 
21. The Secretariat report notes that the dominant  provider of fixed-line services is Telekom 
Malaysia, a state-owned company. We note that in its schedule of specific commitments under the 
GATS, Malaysia has made commitments to addi tional principles such as having an independent 
regulator for telecommunications operators and servi ces. Could Malaysia provide clarification on the 
relationship between Telekom Malays ia and the independent regulator? 
 Part IV. Trade Policies by Sector, (5) Services, (iii) Telecommunications services, Paragraph 67.  
 
22. The Secretariat report mentions that alt hough the monopoly of Telekom Malaysia was 
abolished in 1994, it remains the main dominant provider of fixed-line services. Could Malaysia 
explain why this is still the case? 
 
Part IV. Trade Policies by Sector, (5) Services, (iii) Telecommunications services, Paragraph 68. 
 
23. The Secretariat report notes that the procedures for acquiring the licenses to operate are 
uncertain and lengthy. Does Malaysia concede that  this could constitute an obstacle to further 
competition in the fixed-line market?  
 
24. Malaysia made additional commitments on pub lic availability of licensing criteria. Could 
Malaysia provide further details about the licensing process?    WT/TPR/M/156/Add.1 
 Page 41 
 
 
  Part IV. Trade Policies by Sector, (5) Services, Table IV.11. 
 
25. Canada notes that Malaysia has a restriction on foreign ownership for value-added services. 
Could Malaysia provide more information on  this restriction and its policy rationale? 
 
Part IV. Trade Policies by Sector, (5) Services, (iii) Telecommunications services, Paragraph 68.  
 
26. The Secretariat Report notes that market access is  limited to facilities-based providers. Could 
Malaysia provide information on this policy and what it means for resellers?  
 Part IV. Trade Policies by Sector, (5) Services, (iii) Telecommunications services, Paragraph 68. 
 
27. Although Malaysia is promoting ICT growth, the S ecretariat Report states that there is limited 
trade and investment and that one of the reasons for this could  be the fact that the market for fixed 
line services is largely controlled by Telekom Mala ysia through its ownership of the lines. The 
Secretariat Report states, however, that Malaysia  has sought to encourage investment in the 
telecommunications market by guiding investment into the Multimedia Super Corridor (MSC). Could 
Malaysia provide information about the type of in itiatives involved in promoting investment in this 
sector and in other parts of ICT? 
 
Part VI. Trade Policies by Sector, (5) Services, ( iii) Key sub sectors, Box IV.1: Reform Timetable 
under the Financial Sector and Capital Markets Master Plans: 
 
 The Secretariat Report states that, under the second phase of the FSMP, Malaysia will allow 
incumbent foreign banks to establish new branches.    
28. Could Malaysia specify whether there will be limitations to the number of branches foreign 
banks will be allowed to open, as is the case in the insurance industry (two  new branches a year)? 
 29. Could Malaysia please elaborate on why insura nce companies are limited to only two new 
branches per year?  
30. Will Malaysia allow the establishment of ne w branches under terms that afford national 
treatment?   The Secretariat Report also states that the second phase of the FSMP will gradually level the 
playing field for incumbent foreign banks and accord greater operational flexibility. 
 
31. Could Malaysia provide greater details on othe r measures it is contemplating (other than 
allowing the establishment of new branches)?  
Part VI. Trade Policies by Sector, (5) Servic es, (iii) Key sub sectors, Paragraph 59:  
 
 Paragraph 59 of the Secretariat Report states that branches of foreign insurances companies 
were required to incorporate locally by mid-1998 with  some extensions granted.  Paragraph 45 of the 
Government Report further states that since 2003, majority foreign-owned insurers are allowed to open a limited number of new branches.  
32. Could Malaysia specify whether foreign insu rance branches that did not incorporate in 
Malaysia still operate in the country?  WT/TPR/M/156/Add.1 
Page 42  
 
  33. If yes, do they receive the same regulatory treat ment (e.g. capital requirements, etc.) and have 
the same business powers as locally incorporated ma jority foreign-owned service providers?  Please 
provide details of any differences. 
 
Part IV. Trade Policies by Sector, (5) Services (g) Professional Services, Paragraph 75: 
  Paragraph 75 makes reference to the fact th at the practice of Malaysian law is normally 
restricted to Malaysian citizens or permanent reside nts but that the Attorney General has authority to 
grant limited exceptions on a case-by-case basis, provi ded the applicant has seven years experience.  
 
34. Could the Government of Malaysia please provide  further information regarding the criteria 
which it uses in order to assess potential applican ts who are not Malaysian citizens or permanent 
residents?    35. Can Malaysia please clarify how such a case-by-case assessment would not be inconsistent 
with its obligations with respect to MFN? 
 
Part IV. Trade Policies by Sector, (5) Services, (g) Professional Services, Paragraph 76: 
 
 Paragraph 76 notes that Malaysia participates actively in the APEC architect project aimed at facilitating mobility of architects through mutual recognition of qualificati ons among participating 
APEC economies.   
 
Could the Government of Malaysia please provide  information regarding the extent to which 
it currently recognizes the licensing and qualifications of foreign architects?   WT/TPR/M/156/Add.1 
 Page 43 
 
 
  Questions raised by Switzerland 
 
Report by the Secretariat 
 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
 (1) Introduction 
 Para. 2  suggests that Malaysia is participating constr uctively in the Doha Development Round. At the 
same time, the Secretariat's report indicates that WTO agreements and negotiations seem to play a less pivotal role in the formulation of Malaysia's tr ade policies than was prev iously the case. Does this 
reflect an explicit change in Malaysia's policy preferences toward more regionalism? We would 
appreciate receiving comments from the authoriti es on this apparently new development. 
 
Para. 6 suggests that Malaysia practices a dualist le gal system under which international treaties and 
legal obligations are separate fro m the domestic legal system. The report further suggests that an 
international legal obligation does not become auto matically applicable in Malaysia and that WTO 
agreements are implemented on a case-by-case basi s. How do the Malaysian authorities make sure 
that all their commitments with the WTO are actu ally implemented in the domestic legal system ? 
Also, are there possibilities of appeal  if this were not to be the case and could such appeals force an 
inclusion in the domestic legal system ?  
(7) Foreign Investment Regime 
 The Secretariat's report suggests in para. 55 that th e Government has resisted investment in industries 
seen as key for national development, such as th e automotive industry, although it has sought to 
promote FDI in export-oriented manufacturing as we ll as in capital-intensive and high-tech industries. 
Could the authorities explain the apparent contradic tion between their reluctance to invest in such 
domestic industries while considering these industri es as key for national development ? Can this be 
interpreted as the recognition that such "infant i ndustry" type of investments actually represented an 
industrial policy failure ?  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 (2) Measures directly affecting imports 
 
(iv) Contingency measures 
 
Para. 42 suggests that currently there is no safegua rd legislation in Malaysia, but that MITI has 
expressed its intention to develop such a legislation. What has triggered this change in attitude of the 
authorities toward the need for a safeguard legislation ? 
 
(vii) Trade-related investment measures and local-content requirements 
 
Although the Secretariat's report indicated in para. 49  that Malaysia has eliminated its trade-related 
investment measures as scheduled at the end of 2003 and that there is no specific legislation or 
regulation on local content, para. 50 suggests nevert heless that certain programs aimed at promoting 
and developing SMEs encourage the use of local ma terials and services through financial, technical 
and other related assistance. Could the Malaysian authorities indicate if they have any plans to phase out these programs or to adapt them, and when ? Also, could the authorities explain why such programs which seem to bypass to some extent th e prohibition of local content requirements are 
needed to ensure the promotion and development of SMEs ? WT/TPR/M/156/Add.1 
Page 44  
 
   
(viii) Other measures 
 
Para. 51. Could the Malaysian authorities indicate the reasons for which they resorted to countertrade 
even in such instances where the other parti es would have had an easy access to convertible 
currencies (for instance General Electric), since bart er trade is often considered as an economically 
inefficient way to do trade?   
(4) Measures affecting production and trade 
 
(vii) Competition policy  
Para. 106. The Secretariat's report indicates that  Malaysia notified the WTO in 2003 that it is 
preparing a competition policy and fair trade law and th at the process is expected to be completed by 
the end of 2005. Could the Malaysian authorities indicate whether this new law has actually been 
enacted, when it is going to enter into force, and provide some details on its main characteristics ? 
Also, is it going to replace or supersede the existi ng legislations to address competition issues in the 
communications and multimedia and energy sectors, and in its consumer protection legislation ?  
(viii) Intellectual property 
 In paragraph 117 of its report, the Secretariat points out  that “protection of confidential test data is not 
provided for under current laws”.  
 Please indicate whether Article 39.3 of the TRIPS Agre ement is directly applicable in Malaysia. How 
are the obligations under this provision complied with in practice? Please indicate whether national 
legislation to implement the obligations under this  provision is under preparation. If so, please point 
out the main features of this new legislation. W ill such legislation provide for a specific term of 
protection for test data submitted in  market authorization procedures? 
  WT/TPR/M/156/Add.1 
 Page 45 
 
 
  Written Questions from Trinidad and Tobago 
 Report by the Secretariat (WT/TPR/S/156)  II. Trade Policy Regime: Fr amework and Objectives 
  
I. Paragraph 3, page 16 indicates that Malaysia has relaxed its guidelines, to provide greater 
flexibility for foreign equity participation in lo cal firms and acquisition by Malaysian and foreign 
interests.  The only equity condition is to maintain at least 30% bumiputera equity.   
  
 Can Malaysia elaborate on whether bumiputera equity has resulted in any significant 
benefits? What are the objectives of this restriction and to what extent have these been realized? Are 
their any immediate plans to fully liberalise equity participation?   
II. According to paragraph 22, page 21, Malaysia  has a well-established development planning 
process, which is aimed at achieving the status of a developed country by the year 2020.   
What specific actions are being contemplated by the Government to realize this objective between 
2006-2020? Further, what specific criteria and be nchmarks are being used by Malaysia to assess 
whether it is achieving developed country status?  
 
III. In paragraph 65, page 31, it is noted that Ma laysia has a considerable number of incentive 
schemes designed specifically for various industries as well as to promote the development of targeted 
industries and activities that can contribute to the future growth and development of the Malaysian 
economy.   
  
 Given the importance attached to export and i nvestment incentives, has Malaysia sought to 
assess empirically whether their benefits, notably their capacity to generate exports  and investment 
opportunities, outweigh their costs, both fiscal and in terms of distortions?   WT/TPR/M/156/Add.1 
Page 46  
 
  REPLIES PROVIDED BY MALAYSIA  
 
 
I. ECONOMIC ENVIRONMENT 
 
Investment Regime 
 FDI Regime 
 
Question
 
 
Would Malaysia consider removing foreign equity  restrictions, and export requirements in the 
manufacturing imposed during the 1997-98 period, as originally scheduled for December 31st, 2003? 
(CHILE)   
 
A:  Effective June 2003, 100 per cent equity is a llowed for investments in new projects as well as for 
investments in expansion/diversification projects by existing companies.  Export requirements are not 
imposed for such projects.  For existing companies, they can apply for previous  equity and export conditions to be removed. 
 Question
 
 Australia notes Malaysia’s move to fully liberalise equity holdings in all new manufacturing projects, 
allowing foreign investors to hold 100 per cent equity in all investments in new projects as well as in expansion/diversification projects, irrespective of th e level of exports. Recognising that foreign direct 
investment plays a key role in Malaysia's econo mic growth, has Malaysia considered extending the 
same opportunities to investors in existing manufacturing projects as well as outside of the manufacturing sector? (AUSTRALIA)  
 
A:  Existing manufacturing companies licensed befo re the current liberalised equity conditions can 
apply to have equity and export conditions removed .  These requests will be considered  based on 
merits but generally, companies with export conditi ons are allowed to sell 100% of output in the 
domestic market if these products are not subject to  duties, are not locally-produced or there is 
inadequate supply.  In the non-manufacturing sector, 100 per cent foreign e quity is applicable to a number of activities, 
including setting up of regional establishments; such as regional headquarters, international 
procurement centres, regional distribution cen tres, regional offices and representative offices; 
industry support industries examp le research and development and ICT industries located in the 
Multimedia Super Corridor (MSC). For the other sec tors, it will depend on the level of development 
and readiness for greater liberalisation. 
 Question
 
 Would Malaysia consider furtheri ng liberalising its investment re gime by no longer retaining a 
"discretionary authority over the approval of individual investment projects..."? (CHILE)  A:  Approval requirements are intended to ensu re the orderly development of the manufacturing 
sector.  
  WT/TPR/M/156/Add.1 
 Page 47 
 
 
  Question  
 Which economic fields has Malaysia identified to attract trade related FDI? And in what way does the 
Government plan to attract more FDI? (EC)  
 
A:  Malaysia has identified promoted activities wh ich include processing of agricultural produce, 
biotechnology and software engineering. Details of these activities can be found in the Ministry of International Trade and Industry and MIDA’s websites.   
 
Question
 
 
Prior approval for foreign investment in the form of  acquisitions, mergers   and takeovers is required 
when foreign investments exceed 15% or in aggregat e 30% of voting rights or shareholder funds.   
 Does Malaysia have any plans to relax the requireme nts pertaining to voting rights, shareholder funds, 
and ownership control, with a view to fost ering foreign investment? (p. 19, para. 13) (CHINESE 
TAIPEI)  
 
A:  These polices are reviewed on an ongoing basis.  
 
Question
 
 
The Government of Malaysia is seeking to promot e FDI in export-oriented manufacturing as well as 
in capital-intensive and high-tech industries. We are one of the major sources of investment to 
Malaysia, but we have   received some complaints fr om our investors with respect to shortages in the 
labour market.   
 
Considering that a stable and steady stream of labour is essential to attracting the above-mentioned 
types of FDI, does Malaysia have any plans to address the problem of labour shortages by relaxing 
restrictions on the entry of foreign labour and st reamlining application pro cedures? (p. 29, para. 55) 
(CHINESE TAIPEI)  
 
A:  Malaysia does not encourage labour intensive industries; and Malaysian entrepreneurs in these 
sectors are encouraged to relocate their operations in countries where there a re labour surplus. In 
promoting  capital intensive and high-tech industr ies in Malaysia, the government undertakes efforts 
to increase the supply of technical professionals.   
Question
 
 The Secretariat's report suggests in para 55 that the Government has resisted investment in industries 
seen as key for national development, such as th e automotive industry, although it has sought to 
promote FDI in export-oriented manufacturing as we ll as in capital-intensive and high-tech industries. 
Could the authorities explain the apparent contradic tion between their reluctance to invest in such 
domestic industries while considering these industries as key for national deve lopment? Can this be 
interpreted as the recognition that such "infant i ndustry" type of investments actually represented an 
industrial policy failure? (SWITZERLAND)  
 
A:  It is not true that the Malaysian government is  reluctant to promote domestic investment in such 
industries. Malaysia encourages domestic and fore ign investments in the manufacturing sector, 
including the automotive sector.  
 WT/TPR/M/156/Add.1 
Page 48  
 
  Question
 
 We note that companies investing in Malaysia s ubject to export conditions can now apply for MIDA 
approval to sell products in the domest ic market under certain conditions.  
 
It would be appreciated if Malaysia could please pr ovide more detail regarding the substance of these 
export conditions, as well as an explanation of how these conditions, together with the approval 
scheme to sell domestically, conform to the TRIMs Ag reement, in particular paragraph 2(c) of the 
Annex? (p. 31, para 62) (CHINESE TAIPEI)  
 A:  Existing companies with export requirements are allowed to sell up to 100 per cent of their output 
to the domestic market if the products have zero im port duty, are not produced locally or there is 
inadequate supply in the domestic market. These requirem ents are not inconsistent with Article 2 (c) 
of the Annex to the TRIMS Agreement which allows exportation or sale for exports.  
 Question 
 
 Under Item II(7)(iii) (Trade Policy Regime:  Framew ork and Objectives - Foreign investment regime:  
Incentives), the report states that Malaysia has a considerable number of measures designed to 
promote the development of targeted industries.  Could you please inform us what these measures are, 
and on what basis they are granted. (ARGENTINA)  
 
A: This information is available from the website of the Malaysi an Industrial Development 
Authority www.mida.gov.my   
 
Question
 
 
Would Malaysia consider estab lishing a consultation mechanism with the business community, 
including the European one, in particular when line ministries are considering new legislation having 
an impact on either EU Malaysia trade and investment relation or on the domestic business 
environment? (EC)  
 A:  The Government undertakes consultations with the business community, including through the 
regular MITI and Budget Dialogues. As regards, c onsultations on specific legislation, there is a 
public consultations phase in the tabling of new legislation. Bumiputera Equity  
Question
 
 Paragraph 3, page 16 indicates that Malaysia has relaxed its guidelines, to provide greater flexibility 
for foreign equity participation in local firms and acquisition by Malaysian and foreign interests.  The 
only equity condition is to maintain at least 30% Bumiputera equity.   
 
Can Malaysia elaborate on whether Bumiputera equity  has resulted in any significant benefits? What 
are the objectives of this restriction and to what  extent have these been realized? Are there any 
immediate plans to fully liberalise equity participation? (TRINIDAD AND TOBAGO)  
 
A:  The Bumiputera equity policy is a socio-econom ic tool to restructure the economy and to help 
distribute wealth equitably among Malaysians wherein it aims to increase Bumiputera equity 
participation in the economy. Since it was introduced  in 1971, the equity share of Bumiputera has 
increased from 4.3% to about 18% in 2004.  
  WT/TPR/M/156/Add.1 
 Page 49 
 
 
  Incentives 
 
Question  
 In paragraph 65, page 31, it is noted that Malays ia has a considerable number of incentive schemes 
designed specifically for various industries as we ll as to promote the development of targeted 
industries and activities that can contribute to the future growth and development of the Malaysian 
economy.  Given the importance attached to export and investment incentives, has Malaysia sought to 
assess empirically whether their benefits, notably their capacity to generate exports  and investment 
opportunities, outweigh their costs, both fiscal and in terms of distortions?  (TRINIDAD AND 
TOBAGO)  
 
A:  A study on the effectiveness and impact of tax incentives in Malaysia  is currently being 
undertaken. 
 Question
 
 Tables III.9 and III.10 on pages 60-62 list an extensiv e array of indirect and direct tax incentives 
available to manufacturing firms.  The United States requests that Malaysia notify th e programs in these lists to the WTO Committee on 
Subsidies and Countervailing Measures as soon as possible. (US)  
 
A: These incentives are not notified b ecause they are not subsidies.  
 
Transparency 
 
Question 
 
 Australia appreciates the Malaysian Government's declaration that it is committed to improving the 
transparency of government decision-making and pro cedures, including greater transparency in laws 
and administrative rulings covering sectors such as  customs, investment, intellectual property and 
standards.  However, the Government retains cons iderable discretionary authority over the approval 
of individual investment projects.  Is Malaysia considering increasing transparency in  relation to investment policies, procedures and 
incentives outside of the manufacturing sector? (AUSTRALIA)  
 A:  Malaysia provides information on policies, procedures and incentives in manufacturing and non 
manufacturing sectors through various publications  and websites. Malaysia’s economic policies are 
regularly published in various government plans rep orts such as the Industrial Master Plan, the 5-
year Malaysia Plans, the National Agricultural Poli cy documents and the long-term plans such as 
Vision 2020. In addition, the annual MITI Report,  Economic Report and the Budget Speech, provide 
information on government economic strategies.  The National Gazette publishes notices on changes 
to rules and regulations, while the websites of the various Ministries contain current information of 
pertinent laws and regulations. For example, the webs ite of the Ministry of International Trade and 
Industry contains information on trade and investme nt policies and incentives for the manufacturing 
sector and manufacturing-related services. The Malaysian Communication and Multimedia 
Commission and the Multimedia Development Cor poration websites contain information on ICT 
policies and incentives. 
 WT/TPR/M/156/Add.1 
Page 50  
 
  Competition Policy 
 
Question
 
 Australia notes with interest that in 2003, Mala ysia notified the WTO that it is preparing a 
competition and fair trade law, with the process expe cted to be completed by the end of 2005.  Has 
Malaysia completed its draft policy?  If not, when does Malaysia expect the policy to be finalised? 
(AUSTRALIA)  
 
The EC should like Malaysia to inform about its intention to enact a general competition law and the 
timeframe foreseen? Also with respect to which ins titutional arrangements foreseen in this respect 
 How does Malaysia assess the impact on its devel opment because of the lack of such a general 
policy? (EC)  
 
We see from the report that, in 2003, Malaysia no tified the WTO that it was preparing a competition 
policy and fair trade law; the process was expected  to be completed by the end of 2005. (p. 65, 
para 106) (CHINESE TAIPEI)  
  (a) Could Malaysia please provide an up date on progress to establish a competition 
policy and to enact a fair trade law? 
 
 (b) What will be the status of the Fair Trade Practices Commission.  Will it, for example, 
come under the authority of the Cabinet or a Ministry, and how will its neutrality be ensured? 
 
