WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/TPR/M/225/Add.1 
19 March 2010 
 (10-1472) 
Trade Policy Review Body 
25 and 27 January 2010 Original: English/ 
 anglais/  inglés 
 
 
TRADE POLICY REVIEW 
MALAYSIA 
Record of Meeting
 
Addendum  
Chairperson:  H.E. Mr. István Major (Hungary) 
 
 This document contains the advance written questions, and replies provided by Malaysia.1 
__________________________________________________________________________________ 
Organe d'examen des politiques commerciales 
25 et 27 janvier 2010  
EXAMEN DES POLITIQUES COMMERCIALES 
MALAISIE 
Compte rendu de la réunion
 
Addendum  
Président:  H.E. M. István Major (Hongrie) 
 
 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 
25 y 27 de enero de 2010 
 
EXAMEN DE LAS POLÍTICAS COMERCIALES 
MALASIA 
Acta de la reunión  
Addendum  
Presidente:  Excmo. Sr. István Major  (Hungría) 
 
 En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Malasia.1 
                                                      
 1 In English only./En anglais seulement./En inglés solamente.  WT/TPR/M/225/Add.1 
 Page 3 
 
 
  REPLIES PROVIDED BY MALAYSIA 
 
ARGENTINA  
 
Para 6  
 
 Tax incentives have long been an important instru ment of Malaysia's industrial policy.  Direct 
and indirect tax incentives apply, inter alia,  to investments in the manufacturing, agriculture, tourism 
and approved services sectors, R&D, training, and en vironmental protection activities.  No estimates 
of total tax revenue forgone as a result of these ince ntives have been made available.  Experience in 
other countries suggests that tax incentives are rarely  cost-effective.  The publication of estimates of 
tax revenues forgone as well as studies evaluating th e cost effectiveness of incentives would improve 
fiscal transparency in Malaysia and cont ribute to a more effective tax policy. 
  According to the Secretariat Report, "[t]ax in centives have long been an important instrument 
of Malaysia's industrial policy.  Direct and indirect tax incentives apply, inter alia , to investments in 
the manufacturing sector".  Malaysia is also known to export a large share of its manufacturing output. 
 
1. Would Malaysia please specify the nature of the fiscal incentives for the manufacturing 
sector?  In particular, do these take the form of curre ncy transfers, loan rebates, tax forgiveness, etc.? 
 
Answer:  The major tax incentives are Pion eer Status (PS) and Investment Tax Allowance (ITA). A company 
granted PS enjoys tax exemption on its statutory inco me of 70% to 100% for a period of 5 or 10 years. 
A company granted ITA is entitled to an allowa nce of 60% to 100% of its qualifying capital 
expenditure, which can be offset against its statutory income for 5 years. 
 
These incentives are granted to industries/activities wh ich are promoted by the Government that can 
contribute towards economic growth and in line w ith Malaysia’s development strategies.  For 
example, Malaysia is currently promoting investme nts in high-tech and high-value added investment 
projects, and such investment incentives are grant ed to attract FDI in such industries.  
 
Other incentives include reinvestment  allowance, exemption from import duty, excise duty and sales 
tax. 
 
2. Would Malaysia please specify which pr oductive sectors benefit fro m such incentives? 
 
Answer: 
 
Sectors that mainly benefit from these incenti ves are promoted manufacturing and selected services 
activities. 
 
Para 81  
 
 Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.1  Legislation on anti-competitive measures has been applied in energy as well as in 
                                                      
 1 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   WT/TPR/M/225/Add.1 
Page 4  
 
  communications and multimedia.
2  The authorities state that Malaysia  is currently in the final process 
of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.
3  It is not clear whether GLCs will be 
covered by the FTPB and FTCB.   According to the Secretariat Report, "[t]he aut horities state that Malaysia is currently in the 
final process of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill 
(FTCB)" and that "[i]t is not clear whether GLCs [Government-linked companies] will be covered by 
the FTPB and FTCB".  3. Would Malaysia please clarify whether Govern ment-linked companies are to be covered by 
the future fair trade practices act? 
 
Answer: 
 
The Bill is still at the final drafting stage and has  not been finalised, the coverage of the law upon 
GLC’s cannot be determined at this point of time.  
Para 1
 
  During the period under review, Malaysia has been adopting measures specified under 
various plans, such as the Ninth Malaysia Plan (2006-10) and the Third Industrial Master Plan (2006-20), with a view to guiding the country towards global competitiveness and becoming a higher-
value added and knowledge-based economy.  Malaysia  aims to increase the share of the services 
sector to GDP to 60% by 2020, in an effort to  establish a knowledge-based economy less reliant on 
manufactured exports.   
 
 The Secretariat Report highlights the fact that  "Malaysia aims to increase the share of the 
services sector to GDP to 60% by 2020, in an  effort to establish a knowledge-based economy less 
reliant on manufactured exports".  
4. Would Malaysia please explain how it aims to  achieve a 60% increase in the share of the 
services sector to GDP by 2020? 
 
Answer:  
Among the measures undertaken by the Governme nt to further develop the services sector:  
− Liberalisation of the services sector: 
                                                     
 
 2 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any 
conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or 
market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.    
3 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public.  WT/TPR/M/225/Add.1 
 Page 5 
 
 
  - 22 April 2009 – Immediate liberalisation of 27 services sector; 
- 27 April 2009 – Liberalisati on of financial sector including Legal Practise in 
Islamic Finance; 
- 30 June 2009 – Removal of equity requirement under the Foreign Investment 
Committee (FIC) guidelines.  
- Negotiations in various fora, WTO, ASEAN and regional and bilateral FTAs. 
− Other measures include building capacity of domestic service  suppliers to promote 
export of services; and 
− Review of domestic rules and regulations to facilitate market access and movement of 
professionals. 
 
Para 23  
 
 The Government continues to promote e xports of manufactured products through, inter alia,  
income tax exemptions.  If the value of exports of a manufacturing company increases by at least 50% 
(from the previous year), 30% of its increased net e xport income may be exempted from income tax.  
If a manufacturing company succeeds in penetrating new markets, 50% of its increased net export 
income may be exempted; if it wins the Export Ex cellence Award (Merchandise Category) by MITI, 
100% of increased export value may be exempted.4  In addition, manufacturing exports have been 
facilitated by, inter alia , exemptions and drawbacks for import duties, simplified customs procedures, 
concessionary credits, and insurance and guarantees (C hapter III).  For example, free industrial zones 
and licensed manufacturing warehouses provide minimum customs formalities for export-oriented industries.  Moreover, the Government has been  encouraging the establishment of international 
procurement centres (IPCs) to make Malaysia a major distribution centre in the region. 
  The Secretariat Report emphasizes that "[t]he Government continues to promote exports of 
manufactured products through, inter alia, income tax exemptions". 
 
5. Would Malaysia please provide further deta ils regarding income tax exemption for exporting 
companies? 
 
Answer:  
Details regarding income tax exemption are av ailable at http://www.matrade.gov.my. 
 
 
AUSTRALIA
 
 
Para 28  
 
 Malaysia has signed bilateral preferential ag reements with Japan, Pa kistan and New Zealand 
on 13 December 2005, 8 November 2007 and 26 Oct ober 2009, respectively.  Bilateral negotiations 
are on-going with Australia, Chile, India and the United States.   
1. The Report by Malaysia (page 8, paragraph 28) notes that bilateral negotiations towards the 
conclusion of free trade agreements are ongoing with  Chile, India and the United States (as well as 
                                                     
 
4 The exemption is not granted if the company receives any ince ntives (except for deduction for 
promotion of exports) under the Promotion of Investment Act 1986, the Reinvestment Allowance, and 
Allowance for Increased Exports or Deduction for Cost on Acquisition of a Foreign Owned Company 
(MATRADE online information.  Viewed at:  http ://www.matrade.gov.my/cms/content.jsp?id=com.tms. 
cms.article.Article_6c9d2a10-7f000010-290f290f-73c76693 [11.10.2009]). WT/TPR/M/225/Add.1 
Page 6  
 
  with Australia).  Could Malaysia explain the stat us of the negotiations with Chile, India and the 
United States, and any outstanding issues that may exist between the parties?  
Answer: 
 
Bilateral FTA negotiations are still on-going with Chile , Australia and India.  As for the Malaysia-US 
negotiations, it is currently on hold pend ing further deliberations by both parties.   
 
Para 46
 
 
 The Government is embarking on a new economic  model, which is intended to shift reliance 
from a manufacturing base dependent on semi skilled and low cost labour to one that hinges on high technology and modern services sector  dependent upon skilled and highly paid workers.  This is in 
line with the IMP3, which laid out the policies and strategies to develop the services sector as the next 
engine of growth. 
 
2. Does Malaysia have any plans to unilaterally liberalise other services sectors, such as 
professional services (e.g. legal, engineering and architecture), telecommunications services, or construction services, all of which constitute key el ements of the infrastructure of a competitive, 
modern services-oriented economy?  If so, could Malaysia please elaborate on these plans and the 
anticipated timeframes? 
 
Answer: 
 Liberalisation of the other se rvices sub-sectors will be undert aken on an on-going basis and 
roadmaps for liberalisation and further d evelopment are currently being drawn up. 
 
Malaysia has time-bound plans to open up it s services sector under the ASEAN Framework 
Agreement on Services (AFAS).  Targ eted time line for services equity liberalisation under AFAS is as 
follows:  
Sectors AFAS time line 
Priority sectors: e-ASEAN, healthcare and tourism services  51% :  2008 
70% :  2010 
Logistics 51% :  2010 
70% :  2013 
Other sectors, excluding finance 51% :  2008 
70% :  2015 
 
Para 4  
  Since Malaysia's previous Review in 200 6, its constitutional a nd legal framework has 
remained largely unchanged.
5  Malaysia has a single-structured judicial system consisting of the 
                                                      
 5 Under the Constitution, Malaysia is a federation of 13 states and the 3 federal territories of Labuan, 
Kuala Lumpur, and Putrajava.  It is a parliamentar y democracy with a constitutional monarchy.  Executive 
power is vested in the Cabinet led by the Prime Minister.  Legislative authority is divided between the federation 
and the states.  The federal parliament has legislativ e authority on trade policy i ssues such as finance, 
commerce, industry, shipping, communicat ions, and transport.  Each state has its own constitution, a council of 
state or cabinet with execu tive authority, and a legislature dealing w ith matters not reserved for the federal 
parliament.  Land issues, particularly land use, mining, and forestry are reserved for state legislatures.  Malaysia is a multi-racial society (population of  28.31 million as at July 2009), comprising Malays, Chinese, Indians, and 
other ethnic groups.  WT/TPR/M/225/Add.1 
 Page 7 
 
 
  superior courts and the subordinate courts.  The su perior courts have jurisdiction to determine the 
validity of any law made by parliament or by a state legislature.  In January 2009, a Judicial Appointment Commission (JAC) was established, to improve transparency in the process of 
nomination and appointment of judges.  
Para 13 (Chapter 4)
 
  In Malaysia, mineral products (a part from crude oil and gas) are the property of the states.  
The main laws and regulations governing the sector include the Mineral Development Act 1994 
(effective 1998), the State Mineral Enact ments, and the State Quarry Rules.
6  At the federal level, 
mining is regulated mainly by the Ministry of Natural Resources and Environment, through its 
Minerals and Geosciences Department .  State governments are responsible, inter alia , for issuing 
mineral licences and mining leases.  Private (domestic and foreign) companies can obtain licences or leases to engage in exploration or mining of mi neral products; requirements are the same for domestic 
and foreign invested enterprises. 
 