Para 106 - The Secretariat’s report indicates that Ma laysia notified the WTO in 2003 that it is 
preparing a competition policy and fair trade law and th at the process is expected to be completed by 
the end of 2005. Could the Malaysian authorities indicate whether this new law has actually been 
enacted, when it is going to enter into force, and pr ovide some details on its main characteristic? Also 
is it going to replace or supersede the existing legislations to address competition issues in the communications and multimedia and energy sectors and in its consumer pr otection legislation? 
(SWITZERLAND)  
 
A:  Malaysia’s policy on competition known as th e Fair Trade Practices Policy was approved by the 
Cabinet in October 2005.  The law is expected to  be introduced in 2007. The overall objective of the 
policy is to promote fair trade practices while at the same time to ensure he althy competition in the 
market place.  It will address abuse of dominance, prohibit anti-competitive practices and unfair 
trade practices.  Institutional arrangements – the establishment of a Fair Trade Practices Commission is in the 
pipeline. The Fair Trade Practices Commission is  expected to be under the jurisdiction of the 
Ministry of Domestic Trade and Consumer Affairs. De tails of its status still at the drawing board 
stage.  The competition issues in the communica tions and multimedia and energy sectors will remain 
within the jurisdiction of the relevant agenci es but cross sector competition issues will be addressed 
by the new law. Consumer protection legi slation will continue to be in force. 
 
Malaysia in the WTO:  DDA, Regional , Bilateral and Preferential Agreements 
 
Question
 
 The EC considers that the WTO and multilateral liber alization is the most certain way for small and 
medium sized countries to promote their interests.   WT/TPR/M/156/Add.1 
 Page 51 
 
 
   
How does Malaysia judge the relative importance a nd weight of bilateral/FTA policies and further 
development of the WTO system in terms of  its own trade and development needs?  
 How does Malaysia see the development of its trade policies in the context of the multilateral system? 
 
Para 2 suggests that Malaysia is participating c onstructively in the Doha Development Round. At the 
same time, the Secretariat's report indicates that WTO agreements and negotiations seem to play a less pivotal role in the formulation of Malaysia's tr ade policies than was prev iously the case. Does this 
reflect an explicit change in Malaysia's policy preferences toward more regionalism? We would 
appreciate receiving comments from the authoriti es on this apparently new development. 
(SWITZERLAND)  
 
A:  Malaysia attaches great import ance to the multilateral trading system as it provides stability that 
facilitates international trade. 
  Malaysia will continue to be actively engaged in the Doha ne gotiations. Malaysia hopes to see 
substantial market access in this round, complemented  by clarification of trade rules that will bring 
greater liberalisation in trade, yet taking into account the developmental in terests of developing 
countries. 
 
While the multilateral process has been successful and continues to be relevant, given the 
complexities and wide membership with varied in terests, multilateral negotiations do take up longer 
time. To complement the multilateral approach, Ma laysia is pursuing bilateral and regional trade 
arrangements.  
 Question
 
 As noted in paragraph 25 on pages 21 and 22 of the S ecretariat Report, Malaysia is in the process of 
negotiating bilateral FTAs with Japan, Australia, New Zealand and Korea.  ASEAN, of which 
Malaysia is a member, is negotiating re gional FTAs with those same countries.   
 
 (a) What will the relationship be between Malaysia’s bilateral FTAs and Malaysia’s 
participation in ASEAN’s regional FTAs?   
  (b) Will the ASEAN FTAs subsume the Malaysian FTAs?    
 (c) Will the bilateral FTAs contain additional  preferential treatment not included in the 
regional FTAs?  (US) 
 
A:  Malaysia attaches importance to its free tr ade arrangements with ASEAN and other bilateral 
partners.  There could be differences in these FTAs  given the differences in trade patterns and 
development across FTA partners but the aim in all th ese FTAs is substantial trade liberalisation.  
 Question
 
 The description of the Malaysia-Japan FTA in footnote 17 to paragraph 46 on page 28 of the 
Secretariat Report noted that “Malaysia’s automobile industry was the focal point of negotiations.”   
The paragraph further indicated that the agre ement between Malaysia  and Japan “abolished most  
(emphasis added) tariffs between the two countri es by 2015.”  Article XXIV of the GATT requires 
that FTAs eliminate tariffs on “substantially all the trade” between parties.  (US)   WT/TPR/M/156/Add.1 
Page 52  
 
   (a) What does Malaysia mean by “most tari ffs”?  What percentage of trade and tariff 
lines will be duty-free in 2015 as a result of the FTA? 
  (b) Are any sectors excluded from tariff-elimination under the FTA?   
 (c) When will Malaysia and Japan notify their FTA to the WTO? (US)  
 
A:  The Malaysia-Japan FTA will result in eventual ta riff elimination of over 95% of Malaysia’s tariff 
lines by 2021. It is envisaged that by 2015, more than 90 per cent of lines will be duty-free. Products 
excluded from tariff elimination include tobacco, arms, liquor, used tyres and rice.   
 
The FTA was signed only in December 2005. Both sid es are still putting in place necessary domestic 
procedures before it comes into force in July 2006. The notifica tion will be made before the FTA 
comes into force. 
 Question
 
 Malaysia is part of ASEAN and seems to pursue further FTAs with countries in the region. How does 
Malaysia intend to ensure that its FTAs continue to promote economic growth and development, not 
least when considering the transparency for economic operators.  
FTAs which do not cover substantia lly all trade and which are not sufficiently ambitious can have 
adverse consequences for trade. How will Mala ysia ensure that does not become the case? 
 Would Malaysia give public access, for example th rough the MITI website, to all the contents of 
FTAs signed by Malaysia? 
 
A:  The pursuit of FTAs has the overarching object ive of enhancing trade and development through 
greater trade liberalisation including through comp rehensive coverage. Details of the ASEAN-JAPAN 
FTA agreement are available on ASEAN website  and JAPAN-MALAYSIA Economic Partnership 
Agreement is on the website of the Ministry of  International Trade and Industry www.miti.gov.my 
 Question
 
 Concerning the GSTP, is Malaysia participati ng in the negotiations of the GSTP hosted by 
UNCTAD?  If not, please indicate the reason why Malays ia is not participating in the negotiations. 
(Page 28, paragraph 49) (JAPAN)  
 
A:  Malaysia is participating in the 3
rd Round of the GSTP negotiations.  
 
II. TRADE POLICIES 
 
Trade Policy Formulation and Implementation 
 
Question  
 
How is the issue of trade being dealt within Malaysia’s national strategies? Are the strategies based on 
the possibilities for advancing the country’s deve lopment objectives in the context of increasing 
globalization through trade? (EC)  
 
A:  Trade policy is an important component of Mala ysia’s overall national economic policy.  Trade is 
an instrument for greater integration into the globa lised world, in which trade would provide impetus  WT/TPR/M/156/Add.1 
 Page 53 
 
 
  for Malaysia’s industrialisation process, enhan ce technological innovation and absorption and 
improve living standards.  
 
Question  
 
Para. 6 suggests that Malaysia practices a dualist le gal system under which international treaties and 
legal obligations are separate fro m the domestic legal system. The report further suggests that an 
international legal obligation does not become auto matically applicable in Malaysia and that WTO 
agreements are implemented on a case-by-case basi s. How do the Malaysian authorities make sure 
that all their commitments with the WTO are actually implemented in the domestic legal system? 
Also, are there possibilities of appeal  if this were not to be the case and could such appeals force an 
inclusion in the domestic legal system? (SWITZERLAND)  
 
A:  The WTO commitments and obligations are impl emented by way of enacting them into Malaysian 
domestic laws. The coordinating agency that ensu res the implementation of the WTO commitments 
and obligations are carried out is the Ministry of International Trade & Industry, with the assistance 
from the relevant Ministries and the Attorney General’s Chambers of Malaysia. 
 
The Appeal process is inherent in the Malaysian legal system. Where the WTO Agreement provides 
the avenue for an appeal, the Government will en sure that it is incorporated in the relevant 
legislation.  
 
Question  
 Please explain specific contents of the “the Third In dustrial Master Plan (IMP)”, “the Ninth Malaysia 
Plan” and “the second phase of Vision 2020” that rela te to the liberalization of trade in services.  
(Page 11, paragraph 50) (JAPAN)  
 
A:  These plans are still at the formulation stage and will be launched in the first half of the year.  
 
The IMP3 will cover a period of 15 years (2006-2020) and is expected to outline strategic thrusts and 
policies to enhance the country’s competitiveness and resilience towa rds realizing Malaysia’s vision 
of a fully industrialized and developed nation by 2020.  The Plan covers the manufacturing and 
services sectors and is expected to focus on de veloping new and current growth areas, and 
strengthening the enabling environment for economic growth. 
 
The Ninth Malaysia Plan is expected to focus on macro-economic strategies covering the period 
2006-2010. The Plan will focus on strategies and thrusts for developing the various sectors of the 
economy over the next five years.   
Question
 
 Malaysia is a developing country with high gr owth and great development perspectives. Other 
countries in the global trading system are less fortunate.  
 Has Malaysia introduced arrangements aimed at in creasing the integration of the least developed 
countries in the global trading system, e.g. thr ough schemes increasing the ma rket access of these 
countries? How does Malaysia assess the deve lopment prospects of these countries?  (EC)  
 
A:  Malaysia supports the greater integration of LD Cs into the global trading system.  We consider 
trade to be a mechanism for integration as we ll as enhancing developmental prospects of these 
countries.  In this context, under the ASEAN Integr ated System of Preferences, Malaysia grants non WT/TPR/M/156/Add.1 
Page 54  
 
  reciprocal preferences to the new members of ASEAN such as Cambodia and Laos. Malaysia is also 
participating in the GSTP negotiations that could provide  non-reciprocal commitments for  LDCs.  
 The development prospect for LDCs is contingent upon providing effective capacity building to the 
LDCs.  
 Question
 
 According to paragraph 22, page 21, Malaysia has a well-establis hed development planning process, 
which is aimed at achieving the status of a develope d country by the year 2020.  What specific actions 
are being contemplated by the Government to re alise this objective between 2006-2020? Further, 
what specific criteria and benchmarks are being u sed by Malaysia to assess whether it is achieving 
developed country status? (TRINDAD AND TOBAGO)  
 
A:  Actions to realise these objectives woul d be incorporated in the IMP3 and the 9
th Malaysia Plan 
which are being formulated.   
We would consider Malaysia as having achieved d eveloped nation status by attaining the 9 guiding 
principles used as benchmarks:  - establish a united Malaysian nation with a sense of common and shared destiny - create a psychologically liberated, secure and devel oped society with faith and confidence in 
itself 
- foster and develop a mature democratic society, practicing a form of mature consensual, 
community-oriented Malaysian democracy that c an be a model for many developing countries 
- establish a fully moral and ethical society, w hose citizens are strong in religious and spiritual 
values and imbued with the highest ethical standards 
- establish a matured, liberal and tolerant societ y in which Malaysians of all colours and 
creeds are free to practice and profess their cu stoms, cultures and religious beliefs and yet 
feeling that they belong to one nation 
- establish a scientific and progressive society, a society that is innovative and forward looking - establish a fully caring society and a caring cultu re, a social system in which society will 
come before self 
- ensure an economically just society 
- establish a prosperous society, with an economy that is fully competiti ve, dynamic, robust and 
resilient 
 
Question
 
 
In relation to Malaysia's intention that it "seek s greater market access under Doha negotiations for 
agricultural products, industrial goods and services":  Please explain the gist of the cooperation Malaysia has provided to poorer developing countries in 
relation to liberalization of trade in services since the last TPR of Malaysia. (cf. in light of the question raised by the discussant in the last TPR of Malaysia, i.e. "how Malaysia, as a more 
developed economy among developing countries, viewed cooperation with poorer developing 
countries in the framework of the Doha Wo rk Programme", "TRADE POLICY REVIEW, 
MALAYSIA, Minutes of Meeting", WT/TPR/M/92, pa ragraph 79, as well as Malaysia's position that 
"Malaysia was prepared to participate activel y and constructively in the WTO negotiations on 
services to promote market access opportunities to wards ensuring development of the sector", 
WT/TPR/M/92, paragraph 95).  (Page 7, paragraph 20) (JAPAN) 
 Please convey the specific views of Malaysia, as we ll as any specific plans, if any, on how to 
cooperate with poorer developing countries in relation to the liberalization of the trade in services in 
the framework of the Doha Work Programme. (JAPAN)   WT/TPR/M/156/Add.1 
 Page 55 
 
 
   
A:  Malaysia is of the view that to assist developing countries, including poorer developing countries, 
negotiations must adhere to GATS principles of Ar t IV of increasing participation and Art. XIX on 
progressive liberalisation. Developing countries must al so be assisted in increasing its capacity to 
take advantage of market access opportunities accord ed by GATS. On Malaysia’s part, we have 
provided technical assistance to  other developing countries.   
 
Question  
 Malaysia has benefited greatly from the adop tion of autonomous liberalisation measures.  
How does it intend to continue fostering its grow th and development? Through further autonomous 
measures, and in case which? (EC)  
 
A:  Malaysia has adopted autonomous liberalisation me asures and will continue to so at a level and 
pace that commensurates with its level of development.  
 
We promote growth through a multitude of measures  and autonomous liberalisation is only one of the 
measures.  
 
Measures Affecting Imports 
 Customs Procedures and Trade Facilitation 
 Question
 
 Malaysia has in the context of the autonomous me asures further opened its market, but it has also 
further streamlined its customs administration. 
 How does Malaysia assess the development impact of  the streamlining of its customs administration 
and are there import lessons to be noted by other countries in the WTO? (EC)  
 
A:  The development impact of streamlining cust oms administration has been assessed for example 
through customs efficiency in collecting revenues,  detecting and resolving cases of smuggling and 
fraud as well as faster response to the needs of th e trading community. Some of the important lessons 
to be noted are increased in cu stoms revenue collection by 16% and reduced number of smuggling by 
60%. 
 Question
 
 The EC welcomes the extensive reforms introduced by Malaysia under Trade Facilitation, including 
the introduction of systematic risk management and post-audit controls. The EC fully supports 
Malaysia’s objective of seeking the introductio n of such reforms by trading partners.  
 
What implementation challenges has Malaysia faced and how has it overcome them?  
 What are Malaysia’s plans for further Trade Facilitation reforms?  (EC)  
 
A:  Some of the challenges faced by Malaysia in  the introduction of systematic risk management and 
post-audit controls relate mainly to the operations of  the ICT system, which is not fully developed. 
Malaysia faces problems with coordination, cen tralization of risk management, data bank 
management, etc. Malaysia also faces constraints in terms of training of officers to handle risk management.  WT/TPR/M/156/Add.1 
Page 56  
 
  In overcoming the challenges, Mala ysia is currently developing an ICT strategic plan that will assess 
our present capacity and integrate all the customs systems in order to improve the effectiveness and 
efficiency of the Royal Malaysian Customs.    Malaysia is in the process of developing a Trade Fa cilitation Portal as well as a Customs Portal, to 
facilitate trade related activities. In addition, the IC T strategic plan is expected to contribute towards 
trade facilitation reforms.   
Question
 
 
Malaysia and Thailand are working jointly to de velop shared customs control on their borders, 
including the use of joint documentation.  Could Malaysia please elaborate further on the deta ils of the joint documentation and the mechanism 
being considered for the shared the customs contro l?  We are particularly interested in knowing 
whether both Customs administrations have already been electronically exchanging clearance data for 
imported/exported goods and, if this is the case, coul d Malaysia also elaborate further on exactly how 
the system operates? (CHINESE TAIPEI)  
 
A:  Currently, Malaysia and Thailand have implem ented the single inspection system. Therefore, 
goods crossing the borders between Malaysia and Thailand are inspected once by either one of the 
customs authorities. These goods will not be insp ected again by the customs authorities in the other 
country. The joint documentation is an ASEAN proj ect and work on this is currently underway at the 
regional level. 
 
Customs Valuation 
 
Question
 
 Since July 2005, Profit and General Expenses (PGE) charges have been imposed on the import of selected CBU (complet ely built-up automotive products) in Malays ia, without prior notice.  It has 
been reported that the rate of PGE charges is calc ulated by multiplying 30% (models with engines of 
1.6 litres or less) or 38% (models with engines over 1.6 litres), to the sales price or the value reached 
by deducting the profit and general expenses from the market price, depending on the report).  It has 
also been reported that PGE has been imposed due  to the Malaysian Government's belief that the 
customs value for some of the assembled car s had been under-declared. (Pages 35 to 36, 
paragraph 17)   
Please indicate the details of the PGE charges such as the law, regulation or other basis of the PGE 
charges, whether such law, etc. has been published, the method of calculation of the rate of the PGE 
charges, the goods which are subject to the PGE ch arges, and other basic facts concerning the PGE 
charges. (JAPAN)  
 
Please indicate the specific views of Malaysia on the consistency of the PGE charges with the WTO 
Agreements, in particular on the following points:  From what has been reported, the PGE charges seem to  be inconsistent with: Article I of the GATT (if 
the PGE charges are only applied to selected imported CBU of certain Members), Article II of the 
GATT (if the aggregate amount of customs taxes and charges exceed the rate of Malaysia's Schedule 
of Concessions) and/or Article III.2 of the GATT (as an internal tax applied in excess of like domestic 
products).    WT/TPR/M/156/Add.1 
 Page 57 
 
 
  Furthermore, even if the PGE charges are not inc onsistent with Articles I, II and III of the GATT, it 
may be inconsistent with Article VII.2 (a) of  the GATT and the Agreement on Implementation of 
Article VII of the GATT 1994 (Customs Valuation Ag reement) if it does not follow the procedures of 
valuation for customs purposes stipulated therein.  
If the laws, regulations, etc. of the PGE charges have not been published, such situation may be 
inconsistent with Article X.1 of the GATT. (JAPAN)  
 We also request that such inconsistencies be reme died if any inconsistencies exist between the PGE 
charges and the WTO Agreements.  In this rega rd, please indicate the specific views of Malaysia. 
(JAPAN)  
 
A:  Customs valuation methods are based on the WTO Customs Valuation Agreement (CVA). In the 
case of imported CBU vehicles, a post-clearance aud it was carried out to determine the accuracy of 
declared transaction values.  In cases where Custom s is unable to verify the transaction value, other 
methods of valuation using the bases of determin ing customs value in the CVA were used.  The 
deductive method taking into account the PG&E of the industry was used to determine the actual 
transaction value in cases where the transaction valu es of identical or similar products were not 
available.  
Tariffs  
Question
 
 
Japan supposes that the tariff classification of Malaysia is harmonized with AHTN (ASEAN 
Harmonized Tariff Nomenclature).  If Malaysia publicly releases the specific classification of items and the explanatory note, please 
indicate the URL of the website. (Page 37, paragraphs 20 to 21) (JAPAN)  
 
A:  Malaysia releases the specific classification of items and the explanatory notes in the following 
websites:  http://www.aseansec.org under AFTA and FTA; http: //www.customs.gov.my/kastam under Customs. 
 
Question
 
 According to the Report by the Secretariat, the bo und tariff line of Malaysia remained at 61.5% in 
2005, but Malaysia says it will increase the binding coverage substantially in  the current round of 
negotiations.  In order to promote the predictability  of tariffs, Japan highly hopes that Malaysia will 
increase the binding coverage. In this regard, please i ndicate the specific plans of Malaysia. (Page 37, 
paragraph 23, ref. page 36 Table III.1) (JAPAN)  
 The Secretariat notes that over one-third of Malaysian tariff lines remain unbound, and many bound 
and applied rates have a consid erable gap between them. This naturally creates a degree of 
unpredictability for traders. What targets has Malays ia put in place, and what targets does Malaysia 
intend to put in place, in respect of binding unb ound lines and narrowing th e gap between bound and 
applied rates? (NEW ZEALAND)  
 Malaysia maintains high tariff rates applied in such areas as textile goods (average 13.5%) and 
transport equipment (average 18.5%).  Furthermore,  Malaysia also maintains high tariff rates, from 
30% to 50%, on non-bound goods  such as electronic equipment, glass and motor vehicles. From the WT/TPR/M/156/Add.1 
Page 58  
 
  viewpoint of promoting free trade, Japan hopes that such high tariff rates will be improved. (Page 38, 
paragraph 25) (JAPAN)  
 Concerning such high tariff rates, please indicate the time schedule for reducing tariff rates in Malaysia. 
 