3. Could Malaysia please describe and elaborate on the regulatory responsibilities of the federal 
Ministry and how these differ from the State govern ment responsibilities.  Also, which agency or 
agencies are responsible for approving mining investment?  
Answer:  
 
The Ministry of Natural Resources and Environm ent (MNRE) is responsible for legislating and 
implementing the policies, laws, procedures and gui delines related to natural resources management 
and environmental conservation.  The regulatory powers of the Federal Government is provided 
under the Mineral Development Act 1994 (Act 525) for the inspection and regulation of mineral 
exploration and mining and other related issues.   
Para 42
 
  Malaysia's laws governing FDI do not provide  general principles and rules for foreign 
participation in local businesses.
7  FDI in Malaysia is mainly regulated under the Promotion of 
Investments Act (PIA) 1986, and the I ndustrial Coordination Act (ICA) 1975.8  The Malaysian 
Industrial Development Authority (MI DA), under MITI, is in charge of, inter alia , promoting foreign 
and local investment, and evaluating applications for tax incentives.  As a one-stop centre, MIDA 
coordinates with relevant authorities on investment facilitation measures. 
 
4. Could Malaysia please elaborate on the nature and scope of these amendments and give an 
indication of the expected timeframe for such amendments?  
                                                     
 
 6 The Mineral Development Act provides the framework for the inspection and regulation of mineral 
exploration and mining operations.  The State Mineral Enactments have been adopted by all states except Perlis 
and Sabah.  States that adopted the Enactment also developed their own State Mineral Regulations to set out 
detailed procedures for mineral exploration and mining operations.  Sabah, Kelantan, Selangor, Terengganu, 
Pahang, and Negeri Sembilan also regulate quarry activities under State Quarry Rules. 
 7 Arguably, this had allowed the Government ma ximum policy and regulatory space to screen and 
control FDI to suit the economic and industrial  needs of the particular time (IISD, 2008). 
 8 The PIA was amended in March 2007 to incorporate incentives approved from 2001 to 2007 annual 
Budgets.  The ICA is currently being amended.   WT/TPR/M/225/Add.1 
Page 8  
 
  Answer: 
 The amendments to the Promotion of Investme nts Act 1986 was undertaken to include newly 
introduced or enhanced incentives provided to the manufacturing and manufacturing related services 
sector as announced in the annual Budgets from 2001 to 2007.  The exercise was completed in 2007 
and tabled in Parliament late 2007. 
 The amendments to the Industrial Coordination Act 1975 was undertaken in 2009 to include the introduction of e-application for the Manufacturi ng Licence as well as revoking the application fee 
imposed previously.  The Act is expected to  be tabled in Parliament in mid-2010. 
 Para 43
 
  During the period under review, various measures were adopted to attract FDI.
9  M o r e  
recently, restrictions on foreign investment in services have been removed or reduced (Malaysia 
already allowed 100% foreign equity in manufacturi ng (Chapter IV(5)).  As of 22 April 2009, 100% 
foreign equity is allowed in 27 services subsectors , covering health and social services, tourism, 
transport, business services, and computer and re lated services.  The Government also announced 
relaxation on foreign investment in financial serv ices on 27 April 2009;  fore ign equity limits were 
increased from 49% to 70% for investme nt banks, insurance companies, and takaful  (Islamic 
insurance) operators.  A higher foreign equity lim it beyond 70% is considered on a case-by-case basis 
for insurance companies.  More operational flexibiliti es are also given to locally incorporated foreign 
banks, insurance companies, and takaful  operators (Chapter IV(6)). 
 5. Considering the importance of a strong outcome on services at the conclusion of the WTO 
Doha Round, what consideration has Malaysia give n to scheduling these reforms in its final services 
offer? 
 
Answer: 
 Malaysia's revised offer for the Doha Round already reflects some of these reforms.  The Government 
will continue to undertake binding commitments in  the WTO based on the pr ogressive liberalisation 
provision provided for under the GATS and in  tandem with the capacity of domestic services 
providers.  The final offer for the Doha Round will reflect new improvements taking into account the 
overall balance in the negotiations. 
 
Para 81
 
 
 Malaysia does not yet have a comprehensive competition law, but the authorities recognize that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.
10  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.11  The authorities state that Malaysia  is currently in the final process 
                                                      
9 For example, in 2007, PEMUDAH was set up to  improve transparency, and thus the business 
environment (section (3 )(ii)).  And as of 1 December 2008, manufact uring licences were is sued automatically 
(with a few exceptions) to reduce businesses' operation costs (Chapter IV(5)(i)). 
10 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 11 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers  WT/TPR/M/225/Add.1 
 Page 9 
 
 
  of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in 
accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.12  It is not clear whether GLCs will be 
covered by the FTPB and FTCB. 
 6. Could Malaysia please clarify whether Government-linked companies (GLCs) will be 
covered by the proposed Fair Trade Practices Bill and Fair Trade Commission Bill (page 44, 
paragraph 81)? 
 
Answer: 
 Since the Fair Trade Practices Bill and Fair Trade  Commission Bill are still at the final drafting 
stage and has not been finalised, the full coverage of  the law upon GLC's cannot be determined at this 
point of time.  
Para 91
 
  Malaysia is reviewing its in tellectual property legislation in stages.  Industrial design 
legislation is at the final stage of internal revi ew, and is to be published for public consultation.  
Legislation on patents, trade mark, and copyright is  at the stage of internal discussion by the Law 
Review Committee.  While Malaysia does no t provide protection for data submitted by 
pharmaceutical companies in support of drug regist ration, the Government intends to implement 
test-data protection in Malaysia;  the exact mechan ism for doing this has not been decided yet.   
 