On 15 March 2002, Malaysia raised the tariff ra tes of 199 steel products such as hot-rolled steel 
products and cold-rolled steel products from 0-25% to a maximum of 50%.  Although Malaysia has 
room to decide the tariff rates of steel products which are not bound, such a raise crucially prevents 
trade predictability and the promotion of free trade.  Therefore, Japan hopes that such a raise will be 
repealed. (Page 38, paragraph 25) 
 Concerning this raise of the tariff rates of steel products, please indicate the time schedule for reducing tariff rates in Malaysia.  (JAPAN)  
 
The WTO Secretariats report (WT/TPR/S 156) para graph 19 it is written that:"...According to the 
authorities, Malaysia will continue to review a nd reduce tariff rates in line with its objective of 
achieving a more open and liberal economy, impr oving allocative efficiency, and enhancing the 
competitive environment for domestic industries."   What are Malaysia’s plans for tariff reduction in th ose sectors; particularly in the highest clothing 
applied tariffs, noting that the reduction of import duties on selected raw materials for clothing ( to 
5% and 30% from 10% and 35%)?  (EC)  
 The report of the WTO Secretariat furthermore pr ovides that: “…The proportion of tariffs exceeding 
15% still accounts for nearly one quarter of all tariff s (Chart III.2)…. Currently 57.8% of Malaysia's 
total tariff lines are duty free.  The higher rates apply to protected sectors and luxury products. …  
Tariff protection is high for automotives, textiles,  clothing and leather, food and beverages, and 
imported goods that compete with local production.   Rates exceed 20% on 16.9% of tariff lines; 
several lines have rates over 100%.”  Could Malaysia inform about steps intended to di smantle the high tariff protection in the textiles, 
clothing and leather sectors? (EC) 
 
A:  These issues will be addressed in  the ongoing NAMA negotiations.  
 
Question
 
 
According to the report of the WT O Secretariat: “the Government undertakes regular reviews of the 
tariff structure and tariff rates through annual ad hoc dialogues with major industry players and the 
business community.  The Special Advisory Commit tee on Tariffs (SACT) under MITI receives and 
considers applications for tariff review, which ma y then be announced in the annual budget.”   
 
Would Malaysia consider conducting formal consultations with all stakeholders whenever there is a 
local request for raising tariff barriers or investment barriers? (EC)  
A:  Malaysia has a low tariff regime and tariffs have been reduced progressively in line with 
Malaysia’s commitments in the international, reg ional and bilateral agreements. Any requests for 
tariff reviews by the SACT will take into accoun t views of relevant stakeholders and the impact on 
domestic industries. Regular consultations are undertaken with the business community including 
upon request. 
  WT/TPR/M/156/Add.1 
 Page 59 
 
 
  Import Licensing and Quotas 
 
Question  
 According to the Report by the Secretariat, there are four types of schedules regarding import 
restrictions in Malaysia. Please indicate the specific views of Malaysia on the consistency of each 
type of schedule for import restriction in Malaysia, with Article XI of the GATT.  (Page 44, paragraph 36) (JAPAN) 
 
Since 1999, Malaysia has not notified any institu tion or changes of licensing procedures, under 
Article 5.1 of the Agreement on Import Licensing Pro cedures.  Are there any institution or changes of 
licensing procedures since 1999?  If any, please indicat e them including the reasons for the institution 
or changes as well as notifying promptly. (JAPAN)  
 Please indicate specifically which products are subj ect to non-automatic import licensing. Malaysia 
has not submitted answers to the annual questi onnaire on import licensing procedures under Article 
7.2 and 7.3 of the Agreement on Import Licensing Pro cedures, although the deadline of this year has 
already passed.  Japan hopes that answers will be submitted soon.  In this regard, please indicate the specific prospects.  (JAPAN)  
 
Paragraph 38 on page 44 of the S ecretariat Report advised that Ma laysia has not filed an import 
licensing notification since 1999.  Paragraphs 36 an d 38 of the Secretariat Report identified many 
goods which Malaysia appears to be subjecting to non-automatic import licensing procedures. 
  (a) Please provide further information on the specific goods for which Malaysia requires 
a non-automatic import license to enter the country.   
 (b) Please describe the process for obtai ning non-automatic import licenses, including 
any fees associated with issuance and the average time between application and 
issuance. 
 (c) Does Malaysia issue import licenses to foreign persons or entities?  (d) Is there an appeals pr ocess if an application for a non-automatic import license is 
denied?  If so, please describe it. (US)  
 The Secretariat reports that Malaysia still subject s 27% of its tariff lines to import licensing, which 
has remained largely unchanged during the period of  review. Non-automatic import licensing can, like 
unbound tariff lines, create a degree of uncertainty for traders. Transparency as to licensing processes 
and availability of licences is important. What is Ma laysia doing to increase tran sparency in regard to 
import licensing? (NEW ZEALAND)  
 
A:  Schedules 1 refers to goods in which their import is prohibited while schedules 2-4 list goods 
subject to import licensing which are imposed for a number of reasons including for SPS, health, 
safety and security reasons.  
 
Notifications have been made to the WTO on the im port licensing requirements for these products in 
G/LIC/N/3/MYS/1 dated 19 December 1997 in G/LI C/N/2/ MYS/2 dated 6 September 1999. There 
have been no new changes to licensing pro cedures since 1999. Malaysia will submit updated 
notifications in accordance with the Import Licensing Agreement. 
 
Import licences are issued to importers that apply for them in accordance with procedures listed in 
the websites of relevant Ministries.  There are avenues for appeal in the event of a rejection. 
 WT/TPR/M/156/Add.1 
Page 60  
 
  Question 
 
 Under Item III(ii)(e) (Trade Policies and Practices by Measure - Measures directly affecting imports:  
Tariffs), the report mentions that Malaysia is c onsidering imposing out-of-quota rates on poultry and 
dairy products, inter alia .  Could you please provide more detail s and explain on what basis it will be 
applied? (ARGENTINA)  
 
A:  Poultry and dairy products are two of the ite ms which Malaysia has reserved the right to impose 
TRQ.  Malaysian products which are entitled to TRQs  can be found in Section 1B of its country 
schedule. Currently, the proposal to impose TRQs on these two products are still being considered by 
the government.  
Question
 
 Under item III(1) (Trade Policies and Practices by Measu re – Introduction), the report states that apart 
from import prohibitions applied for national security , religious or environm ental reasons, Malaysia 
makes use of various non-tariff border measures wit hout specifying what those measures are.  Could 
you please list these measures and tell us what they consist of? (ARGENTINA)  
 
A:  The Secretariat’s Report in paras 3, 4 and 5 in page 33 seems to have further elaborated on the 
statement it made. If the reference was to import licen sing, para 3, pg.33 of the Report has provided 
further explanation, while a list of the products involved is available in table AIII.2 of the 
Secretariat’s Report.  Contingency Measures  
Question
 
 Para. 42 suggests that currently there is no safegua rd legislation in Malaysia, but that MITI has 
expressed its intention to develop such a legislation. What has triggered this change in attitude of the 
authorities toward the need for safeguard legislation? (SWITZERLAND)  
 A:  There has been no change in attitude.  It has always been the inte ntion of the Malaysian 
authorities to enact safeguards legislation.  Government Procurement  
Question
 
 Paragraph 44 explains that Malaysia  “intends to maintain its requirement for all government agencies 
to procure supplies and services from local sources.  In ternational tenders will be  invited only if goods 
and services are not available locally.”     
 (a) How are preferences for local suppliers administered?   
 
A:  Given the policy of local procurement, the i ssue of applying preferential margins to local 
suppliers does not arise.  
  (b) How are foreign suppliers able to know wh en they are eligible to participate in a 
tender?  
 
A:  All international tenders are advertised in local newspapers, government department websites and 
the Malaysian Government Portal (MyGov). The relevant Embassies and High Commissions are also  WT/TPR/M/156/Add.1 
 Page 61 
 
 
  duly informed. Eligibility and criteria to participate in  tenders are stated in th e  advertisements.  As 
long as foreign suppliers are qualified and fulfill all the requirements stated in the tender advertisement, they are eligible  to participate in a tender.  
 
 (c) Does Malaysia have a framework and a ti meline to join the GPA, or, to otherwise 
increase government procurement eligib ility for foreign suppliers? (US) 
 
A:  Malaysia is not a party to the WTO GPA as the Government is of the view that Malaysia has yet to 
attain the level of economic development that would enable it to benefit from the agreement. 
 Question
 
 Paragraph 46 discusses the legal and regulat ory framework.  In this framework: 
 Are technical specifications in the tender documentation expressed in terms of performance and 
functional requirements, rather than design or descriptive characteristics? 
 
A:  Technical specifications in tender documen ts are expressed in terms of performance and 
functional requirements. In cases where it is part  of the requirement, design or descriptive 
characteristics will also be expressed.  As is the policy and principle to ensure prospective bidders 
are well informed of the specifications required, any type of details such as expected performance, 
functional, design or descriptive characteristics ma y be used.  However, ta ilored specifications are 
not allowed.  
 
Is preference given to open source software appli cations over proprietary applications in government 
procurement?  If yes, could you please explain and provide applicable laws and regulations mandating 
this requirement? (US)  
 
A:  The preferential treatment to wards open source software applications in GP is stipulated in the 
Malaysian Public Sector Open Source Softwa re Master Plan, announced on 16 July 2004. 
 
Question
 
 
Paragraph 47 explains that the Government intr oduced an electronic procurement (eP) system. 
  (a) What is the operational status of the electronic procurement system and what 
information is presently available on the system (tender documents, award 
information, etc.) (US)    
 
A:  The Supplier Registration and Central Contract Modules which went live on 6 October 2000 in 
Peninsula Malaysia have ben extended to Federal agencies in East Malaysia on 19 April 2004, while the Tender and Quotation modules, which were deve loped in the year 2001 have successfully ‘gone 
live’ to 14 responsibility Centres on 27 May 2003. 
 
The Supplier Registration and Central Contract  modules under the electronic procurement system 
(ePerolehan) have been developed and already been  implemented since 6 October 2000.  Currently, 
330 responsibility Centres (Governmetn Agencies) and  64,429 suppliers have been eP enabled. The 
Quotation and Tender (Q&T) modules have been developed and have gone live since May 2003 and 
implemented in 14 pilot responsibility Cent res. Currently, the Q&T modules are undergoing 
enhancement features to be more user friendly. W ith the successful launch of the Q&T modules under 
the eP system, interested suppliers will have access to GP opportunities by viewing the eP website at 
https://www.eperolehan.com.my /jspages/NoticeBoard.jsp 
 WT/TPR/M/156/Add.1 
Page 62  
 
   (b) Is this system available to the public, or does it require user registration and/or 
payment of a fee for access?  (US)  
 
A:  The eP system requires user registration and suppli ers need to pay some fees for registration. The 
suppliers who are registered need a smart card for access to the syst em.  Similarly, the Responsibility 
Centres also require the smart cards to access the system.  
 
Question
 
 Paragraph 47 mentions the launching of the second phase of the electronic procurement system (eP) in 
2004. (EC)  
 How is the project advancing and when will the project be implemented overall? 
 
A:  This eP system is currently in the sec ond phase of implementation whereby there are 330 
Responsibility Centres actively using the system.  The Q&T modules under the eP system will be 
extended to 3,123 Responsibility Centres in phases.   This will provide equal opportunities for 
registered suppliers to participate in procuremen t exercises. All agencies nationwide will have to 
carry out procurement exercise through the eP system in the future so as to obtain optimum benefits 
from greater participation of bidders.  
 Question
 
 Referring to the report prepared by the WTO secretariat page 47 and 48.  From the statistics provided in Table III.4 (paragra ph 43), could Malaysia provide us with details 
regarding the tendering procedures used (competitive,  limited or direct) and the origin of the winning 
companies (international, local). (EC) 
 
A:  Details regarding the tendering procedures used are available in the website of the Ministry of 
Finance and other ministries responsible for the tenders.  
 Question
 
 Are price preferences cumulative (such as 10% b ecause the tenderer is Bumiputera + 10% because the 
goods are locally produced)? (EC)  
 
A:  There is a price preference of  up to 10% for Bumiputera tenderers. 
 
Question
 
 Has Malaysia considered reducing the value of the pr ice preferences currently in  use over the years to 
come? (Paragraph 44)  A:  Government procurement policies are formul ated in tandem with the National Development 
Policy. GP polices will be reviewed wh en such policies are being reviewed. 
 
Question
 
 
Malaysia has participated in the WTO Working Gr oup on transparency in government procurement, 
but is not a party to the plurilateral WTO Governme nt Procurement Agreement; it intends to maintain 
its requirement for all government agencies to procure supplies and services from local sources. 
(p. 47, para. 44).   WT/TPR/M/156/Add.1 
 Page 63 
 
 
   
 (a) As the third largest foreign investor in Malaysia, we are particularly interested in 
knowing whether Malaysia has any plan s to accede to the WTO Government 
Procurement Agreement? (CHINESE TAIPEI)  
 A:  Malaysia is not a party to the WTO GPA as the Government is of the view that Malaysia has yet to 
attain the level of economic development that would enable it to benefit from the agreement. 
 
 (b) Furthermore, is the subject of government  procurement a part of any of Malaysia’s 
free trade agreements with other trading partners? (CHINESE TAIPEI) 
 
A:  Malaysia’s current position is to exclude GP in FTAs. As GP is used as a tool to achieve national 
development policies, inclusion of  GP in FTAs is not feasible.  
 
Question
 
 
Malaysia is not a member of the GPA and it curre ntly uses government procurement policy as one of 
the means to secure domestic public policy purposes.   In the Malaysian government procurement 
market, foreign companies are not given a fair opportunity to take part in the bid on their own and 
thereby are compelled to participate jointly with domestic companies.  What plans does the Malaysian 
government have to render the proc urement procedures more fair and transparent, including becoming 
a member of the GPA?  (KOREA) 
 
A:  Malaysia has always strived to achieve a hi gh standard of transparency in its procurement and 
therefore efforts to improve transparency and increa se competition in GP have been a continuous 
exercise. Malaysia subscribes to th e elements agreed upon in the Non-Binding principles (NBPs) and 
the APEC Transparency Standards with the objecti ve of improving its procurement regime. 
 Malaysia is not a party to the WTO GP A for the reasons already explained.  
 STANDARDS, TECHNICAL REGULATIONS 
 
Question
 
 Paragraph 71 on page 53 of the Secretariat Report indicated that 3.2% of Malaysian standards are 
compulsory.  The Secretariat advised in paragraph 74 on page 54 that the Malaysian authorities have 
endorsed the wider adoption of Ma laysian standards as mandatory st andards to protect consumer 
health and safety and the environment.  Please describe the process of advance public  comment Malaysia employs when developing 
compulsory standards. (US)  
 
Question
 
 Canada thanks Malaysia for the comprehensive present ation of its approach to standards, conformity 
assessment and regulation. We also thank Malaysia for the use of the intern ationally accepted format 
for designating the degree of alignment of national st andards to international standards (Table III.5). 
This action promotes transparency.  Further, we acknowledge Malaysia's gene ral relatively high level 
of alignment of national standards with interna tional standards and a commitment to increasing the 
rate of alignment as new standards are published.    There appears to be no indication of whether any Malaysian standardizing body has accepted Annex 3 
of the TBT Agreement (Code of Good Practice). (CANADA)  WT/TPR/M/156/Add.1 
Page 64  
 
   
A:  Malaysia being a signatory to the WTO T BT Agreement is obliged to accept all of its 
requirements.  This includes the Annex 3 of the agreement. 
 
The Department of Standards Malaysia (DSM), th e national standards body has formally accepted 
the Code of Good Practice since its establishment in 1996.  
Question
 
 Canada requests that Malaysia provide more deta ils on the National Standards Strategy and Action 
Plan, in addition to the website address to locate the electronic edition. (Paragraph 69) (CANADA)  
 
A:  An electronic copy of the National Standards  Strategy and Action Plan (NSSAP) is available on 
the DSM website, www.dsm.gov.my  
Question
 
 Canada notes that “Malaysia is also active in nego tiating mutual recognition agreements with several 
APEC economies based on guidelines established by the governing international bodies.”  Could 
Malaysia please clarify by indicating specifically whet her this denotes a reference to APEC MRAs or 
other MRAs? If this is a reference to APEC MRAs, please indicate which ones. (Paragraph 70) 
(CANADA)  
 
A:  Malaysia has submitted application to participat e in the APEC EEMRA Part 2.  The application 
will be considered at the APEC JAC EEMRA meeting on 29 February 2006. 
 
At the ASEAN level, we are the signatory to the ASEAN EEMRA and the ASEAN Harmonised 
Cosmetic Regulatory Scheme (this agreement incl udes MRA of Product Registration Approvals for 
Cosmetics)  
 
Question
 
 
Concerning the reference to “compulsory standards” , is there a distinction between these standards 
and standards referenced in regulation? (CANADA)  
 
A:  Standards can be “compulsory” in Malaysi a, either through direct reference in Technical 
Regulation or if Regulatory Authorities accept thes e as meeting general regulatory requirements 
stipulated in regulations. In the latter case these standards will not be directly referenced in 
regulations, but the regulator will accept the Malaysian standards as meeting the stipulated 
regulatory requirements. This information is  published in departmental guidelines. 
 
Question  
 
What proportion of Malaysian standa rds is referenced in regulation? How does Malaysia plan to 
increase the number of standards referenced in technical regulations? (CANADA)  
  
A:  The latest data that is available indicates that regulatory agencies reference 123 Malaysian 
standards . This is about 3% of the total number of standards published (currently there are 3976 
standards) . 
  WT/TPR/M/156/Add.1 
 Page 65 
 
 
  Question  
 How does Malaysia plan to increase the number of st andards referenced in technical regulations?  
(CANADA)  
 
A:  (Please refer to the NSSAP under the Strategy 1 – Wider adoption of MS in technical regulation) 
 
Question
 
 What is Malaysia’s policy on adoptin g foreign standards to meet national regulatory requirements?  Is 
there a policy on equivalency? (CANADA) 
  
A:  Foreign standards are adopted to meet regulat ory requirements only in the absence of Malaysian 
standards.   
Decisions on equivalency are undertaken by the resp onsible regulatory authority, there is no general 
policy. 
  
Question
 
 Despite a large number of areas subject to the adoption of mandatory standards (listed in 
paragraph 74), Malaysia seems to have made little progress in making greater use of standards in 
regulation. What steps are being taken to prom ote the benefits of voluntary standards among 
regulators? (CANADA)  
 
A:  Discussions between the regulators responsible and DSM  are on-going.  
 
Regulators are actively involved in voluntary standardisation.  A study to review this issue is planned to be  undertaken in the near future to arrive at 
recommendations for comprehensive policy decisions on approaches. 
 Question
 
 Regarding the development of nati onal standards, what role do stak eholders such as consumer groups 
and other non-private sector stakeholders play in this process? (CANADA)  
 A:  Malaysia implements the TBT Code of Good Pr actice, with repect to the process of standards 
development. All Standards projects are announced , all identified interested parties, including 
consumer groups, NGOs, business associations and govern ment agencies are invited to participate in 
committees. Any party can submit proposals for new standards and additionally submit comments 
prior to confirmation of the standard. 
 Question
 
  Could Malaysia please provide mo re details on how tax incentives and other measures are used to 
encourage participation in standardization activity? (CANADA)  A:  A single tax deduction is granted for privat e sectors on the expenditure incurred for participating 
in international standardization activities.    A guideline to acquire verification from DSM c an be assessed on DSM’s website as follows: 
http://www.dsm.gov.my/word/Eng%20Guideline.pdf WT/TPR/M/156/Add.1 
Page 66  
 
   
Question
 
 In Table III.5, although the number of food and ag riculture standards has increased (from 2001-2005), 
the actual number of international standards be ing adopted has decreased. How might this be 
explained?  Moreover, there are two additional ar eas where the adoption of international standards 
remains low relative to the total number of Malays ian standards: civil engi neering and construction, 
and road vehicles. What are the reasons fo r the lower adoption rates in these areas? (CANADA)  
 
A:  A number of standards have been developed in recent years for indigenous agricultural produce 
and food products for which there are no corresponding international standards. 
 In the civil engineering sector (building & cons truction) sector, the lower number of adopted 
international standards can be attributed to:  - absence of sufficient suitable international standards,  
 - long history of the use of British Standards & Building Codes of Practice, and 
 - existing infrastructure considerations.  The activity for standards in road vehicles has be en at a low level. The government has announced 
that Malaysia will be signing on to the 1958 UN/ECE agreement and will be moving to adopt the uniform technical regulations developed by WP  29 of UN/ECE. Future work on national standards 
will be aligned to these regulations  
Question
 
 Could Malaysia please provide more information on the relationship between DSM and the Minister 
of Science, Technology and Innova tion, with respect to accreditation criteria and procedures which 
must be approved by the Minister? (CANADA)  
 
A:  DSM is under the purview of the Ministry of Science, Technology and Innovation.  The Director-
General (DG) of DSM is appointed by the Minist er of Science, Technology and Innovation as in 
Clause 9(1) of the Standards of Malaysia 1996 (Act 549). 
 
As such, the DG of DSM reports to the Minister on the functions and duties assigned to him under the 
Act.  As stipulated in the Act, (Section 10(2)(h)), Th e DG may accredit, in accordance with criteria and 
procedures approved by the Minister  
 
Question
 
 In Malaysia's experience, which MRAs have worked well and why? (CANADA)  
  A:  The MRAs in the voluntary sector- eg IE CEE CB scheme, and MRAs between accreditation bodies 
and certification bodies have worked quite well. Fo r example Malaysian certification bodies have 
several agreements with foreign counterparts and these are well utilised.   The voluntary sector MRAs are easier to negotiate a nd due to the targeted objective are established to 
meet specific existing market requirements 
In the regulated sector, Malaysia has signed 2 MRAs at the ASEAN level: 
1.  ASEAN EEMRA 2. ASEAN Harmonised Cosmetic Regulatory Scheme  (this agreement includes  MRA of Product 
Registration Approvals for Cosmetics)   WT/TPR/M/156/Add.1 
 Page 67 
 
 
   
Question  
 We note that reference has not been made to certain voluntary arrangements such as IAF or the 
IECEE CB Scheme when others are mentioned (PAC, APLAC, ILAC).  Could Malaysia outline the 
extent to which its regulatory author ities utilize all of these arrangements? (CANADA)    
 
A:  Malaysia participates in the IAF and the IEC EE CB Scheme.  IECEE CB certificates are accepted 
by the electrical safety regulator (Energy Comm ission). Management system certification is not a 
regulatory requirement in Malaysia and the questi on of formal accepance does no arise. Accredited 
test reports are generally accepted by  the regulatoy agencies concerned.  
 
Question
 
 Under item III(4)(i)(c) (Trade Policies and Practi ces by Measure – Measures affecting production and 
trade:  Standards and other technical requirement s) on halal certification, the report states that 
Malaysia is interested in developing the country as a hub for halal food products, and to that end has 
developed its own certification.  Could Malaysia pl ease explain whether its certification is similar to 
that of other Muslim countries, and if not, how it di ffers?  What would happen if a product has halal 
certification and the establishment producing the product does not, or vice versa? (Argentina)  A:  The Malaysian Halal certification system is based  on Islamic law and principles. Similarly, the 
certification systems of other Islamic countries would be based on Islamic law and principles. However, we are not in a position to comment  on the certification systems of other countries. 
 The Malaysian halal certificate can be issued based on various categories, i.e. companies,  products 
and premises (hotel kitchens , restaurants, and abattoirs). 
 
Other Measures (Countertrade) 
 
Question
 
 
Para. 51. Could the Malaysian authorities indicate the reasons for which they resorted to counter trade 
even in such instances where the other parti es would have had an easy access to convertible 
currencies (for instance General Electric), since bart er trade is often considered as an economically 
inefficient way to do trade? (SWITZERLAND)  
 A:  The primary objective of offset/counter trade is to maximise benefits in procurement involving 
high value. In this context, the Government uses procurement policy to achieve national objectives 
such as promoting and developing local industries and transfer of technology. 
 
Measures Affecting Exports 
 
Export Processing Zones  
Question
 
 In paragraph 61, Chapter III, the report by the S ecretariat says; “Malaysia has a number of free-trade 
zones for which the policy is overseen by Malaysian Cu stoms.  The zones are established to facilitate 
operations of export-oriented compan ies, which export all or almost all their products …  FIZs enable 
export-oriented companies to enjoy minimal cu stoms formalities and duty-free imports of raw 
materials, component parts, machinery, and equipm ent required directly in the manufacturing process, 
as well as minimal formalities in exporting their fini shed products.  Companies located within FIZs WT/TPR/M/156/Add.1 
Page 68  
 
  must export at least 80% of their production an d use mainly imported raw materials/components”. 
Could the Malaysian authorities explain what is for eseen in the legislation when a company within a 
Free Industrial Zone fails to expor t at least 80% of its production? (COLOMBIA)  
 
A:  A company in the Free Industrial Zone that do es not export its products is required to pay import 
duty on goods that are sold locally.  
 
Question
 
 Is the policy regarding duty-free imports of raw materials, component parts, machinery, and 
equipment required directly in the manufacturing process within a FIZ contingent upon export 
performance? (COLOMBIA)  
 
A:  A company located within the FIZ is allowed to  import raw materials needed in the manufacturing 
of goods for exports.  
 Question
 
 According to paragraph 61 on page 51 of the Secretar iat Report, companies located in Free Industrial 
Zones (FIZs) must export at least 80% of their production.  Paragraph 63 noted that enterprises 
operating in the zones do not receive preferential income tax treatment. 
 
 (a) Please indicate the tax incentive program s identified in Tables III.9 and III.10 on pp. 
60-62 of the Secretariat Report for which firms located in FIZs qualify. (US)  
 
A: Companies in Malaysia, including those in the FIZs  are eligible for tax in centives if they were to 
participate in promoted activities or producing promoted products as well as conducting R&D. 
 
 (b) Please identify the operation of these pr ograms for which firms located in FIZs 
qualify, application procedur es, and the eligibility require ments to receive benefits. 
(US)  
 
A:  Firms that qualify for tax incentives may submit applications to the Malaysian Industrial 
Development Authority (MIDA) under the Ministry of International Trade and Industry. A joint 
working committee comprising several Government departm ents considers each application based on 
its merits. The approval is granted by the Minister  of Finance and the Minister of International Trade 
and Industry under the Promotion of Investments Act 1986. 
 
Export Duties 
 
Question
 
 In Malaysia, export duties are imposed on many go ods including agricultural and fishery products. 
The average rate was 7.8% in 1997and 11.7 % in 2001. Now, the majority is in the 15-20% range.  
From the viewpoint of balancing rights and obligations between export countries and import 
countries, Japan is concerned about the rise of e xport duties which were not bound and not obliged to 
be reduced in the Uruguay Round. If Malaysia is  considering the reduction of export duties or 
measures to rebalance rights and obligations betw een export countries and import countries, please 
indicate them. (Pages 49 to 50, paragraphs 53 to 54) (JAPAN)  
 
A:  Export duties are imposed for a variety of  reasons including, funding of R&D activities, 
environmental preservation and developmen t of the relevant industries.  
  WT/TPR/M/156/Add.1 
 Page 69 
 
 
  Question  
 In domestic laws and regulations  of Malaysia, export taxes are imposed on goods including forest 
products originating in Peninsular Malaysia, the Stat e of Sabah. However, it is reported that special 
royalties are imposed on export goods instead of expor t taxes in the State of Sabah.  Differential 
special royalties for export goods seem to mean e xport duties. In this regard, please indicate the 
specific views of Malaysia. (JAPAN)  
 
A:  Under the Malaysian Constitution, land is a st ate matter. States are allowed to impose royalties 
on the exploitation of natural resources (such as minerals, timber/logs and groundwater) extracted 
from the respective States.  
 
Question
 
 In Peninsular Malaysia, the export of all tree specie s except small diameter trees is prohibited. In the 
State of Sabah, there are log export restrictions which have been annually limited to a maximum of 
2,000,000m
3 since 1996.  In the State of Sarawak, it leads to export restrictions that a certain rate of 
production of logs is regulated to be ensured for the processing within the State.  It means not to 
protect the environment but to promote the domestic  industry for the purpose that export of logs are 
limited against the general promotion of many ex port goods.   In this regard, please indicate the 
coherence to Article XI of the GATT. (Page 50, paragraphs 56 to 57) (JAPAN) 
 
A:  Export restrictions on logs are part of Malaysi a’s efforts to conserve th e natural forests through 
Sustainable Forest Management (SFM). Given the need for protection of the environment and 
conservation, the amount of raw materials available will be limited.  
 
Question  
 Referring to paragraph 54 on page 50 of the Secret ariat Report, Malaysia has maintained an export 
duty on palm oil reportedly to discourage expor ts and to encourage downstream processing in 
country. The Secretariat Report states in Table III .8 that the export duty on palm oil is 0 -30 % 
depending on price per ton; and 10% to 30% for crude palm oil based on tonnage. Further reports 
indicate that Malaysia has exempted or forgiven e xport duties on crude palm oil destined to overseas 
Malaysian-owned or invested refining plants.     (a) Please provide further details of Malays ia’s export tax policy for palm oil.    
 
 (b) Please explain in detail the policy and cr iteria for the tax-free export of crude palm 
oil.   
  (c) How much crude palm oil is allowed to be exported tax-free or at reduced rates on an 
annual basis?   
 
 (d) Are there plans to increase this amount in the future? (US) 
 
A:  Basically, the imposition of export tax on crude  palm oil (CPO) is to encourage value addition 
and further develop the downstream industries of pal m oil. However, due to reasons listed below, 
certain portion of those CPO produced is  allowed to be exported duty-free: 
 
 (i) As part of Malaysia’s overall strategi es for rural development, the Government has 
encouraged the opening of new oil palm plantations in the less developed states of Malaysia, namely Sabah and Sarawak. Both states are also cu rrently experiencing 
under-capacity in terms of refining/down-stream processing. WT/TPR/M/156/Add.1 
Page 70  
 
   
 (ii) Under normal circumstances, CPO produced from those two states are less 
competitive in terms of price because of high transportation cost involved (due to the 
remoteness of the oil palm plantations). 
 (iii) Duty exemptions are only given to expor ts of CPO from these two states due to their 
relatively less developed status and there are currently not enough facilities to 
process all the CPO produced by them. 
 Details of Malaysia's current tax policy for cr ude palm oil (CPO) are as stated below: 
 
 (i) on  the first RM650.00 per tonne is duty free; 
  (ii) plus on the next RM50.00 per tonne duty is 10%;    (iii) plus on the next RM50.00 per tonne duty is 15% ; 
 
 (iv) plus on the next RM50.00 per tonne duty is 20% ;   (v) plus on the next RM50.00 per tonne duty is 25% ; and   (vi) plus on the balance 30 %. 
 
On the gazetted value, a duty to be calculated in Ringgit per tonne, according to rates and categories 
shown above.   As such, the criteria for the granting of duty  exemption for exports of CPO are as follows: 
 
 (i) The CPO must come from the less de veloped states of Malaysia, namely Sabah and 
Sarawak.  
  (ii) The eligible companies must have an integrated structure of operation, i.e. 
plantation, milling, refining and exporting facilities in Sabah and Sarawak and the 
decision is theirs whether to export or to refine the crude.  
 About 10% of the annual CPO production in the coun try will be given exemption to be exported duty 
free.  
At present, there is no plan to in crease the 10% of the production level of CPO to be exported duty 
free. 
 
Export promotion/Finance 
 
Question
 
 
In paragraph 66 on page 52, the Secretariat Report stated that “tax incentives for exporters including 
double deductions in respect of expenses for:  ove rseas advertising and travel, supply of free samples 
abroad, promotion of exports, maintaining sales o ffices overseas, and research on export markets.  
There is a single deduction for export promotion;  eligible expenses are the cost of quality 
certification, patents, websites, and hosting potential export customers.”   
 Please provide further information on each of the programs identified above.  Specifically, please provide details explaining how these programs operate and inform ation regarding the eligibility 
requirements for companies to receive benefits. (US)   WT/TPR/M/156/Add.1 
 Page 71 
 
 
   
A:  In computing adjusted income of companies for tax purposes, certain expenses are allowed as 
single deduction under the Income Tax Act 1967, in cluding expenses incurred for quality certification, 
registration of patents, developing websites.   
Companies undertaking promotion activities to de velop overseas markets are allowed a further 
deduction under the double deduction incentives.  Companies seeking opportunities for the promotion 
of exports of manufactured products  and agriculture produce are eligib le to claim such expenses such 
as overseas advertising; supply of free samples abroad; export market research; preparation of 
tenders for the supply of goods overseas; supply of technical information abroad; public relations 
work connected with export; exhibits and/or participa tion in local or international trade or industrial 
exhibitions approved by MITI; fares in respect of  travel overseas by employees of companies for 
business; accommodation and sustenance expens es incurred by Malaysian businessmen going 
overseas for business at RM200 per day; costs of main taining sales office overseas for the promotion 
of exports; professional fees incurred in packaging  design services provided by local professional 
service provides; participation in virtual trade shows; Participation in trade portals for the promotion 
of local products; and cost of maintaining warehouses overseas.  The companies can claim these deductions in their an nual tax returns which is submitted to the Inland 
Revenue Board. After the expenses are verified and approved, the computation is accepted in the 
company’s annual tax returns. 
 Question
 
 Although not mentioned in the Secretariat Report, the United States understands that Malaysia also 
provides tax exemptions to companies that demonstrate increasing exports.   
 
 (a) If this program in fact exists, please describe its operation, its specific benefits, and 
the eligibility requirements for firms to qualify for the benefits. 
  (b) Are firms located in FIZs eligible for benefits under this program?(US)  A:  Manufacturing companies are eligible to apply for the following:    (i) tax exemption on statutory income equi valent to 30% of increased export value 
provided the company achieves a significant increase in exports; 
 
 (ii) tax exemption on statutory income e quivalent to 50% of increased export value 
provided the company succeeds in penetrating new markets. 
 
Question
 
 Paragraph 60 on page 51 of the Secr etariat advised that Malaysia did not provide its system of 
calculating duty drawback for this Trade Policy Review. 
  (a) Please describe the system Malaysia  uses for calculating duty drawback. 
  (b) When will Malaysia notify its duty drawback program(s) to the WTO Committee on 
Subsidies and Countervailing Measures? (US)  
 
A:  Duty drawback is provided for under S ections 93, 95 and 99 of the Customs Act 1967.  
  WT/TPR/M/156/Add.1 
Page 72  
 
  For goods
 for which the customs duty has been paid  and the goods are then re-exported, Section 93 of 
the Customs Act 1967 allows 90% refund on the import duty and Section 29 of the Sales Tax Act 1972 (and Regulations No. 18) allows 100% refund on the sales tax.   For goods that are destroyed
, Section 95 of the Customs Act also allows 90% refund on the import 
duty and Section 29 of the Sales Tax Act 1972 (and Regulations No. 18) allows 100% refund on the 
sales tax.   For imported goods used in manufacture or in packing
, Section 99 of the Customs Act also allows 
100% refund on the import duty and Section 29 of the Sales Tax Act 1972 (and Regulations No. 18) 
allows 100% refund on the sales tax.  
Question
 
 Paragraph 67 on page 52 of the Secretariat Repor t stated that, “the Malaysian External Trade 
Development Corporation (MATRADE) is Malaysia's  official trade promotion agency, working to 
help Malaysian companies enter the internationa l market and to connect overseas businesses with 
reliable suppliers of Mala ysian products and services.” 
 Please provide information regarding the specific typ es of assistance provided under this program, the 
magnitude of the benefits, and th e eligibility requirements for comp anies to receive those benefits. 
(US)  
 
A:  Details regarding trade  promotion programmes are av ailable on MATRADE’s website 
www.matrade.gov.my  Basically this programme facilitates new exporters in introducing their 
products into export markets. This is undertaken through trade fair participation, product catalogue 
and website development.  
Question 
 
 Please illustrate specific examples of Malaysia's active promotion of "trade in new and emerging 
markets". (Page 7, paragraph 22) (JAPAN) 
 
A:  Malaysia seeks to diversify its trade with trad itional partners to trade in new and emerging 
markets. This is undertaken thro ugh raising brand awareness, trad e exhibitions/trade fairs, inward 
buying missions and specialised marketing initiatives in these countries.  
 Question 
 
 Under Item III(3)(vi) (Trade Polic ies and Practices by Measure – Measures affecting exports:  Export 
finance, insurance and guarantees), the report refers to the existence of an Export Credit Refinancing 
Scheme under which export financing facilities and guarantees are granted.  Could you please provide 
information on what sectors benefit from this system? (ARGENTINA)  
 
A:  All products can benefit from this scheme except products subject to an import prohibition.  
  WT/TPR/M/156/Add.1 
 Page 73 
 
 
  Measures Affecting Production and Trade 
 Intellectual Property 
 
Question
 
 
Does the Geographical Indications Act 2000 permit  the co-existence of homonymous terms for 
geographical indications for wines and spirits? (CHILE)  
 
A:  Section 7(1) of the Geographical Indications  Act 2000, provides that in case of homonymous 
geographical indications for wines, protection shall be accorded to each indication. 
 Subsection (2) provides that in case of bona fide concurrent use of the homonymous geographical 
indications, the Registrar shall determine the practical conditions under which the homonymous 
geographical indications in question will be differentia ted from each other, taking into account the 
need to ensure equitable treatment of the produ cers concerned and that the public are not misled. 
 
Question
 
 Does the Geographical Indications Act 2000 extend to other agricultural products the additional 
protection granted by article 23 of the TRIPS Agre ement only for geographical indications for wines 
and spirits? (CHILE)  
 
A:  The Geographical Indications Act 2000 provides pr otection for wines and spirit as well as natural 
product, agricultural products and any product of handicraft. This legislation provides additional 
protection for wines and spirits as required  under Article 23 of the TRIPS Agreement. 
 
Question
 
 Is Malaysia planning to ratify the WIPO Copy right Treaty and the WIPO Performers and Phonograms 
Treaty? When? (CHILE)  
 A:  In the amendment of 1997, almost all pr ovisions of WCT and WPPT were taken into account. 
Malaysia is planning to accede to the WIPO Copyright Treaty and the WIPO Performers and 
Phonograms Treaty in the year 2006.  
Question
 
 
Please provide information on the status of plant variety protection in Ma laysia, and Malaysia’s 
schedule for domestic procedures for concluding th e International Convention for the Protection of 
New Varieties of Plants (UPOV C onvention). (Page 67, paragraph 116) (JAPAN)  
 
A:  Plant varieties protection is available under th e Protection of New Plant Varieties Act 2004. It has 
been passed by the Parliament and gazetted on 1 Ju ly 2004. This act is based on the sui generic 
system in accordance to UPOV Convention. The Ministry of Agriculture and Agro-Based Industry 
administers this Act. 
 
Question  
 
Please provide Malaysia’s standard of patentability on naturally occurring micro-organisms. (Page 68, 
paragraph 117) (JAPAN)  
 WT/TPR/M/156/Add.1 
Page 74  
 
  A:  Man-made living micro-organism under the Malaysian Patents Act 1983 refers to a living micro-
organism obtained by way of man’s intervention thr ough an isolation process. It is not possible to 
obtain micro-organisms naturally. Since there is human intervention involved in such a process, 
therefore any extraction of micro-organism w ill be termed as man-made micro-organism. 
 Question
 
 Please provide the list of documents to be submitted to the competent authority that are required for 
the attestation, notarization, authentication, legali zation or other certification, in the course of the 
application procedure (or other relevant administra tive procedures) for industrial property rights. In 
addition, if there are any exceptions to such requi rements, please provide the details of the conditions 
of such exception.  (Pages 68 to 69, paragraphs 117 to 120) (JAPAN)  
 
A:  (1) Trade Marks
 
 
 (a)  Section 64 
 Evidence to be adduced shall be by way of a statutory declaration.   (b)  Section 75  Registrar may receive evidence by oath  
 (c)  Regulation 23 
 A certified translation and transliteration is re quired by the competent authority where the 
trade mark contains words other than in Roma n characters. It is not specified, certified by 
whom, but the competent authority genera lly accepts certified copies from a certified 
translator usually from the Courts. 
 
 (d)  Regulation 32  A Statutory Declaration is required for an applic ation to register a defensive trade mark. This 
regulation clearly specifies that for this type of  mark application, a Statutory Declaration in a 
normal trade mark application as Form TM 5 states that this shall be so, although there is no 
specific provision requiring the applicant to s ubmit a Statutory Declaration for a normal 
trade mark application.  
  (e)  Regulation 40-42 & 50  Evidence to be adduced in cases of oppositi on shall be filed by way of a Statutory 
Declaration. 
 
 (f)  Regulation 69  Statement of case to be submitted in a proposed assignment of making, cancelling or varying 
an entry, may need to be verified by way of Statutory Declaration. 
  (g)  Regulation 71 & 72 
 The statement and the evidence to be submitte d for an application of making, cancelling or 
varying an entry, may need to be verified by way of Statutory Declaration. 
  (h)  Regulation 90  General provision in respect of Statutory Declaration 
 
 (i)  Form TM2  In an application to be an agent, the certific ates to be attached shall be certified by the 
Commissioner for Oaths and certifyi ng the experience of applicant, this shall be by way of 
Statutory Declaration.   WT/TPR/M/156/Add.1 
 Page 75 
 
 
   
 (j)  Form TM3  In an application to renew as an agent, the certificat es to be attached shall be certified by the 
Commissioner for Oaths.  
 
 (k)  Form TM5 
 Both normal trade mark and defensive trade mark application requires a Statutory 
Declaration to be filed as well. 
  (l)  Form TM15 
 A statement of case is to be verified by way of Statutory Declaration. 
 Usually for Priority Date Claims, the Registrar w ould request for a certified copy of the application 
made in the Convention country.   
(2) Patent
 
  (a) Section 27  For the purposes of the priority date claim, a certified as correct copy from the Convention 
country office is required. 
 
 (b)  Section 80 
 Registrar may receive evidence by oath.   (c)  Second Schedule Section 35(3)  An affidavit by the owner for renewal  of a Utility Innovation is necessary. 
 
 (d)  Regulation 22  A certified copy of earlier application for th e purposes of priority date claim is to be 
submitted. 
  (e)  Patent Forms Nos. 1 & 14 
 A certified copy of the assignment is to be submitted where there is an assignment. 
  (f)  Patent Form No.15  An affidavit by the owner for the renew al of a Utility Innovation is necessary. 
 