7. Could Malaysia please elaborate on the timeframes and processes of the staged review, 
including the legislation and subject matter to be c overed at each stage, and when the different stages 
are expected to be completed?  
Answer: 
 
The amended legislation is expected to be tabled in Parliament as below: 
i) Industrial Designs Act 1996 – June 2010  
ii) Copyright Act 1987 – March 2010 
iii) Patents Act 1983 – November 2010  
iv) Trade Marks Act 1976 – Mac 2011 
 
A comprehensive review covering scope, institutional arrangements, enforcem ent, exceptions and 
limitations and associated regulations is being undertaken.   
                                                                                                                                                                    
 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or 
market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.    
12 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public. WT/TPR/M/225/Add.1 
Page 10  
 
  Para 2
 
  Malaysia has a generally liberal trade regi me for agricultural products, with an average 
applied MFN tariff at 2.8% (WTO definition) in 2009, although some non- ad valorem  tariffs tend to 
conceal relatively high rates.  In addition, import licensing applies to some agricultural products, and 
rice may only be imported by BERNAS.  As a monopsony buyer of rice, BERNAS has the market 
power to negotiate lower prices with its supplie rs.  Malaysia began to apply tariff-rate quotas on 
agricultural products in 2008.  Import tariffs are ze ro for mineral resources and oil and gas, which are 
not subject to any import licensing requirements.  Export taxes, however, apply to some mineral products, and to crude oil and condensate. 
 
8. Could Malaysia please explain if this import arrangement with BERNAS will be maintained 
after 2011, particularly in light of the Government's  stated intention of encouraging foreign direct 
investment in the agriculture sector? 
 
Answer: 
 A study on the status of BERNAS is curren tly being undertaken by the Government.  
 
Para 9
 
 
 Malaysia has an overall liberal trade regime on agricultural products although the authorities 
consider the increasing food imports to be a challenge .  Its tariffs on agricultural imports are generally 
low, averaging at 2.8% (WTO definition) in  2009 (Table III.1).  Nevertheless, some non- ad valorem  
tariffs, particularly in agri culture, tend to conceal relatively high rates (Chapter III).13  The authorities 
state that Malaysia continues to maintain non- ad valorem  duties (with high AVEs) for agricultural 
products to protect farmers or for public health reasons (alcoholic bevera ges and tobacco).  The 
Government is currently reviewing its use of non- ad valorem  duties in line with the Doha 
negotiations.  9. Could Malaysia please outline if it has sought to meet its desired policy objectives through 
other measures which do not distort international trade?   
 
Answer: 
 Malaysia is prepared to convert the non-ad valorem duties to AVE, in line with the on-going Doha 
negotiations. 
Para 67
 
  Telecom services suppliers must obtain a licence from the Minister of Information, Communication and Culture;  licence conditions are th e same for local and foreign service suppliers.  
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  
Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed.
14   
 
                                                      
 13 Some 6.1% of all agriculture tariff lines are subject to non- ad valorem  tariffs.  Three tariff lines (at 
HS 9-digit level) have AVEs higher than 1,000%, cove ring some banana products and some tobacco refuse 
(HS080300200, HS080300400, and HS240130000).  The average duty for agricultural products, including all 
AVEs, is 18.1%;  excluding these three lines, it is 7.2%.  
14 Higher equity participation is allowed for "indivi dual network service provider licences", and "class 
application service provider licenses".  WT/TPR/M/225/Add.1 
 Page 11 
 
 
  10. Could Malaysia please elaborate on these licence categories and the types of carriers that 
would be eligible for higher equity participation?  How is the higher e quity participation referred to in 
footnote 54 administered - is it a uniform amount for all licensees in these categories or does it vary on a case-by-case basis?  What is the numerical li mit of the higher equity participation permitted for 
these licence categories and is the approval of th e higher equity participation subject to any 
conditions?  If so, please describe the conditions. 
 
Answer: 
 Telecommunications service providers are classifi ed under Individual Network Facilities Service 
Providers [NFP(I)], Individual Network Service Pr oviders [NSP(I)] and Class Application Service 
Provider Foreign [ASP(C)].   Foreign equity restrictions on NFP(I) is 30% while for NSP(I) is 49%.  There is no foreign equity 
restriction for category under ASP(C).  These cond itions are uniform for all service providers.  
Further details on the licensing conditions a re available at http://www.mcmc.gov.my.  
 
Para 85
 
  Malaysia's professional services sector, as one of the sectors identified for further growth in 
the IMP3, has been relatively clo sed to foreign competition by comparison with other sectors of the 
economy.  The Government has been reviewing the domestic laws and regulations in an effort to 
further liberalize this sector.  The ASEAN Free Tr ade Area offers more market openings within the 
region, enabling Malaysian professionals to be mo re involved in professional services in neighbouring 
countries.  A number of MRAs have been signed to facilitate the freer mobility of professional service 
providers within the region.
15 
 
11. Could Malaysia please elaborate on the new liber alising measures under consideration for the 
legal, accounting, engineering and architectural serv ices sectors as part of the Malaysian Government 
review?  
Answer: 
 
Liberalisation of the professional services (legal, a ccounting, engineering and architectural) will be 
undertaken on an on-going basis.  Roadmaps for lib eralisation and further d evelopment are currently 
being drawn up.  
In addition, initiatives to review of domestic rul es and regulations are being undertaken to attract 
FDI, facilitate market access and the movement of professionals. 
 