(3)  Industrial Designs
 
  (a)  Section 41  Registrar may receive evidence by oath.   (b)  Section 17 
 For the purposes of priority date claim, a certified as correct copy from the Convention 
country office is required.  
  (c)  Regulation 6  A certified translation is necessary for doc uments that are not in English.  
 
 (d)  Regulation 14  A certified copy of earlier application for purposes of priority date claim to be submitted. A 
certified translation is necessary for docum ents that are not in English. 
 WT/TPR/M/156/Add.1 
Page 76  
 
   (e)  Regulation 26/ID Form 5 
 A certified copy of the assignment etc. is to  be submitted where there is an assignment. 
  (f)  Regulation 35 & 36  Evidence filed shall be by way of Statutory Declaration or Affidavit.  
 
 (g)  ID Form 11  In order to be registered as an agent, th e following documents are to be submitted:- 
 Qualification Certificates are to be certified by Commissioner for Oaths; and 
 
 (h)  ID Form 12 
 In order to be renewed as a registered agent  qualification certificates to be submitted must be 
certified by Commissioner for Oaths; and  
 
(4) Copyright
 
 
 (a)  Section 42  An affidavit or a Statutory Declaration sha ll be admissible as evidence in proceedings. 
  (b)  Regulation 4 (Copyright (License to produce & publish in the national language a 
translation of a literary work) Regulations 1987   
 An application for a license under the above Regul ation requires the said Form to be affirmed 
before a Commissioner for Oaths. 
  (c)  Regulation 9 (Copyright (License to produce & publish in the national language a 
translation of a literary work) Regulations 1987   
 Tribunal may request that evidence be made by way of Statutory Declaration or in any other 
manner as deem fit. 
  (d)  Regulations 3&4 Copyright (Notice of prohibition of import) Regulations 1987
 
 Notice to be given requires it to be af firmed before a Commissioner for Oaths. 
 
 (e)  Regulation 14 Copyright (Licensing) Regulations 2000  
 Evidence is to be by way of an affidavit.  
(5) Geographical Indications
 
 
 (a)  Regulation 6/Form GI 1  
 Statutory Declaration is required  when submitting the application.  
  (b)  Regulation 19-21
  
 Evidence to be by way of Statutory Declaration.  
 (c)  Regulation 42
  
 Evidence to be submitted may be by way of Statutory Declaration or affidavit. 
  (d)  Regulation 43
 
 General provision in respect of Statutory Declaration and Affidavit. 
 
(6) Layout-Designs Of Integrated Circuits  
  Section 18  Evidence to be by way of an affidavit.  WT/TPR/M/156/Add.1 
 Page 77 
 
 
   
Question  
 Japan recognized that Malaysia was preparing the am endments of domestic laws  and regulations to be 
able to conclude the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty in 
early 2005.  However, Malaysia has not yet concluded these treaties. 
30. Please explain specifically which parts of the cu rrent Copyrights Act do not cover these treaties. 
(Page 68, paragraph 119) (JAPAN)  
 
A:  Amendments of 1997 include pr ovisions of the WCT and WPPT.  However, after the Copyright Act 
review in 2005, it was found that some further clar ity is needed to be addressed. The Bill for the 
amendments is scheduled to be tabl ed in Parliament in November 2006. 
 
Question
 
 
Please provide the Copyrights Act amended in 2003. (JAPAN)  
 
A:  A copy of this legislation is available on  the Intellectual Property Corporation of Malaysia 
website at  www.myipo.gov.my 
 
Question  
 
Concerning the enforcement of the protection of intellectual property rights in Malaysia, please 
indicate the following statistical data:   (a) the status of enforcement for each ri ght such as trademarks, copyright, patents, 
industrial designs and protection of new plant variety. (JAPAN) 
 
A:  The Enforcement Division under the Ministry  of Domestic Trade and Consumer Affairs is 
responsible for enforcing IP protection in Malaysia together with the Royal Malaysian Police Force, 
whilst the Malaysian Custom Department has the task of assisting in border protection.   
The statistical data is only available for criminal actions taken under the Copyright Act 1987 and the 
Trade Descriptions Act 1972.  In 2005, there were 1,173 cases relating to copyright infringement and 
infringing items and contrivances worth RM30.5 million were seized. Under the Trade Descriptions 
Act 1972, there were 2,264 cases where action was ta ken involving the seizure of counterfeit goods 
worth RM6.1 million.  
 
The information pertaining to statistics on enfo rcement of each IP component is currently not 
available. 
  
 (b) the status of border measures at cust oms for each originating country. (Pages 69 to 
73, paragraphs 124 to 128) (JAPAN)  
 
A: The Malaysian Customs is authorized to enforce border measures und er the Trade Marks Act 
1976. The officers may take ex-officio action by conducting inspection and de tain goods which are 
counterfeits. Such pre-emptive actions are jointly conducted with officers from the Ministry of Domestic Trade and Consumer Affairs.  
 
Question
 
 With respect to para 118 on page 68 of the S ecretariat Report, can a trademark owner file an 
infringement claim if registration was not renewed?   Can the trademark owner reinstate a lapsed WT/TPR/M/156/Add.1 
Page 78  
 
  trademark registration and file an infringement claim for loss during the period between lapse and 
reinstatement of the registration?  Does Malaysia believe that the requirement to renew registration 
acts as a disincentive to counterfeiters? (US) 
 
A:  Section 82(1) of Trade Marks Act 1976 provides  that, no person shall be entitled to initiate any 
action to prevent or recover damages for the infringe ment of an unregistered trade mark. However, 
subsection(2) provides that, notwithstanding subsection (1), nothing  in this Act shall be deemed to 
affect the right of action against any person for passing of goods or services as those of another person or the remedies in respect thereof. 
 
The law provides that the registration of trade ma rk shall not be renewed where the application for 
renewal is made after one year the mark has lap sed from the date of expiration of the last 
registration, and the lapsed trade mark will be published in the gazette.   If any infringement claim made after the trade ma rk has lapsed, the general provision of passing off 
action under the common law will prevail. 
 The lapsed trade mark could not be reinstated; however the owner can file a new application on the 
said mark. 
 
Question
 
 
Referring to paragraph 122 on page 69 of the Secret ariat Report, the Geographical Indications Act of 
2000, and the Trade Marks Act of 1976, it is un clear whether earlier established trademarks are 
protected from confusingly similar and later in tim e geographical indications, as required by Articles 
16(1) and 24(5) of the TRIPS Agreement.  In other words, the principles of priority and exclusivity 
between trademarks and geographical indications do not appear to be addressed in Malaysia’s 
Trademark/GI law.   How does Malaysia's law prevent the protection/ regi stration of a later in time geographical indication 
if it is confusingly similar with an earlier established trademark? (US) 
 A:  The Geographical Indications Act 2000 does pr ovide exception for prior use as stated under 
Section 28.  Section 28 Exception for Prior Use  
(1) Nothing in this Act shall prevent continue d and similar use in Malaysia of a particular 
geographical indication of another country identifying wines or spirits in connection with goods or 
services by any nationals or domiciliaries of Malays ia who have used that geographical indication in 
a continuous manner with regard to the same or  related goods or services in Malaysia either- 
  (a) for at least ten years before 15 April 1994; or 
 (b) in good faith before 15 April 1994. 
 (2) Where a trade mark has been applied for or regist ered in good faith, or where rights to a trade 
mark have been acquired through use in good faith either-  
 (a) before the commencement of this Act; or 
 (b) before the geographical indication is protected in its country of origin,   WT/TPR/M/156/Add.1 
 Page 79 
 
 
  This Act shall not prejudice the registrability or the validity of the registration of the trade mark, or 
the right to use the trade mark, on the basis that su ch a trade mark is identical with or similar to a 
geographical indication.  (3) Nothing in this Act shall apply in respect of  a geographical indication of any country with respect 
to goods or services for which the relevant indication is identical with the term customary in common 
language as the common name for such goods or servi ces in Malaysia or in respect of a geographical 
indication of any other country with respect to products  of the vine for which the relevant indication is 
identical with the customary name of a grape variety existing in Malaysia as of 1 January 1995. 
 Question
 
 Referring to para 124 on page 69 of the Secretaria t Report, does Malaysian law grant rights holders 
the option to elect in an infringement case between  compensation for actual damages and statutory 
damages?  If so, when during the enforcement proc eedings, must the right holder choose between the 
two? (US)  
 
A:  With regard to compensation in infringement cases, IP right holders do have the option to choose 
between actual damages and statutory damages. Claim ant for actual damages will bear the burden of 
proof on the actual cost.  
 Question
 
 In para 126 on pp. 69-70, the Secretariat Report cite d International Intellectual Property concerns that 
overproduction of optical discs in licensed and unli censed production plants is leading to significant 
exports of pirated materials.   
 
 (a) In addition to the actions identified in  Box III.1 and Table III.12, what steps is the 
Malaysian government taki ng against unlicensed production of optical discs?    
 
A:  The Government introduced th e Optical Discs Act 2000 to monitor the production of optical discs 
and thus indirectly control its contents which are normally copyrighted works. From  2001 to 31 
December 2005, 31 cases against illegal or unli censed optical discs factories and 38 cases against 
licensed factories have been ta ken. Machineries and equipment worth RM86 million have been seized. 
 
 (b) Have the authorities closed any unlicensed  plants?  Does the law give the authorities 
the right to revoke the license of and close an optical disc plant if it is discovered to 
be producing pirated products? 
 
A:  Yes, since 2001 the Enforcem ent Division has acted upon 31 ille gal factories and closed down 6 
licensed factories found to have violated the Optical Discs Act 2000. 
 
 (c) Is the government actively inspecting op tical disc plants for production of pirated 
material? (US)  
 
A:  Yes, the enforcement officers regularly c onduct inspection and monitor the manufacturing 
activities. In 2005, a total of 364 inspections were carried out.  
 Question
 
 The report of the WTO Secretariat states that: “Trade mark counte rfeiting is reportedly rampant in 
Malaysia due to insufficient enforcement; artic les include apparel and luxury goods, printer 
cartridges, plastic container systems, motor oil, automobile spare parts, household cleaning agents, WT/TPR/M/156/Add.1 
Page 80  
 
  shampoo and skin care items, tobacco, mobile phone  batteries, and toys.  Counterfeit pharmaceutical 
products, including drugs with the wrong ingredients a nd those with fake packaging, are of particular 
concern.  In order to curb product counterfeiting, an Anti-Counterfeit Task Force was established in 
March 2002.  The task force has helped to bu ild a closer network among trade mark owners, 
government agencies, and the Ministry of Domes tic Trade and Consumer Affairs.  The report 
furthermore contains a table with actions take n under the Trade Descriptions Act 1972 against 
counterfeit products are detailed in Table III.13. IPR protection is a primary concern of the EU whose 
industry is one of the main targets of counterfeiti ng. The EC has noted that two sectors (clothing and 
leather goods) feature prominently in the Table III.13 bot h in number of cases and in value of seizure. 
 
Table III.13 
Seizure of counterfeit goods under Trade Descri ptions Act 1972, January 2001 to December 2004 
 2001 2002 2003 2004 
Number of cases 1,954 3,171 6,084 3,887 
Clothing 526 611 900 853 
Medicine 9 30 22 28 
Spare parts 10 12 25 35 
Watches 75 76 148 125 
Leather goods 115 150 310 295 
Cassettes/videos 87 28 103 51 
Optical discs 710 1,880 3,878 1,593 
Seizure value (RM)  10,767,739.4 19,341,891.8 23,711,020.5 78,162,987.2 
Clothing 1,076,933.7 587,349.3 4,554,606.3 2,268,088.4 
Medicine 24,779.8 186,392.0 330,673.6 13,271.0 
Spare parts 132,730.0 28,829.0 230,417.8 19,795,248.0 
Watches 76,321.0 269,117.0 373,427.3 718,590.1 
Leather goods 57,096 338,651.4 789,817.4 1,734,669.9 
Cassettes/videos 87,140.6 36,524.5 189,461.3 1,508,936.0 
Optical discs 1,840,445.4 13,299,508.0 7,547,963.3 8,973,819.0 
Source: Enforcement Division, Ministry of Domestic  Trade and Consumer Affairs, Malaysia. 
 
Do the Malaysian authorities particularly the Enfo rcement Division envisage cooperation with the EU 
and its Member States authorities both in prevention and against counterfeiting?   How does Malaysia intend to significantly reduce the production and trade in of counterfeit goods? Has it adopted a national strategy to this effect, a nd if not does it intend to do so, also targeting these 
sectors where counterfeiting continues to be of a significant nature? (EC)  
 
A:  The Malaysian Government is willing to co operate with EU and its Member States authorities 
both in prevention and the fight against counterf eiting through IPR owners’ representatives in 
Malaysia. In combating counterfeiting, the Minist ry of Domestic Trade and Consumer Affairs has 
recorded 2,264 cases in 2005 under the Trade D escriptions Act 1972 and has seized goods with a 
street value of RM6.1 million.  
 Investigation reveals that most of the count erfeit goods found in Malaysian markets are being 
imported from other countries. The role played  by the Anti Counterfeit Task Force spearheaded by 
the Ministry of Domestic Trade and Consumer Affa irs which comprises various government agencies 
and the product owners has been an effective means  of combating counterfeiting in the country. 
Continuous enforcement efforts a re being carried out relentlessly to fight the war against counterfeit 
goods. 
  WT/TPR/M/156/Add.1 
 Page 81 
 
 
  Question  
 Footnote 42 on page 72 of the Secretariat Report indi cated that Malaysia’s Court of Appeal has ruled 
that enforcement officials must obtain a Trade Desc ription Order to conduct criminal raids when the 
counterfeit product seized is not identical to the tr ademarked original.  The United States agrees with 
those Members that view this ruling as complica ting enforcement of the Trade Mark Law.   
  (a) Has the government appealed this decision to a higher court?  
A:  The Malaysian government is of the view that this decision of the court is in tandem with the 
principles of law for the protection of trade mark infringement. Actions taken previously without a 
Trade Description Order in such cases have in fact led to civil ac tions against enforcement officials 
and this has made enforcement efforts more difficult.  
 
 (b) Does the government intend to amend th e Trade Mark Act of 1976 to allow criminal 
raids when counterfeit product that is not identical to the original is seized? (US)  
 
A:  Enforcement of counterfeiting product of trade  marks comes under the provision of the Trade 
Description Act 1972 and the provisions under th is Act are adequate to address this issue.  
 
Question
 
 
Malaysia has made determined effort s to improve the enforcement of    intellectual property rights.   
 
Have any special measures been formulated by th e Malaysian Customs Administration to protect IPR 
at the borders. If so, how are these measures implemented?   
(p. 69, para. 124) (CHINESE TAIPEI)  
 
A:  The enforcement of Border Measures by the Cu stom Authority is provided for under the Trade 
Marks Act 1976 while other criminal sanctions for intellectual property infringement is being enforced by the Ministry of Domestic Trade and Consumer Affairs via the Copyright Act 1987 and the 
Trade Descriptions Act 1972.  
 
The Customs officers may also exerci se their ex-officio action to enforce border measures. They are 
empowered to detain and seize the infringing and counterfeit goods. Pirated goods seized in these circumstances are liable to forfeiture as if they were prohibited goods under the law relating to 
Customs. While in the case of counterfeit goods sei zed under the Trade Marks Act, the customs officer 
shall notify the Registrar, the importer and the app licant giving notice that the goods will be released 
to the importer unless an action for infringement is  instituted by the applicant within the specified 
period.  
Question
 
 
Canada notes that amendments incorporated in 2003 into the Malaysian Patents Act of 1983 include, 
inter alia , “updating the provision on compulsory licences in compliance with Article 31 of the 
TRIPS Agreement”. (CANADA)  
  (a) Could Malaysia provide some exam ples of the updated compulsory licences? 
 
A:  Section 52 of the Patents Act 1983 has been ame nded in 2003 to extend the scope of compulsory 
licence to allow the act of importation. 
 WT/TPR/M/156/Add.1 
Page 82  
 
   (b) Would Malaysia consider taking advantag e of the implementation of paragraph 11 of 
the General Council decision of 30 August 2003 on the implementation of paragraph 
6 of the Doha Declaration on the TRIPS Agreement and Public Health, as agreed on December 6, 2005? 
 A:  Malaysia is still studying the legal and proce dural issues associated with this amendment.  
 
Question
 
 Canada notes that “protection of confidential t est data is not provided for under current laws. 
Presently, pharmaceutical and agricultural chemical t est data are protected under the Official Secrets 
Act 1972”.   Could Malaysia please provide further information on  its legislative protection of pharmaceutical and 
agricultural chemical test data? (CANADA)  
 
A:  The Official Secrets Act 1972 (OSA) prohibits disclosure of test data on pharmaceutical and 
agricultural chemical test data, which includes making use of information, test or other secret 
information presented to the comp etent authorities in order to ob tain market authorization. Other 
than the OSA there is no other legislation protection with regards to the test data. However, Malaysia 
is considering the possibility of promulgatin g to the Data Exclusivity legislation. 
 
Question
 
 Canada understands that “trade mark  protection is not limited in time  provided registration is renewed 
and use continues”. Could Malaysia provide more  information on the terms of protection granted 
under its trademark legislation? (CANADA)  
 
A:  Registered trade mark in Malaysia is protected  under the following provisions of the Trade Marks 
Act 1976:   (a)  Section 35 
 
 The registration of a person as the registered  proprietor entitles that person to the exclusive 
right to use the trade mark in rela tion to the goods or services.  
  (b)  Section 36 
 
 The fact that a person is the registered propr ietor of the trade mark shall be prima facie 
evidence of the validity of the original registration of the trade mark. 
  (c)  Section 37  
 A trade mark registered under the Trade Mark Act 1976, after expiration of seven years from 
the date of registration shall be conclusive evidence for purposes of legal proceedings. 
  (d)  Section 38  
 A registered proprietor is entitled to commenc e an action of infringement against a person 
who has infringed his registered trade mark. 
  Although the terms of protection are specifie d in the Trade Marks Act 1976, the Act also 
specifies certain act that does not constitute infringement.  WT/TPR/M/156/Add.1 
 Page 83 
 
 
   
 (a) Section 40   This section specifies acts not c onflicting to the infringement. 
 Question
 
 Canada notes that “an amendment to the Copyrigh ts Act 1987 in the year 2000 provides protection for 
performers with a view to complying with the TRIPS Agreement.” Could Malaysia provide more 
information on the scope of protection co nferred to performers? (Paragraph 119) (CANADA)  
 
A:  Scope of protection conferred to performers as st ated under section 16A (1) (a) to (e) as follows: 
 Section 16A Nature of performers’ right
 
(1) Performers’ right shall be the exclusive right to control in Malaysia- 
 (a) the communication to the public of a live performance, except where the live 
performance used in such communication is itself a live broadcast performance; 
 (b) the fixation of an unfixed performance;  (c) the  reproduction of the fixation of a live performance if-   (i) the fixation itself was done without the performer’s consent;   (ii) the reproduction is made for pur poses different from those for which the 
 performer gave consent; or 
  (iii) the fixation was made in accordance with the provisions of subsection (3),  
 and the reproduction is made for purposes d ifferent from those referred to in  
 those provisions; 
 (d) the first making available to the public of  a fixation of a live performance, or copies 
thereof, through sale or oth er transfer of ownership; and 
 (e) rental to the public of a fixation of a li ve performance, or copies thereof, irrespective 
of the ownership of the copy rented. 
 
Question
 
 
Could Malaysia please elaborate on the type of pr otection provided by its Geographical Indications 
Act 2000?  For example, is protection provided for all goods in accordance with the TRIPS Agreement (Article 22)? Could Malaysia give more  information on its system of protection?  
(CANADA)  
 
A:  Protection is provided for all goods in a ccordance with Article 22 of the TRIPS Agreement. 
Section 3 Protection of geographical indications Pr otection under this Act shall be given to a 
geographical indication- 
 
 (a) regardless whether or not the geographica l indication is registered under this Act; 
and 
 
 (b) as against another geographical indication which, although literally true as to the 
country, territory, region or locality in wh ich the goods originate, falsely represents 
to the public that the goods originate in another country, territory, region or locality. 
 
Section 5 Institution of proceed ings for injunction and damages
 
 (1) Any interested person may in stitute proceedings in the C ourt to prevent, in respect of 
geographical indications: WT/TPR/M/156/Add.1 
Page 84  
 
   (a) the use in the course of trade of any means in the designation or presentation of any 
goods that indicates or suggest, in a manner which misleads the public as to the geographical origin of the goods, that the goodsIquestion originate in a geographical 
area other than the true place of origin; 
 (b) any use in the course of trade which constitutes an act of unfair competition within 
the meaning of Article 10bis of the Paris Convention as set out in the Schedule; 
 (c) any use in the course of trade of a ge ographical indication which, although literally 
true as to the country, territory, region or locality in which the goods originate, 
falsely represents to the public that the goods originate in another country, territory, 
region or locality; or 
 (d) any use in the course of trade of a geographical indication identifying wines for 
wines not originating in the place indicated by the geographical indication in question or a geographical indication identifyi ng spirits for spirits not originating in 
the place indicated by the geographical i ndication in question, even where the true 
origin of the wines or spirits is indicate d or the geographical indication is used in 
translation or accompanied by expressions such as “kind”, “type”, “style” or 
“imitation”. 
 (2) The court may grant an injunction to prevent any unlawful use of the geographical indication 
and award any damages and any other legal  remedy or relief as it deems fit. 
 