Para 86
 
  Malaysia is currently undertaking a study of  its legal services framework with a view to 
further liberalizing the sector.  The practice of Mala ysian law is restricted to Malaysian citizens or 
permanent residents who have served an apprenticesh ip with a Malaysian lawyer, are competent in 
Bahasa Malaysia (an official langua ge), and have been admitted to the Malaysian Bar pursuant to the 
Legal Professional Act 1976.  Under Malaysia's GATS commitments, foreign lawyers can practise in 
Malaysia only through a corporation incorporated in Labuan, and are restricted to advisory and 
                                                     
 
15 ASEAN MRAs on Engineering Services (signe d on 9 December 2005), on Nursing Services 
(8 December 2006), and on Archit ectural Services (19 November 2007), on Medical Practitioners 
(25 August 2008), and on Dental Practitioners (25 Augu st 2008);  and ASEAN Framework MRAs on Surveying 
Qualifications (19 November 2007), and on Accounting Services (25 August 2008). WT/TPR/M/225/Add.1 
Page 12  
 
  consultancy services relating to home country laws, international law, and offshore corporation laws 
of Malaysia.
16  No "GATS plus" commitment in legal services has been made in Malaysia's bilateral 
and regional FTAs.  12. Could Malaysia please provide more information on the details of this study, the nature and 
scope of the liberalising measures under considera tion, and the timeframe and process for introducing 
any new liberalising measures?  
Answer: 
 
The Attorney General Chambers, t ogether with the Bar Council Malaysia, are reviewing existing laws 
and regulations that govern the legal profession in Ma laysia in order to realise the plan to liberalise 
the legal services sector. The review  process is still ongoing with in tensive consultations with the 
relevant stakeholders. 
 13. Can Malaysia please advise its approach to deali ng with the objective of extending further the 
market access liberalisation in its FTA negotiati ons, i.e. does Malaysia seek to provide scope for 
future reviews with a view to expanding th e coverage of market access liberalisation? 
 
Answer: 
 
All FTAs concluded by Malaysia contain a provis ion for future review. This review allows both 
signatory countries to request fo r further expansion or deepening of market access liberalisation on 
the basis of mutual benefit.  
14. The review of the National Automotive Policy (announced on 28 October 2009) provides that 
the Open Approved Permit system will be termin ated by 31 December 2015 and the Franchise 
Approved Permit system will be phased-out by 31 December 2020.  Can Malaysia please advise why 
different approaches were taken to Franchise A pproved Permits and Open Approved Permits?  Can 
Malaysia also advise on the policy rationale behi nd the phase-out periods for these import licensing 
requirements?  Answer:  The rationale for phasing-out of Approved Permits is  to provide a clear roadmap for importers and as 
an interim period for the importers to di versify and venture into other businesses. 
 
15. The Secretariat Report (paragraphs 75 to 78,  pages 42-43) elaborates on Malaysia's 
government procurement policy.  In light of Mala ysia's Government Transformation Program, and the 
establishment of PERMANDU (on 16 September 2009) wh ich aims to enhance the efficiency and 
transparency of Government machinery, can Ma laysia please advise on whether it is looking to 
introduce additional transparency mechanisms in its Government procurement processes? 
 Answer:   Malaysia has adopted its procurement practices based on the principles of transparency, public 
accountability, value for money, fair dealing as well as  open and fair competition.  This is also in line 
with UNCITRAL Model Law.  Apart from that, efforts have been taken to review the existing 
procurement rules and procedures from time to ti me with the objective to  expedite procurement 
processes and accelerate decision making by delegati ng more power to agencies.  As to date, many 
initiatives have been put in place to impro ve the government procurement system and enhance 
                                                     
 
 16 WTO document GATS/SC/52, 15 April 1994.  WT/TPR/M/225/Add.1 
 Page 13 
 
 
  transparency in government procu rement processes.  Amongst the initiatives are procurement of 
supplies and services to be done online via ePerole han system, information of successful bidders are 
to be published in the procuring Agencies’ webs ites, and public opening of tender is a mandatory 
requirement for all supplies and services tend ers above RM 30 million and works tenders above 
RM 50 million.   
 16. Given the importance of the Government Proc urement sector in Malaysia (covering both 
goods and services) and the benefits of transp arent and competitive government procurement in 
maximising value from public spending, can Malaysia please explain what approaches it is developing to help derive the bene fits of open government procuremen t policies and at the same time 
manage domestic priorities?  To what extent is consideration being given by Malaysia and its FTA 
negotiating partners to including commitments on Government Procurement in its Free Trade 
Agreement negotiations, and what are the releva nt factors informing Malaysia's approach? 
 
Answer: 
 
Government Procurement (GP) in Malaysia has always placed importance on transparency and best-
value for money in tandem with GP principles.  To achieve this, procuremen t above RM 500,000 is to 
be done through open tender.  At the same time, Govern ment Procurement is also used as a tool in 
nation building to achieve Malaysia's socio-economic  agenda and also in support for full achievement 
of the objectives and aspirations towards a developed nat ion status.  This is done by stimulating the 
growth of local industries through maximum utilization of local materials and resources.  
 
 
BRAZIL
 
 
WTO Secretariat Report 
 
Para 31  
  Since 1 April 2008, Malaysia has applied tariff-ra te quotas (TRQs) on 18 products to meet the 
requests of domestic small producers.  As a result,  these items, whose tariff rates used to range from 
0% to 5%, are now subject to in-quota rates ra nging from 0% to 25% and out-of-quota rates ranging 
from 20% to 90%.  The authorities maintain that they had suspended the implementation of TRQs, which was part of Malaysia's tariff concessi ons during the Uruguay R ound, until March 2008. 
 1. Could Malaysia please specify wh ich products or tariff lines have been subject to TRQs since 
April 2008, along with the respective in-quota and out-of-quota rates?  Are there any plans to lift 
these TRQs in the near future?  
Answer:  
 Please refer to the Table AIV.1 in Chapter 4 of the WTO Secretariat Report for products or tariff lines 
which have been subjected to TRQs since April 2008. 
 Currently, Malaysia does not have any plans to lift these TRQs in the near future as it was only 
implemented on 1 April 2008. 
 WT/TPR/M/225/Add.1 
Page 14  
 
  Para 11
 (Chapter 4) 
  Malaysia began to apply tariff-rate quotas on 18 tariff lines at the HS 9-digit level from 
April 2008, covering poultry products, pork produc ts, fresh milk, and cabbage (Table AIV.1).
17  
Quotas are allocated on a first come, first served b asis, and some quotas were overfilled while others 
were not taken up.  The authorities state that TRQs are applied to allow a "reasonable" time for the 
industry to restructure, and are in line with Malaysia's commitments under the WTO.  2. The report by the Secretariat states, in page 50 (paragraph 11), that "Malaysia began to apply 
tariff-rate quotas on 18 tariff lines at the HS 9-dig it level from April 2008, covering poultry products, 
pork products, fresh milk and cabbage".  Are there any plans to remove these tariff quotas? 
 
Answer:  
 Currently, Malaysia does not have any plans to remo ve the TRQs over the short/medium term as it 
was only implemented on 1 April 2008.  However, e xemption from paying the in-quota tariff rate is 
given for TRQ products that are used for further processing.   
 
 
CANADA
 
 Para 2
 
  To ensure that the Malaysian economy continue d to remain resilient against these challenges, 
the Government put in place various measures, pa rticularly in enhanci ng domestic demand and 
mitigating the impact of the unstable external e nvironment.  These include fiscal and monetary 
measures to stimulate domestic demand-led growth , enhancing the competitiveness of the economy, 
stimulating new sources of growth, focusing on th e development of human capital and diversifying 
exports to gradually reduce over-d ependence on traditional markets.  The first Economic Stimulus 
Package was introduced in November 2008 totalling RM 7 billion, while the second Stimulus Package 
made available in March 20 09 totalled RM 60 billion.  
 
 The report mentions that measures put in place in order for the Malaysian economy to remain 
resilient include "stimulating new sources of growth ", and "diversifying exports to gradually reduce 
over-dependence on traditional markets".   1. Could Malaysia please provide specific details of these new sources of growth and how 
exports have been diversified to other markets? 
 2. Which traditional markets will be affected? 
 
Answer: 
 
New sources of growth include the development of th e services sector.  Niche areas including Islamic 
finance, Halal products and services, tourism, ICT,  biotechnology, logistics and resource-based 
industries.    The Government undertakes sp ecific missions and trade fairs to potential countries and organizes 
promotional activities on Malaysian products at interna tional forum.  Trade has been enhanced with 
new emerging economy such as China, India, Braz il and Russia as well as some developing countries.  
                                                     
 
 17 Prior to April 2008, the authorities state that no  TRQ had been enforced although Malaysia has the 
right to implement TRQ on 73 lines at HS 9-digit level under its Uruguay Round commitments.  WT/TPR/M/225/Add.1 
 Page 15 
 
 
  The share of exports to traditional markets in 2008 such as United States of America, Japan and 
Singapore has decreased, as follows:  
Share to Total Exports (%) 
No Major Export Destinations 
2000 2008 
1 USA 20.5 12.5 
2 Singapore 18.4 14.7 
3 Japan 13.1 10.8 
4 China 3.1 9.5 
5 India 1.2 3.7 
6 Russia 0.1 0.5 
7 Brazil 0.3 0.4 
 
Para 5  
  The labour force increased from 11.2 million in 2006 to 11.7 million in 2009.  The contraction in growth in 2009 has resulted in grad ual increase in levels of unemployment, with the 
rate relatively high at 4.5%. 
 
Question related to Sec Report Chapter 1, Para 2. 
 
Para 2
 
 
 Real growth in Malaysia was 4.6% in 20 08 (down from 6.2% in 2007).  With exports 
declining significantly in the second half of the year, there was a decrease in the contribution of 
external demand, the country's traditional source of  growth.  Consequently, the unemployment rate 
increased slightly to 3.3% in 200 8 (3.2% in 2007).  The consumer  price index (CPI) increased by 
5.4% in 2008 (2.0% in 2007), mainly reflecting the sharp rise in commodity prices in the first half of 
the year.18  Higher commodity prices partly, if not fully, explain the rise in the shares of agriculture 
and mining and quarrying in GDP and the decline in the shares of manufacturing and services (Table I.2).
19 
 3. The reports cite Malaysia's low unemployment rate.  Given the heavy use of foreign labour in 
Malaysia (the highest in South East Asia), which acts as a buffer for the local population, could 
Malaysia please provide a better sense of the scale of retrenchments in the economy? 
 
Answer: 
 The number of retrenchments decreased by 1.1% fr om 36,361 in 2008 to 36, 243 in 2009, of which 
25.8% or 9,337 workers opted for the Voluntary Separ ation Scheme (VSS).  Of the total, 75.6% or 
27,416 workers were from the manufacturing sector.  
 