Section 20 Presumption where geographical indication is registered
 
 (1) A geographical indication registered under th is Act shall, in any proceedings, raise a 
presumption that such indication is a geographica l indication within the meaning of section 2. 
 
(2) A certificate of registration issued under this Act shall be prima facie evidence of the facts 
stated in the certificate and of the validity of the registration.  Section 21 Right of use
 
 (1) In the case of registered geographical indi cations, only producers carrying on their activity 
in the geographical area specified in the Regi ster shall have the right to use a registered 
geographical indication in the course of trade.  (2)  The right of use shall be in respect of the products specified in the Register in accordance to 
the quality, reputation or characteristic specified in the Register. 
 
Question
 
 In addition, what type of protection is provided for wines and spirits (Article 23)? Could Malaysia 
please indicate approximately how many GIs are currently protected under this legislation? 
(CANADA) 
 
A:  The Geographical Indications Act 2000 provides fo r additional protection to be provided to wines 
and spirits as required under Article 23 of the TRIPS Agreement. To date, there is only one 
geographical indication registration.  
Question
 
 In paragraph 117 of its report, the Secretariat points out  that “protection of confidential test data is not 
provided for under current laws”.    WT/TPR/M/156/Add.1 
 Page 85 
 
 
  Please indicate whether Article 39.3 of the TRIPS Agre ement is directly applicable in Malaysia. How 
are the obligations under this provision complied with in practice? Please indicate whether national 
legislation to implement the obligations under this  provision is under preparation. If so, please point 
out the main features of this new legislation. W ill such legislation provide for a specific term of 
protection for test data submitted in  market authorization procedures? (SWITZERLAND) 
 A:  Generally, undisclosed information is protect ed under the principle of common law. However, 
official information which includes undisclosed information that is being submitted to the authorities 
is governed under the Official Secret Act 1972. Ma laysia is also considering the possibility of 
promulgating to the Data Exclusivity legislation. 
 
SME DEVELOPMENT 
 
Question
 
 
The report of the WTO Secretariat (paragraph 50) describes the Industrial Linkage Program and the 
Vendor Development Program for the development of  SMEs, including briefly the utilisation of Free 
Trade Zones and other measures.  In absence of a New and Full Subsidy Notificati on pursuant to Article XVI:1 of the GATT 1994 and 
Article 25 of the SCM Agreement, could Malaysia  please provide more detailed information on these 
programmes and special zones according to the format G/SCM/6/Rev.1. (EC) 
 
A:  The details of these programmes are available on the website www.smidec.gov.my. In essence, the 
programmes seek to encourage the matching of bi gger companies with local SME suppliers and we 
see no connection here with the SCM.  
 
Question 
 
 Although the Secretariat's report indicated in para. 49  that Malaysia has eliminated its trade-related 
investment measures as scheduled at the end of 2003 and that there is no specific legislation or 
regulation on local content, para. 50 suggests nevert heless that certain programs aimed at promoting 
and developing SMEs encourage the use of local ma terials and services through financial, technical 
and other related assistance. Could the Malaysian authorities indicate if they have any plans to phase out these programs or to adapt them, and when? Also, could the authorities explain why such 
programs which seem to bypass to some extent th e prohibition of local content requirements are 
needed to ensure the promotion and development of SMEs? (SWITZERLAND) 
 
A:  The SME programmes are aimed at promoti ng industrial linkages and vendor development.  
Bigger companies seeking local suppli ers are facilitated in this process by the Small and Medium 
Scale Development Corporation, which provides a list of SMEs and undertake matching programmes.   
There are no local content requi rements in these programmes. 
 
III. SECTORAL POLICIES 
 
Process of Increasing Sectoral Productivity 
 
Question
 
 
Doing away with unnecessary external as well as in ternal impediments to trade is vital for the 
promotion of trade and development itself. To this end, the EC should like to pose the following questions to Malaysia.  WT/TPR/M/156/Add.1 
Page 86  
 
  Could Malaysia please indicate if any process of  increasing productivity and diversifying production 
is currently being considered and if so within which sectors?   In what way is Malaysia seeking to enhance a s ecure sustainable development when increasing the 
manufacturing of goods, i.e. how can Malaysia ensure  adequate protection of the environment, while 
maximizing foreign exchange earnings?  (EC) 
 
A:  Increasing productivity and diversifying producti on is ongoing in all economic sectors through 
adoption of cost and technology-effective and efficient  methods. These include the use of technologies 
that are resource-efficient so as to ensure that  economic activities meet the goals of sustainable 
development.  The regulatory environment has also been strengthened, through the use of 
environmental quality and assessment studies and zo ning regulations so that development takes place 
in a sustainable manner.  
 
Ensuring Sustainable Development 
 
Question
 
 The EC welcomes Malaysia’s emphasis on su stainable economic growth and sustainable 
development. Looking at the overall policies of  Malaysia:  
What plans does Malaysia have for adoption of po licy strategies in order to enhance sustainable 
development? Does the issue of trade and sustai nable development fit in to Malaysia’s overall 
development strategies?  The importance of linking trade with sustainable dom estic policies, and in particular employment-
related matters and core labour sta ndards, was confirmed last year by the Final Report of the World 
Commission on the Social Dimension of Globalisation.   How does Malaysia assess the conclusions in the re port, and does Malaysia intends to follow up the 
various programmes which have been implemente d to increase employment and address challenges 
related to social adjustment? 
 
How does Malaysia assess the possibilities for incr easing trade and development while ensuring 
environmental sustainability? Does Malaysia current ly have a specific plan addressing this? (EC) 
 
A:  Malaysia implements policies and measures on sustainable development aimed at improving the 
quality of life, promoting sustainable consumptio n and production, protecting the environment, 
sustainably managing the natural resource  base and enhancing human institutional and 
infrastructure capacity. These measur es are part of development polic ies under the national five-year 
plans, the latest being the Eighth Malaysia Plan.  The Ninth Malaysia Plan and the Third Industrial Master Plan that are currently being formulated will further elaborate on sustainable development 
policies.  Such policies and measures are formul ated taking into account social and economic 
considerations, including improving the working conditions of the labour force. 
 
(a) Agriculture 
 
Question
 
 
In paragraph 10 Chapter IV, the report by the Secr etariat says; “A number of agricultural products 
remain subject to import licensing requirement s, including rice and rice products, sugar, un-
manufactured tobacco, milk, cabbage, coffee, and cereal flours”. Could the Malaysian authorities 
explain the process of import licensing allocation for coffee and tobacco? (COLOMBIA)   WT/TPR/M/156/Add.1 
 Page 87 
 
 
   
The Government also maintains a range of intern al management measures, such as import licensing 
for rice, sugar and dairy products. We would welcom e Malaysia’s clarification of why these measures 
are required and where details of these arrange ments are written down for exporters to access 
(AUSTRALIA) . 
 
A:  Many of Malaysia’s import licensing requirements for agricultural products are to meet sanitary 
and phytosanitary (SPS) requirements while some a re to meet the requirements under the Convention 
on Trade of Endangered Species of  Fauna and Flora (CITES).  
There are also import permits which Malaysia uses to monitor closely essential items such as rice and 
sugar, as well as coffee and tobacco.  Malaysia is a small producer of th ese products and imports 
substantial amount of these products. Information p ertaining to the application for import licenses or 
permits is available at the respective agencies.  
 
Question  
 
Please explain the reason why the applied tariff rat es of the following items are higher than bound 
rate:  (a)  HS0710 - Frozen Vegetables  
(b)  HS2009 - Fruit juices (JAPAN)  
 
A:  Regarding the agricultural products where the ap plied rates are higher than the bound rates, this 
is being investigated and action will be taken accordingly. 
 Question
 
 The Report by the Secretariat states that import licen ces for white sugar are reportedly available only 
to certain Malaysian sugar refiners. Concerning this  point, please indicate more information in detail, 
including an outline of this system and any re levant laws and regula tions. (Pages 78 to 79, 
paragraph 10) (JAPAN)  
 A:  Sugar is an essential product which is regul ated under the Supply Control Act 1961 and Price 
Control Act 1946. Import licenses are issued for mo nitoring purposes, and refiners will be allowed to 
import according to their requirement.  
Question
 
 In paragraph 10 on page 79, the Secretariat Report states: "Malays ia's food standards and labelling 
regime, in particular the halal trade regime, h as also caused concern among foreign exporters.  One 
issue seems to be the accreditation of foreign aba ttoirs in cases where the Malaysian Department of 
Islamic Affairs (JAKIM) does not recognize anot her country's halal approval and accreditation 
programme for meat; this creates uncertainty fo r foreign exporters of some processed foods." 
 What steps are being taken by Malaysia to r ecognize products approved as halal in other countries 
that follow the Codex halal guidelines,  thus providing national treatment? (US)  
 A:  In Malaysia, halal certification is undertaken by JAKIM.  Halal certification is done based on the 
Malaysian Halal Standard HS1500: 2004 which prov ides guidelines for the production, preparation 
and handling and storage of halal produ cts.  Inspection of food faciliti es by JAKIM or inspection by a 
foreign competent body licensed by JAKIM are undert aken for conformity assessment purposes. The 
Malaysian standard is applicable to both foreign and local food producers.  WT/TPR/M/156/Add.1 
Page 88  
 
   
Question
 
 Referring to para 20 on page 82 of the Secretariat Report, the United States understands that in April 
2005, Malaysia’s Ministry of Finance announced  that under Malaysia’s National Biotechnology 
Policy, approved biotechnology companies will be e ligible for various tax incentives.  The program 
will be administered by the Malaysian biotechno logy corporation. The actual package of tax 
incentives accorded to a given biot echnology company will be customized based on the merits of the 
project.  
Please provide further details regarding the types of incentives that will be provided to the Malaysian 
biotech industry under the National Biotechnology Po licy.  In particular, please provide information 
regarding the eligibility requirements fo r companies to receive these benefits. (US)  
 
A:  To support the objectives and aspirations of the National Biotechnology Policy, approved 
Biotechnology companies will be eligible for the following tax incentives: 
  (i) Incentive for Holding Companies
 
 
A Holding Company owning at least 70% of an approved Biotechnology company can claim: 
 
 (a) Group relief whereby its income can be offset by losses incurred by its approved 
subsidiary Biotechnology company; or 
   (b) Deduction for its investment in its  approved subsidiary Biotechnology company 
against its profits; 
  
(ii) Tax Exemption for Biotechnology companies
 
  - Approved Biotechnology com panies will be eligible for: 
   (a) Pioneers Status: 100% income tax exemption for a period of up to 10 years; or 
 (b) Investment Tax Allowance: 100% of qualifying investments over a period of 5 years 
can be set off against profits (this incen tive is not available if holding company 
incentives have been claimed); 
 (iii) Dividends distributed from tax exempt Biot echnology companies will be treated as tax exempt 
income for its shareholders; 
 (iv) Import duty and sales tax exemption on appro ved Biotechnology equipment and materials; 
 (v) Double deduction for qualifying expenditure on R&D;  
(vi) Double deduction for qualifying expenditure on export promotion. 
 The Biotechnology Corporation will act as the single point of contact (One Stop Agency) to process 
applications for tax incentives to biotechnology related companies. The actual package of tax 
incentives accorded to a given Biot echnology company will be customized based on the merits of the 
project. 
  WT/TPR/M/156/Add.1 
 Page 89 
 
 
  (b) Mining, Minerals And Energy 
 
Question  
 The Report by the Secretariat states that export du ties on most minerals have been abolished. Please 
indicate remaining export duties on minerals, if any. (Page 83, paragraph 26) (JAPAN)  
 
A:  Most export duties have been abolished. Only 14 lines are subject to export duties: 
 
- 12 lines are imposed at 5 percent; 
- 2 lines are imposed at 10 percent. 
 (c) Manufacturing  
 
Motor Vehicles 
 
Question
 
 Concerning the 50% rebate of excise duty fo r national car manufacturers, please explain the 
coherence to paragraph 2 of Article III of the GATT.   If Malaysia is considering the elimination or 
amendment of such a rebate, please indicate the prospects for it. (JAPAN)  
 
Malaysian national car manufacturers have for many  years benefited from excise tax rebates which 
are not available on imported cars, including those imported from the European Union. According to 
the WTO Secretariat Report (paragraph 45) Proton and Perodua and two locally incorporated joint-
ventures importing kits receive a 50% tax rebate  on excise taxes, not available to foreign 
manufacturers. This measure appears to be in violat ion of the WTO rules and in particular of Article 
iii.2 of the GATT by discriminating in favour of dom estic production. Can Mala ysia confirm that the 
excise duty rebate benefits for Malaysian national car  producers will be withdrawn in conformity with 
the WTO commitments of Malaysia, and inform from when this will be effective? (EC)  
 
Furthermore, can Malaysia confirm that all incen tives and grant to be introduced under the National 
Automotive Policy Framework, particularly those li nked to exports, will comply with the WTO rules? 
How does Malaysia intend to ensure th at this indeed does become the case? (EC)  
 Paragraph 35 on pp. 43 and 44 of the Secretariat Report stated that “Imports are generally  (emphasis 
added) treated in the same way as domestically pr oduced goods and services as regards indirect taxes 
(sales tax, excises).  The main  (emphasis added) exception is the 50% rebate of excise duty for 
national car manufacturers, which constitut es a substantial non-tariff barrier.”   
  (a) Please identify other imported goods subjected to sales and excise taxes at rates 
different from those applied to domestically-produced goods. 
 
 (b) Does Malaysia have plans to eliminat e the discriminatory excise duty rebate for 
national car manufacturers and any other produc ts identified in its response to this 
question? (US)  
 Malaysia protects its local car manufacturers from foreign competition by overseeing a system of 
approved permits (APs), which acts as a quota by rest ricting the total number of automobiles that can 
be imported in a given year relative to the size of  the domestic market.  In our view, this is 
inconsistent with Article 11 of  GATT 1994 (General Elimination of Quantitative Restrictions).  
 WT/TPR/M/156/Add.1 
Page 90  
 
  In addition, Proton and Perodua, plus two locally incorporated joint ventures assembling imported 
kits, receive a 50% tax rebate on excise taxes, not ava ilable to foreign manufacturers.  In our view this 
measure is inconsistent with Article 3 of GA TT 1994 (National Treatment) and the WTO Agreement 
on Subsidies and Countervailing Measures. 
 
Will Malaysia consider amending these measures to bring them into compliance with WTO 
Agreements?  (pgs. 90-92, paras. 42-47) (CHINESE TAIPEI)  
 It is reported that Malaysia has a quota restricting the number of cars in granting import licenses of assembled cars in order to promote the domestic auto motive industry.  Therefore, Japan requests that 
Malaysia should notify the outline  of the import licensing system for assembled cars immediately to 
the WTO, in accordance with Article 5 and 8.2(a)  of the Agreement on Import Licensing Procedures.  
In this regard, please indicate the specific view s of Malaysia. (Page 44, paragraphs 36 to 38) 
(JAPAN)  
 With respect to import licensing, there is a system  of approved permits (APs ) in Malaysia, required 
for every car manufactured or assembled outside the country. In this regard, please indicate the specific view of Malaysia on the consistency with  WTO Agreements such as Article XI of the GATT, 
in particular, concerning the following points:   (a) APs are provided only to certain investors. 
 (b) The quantity of imports is limited to 10% of the size of the domestic market. 
 (c) APs to be provided can be sold. (JAPAN)  
 Referring to paragraph 45 on page 91 of the Secretariat Report, Malaysia’s recently released National 
Automotive Policy Framework sets the goals of th e government for promoting the Malaysian auto 
sector.  The framework suggests that new incenti ves will be made available to enhance the 
competitiveness of automotive manufacturers in Malaysia.   Please provide further details regarding the types of incentives that will be provided to the Malaysian 
auto industry under the National Automotive Policy Framework.  In particular, please provide 
information regarding the magnitude of the bene fits and the eligibility requirements for auto 
manufacturers to receive these benefits. (US)  
 The Secretariat Report noted in paragraph 37 on pa ge 44 that Malaysia requires auto, truck, and 
motorcycle importers to possess a MITI-approved import permit.   
 (a) Please describe the process for obtaining  these permits, including any fees associated 
with issuance and the average time between application and issuance. 
 (b) Does MITI issue these import permits to foreigners?   (c) In the interest of tran sparency, when does Malaysia in tend to provide the WTO with 
updated, comprehensive replies to the Import Licensing questionnaire? (US)  
 
Would Malaysia commit itself to a specific ti me schedule for the progressive dismantling and 
eventual elimination of the Approved Permit system , bearing in mind the public statement made by 
the Minister of International Trade and Industry in July 2005 that “the AP system was in violation of WTO commitments”? (EC) 
 
It is our understanding that a “National Automotiv e Policy Framework” has recently been announced 
by the Government of Malaysia designed to pr omote the Malaysian automotive vehicle industry. 
 Could Malaysia please elaborat e? (pgs. 90-92, paras. 42-47) (CHINESE TAIPEI)  
  WT/TPR/M/156/Add.1 
 Page 91 
 
 
  A:  The issues raised by several members relati ng to the national car, New Automotive Policy and 
import licensing of automobiles are address ed together since they are related. 
 
On import licensing notifications, Malaysia has no tified the non-automatic licensing requirements for 
motor vehicles in Document G/LIC/N/3/MYS/1 dated 19 December 1997.  
 
The National Automotive Policy Framework was launched on 19 October 2005 with the following 
objectives:   (i) To promote a competitive and viable automotive sector, in particular national car 
manufacturers; 
  (ii) To become a regional hub for manufacturing, assembly and distribution for 
automotive vehicles;  
 
 (iii) To enhance value added and lo cal capabilities in the automotive sector; 
  (iv) To promote export-oriented Malaysian  manufacturers as well  as component and 
parts vendors; and 
  (v) To promote competitive and broad-ba sed Bumiputera participation in vehicle 
manufacturing, distribution and importati on as well as in component and parts 
manufacturing. 
 Details of the National Automotive Policy are being finalised.    
 
The import licensing system for motor vehicles was introduced to promote national socio-economic 
objectives. The Government is keeping this under revi ew to ensure its consistency with the WTO. 
 
Question
 
 It is frequently reported that the Malaysian Govern ment is considering the decrease of the numbers of 
manufactured or assembled cars to be approved for import to Malaysia.  Is the Malaysian Government 
considering such a plan?  If so, please expl ain specifically such a plan in detail. (JAPAN)  
 
A:  There is no such plan. 
 Question
 
 The aerospace industry is mentione d in para 31 on page 85 of the Secretariat Report as a sector for 
potential future growth.  Given this goal, has Mala ysia considered joining the Agreement on Trade in 
Civil Aircraft? (US)  
 A:  There is no such plan. 
 
(d) Services 
 
Question
 
 
The Report by the Secretariat states that in general,  the services sector is not yet as open to trade as 
the agriculture and manufacturing, largely due to re strictions on foreign direct investment, which is 
necessary for the establishment of commercial pr esence, the main mode of delivery for most WT/TPR/M/156/Add.1 
Page 92  
 
  services”. In this regard, please provide the spec ific view of Malaysia. (Page 93, paragraph 50) 
(JAPAN)  
 
A:  Malaysia welcomes FDI in the services indus try. However, the pace of liberalisation will be 
determined by the level of readiness of the indivi dual sub-sector, in accordance with the principle of 
progressive liberalisation.   
Question
 
 Please explain the full demarcation of the services s ector among Malaysian authorities (beside what is 
already explained in footnote 19). (Page 94, paragraph 51, including footnote 19) (JAPAN) 
 
A:  The Ministry of International Trade and Indu stry (MITI) is the coordinating body for issues 
relating to services trade and services liberaliza tion under the WTO, regional and bilateral 
agreements.  Other agencies with oversight  of specific individual sectors include: 
 
- Ministry of Energy, Water and Communicati ons - telecommunications, energy and water 
services 
- Ministry of Higher Education - higher education services - Professional Services Development Corporation - professionals such as engineers, architects 
and accountants 
- Ministry of Health - doctors, nurses and other medical personnel 
- Ministry of Transport - Maritime, Air and Land transport services - Bank Negara Malaysia (Central Bank) - banking, insurance and securities services 
 
Question
 
 
Regarding the limitation for a minimum bumiputera equity participation of 30%, it is among those 
issues that are described in the Secretariat’s report as to “create di sincentives to investment in the 
market”.  We would like to know whether Malaysia has any plan to review its bumiputera policy in 
the near future. ( HONG KONG, CHINA) 
 A:  The limitation for a minimum Bumiputera equity participation of 30% is an affirmative action which is uniformly applied across the economy. It is  a socio-economic tool to restructure the economy 
and to facilitate equitable distribution of wealth  with an aim to increase the Bumiputera equity 
participation in the economy.  
 Question
 
 According to the Report by the Secretariat, in 1997 the limits of foreign equity were raised to 49% in 
telecommunications.  Are the limits of foreign equity of both basic telecommunications services and value-added telecommunications services 49% under th e current regulations of Malaysia? (Page 31, 
paragraph 64) (JAPAN)  
 
A:  Malaysia had in 1997, in the face of As ian Financial Crisis, autonomously liberalised the 
telecommunications market to allow for 61% foreign equity and to be reduced to 49% in 5 years.  
This is still in practice. However, insofar as Malaysia’s current commitments to WTO, the 
commitment on foreign equity remains at 30%.  
 