                                                     
 
 18 Domestic food and fuel prices dec lined in the fourth quarter of 2008. 
 19 In 2008, services mainly contributed to the overall growth, although a slowdown in services 
subsectors that were dependent on trade and/or activitie s related to capital market moderated the growth of 
services in the second half of the ye ar;  manufacturing grew in the first half of 2008 but deteriorated in the 
second half in line with the worsening of global demand. WT/TPR/M/225/Add.1 
Page 16  
 
  Para 20
 
  Since the transition of the exchange rate arra ngement from a peg to a managed float regime in 
July 2005, the ringgit has generally been on a path of appreciation.  By April 2008, the ringgit had undergone a cumulative appreciation of over 21% agains t U.S. dollar, reaching its peak of RM 3.1315 
on 23 April 2008.  This trend subsequently reversed  as the global financial crisis led to portfolio 
outflows from emerging economies.  The deleveraging ac tivity caused the ringgit to depreciate, in line 
with other regional currencies.  Th e current regime has provided the flexibility for the ringgit to adjust 
to global economic and financial de velopments.  It has also accorded a degr ee of exchange rate 
stability against the country's main trading partners.  In addition, further liberalization of Malaysia's 
foreign exchange administration rules were undertaken in 2005, 2007 and 2008 to provide for greater 
mobility of capital flows and reduce the costs of doing business, including by providing greater flexibility for resident corporations to source ringgit and foreign currency financing onshore and 
offshore.  Question related to Sec Report Actual Chapter 1, Para 8. 
 
Para 8
 
  The authorities state that the exchange rate regime for the ringgit has remained largely 
unchanged since 21 July 2005.  It is under a "managed  float" system based on a basket of currencies;  
the ringgit rises or falls within a trading band based  on the weighted values of a number of selected 
currencies.
20  Malaysia's rules on foreign exchange admi nistration have been gradually liberalized 
during the review period with a view to promoting the competitiveness of the economy.21  T h e  
authorities consider that the economic benefits of liberalizing foreign exchange administration 
outweigh the risks and costs involved, and that libe ralization has led to positive economic benefits for 
the country by reducing the cost of doing business and facilitating the sound and healthy development 
of the financial system, while maintaining m onetary and financial stability, in Malaysia. 
  The reports reference Malaysia's "managed float regime" for the ringgit.  However, no 
mention is made of Malaysia's offshore tradi ng ban of the currency (implemented in 1998).  
 
4. Could Malaysia provide views on whether it plans to review and/or remove the offshore 
trading ban of the ringgit?  
Answer: 
 
In order to fully benefit from liberalisation and ensu re that the risks can be effectively managed, Bank 
Negara Malaysia (the Central Bank) regularly a ssesses the benefits, cost and preconditions required 
for further liberalisation.  Among the key factors that need to be considered before undertaking 
further liberalisation would be the benefits to th e Malaysian economy and financial system, as well as 
the presence of a developed and vibrant foreign exchange market onshore in Malaysia. 
                                                     
 
 20 Although details on the basket of countries are not revealed, it is widely assumed that among the 
currencies used are the Chinese yuan, Singapore dollar, Japanese yen, the U.S. dollar, and the euro. 
21 Changes adopted on 1 April 2007 include:  expansion of the scope of licensed onshore banks' foreign 
currency businesses;  facilitation of investments in ringg it assets by non-residents;  an increase in the limit of 
foreign currency borrowing by resident corporations;  an increase in the limit of residents to invest in foreign  currency assets;  and increasing flexibilities concerning cr oss-border use of proceeds from the listing of shares 
through initial public offering on the Bursa Malaysia (s tock exchange).  For details of current foreign 
administration rules and restrictions on foreign exchange transactions in Malaysia, see BNM (various issues);  and BNM online information on foreign exchange administration.  Viewed at:  http://www.bnm.gov.my/ 
fxadmin [12.10.2009].  WT/TPR/M/225/Add.1 
 Page 17 
 
 
  At this juncture, Bank Negara Malaysia's assessmen t is that while there ma y be benefits, they are 
outweighed by the risks involved.  In the past, th e trading of the ringgit offshore market was used as 
an active mechanism to speculate on the ringgit exchange rate.  For now, the policy of non-internationalisation will remain.  Although the ri nggit is not traded in the international markets, 
there continues to be investment  inflows into Malaysia and non-residents are free to access ringgit 
from onshore market for thei r investments in Malaysia.  
 
Para 23
 
  To ensure export growth remains robust, trad e policies will focus on strengthening Malaysia's 
presence in traditional markets as well as diversifying into non-traditional export markets.  Malaysia 
is actively promoting trade in new and emerging mark ets, such as China, India, Middle East and the 
new EU members.  With the current focus on promoting the development of the services sector, 
promotional efforts will also be intensified for the export of services.  
5. With Malaysia's intention to diversify into non-traditional markets (actively promoting in new 
and emerging markets), and with Malaysia's "curre nt focus on promoting the development of the 
services sector" with promotional efforts also being "intensified for the export of services", is the 
intention of services promotion mainly targeted at  the described new or emerging markets, or will 
they extend to the traditional markets as well?  Answer:  Promotion efforts will continue to target both new and traditional markets. 
 
Para 26
 
 
 Malaysia seeks greater market access unde r the Doha Round negotiations for selected 
agricultural products, industrial goods and services.  Conclusion of the Doha  Round of negotiations 
will enhance market access opportunities for Malays ian products and services, as well as impact 
positively on the domestic and global economic development.  
 Malaysia specifies the desire for greater ma rket access for services under the Doha Round.  
 6. What enhanced market access in services is Malaysia looking for via the conclusion of the 
Doha Round?  
7. Are there any particular modes/sectors of interest to Malaysia? 
 
Answer: 
 
Malaysia's interest in th e services negotiations under the Doha Ro und is for greater market access for 
its services providers in the area of private educ ation and computer and related services.  Education 
is one of the targeted areas of growth for servi ces sector under the Third Industrial Master Plan.  
 In tandem with negotiations with market access, Malaysia would like to see a balance between market 
access and other areas of negotiations in servic es such as rules and domestic regulation. 
 Para 28
 
  Malaysia has signed bilateral preferential ag reements with Japan, Pa kistan and New Zealand 
on 13 December 2005, 8 November 2007 and 26 Oct ober 2009, respectively.  Bilateral negotiations 
are on-going with Australia, Chile, India and the United States.  WT/TPR/M/225/Add.1 
Page 18  
 
  Question related to Sec Report Chapter 2, Para 28. 
 