Question
 
 
The Report by the Secretariat also states that liber alization of the telecom market in Malaysia is 
limited by an investment cap of 30% for an equity stake in a Malaysian telecom company, which  WT/TPR/M/156/Add.1 
 Page 93 
 
 
  includes a supplier of basic telecom services, valu e-added services, and IT and database services.  
Please explain specifically the relation between 49% for the limits of foreign equity and an investment 
cap of 30% for an equity stake in a Malaysian telecom company in telecommunications services.  
Please indicate whether 49% is the limit of foreign equity, instead of the investment cap of 30%, or 
whether 49% of 70% (in which the investment cap of 30% is subtracted) is the real limit of foreign 
equity in telecommunications services. (Page 31, pa ragraph 64, ref. pages 101 to 102, paragraph 68). 
(JAPAN)  
 
A:  The Secretariat Report appears to have co-mi ngled the current foreign equity commitment of 30% 
with the autonomous liberalisation of 49%.  
 Question
 
 The Report by the Secretariat states in footnote 26  that some industry analysts believe that the 
Government must eventually distance itself from Te lekom Malaysia, and legislate provisions for local 
loop unbundling, co-location, and interconnections, otherwise Malaysia will not have a competitive 
market for broadband service.  Japan also believes th at in addition to the promotion of deregulation 
and the elimination of restrictive competition activities, the regulation for the dominant carriers is important in order to ensure fair competition and to promote consumers’ benefits in the 
telecommunications market. Is Malaysia planning to  provide some regulations  to Telekom Malaysia, 
such as local loop unbundling, co-location, and interconnections? (Page 101, paragraph 67, 
footnote 26) (JAPAN)  
 
A:  The Malaysian Communications and Multimed ia Commission was established based on the 
powers provided for in the Malaysian Communi cations and Multimedia Commission Act 1998 and 
Communications and Multimedia Act 1998.  
The Commission’s key roles are the regulation of the communications and multimedia industry, 
implementing and promoting the Government's national  policy objectives for the communications and 
multimedia sector.   The Commission is also charged with overseeing th e new regulatory framework for the converging 
industries of telecommunications, br oadcasting and on-line activities. 
 
Local loop unbundling, co-location and interconn ections are provided for in the Commission 
Determination on the Mandatory Standard on Access (Determination No. 2 of 2005)  which applies to 
all licensees under the Communications and Multimedia Act 1998. This instrument along with many 
other legislative instruments to promote industry competition can be found at 
http://www.mcmc.gov.my/registers/cma/comdeter/index.asp  
Question
 
 The Secretariat report notes that the dominant provide r of fixed-line services is Telekom Malaysia, a 
state-owned company. We note that in its sch edule of specific commitments under the GATS, 
Malaysia has made commitments to additional prin ciples such as having an independent regulator for 
telecommunications operators and services. Could Ma laysia provide clarification on the relationship 
between Telekom Malaysia a nd the independent regulator? (CANADA)  
 
A:  The Malaysian Communications and Multimedia  Commission was established pursuant to the 
Malaysian Communications and Multimedia Comm ission Act 1998 which creates an independent 
regulatory agency charged with the developm ent and regulation of the communications and 
multimedia sector in Malaysia. The law which governments the converged communications and 
multimedia sector is the Malaysian Co mmunications and Multimedia Act 1998. WT/TPR/M/156/Add.1 
Page 94  
 
   
Telekom Malaysia is a corporate body incorporat ed under the Companies Act 1965 and is one of the 
many operators of communications an d multimedia services in Malaysia. 
 Telekom Malaysia is a licensee  under the Communications and Multimedia Act 1998 and together 
with many other licensees, are subject to the re gulatory oversight of the Malaysian Communications 
and Multimedia Commission.  
Question
 
 
The Secretariat report mentions that although the monopoly of Telekom Malaysia was abolished in 
1994, it remains the main dominant provider of fixe d-line services. Could Malaysia explain why this 
is still the case? (CANADA)  
 
A:  Soon after the abolition of the monopoly, several other operators were also awarded licenses for 
fixed line in 1996. These operators were at that time in possession of mobile licenses and they chose 
to cherry pick areas in which they would roll ou t their fixed line operations. Over time, these 
operators decided to abandon the fixed line ma rket and concentrate their resources in mobile.  
 As such, with the near perfect substitutability of mobile service for fixed line services, there was little 
commercial interest by any party to provide fixed  line services with Telekom Malaysia having to 
continue to maintain their legacy networks. Du ring the time period of 2000 to 2004, the fixed line 
penetration has actually declined from 19.7 per 100 in year 2000 to 17.2 per 100 in year 2004 whilst 
mobile penetration grew from 21.8 per 1 00 to 56.5 per 100 in the same time period. 
 
Question
 
 
The Secretariat report notes that the procedures fo r acquiring the licenses to operate are uncertain and 
lengthy. Does Malaysia concede that this could co nstitute an obstacle to further competition in the 
fixed-line market?   
A:  The Secretariat’s report is not accurate . The Communications and Multimedia Act 1998 and the 
regulations there under has provided for a transparen t regulatory framework including provisioning 
of licenses for the communications  and multimedia sector. The independent regulator, the MCMC is 
committed to ensuring that its processes and procedures are transparent and efficacious. 
 Please refer to the independent regulator’s we bsite at http://www.mcmc.gov.my/what_we_do/ 
licensing/cma/framework.asp for a brief explanation of the types of licenses as well as Frequently 
Asked Questions.   Please refer to http://www.mcmc.gov.my/ what_we_do /licensing/cma/individual.asp for the licensing 
process and the types of forms to be filled in, th e checklist to be complied with and the application 
template and information required. 
 
On the second question, the fixed line market appea rs to be unattractive to the industry players 
despite them being given the sa me licenses as Telekom Malaysia. 
 
Question
 
 
Malaysia made additional commitments on public av ailability of licensing criteria. Could Malaysia 
provide further details about the licensing process?    WT/TPR/M/156/Add.1 
 Page 95 
 
 
  A:  Further information on Licensing Criteria can be found in the Communications and Multimedia 
Act 1998.    The Communications and Multimedia (Licensing) Regulations 2000 provides for standard license 
conditions for all licenses, and special license cond itions for each category of Individual license. 
 
Details about the licensing process can be f ound at http://www.mcmc.gov.my/what_we_do/ 
licensing/cma/framework.asp and it is in English.  
Question
 
 
Canada notes that Malaysia has a restriction on foreign ownership for value-added services. Could 
Malaysia provide more information on th is restriction and its policy rationale? 
 
A:  Malaysia as a developing country would like to see the increased local participation in economic 
activities while at the same time welcoming forei gn participation in this market segment.  
 The restriction is aimed at achieving the right ba lance for the Malaysian economy.  Malaysia will 
from time to time review this policy as the country continues to develop.  
Question
 
 
The Secretariat Report notes that market access is  limited to facilities-based providers. Could 
Malaysia provide information on this policy and what it means for resellers?  
 
A:  Market access is not limited to facilities-ba sed providers. Malaysia has autonomously improved 
its regulatory framework to facilitate and pr omote service- based industries as well. The 
Communications and Multimedia Act 1998 provides for 4 types of license categories:  Network Facilities Providers (NFP)
 - who are the owners of facilities such as satellite earth stations, 
broadband fibre optic cables, telecommunications lines and exchanges, radio communication transmission equipment, mobile communications bas e stations, and broadcasting transmission towers 
and equipment. They are the fundamental build ing block of the convergence model upon which 
network, applications and content services are provided.  Network Services Providers (NSP)
 - who provide the basic connec tivity and bandwidth to support a 
variety of applications. Network services enable c onnectivity or transport be tween different networks. 
A network service provider is typically also th e owner of the network facilities. However, a 
connectivity service may be provided by a p erson using network facilities owned by another. 
 Applications Service Providers (ASP)
 - who provide particular functions such as voice services, data 
services, content-based services, electronic commerc e and other transmission services. Applications 
services are essentially the functions or capabi lities, which are delivered to end users. 
 
Content Applications Service Providers (CASP)  - who are special subset of applications service 
providers including traditional broadcast servic es and newer services such as online publishing and 
information services.  
ASP and CASP are license categories that are non-facilities based and resellers would able to 
participate in the market using those type of licenses.  WT/TPR/M/156/Add.1 
Page 96  
 
  Question
 
 According to the Report by the Secretariat, Malays ia made a number of commitments under the Basic 
Telecommunications Agreement but market access is limited to facilities-based providers. In this 
regard, does the initial offer of Malaysia (TN/S/O/ MYS) improve this point and include market access 
of both facilities-based providers and non-facilities based providers? (Page 101, paragraphs 68) 
(JAPAN) 
 
A:  Malaysia’s initial offer in cludes market access to both facilities (essentially NFP and NSP 
Individual and Class) and non-facilities based prov iders (essentially ASP Individual and Class).  
 Question
 
 
In the initial offer of Malaysia (TN/S/O/MYS) , telecommunications services are described as based 
on not the common classification (MTN.GNS/W/120), but the classification of domestic regulation.  
Malaysia explains that Network Facility Services providers (NFP), Network Service providers (NSP) 
and Application Service providers which requi re individual licences, are equal to basic 
telecommunications services and those which require class licences are equal to value-added telecommunications services. (JAPAN)  
 
A:  The common classification defin ed as basic and value-added tel ecommunication is technology and 
service specific. What Malaysia is offering throug h the domestic classification of services is the 
elimination of technology and service dependencies in providing services (this include several new 
services such as WIFI, VOIP).   Foreign participa tion in the telecommunica tions sector can now be 
more than that defined as basic and value-added services.  
For more information, please refer to: 
http://www.mcmc.gov.my/what_we_do/licensing/cma/framework.asp  
Question
 
 Would Malaysia consider removing the foreign equ ity restriction of 30% on the Telecom Industry? 
(CHILE) 
 
A:  Malaysia is currently reviewing the foreign equity limit on telecommunications sector but any 
change in the equity limit will be with regard to the developmental and capacity building needs for the 
sector as provided for in Article IV and XIX of the GATS.  
Question
 
 We note that a foreign investment cap of 30% is in  place for an equity stake in a Malaysian telecom 
company.  We however learnt that a higher than 30% foreign ownership might be allowed in Malaysia 
under certain circumstances.  In this regard, woul d Malaysia please clarify its existing regime with 
respect to the permitted level of foreign investment in  the telecom market?  We would also be grateful 
if Malaysia would brief us on th e criteria and procedures for obtai ning special investment approval? 
(WT/TPR/S/156, P. 101 - 102, Paras. 68 - 69) (HONG KONG, CHINA)  
 A:  Applications for equity above 30% is grant ed autonomously and on a case by case basis. To 
support such applications, the ap plicant should provide details on specific and capacity building 
initiatives, technology transfer programmes and traini ng of the local workforce and contributions to 
the industry. 
  WT/TPR/M/156/Add.1 
 Page 97 
 
 
  Question  
 Besides, we note that Malaysia has sought to en courage investment in the telecommunications market 
by guiding investment into the Multimedia Super Corridor (MSC) and providing tax incentives to attract multinational corporations.  Would Malaysia elaborate on the eligibility criteria for an entity to 
obtain a MSC status?  Are such entities subject to the same foreign equity cap of 30% as all other 
entities? (HONG KONG, CHINA)  
 
A:  MSC companies are allowed 100% foreign equity holding. MSC Status Eligibility Criteria can be 
obtained at www.msc.com.my (http://www.msc.com.my)  
  
Question
 
 Although Malaysia is promoting ICT growth, the Secret ariat Report states that there is limited trade 
and investment and that one of the reasons for this could  be the fact that the market for fixed line 
services is largely controlled by Te lekom Malaysia through its owners hip of the lines. The Secretariat 
Report states, however, that Malaysia has sought to  encourage investment in the telecommunications 
market by guiding investment into the Multimedia  Super Corridor (MSC). Could Malaysia provide 
information about the type of initiatives involved in promoting investment in this sector and in other 
parts of ICT? (CANADA)  
 A:  Communications services can now be deliver ed through various other technologies such as 
satellite and wireless which is readily available in  Malaysia. Fixed line is not the only means of 
delivering services. As described in an earlier response,  fixed line penetration is declining due to lack 
of interest by the competing opera tors to roll out fixed line services. 
 
Through the MSC initiative, Malaysia continues to attract leading ICT companies of the world to 
locate their industries in the MSC and undert ake research, develop new products and technologies 
and export from this base.   The MSC is also an ideal growth environment for Malaysian ICT SMEs to transform themselves into 
world-class companies.  
 
Furthermore, the MSC we lcomes countries to use its highly advan ced infrastructural facilities as a 
global test-bed for ICT applications and a hub for their regional operations in Asia.  To qualify for MSC status, applicants must meet the following criteria:  
 
 (i) Be a provider or heavy user of multimedia products and services;  (ii) Employ a substantial number of knowledge workers.  (iii) Provide technology transfer and/or c ontribute towards the development of the MSC 
or support Malaysia’s K-economy and services. 
 (iv) Establish a separate legal entity for the MSC qualifying multimedia business and 
activities. 
 (v) Locate in a MSC designated cybercities.  (vi) Comply with environmental guidelines.   More information on the MSC initiative can be found at www.msc.com.my. 
 
Question
 
 Please illustrate specific examples of policies in relati on to the liberalization of trade in services of the 
sectors referred to in paragraphs 41 and 42 (page 9)  of WT/TPR/G/156, as well as those referred to by WT/TPR/M/156/Add.1 
Page 98  
 
  the Secretariat as areas to be particularly further expl oited (education, tourism, Islamic finance, health 
care, professional and consultancy services as well as  ICT-related and manufacturing-related services, 
(Page 9, paragraphs 41 and 42, ref. page 94,  paragraph 52 (page 94) of WT/TPR/S/156. (JAPAN)  
 
A:  Paras 41 and 42 in the Government Report refer to  the Government’s intention to promote growth 
in the sectors mentioned. In this context, Mala ysia’s policies include promotion of eco and health 
tourism and also investment in and development of  these sectors. The promotion of ICT through 
innovative approaches such as the Multimedia Super Co rridor is a specific example. Another is in the 
area of manufacturing-related services, ther e is liberalization in the setting up of regional 
headquarters and procurement and distribution centres.  
 
Question
 
 With regard to relaxation or e limination of restrictions on market access for mode 3 in the 
construction services sector, please provide Mala ysia's position.  (Page 9, paragraph 42) (JAPAN)  
 
A:  Malaysia is of the view that the present re gulations governing mode 3 access is adequate to 
enable the participation of foreign construction firms. 
 
Financial Sector 
 
A. Banking Sector 
 
Questions:  Progress of Financial Sector Master Plan (FSMP) 
 
 The U.S. notes that Malaysia has had in place a Financial Sector Master Plan since 2001 which 
envisions financial sector (banking, insurance, secu rities, other financial services) liberalization by 
2007.  We understand that Malaysia  has made a lot of progress in strengthening its regulatory system 
to help underpin such liberaliza tion.  Nevertheless, we have very  little evidence that Malaysia has 
taken concrete steps towards uniform liberalization.    What additional steps does Malaysia have planned to meet its 2007 deadline that will advance true 
market opening - that is, granting new licenses to an y applicant that is able to meet Malaysia's 
prudential standards, including the establishment of  new companies and not just forcing small stake 
investment in existing, non- competitive local companies? (US)  
 We note with appreciation that Ma laysia has taken substantial step s to strengthen and liberalise the 
financial services sector, and is now in Phase 2 of th e 10-year Financial Sector Master Plan launched 
in 2001.  It is noted that fore ign participation will be reviewed in Phase 3 of the Financial Sector 
Master Plan.  Would Malaysia provide more deta ils about its measures for introducing new foreign 
competition to the financial services sector after 2007? (WT/TPR/S/156, P. 95, Para. 55) 
(HONG KONG, CHINA)  
 Malaysia’s Financial Sector Master Plan (FSMP) is aimed at building competitive domestic banks.   
 
In terms of liberalization, what is the current status of the FSMP? (CHINESE TAIPEI)  
 
The FSMP defers the introduction of new foreign competition until after 2007.   Can Malaysia say 
how soon after 2007 it expects this introduc tion to take place? (p. 95, para. 55) (CHINESE TAIPEI)  
 
According to the report of the WTO Secretariat Malaysia's financial sector remains one of the most restrictive in the world and much of the existing liberalisation remains unbound.  Is Malaysia planning 
to make an offer in financial services in the Doha round? (EC)   WT/TPR/M/156/Add.1 
 Page 99 
 
 
   
A:  The FSMP, launched in 2001, sets out the reco mmendations to be implemented over 10 years in 
three phases. While measures to increase domestic c apacity have been implemented during the first 
phase, these measures will be continued in the sec ond phase to further strengthen the effectiveness of 
the financial sector in meeting the requirements of the economy, enhance domestic competition and 
strengthen the infrastructure for consumer protection.  This will collectively ensure that the financial 
sector is able to adjust and respond positively to co mpetition arising from greater deregulation and 
liberalisation.  
Malaysia has now advanced into the second phase of the FSMP, where the policy of gradually 
deregulating and liberalising the financial sector will be complemented with the objectives of 
bringing increasing benefits to the overall economy.  In the second phase, Bank Negara Malaysia will 
accord greater operational flexibility to foreign bank s operating in Malaysia so that they can better 
serve the needs of the economy. Indeed, the Bank  has allowed locally-incorporated foreign banking 
institutions to establish more branches on a pred etermined ratio of 1(market centres):2(semi-
urban):1(non-urban) within one year star ting from 1 January 2006 already.   
 Malaysia has not deferred the introduction of ne w foreign competition until after 2007. It should be 
noted that new foreign competition was introduced ahead of 2007. In 2003, Bank Negara Malaysia 
had allowed the issuance of three new Islamic banking licenses to foreign parties for which 100% 
foreign ownership permitted. The foreign equity pa rticipation limit in Islamic subsidiaries and 
investment banks was also raised to 49%. In  addition, commercial banks, including locally-
incorporated foreign banks, can provide factorin g services, either as part of their commercial 
banking business or through a separate legal entity. The separate legal entity can be in the form of a 
fully or partially-owned subsidiary or a joint venture with any other parties, including foreign parties.   
 
Going forward, as stated in the FSMP, the policy on foreign participation will be reviewed in Phase 
3, where consideration will be given to introducing new foreign competition in the financial sector.  
The timing of this review would hinge, among others, on the achievements of specific milestones under Phases 1 & 2 of the FSMP.  
 Among the liberalisation measures that would be furt her considered include issuance of new licenses 
for specialised lines of insurance business and g reater opportunities for internationally-reputed 
insurers to acquire equity interests in , or forge strategic alliances w ith, domestic players, both in the 
direct insurance and reinsurance sectors. 
 Question:  Number of Commercial Bank
 
 As the number of commercial banks cited here (28)  is different from the number of commercial banks 
cited in the report by the Malaysian Government (29, see WT/TPR/G/156, paragraph 43 (page 10)), 
please confirm the correct number.  (Page 94, paragraph 56, ref. pa ge10, paragraph 43 of 
WT/TPR/G/156) (JAPAN)  
 A:  The number of commercial banks at the time the re port by the WTO was prepared (that is, in July 
2005) was 28. The number of commercial banks has si nce risen to 29 with the Kuwait Finance House 
officially commencing business on 5 August 2005.    
Questions:  Operational Flexibility with Re gard to Establishment of New Branches
 
 Please explain the details of how greater operational flexibility will be accorded to offer “the ability 
for foreign banks in Malaysia to establis h new branches”. (Page 10, paragraph 45) (JAPAN)  
 WT/TPR/M/156/Add.1 
Page 100  
 
  The Secretariat Report also states that the second ph ase of the FSMP will gradually level the playing 
field for incumbent foreign banks and accord greater operational flexibility. (CANADA)  
 Could Malaysia specify whether there will be limitati ons to the number of branches foreign banks will 
be allowed to open, as is the case in the in surance industry (two new branches a year)? (CANADA)  
 
A:  Locally-incorporated foreign banking institution s were allowed to establish up to four additional 
branches based on a predetermined ratio of 1( market centres):2(semi-urban):1(non-urban) within 
one year from 1 January 2006. This is the fir st of a phased approach of physical branch 
liberalisation. The implementation of subsequent phase(s) will be further reviewed based on the 
progress of this liberalisation initiative with flexibility  to ensure that maximum benefits can be reaped 
from this process. 
 
Question:  Islamic Banking
 
 
With respect to the Malaysian Government’s aim to  raise the percentage of the Islamic banks’ assets 
of the banking sector’s total assets, does this mean that the Malaysian Government aims to raise the 
ratio of the Islamic banking sector within the ba nking sector?  If so, please explain the basis (law, 
ordinance, guideline, etc.), substance and the ra tionale of such policy. (Page 96, paragraph 57) 
(JAPAN)  
 
A:  Malaysia developed the Islamic banking sector as  an alternative form of financial intermediation 
in meeting the economic needs of the nation. As th ere is still vast potential to increase the significance 
of the Islamic banking sector in the overall financia l system, the FSMP was formulated to further 
enhance the effectiveness and efficiency of the Isla mic banking system. Towards this end, well-defined 
strategies were adopted towards enhancing the institutio nal capacity as well as the development of 
the financial infrastructure and re gulatory framework in order to support the sound and progressive 
expansion of the Islamic banking sector. The 20% market  share serves as an indicator to measure the 
expansion of the Islamic banking sector. 
 
Questions:  Employment of Expatriates, Trade Finance and Foreign Exchange Remittance Business  
 
According to our understanding, Mala ysia maintains certain restricti ons on the operations of foreign 
banks, in such areas as setting up branches or subsidiaries in Malaysia, hiring employees for certain services, conducting 12-month trade finance busin ess, onshore currency exchange and import/export 
foreign exchange remittance business.  
Does Malaysia have any plans to relax these types of  restrictions on the ope rations of foreign banks? 
(CHINESE TAIPEI) 
 
A:  The locally-incorporated foreign banks have b een allowed to offer full-range transactional 
internet banking services since 1 January 2002, which is a liberalisation of the branching policy for 
foreign-owned banks. This was done during Phase 1 of the FSMP. In addition, locally-incorporated 
foreign banking institutions were allowed to estab lish up to four additional branches based on a 
predetermined ratio of 1(market centres):2(sem i-urban):1(non-urban) within one year from 1 
January 2006. This is the first of a phased approach of physical branch liberalisation. The implementation of subsequent phase(s) will be further reviewed based on the progress of this 
liberalisation initiative with flexib ility to ensure that maximum benefits can be reaped from this 
process.  The expatriate policy for the banking and insurance sectors has been liberalised  since the conclusion 
of the last round of financial services negotiations  at the World Trade Organisation in December 
1997.  WT/TPR/M/156/Add.1 
 Page 101 
 
 
   
Malaysia accords greater flexibility in terms of the number and breadth of areas that expatriates 
could be appointed to in senior management and specialist positions in financial institutions in 
Malaysia, provided that the appropriate fit and prope r criteria are met by the relevant applicants.   
 
There is no restriction for foreign-owned banks in Malaysia to provide trade financing facilities of 
any tenure, in Ringgit or foreign currency. Foreign exchange administration rules are applied 
uniformly to all domestic and foreign-owned banks in Malaysia. 
 
There is no restriction for foreign-owned banks in Malaysia to conduct foreign exchange and 
remittance services in Malaysia.  
B. Insurance Sector 
 
Questions:  Establishment of New Branches
 
 
Could Malaysia please elaborate on why insurance companies are limited to only two new branches per year? (CANADA)  
 
Will Malaysia allow the establishment of new br anches under terms that afford national treatment? 
(CANADA)  
 
A:  The relaxation of the branching policy for fo reign-owned insurers with foreign shareholding not 
exceeding 51% to open two new branches per year cons titutes a fast tracking of the Financial Sector 
Master Plan (FSMP). This is also part of the pr ogressive approach to liberalization with the ultimate 
view to level the playing field between domestic and foreign players in the market. 
 
Question:  Operational Flexibility
 
 Could Malaysia provide greater de tails on other measures it is contem plating (other than allowing the 
establishment of new branches)? (CANADA)  
 A:  Under Phase 2 of the FSMP, further deregulat ory measures are being implemented to promote 
greater competition as well as enhance the ab ility of insurers to respond more pro-actively and 
speedily to changes in consumer demands and market conditions. This will include greater flexibility 
accorded to foreign insurers to establish branch offices, the progressi ve deregulation of pricing for 
tariff-rated insurance products, greater investment  management flexibility and removal of limits on 
management expenses. 
 
Questions:  Local Incorporation of Br anches of Foreign Insurance Companies
 
 Paragraph 59 of the Secretariat Report states that branches of foreign insurances companies were required to incorporate locally by mid-1998 with so me extensions granted.  Paragraph 45 of the 
Government Report further states that since 2003, majority foreign-owned insurers are allowed to 
open a limited number of new branches. (CANADA)  
 Could Malaysia specify whether foreign insurance br anches that did not incorporate in Malaysia still 
operate in the country? (CANADA)  
 
If yes, do they receive the same regulatory treatme nt (e.g. capital requirements, etc.) and have the 
same business powers as locally incorporated major ity foreign-owned service providers?  Please 
provide details of any differences. (CANADA)  
 WT/TPR/M/156/Add.1 
Page 102  
 
  A:  All licensed insurers (other than foreign professi onal reinsurers which are allowed to operate as 
branches in Malaysia) are required to be incorpor ated as public companies in Malaysia. All direct 
insurers operating in Malaysia have co mplied with this requirement with the exception of two. These 
two insurers are required to comply with the mandatory requirements. 
 
All foreign-owned insurers operating in Malaysia en joy consistent regulatory treatment and business 
powers irrespective of their legal or institutional status. 
 
C. Securities Sector 
 Question:  Scheduling of Commitment on Market Access 
 
 The Malaysian government has announced that fore ign participants will be allowed to own 100% 
equity in futures brokers, futures fund managers, and futures trading advisers.     
Will Malaysia consider reflecting this change in  its Schedule of Special Commitments on market 
access? (p. 100, paras. 64, 66) (CHINESE TAIPEI)  
 
A:  It should be noted that the initiative undertaken  is part of the effort to further strengthen the 
capital market particularly at the intermediaries level. As such, Malaysia Commission may consider 
scheduling this under Mode 3, subject to as an d when the economic needs arise and the relevant 
approvals.  
Question
 
 Please provide Malaysia’s specific plans, if any, fo r liberalization in manufacturing-related services in 
relation to Malaysia’s aim to diversify its manuf acturing sector (e.g. liberalization plans like those 
referred to in the Report by the Secretariat). (Page 10 2, paragraph 70, ref. page  9, paragraphs 33 to 34 
of WT/TPR/G/156) (JAPAN)  
 
A:  Malaysia already has in place liberal manu facturing-related services policies.  Malaysia 
promotes commercial presence of operational headquarters, regional distribution centers, 
international procurement centers, regional o ffices and representative offices), and support services 
(including integrated logistics, integrated marketing, R&D).   
Question
 
 
According to the Report by the Secretariat, th e private Higher Educational Institutions Act 1996 
permits foreign universities to establish branch ca mpuses.  However, the initial offer of Malaysia 
(TN/S/O/MYS) inscribes in mode 3 of higher education that “only through a joint venture with foreign equity not exceeding 49% and subject to an economic needs test”.  From the view point of promoting the free trade of higher education, the e limination or further deregulation of the limitation 
of foreign equity is encouraged.  
 
- Please explain the reason why the limitation of foreign equity in higher education is required 
in the initial offer.  
- Please indicate the prospects, if such a limitation will be improved. (Page 104, paragraph 74)  - Please indicate the specific standards to be used in the economic needs test. (JAPAN)  
 
A:  The limitation on foreign equity is to encour age joint ventures with loca l entities. The offer on 
private higher education services is already substantial as equity of  more than 49 per cent can also be 
considered under certain conditions.  
  WT/TPR/M/156/Add.1 
 Page 103 
 
 
  Question  
 With regard to higher education, the Conditional In itial Offer of Malaysia (TN/S/O/MYS, 31 January 
2005) inscribes “unbound except for students moving abroad including students under franchise and twinning arrangements” in the limitations on market access as Mode 2 of higher education (students 
moving abroad from Malaysia).  Therefore, we suppose that there may be some restrictions in 
Malaysia for students moving abroad such as requiri ng franchise and twinning arrangements.  On the 
other hand, regarding students moving into Malays ia, the Report by the Secretariat states that 
“According to the Government, there were 51,000 st udents in Malaysia from 130 countries in 2004”.  
Concerning students moving into Malaysia from other countries, are there no limitations in Malaysia?  
If there are some restrictions in Malaysia, such  as requiring franchise a nd twinning arrangements, 
please indicate them specifically. (Page 104, paragraph 74) (JAPAN)  
 
A:  With regards to franchise and twinning progr ammes, there is no limit on students coming to 
Malaysia. Any private higher education institute mu st prove that the partner university is ranked 
among the top 200 in the world.  
Question
 
 Would Malaysia consider removing the “joint ve nture” requirement for foreign investment on the 
Health Services sector? (CHILE) 
 
A:  This requirement is meant to encourage and ensu re local participation in the provision of health 
services.  
Question
 
 
As indicated, the Malaysian government is relaxing immigration conditions for the entry of foreign 
medical specialists, therapists and patients in orde r to further increase the contribution to the economy 
made by so-called “health tourism”.    It would be appreciated if Malaysia could provi de us with details of the revised regulations 
concerning immigration requirements in this respect. (p. 103, para. 73) (CHINESE TAIPEI)  
 
A:  Entry of tourists for medical treatment is s ubject to normal visa requirements. Entry of medical 
personnel for employment purposes is subject to domestic regulations.  
 Question
 
 The Report by the Secretariat states that Malaysia n law does not allow for foreign legal consultancy 
except on a limited basis in the Labuan Internationa l Offshore Financial Centre, offering services 
relating only to home country laws, international la w and offshore corporation laws of Malaysia for 
offshore clients. Are there any plans to enlarge fo reign legal consultancy which is currently admitted 
in the Labuan International Offshore Financial Centre , to all areas in Malaysia?  If any, please provide 
detailed information. (Page 104, paragraph 75) (JAPAN)  
 
A:  Under Malaysia’s Specific Commitments und er the General Agreement on Trade in Services 
(GATS), foreign lawyers could only practise as co nsultants in Labuan Island, offering services 
covering advisory and consultancy services relating only to home country laws, international law and 
offshore corporation laws of Malaysia for offshore clients. 
 WT/TPR/M/156/Add.1 
Page 104  
 
  Malaysia’s Legal Profession Act 1976 allows only Malaysian citizens and permanent residents to 
practise law in Malaysia. Nevertheless, the Legal Profession Act 1976 allows for a foreign lawyer to 
practise law in Malaysia u nder exceptional circumstances. 
 Part II A of the Legal Profession Act 1976 allows foreign lawyers to apply for special admission 
certificates from the Attorney Gene ral. After this certificate is is sued, the foreign lawyers would be 
permitted to practis
e as a solicitor in Peninsular Malaysia for the specified duration, subject to 
renewal from time to time.   Such “case-by-case” admission for foreign lawyers to pr actise in Malaysia is not inconsistent with its 
MFN obligations as it is not incons istent with Malaysia’s current comm itments in the legal services as 
reflected in Malaysia’s Schedule of Commitments. 
 
Malaysia is currently undertaking a study to examine the possible change in the current system with a 
view to allow for further liberalisation of the le gal services sector. Any further liberalisation will be 
reflected in our Schedule of  Commitments accordingly. 
 
Question
 
 Paragraph 76 notes that Malaysia participates actively in the APEC architect project aimed at 
facilitating mobility of architects through mutual recognition of qualificati ons among participating 
APEC economies.   
 Could the Government of Malaysia please provide information regarding the extent to which it 
currently recognizes the licensing and qualifications of foreign architects? (CANADA)  
 A:  The recognition of foreign architects via li censing and recognition procedures is regulated under 
the Architects Act. The regulatory authority is the Board of Architects. Procedures for the licensing of 
foreign architects are set out in the Act, while rec ognition of qualifications is undertaken by the Board 
base on specific criteria available on the website – www.lam.gov.my.  
 
Question
 
 
The Report by the Secretariat states that it has been  reported, but not confirmed, that the Government 
is considering imposing minimum st ocking requirements so that 30% of all goods on shelves must be 
from Bumiputera companies.   
- In this regard, please explain the Governme nt of Malaysia’s position.  (Page 105, 
paragraph 79)   
- Is the Government of Malaysia consideri ng such a minimum stocking requirement or a 
similar requirement?  If so, what are the details of such plan? (JAPAN)  
 
A:  The Government has minimum stocking requirem ents for hypermarkets and department stores. 
This policy is currently under review.   
Question
 
 In Malaysia, communication, construction and inte rnational marine transport services are provided 
only through a representative office, regional office, or locally incorporated joint-venture corporation 
with Malaysian individuals or Malaysian-controlled co rporations or both.  Further, aggregate foreign 
shareholding in the joint-venture corporation should  not exceed 30 per cent.  Moreover, distribution 
services are not committed.  What  plans does the Malaysian government have to mitigate the above-
mentioned service related restrictions and to commit on distribution services? (KOREA)  WT/TPR/M/156/Add.1 
 Page 105 
 
 
   
A:  Under the GATS, Malaysia made commitments in a number of sub-sectors.  Malaysia has made 
conditional offers under the Doha negotiations. Cons ultations are still on-going to improve these 
offers.  
 
Question  
 
The Report by the Secretariat states that according to the Government, cooperation with other international ports will be enhanced through joint ventures and strategic alliances with foreign port 
operators and shipping companies. In this rega rd, please indicate specific examples. (Page 106, 
paragraph 81) (JAPAN)  
 A:  Example of strategic alliances is Port  of Tanjung Pelepas with Maersk-Sealand. 
 
Question
 
 Does “cooperation with other international ports w ill be enhanced through joint ventures” mean that 
maritime auxiliary services (e.g. cargo-handling ser vices, container station and depot services) by 
joint ventures can be provided in Malaysia? (JAPAN)  
 
A:  The terminal operations of federal ports hav e been privatised to terminal operators. These 
operators are responsible for prov iding these services consistent with  the terms of their respective 
privatisation agreements. 
 Question
 
 In the report of the WTO Secretariat (paragraph 81) the importance of Malaysian ports and the 
ambition to strengthen these sectors to become a transhipment hub is underlined. 
Does any specific restrictions apply for foreign i nvestors in activities such as: cargo-handling (CPC 
741), storage/warehousing (CPC 742), maritime agency services, freeing forwarding /freight agency services (CPC 748 and 749) and for customs clearance services, maritime agency services (e.g. as these activities are defined in the maritime model schedule)? (EC) 
 
A:  Any restrictions in terms of foreign partic ipation would be consis tent with Malaysia’s  foreign 
investment guidelines  for cargo-handling (CPC 741), stor age/warehousing (CPC 742) and GATS 
schedules for maritime agency services, freeing fo rwarding/freight agency services (CPC 748 and 
749) and maritime agency services (e.g. as these activities are defined in the maritime model 
schedule).  
 Question
 
 According to the report of the WTO Secretariat th e upstream oil and gas industry is controlled by 
Petronas, which is the sole entity with legal title  to ownership, explor ation, and production of 
Malaysian crude oil and gas deposits.  
 
To what extent are other compan ies entitled to undertake upstream wo rks on a fee or contract basis, 
and what are the criteria for their selection?   Which specific restrictions do apply to foreign enterprises? (CHINESE TAIPEI)  
 
A:  As the national petroleum corporation, wholly-owned by the Federal Government, PETRONAS 
has close working relationships with foreign oil co mpanies in the upstream oil and gas sector. This is WT/TPR/M/156/Add.1 
Page 106  
 
  undertaken by means of the Production Sharing Contract (PSC) System, which replaced the 
Concession System in 1976.  Malaysian PSCs are similar to tho se that multinational oil and gas companies enter into with other 
host countries and partners. Each contract obligates the PSC Contractor to provide all the financing 
and bear all the risk of exploration, development and  production activities in exchange for a share of 
the total production.  Open exploration acreages of varying sizes and hydrocarbon productivit y are available for 
development. To undertake this development, PETRONAS always welcome international oil and gas 
companies to invest in the exploration a creages under the relevant PSC terms.  
 Data of all open exploration a creages in Malaysia are also ava ilable for review by interested and 
genuine oil and gas companies free of charge.   
There is no specific restriction as the upstream oi l and gas sector is alre ady opened to foreign 
participation. To date, PETRONAS has signed more than 60 PSCs with international petroleum 
companies enabling them to participate in the exp loration, development and production of oil and gas 
in the country.  In some of the upstream explo ration blocks, the foreign participation increases up to 
85%.  
 Question
 
 According to the report of the WTO Secretariat the production by the utilities in particular electricity 
is set to continue as household and manufacturing industry demand grows.   
Would Malaysia explain the regulatory framework for the electricity sub sector? 
 How many companies are involved in production, transmission, distribution, and/or supply of electricity?   Does Malaysia plan to attract foreign investment in that sub sector to cope with the rising electricity 
demand? (EC)  
 
A:  The electricity supply for Malaysia consists of 3 main systems, that for Peninsular Malaysia, for 
the State of Sabah and for the State of Sarawak.  The regulatory framework for the electricity sub-
sector comes under the Electricity Supply Act 1990. 
 At present there are 3 vertically integr ated utility companies in the country:- 
 - Tenaga Nasional Berhad (TNB), for Peninsular Malaysia;  
- Sabah Electricity Sendirian Berhad (SESB) for the state of Sabah; and 
 - Sarawak Electricity Supply Corporation (SESCO) in the state of Sarawak.  These utilities undertake generation, transmission, distribution and supply activities in their 
respective supply areas.  There are also about 20 investor owned independent power producers 
(IPPs) generating and selling electricity to the utilities under long term Power Purchase Agreements 
(PPAs).  There are about 34 small electricity distri butors who generate electricity on their own or 
purchase them from the utilities and distribute and  supply to customers in designated areas. 
  WT/TPR/M/156/Add.1 
 Page 107 
 
 
  All the above companies involved in the electricity  supply industry are licensed and regulated by the 
Energy Commission in Peninsular Malaysia and in the state of Sabah and by the Chief Electrical Inspector in the state of Sarawak. 
 
Question
 
 
The Energy Commission Act 2001 provides for the Energy Commission to promote and safeguard 
competition and to prevent the misuse of monopoly or market power.  However, it is our understanding that the three State-owned utilities in  Malaysia dominate all energy generation and 
distribution markets through a system of vertical-integration.  Could Malaysia therefore please explain 
further what steps it is planning to take in order to ensure the transition into a competitive market for 
the energy sector?  (p. 66, para. 111) (CHINESE TAIPEI)  
 
A:  The introduction of investor-owned indepe ndent power producers (IPPs) and private distributors 
have introduced competition into the sector.  
 
Question
 
 The Malaysian Government welcomes foreign investme nt in its energy and mining sector.  However, 
as a result of the long-term trend of declining oi l reserves, Petronas, the State-owned oil and gas 
company, has embarked on an international explora tion and production strategy.  Is this move likely 
to have implications for Malaysia ’s national mineral policy or any impact on the oil industry?  If so, 
please provide details. (p. 84, para. 27) (CHINESE TAIPEI)  
 
A:  The international exploration and production st rategy by PETRONAS is purely based on business 
and commercial consideration, and hence there w ould be no implication on Malaysia’s national 
mineral policy.  
Question
 
 
Majority foreign equity participation of up to 100%  is permitted in projects involving extraction or 
mining and processing, but mergers and acquisitions ar e subject to FIC approval and, in determining 
the percentage, three criteria are considered.  We would appreciate knowing the reason for the requi rement for FIC approval?  In addition, could 
Malaysia please describe exactly how the three criteria are used to determine the percentage of stock 
holdings that apply to foreign participation, and ho w the fair treatment of foreign investment can be 
ensured?  (p. 84, para. 27) (CHINESE TAIPEI)  
 
A:  For mining and exploration cases, a maximum percentage of foreign equity participation (100%) 
is allowed subject to /depending on the level of expertise, technologies involved, and amount of 
capital injected for the project. 
 The three criteria are :  - Level of equity participation allowabl e based on reasons explained as above; 
- Purchase considerations for th e said transaction/proposal 
- Type of activities.  
Question
 
 Although the upstream market of the gas industry in  Malaysia, such as exploration, has been opened 
up to foreign participation, Petronas remains the sole pipeline gas supplier on the downstream side. WT/TPR/M/156/Add.1 
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Given this situation, does the Malaysian Governme nt have any plans for opening up the gas industry’s 
downstream market to foreign participation?  (p. 84, para. 28) (CHINESE TAIPEI) 
 
A:  In pipeline gas business, PETRONAS buys gas fr om upstream suppliers, an d subsequently process 
and transmit the gas to the end users.  
 In Peninsular Malaysia, the processed gas is tr ansported via the Peninsular Gas Utilisation (PGU) 
System with its major customers being the power sector (70%), non-power sector (18%), reticulation 
sector (4%) and the remaining 8% is exported to Singapore. Gas reticulation business is undertaken 
by Gas Malaysia Sdn Bhd (GMSB) and the foreign participation in GMSB is 15% (held by Tokyo 
Gas, Mitsui and Mitsubishi). In this regard, there is  no specific plan in opening up the gas industry’s 
downstream market to foreign participation.  
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