Para 28
 
  Malaysia has concluded three bilateral free-trade agreements (with Japan, New Zealand, and 
Pakistan), and is negotiating others (with Au stralia, Chile, India, and the United States) 
(Table AII.4).
22  Its objectives in negotiating FTAs are to:  seek better market access and enhance the 
competitiveness of its exports;  further facilitate  and promote trade, investment, and economic 
development;  and improve capacity building in sp ecific areas through technical cooperation.  To 
achieve these objectives, its FTAs are not confin ed to market-opening measures for goods and 
services;  rather, they include investment, trade facilitation, intellectual property rights (IPR), and 
other areas, such as competition policy, standards, and conformity assessment. 
 8. The reports reference Malaysia 's bilateral trade negotiations with the United States.  Could 
Malaysia please provide an update on th e status of these FTA negotiations? 
 
Answer: 
 
The Malaysia-US negotiation is put on-hold pending further deliberations by both parties.  
 
Para 44
 
 
 The Government has also introduced sev eral measures to increase food production and 
productivity in line with the food security initiative to ensure sustainable supply of food.  Among the 
programmes being implemented include upgrading a nd building of agricultural infrastructure, food 
production parks, aquaculture industrial zones and national feedlot centres to increase production of 
fruits, vegetables, livestock and fish products. 
  The report cites the Government's efforts to  increase food production while the Secretariat 
Report discusses Malaysia's fiscal policies (Part I.  Introduction: (2) Macroeconomic Policies and 
Developments; paragra phs 9-10, page 6). 
 
9. Could Malaysia please provide an update on wh ether it plans to adjust or remove the retail 
price subsidies it provides for many food commodities?  
Answer: 
 
Price control on these items have been lifted: 
 
− bread (1/1/10); 
− sweetened condensed milk (1/4/09); and 
− chicken (1/6/08). 
 Some essential goods such as general purpose wheat flour, cooking oil (pure and blended palm oil), 
petrol, diesel, and liquefied petroleu m gas, are subject to administra tive price control.  The purpose 
of the control is to ensure that prices of essen tial goods are capped at a reasonable level.  The price 
trends of these goods are monitored and c onsidered before the ceiling price is set.  
 
                                                     
 
 22 Malaysia's two bilateral FTAs with Japan and Pa kistan are operational and consideration of these 
FTAs by the relevant WTO Committees was completed in  2009 pursuant to the Transparency Mechanism for 
RTAs (WTO documents WT/REG216/M/1, 4 May 2009;  WT/REG265/M/1, 29 September 2009;  and 
WT/COMTD/RTA/M/3, 21 October 2009).  WT/TPR/M/225/Add.1 
 Page 19 
 
 
  Para 47  
  During the period under review, the services sector continued to be the main contributor to the GDP.  Despite the global economic slowdown in 2008, the services sector accounted for 55% of 
the GDP compared with 51.2% in 2005.  The sector is the largest source of employment in the 
country, employing 52% of total workforce.  The services sector registered a trade surplus for the 
second consecutive year in 2008 of RM 2.3 billion, following a surplus of RM 2.8 billion in 2007 due 
mainly to the increase in exports of the tourism and education sectors.   10. As the main contributor to the GDP (55% in 2008), and largest source of (52% of total 
workforce), which services sub-sectors contributed the most? 
 11. What is the distribution and breakdown within the services sector?  
Answer: 
 
The service sector is the major contributor, both to the national GDP and employment with more than 
50% contribution.  On the employment side, th e component of other services which comprises 
utilities, wholesale and retail trade, accommoda tion and restaurant as well as other services 
contributed 54.6% of total employment in the servi ces sector or 28.5% of total employment.  Other 
services contribute 23.8% to national GDP or 43.3% of  total value added in th e services sector.  The 
government sector contributes 20.9% of total employ ment in services sector, while finance, insurance, 
real estate and business services at 13.4%. 
 
GDP and employment, 2008 
 Gross domestic products (GDP)3 Employment 
 RM million % share Number % share 
Services 290,538 55.0 6,046.1 52.2 
Finance, insurance, real estate and 
business services 85,192 16.1 811.9 7.0 
Transport, storage and 
communication 40,687 7.7 673.2 5.8 
Government services1 38,875 7.4 1,263.5 10.9 
Other services2 12,784 23.8 3,297.5 28.5 
Total 528,311  11,576.5  
 
Note: 
1 Includes public administration, health, education and defence. 
2 Includes utilities, wholesale and retail trade, accom odation and restaurant as well as other services. 
3 At 2000 prices. 
 
Source: Statistics Department, Economic  Planning Unit, Economic Report 2009/1010. 
 
Para 53  
 
 On 27 April 2009, Bank Negara Malaysia announc ed further liberalization in the issuance of 
new banking licences for Islamic banking, specializ ed banking, and world-class banks.  The foreign 
equity limits in existing domestic Islamic banks , investment banks, insurance companies and takaful 
operators were raised to 70%.   WT/TPR/M/225/Add.1 
Page 20  
 
  Question related to Sec Report Chapter 2, Para 43. 
 
Para 43
 
  During the period under review, various measures were adopted to attract FDI.
23  M o r e  
recently, restrictions on foreign investment in services have been removed or reduced (Malaysia 
already allowed 100% foreign equity in manufacturi ng (Chapter IV(5)).  As of 22 April 2009, 100% 
foreign equity is allowed in 27 services subsectors , covering health and social services, tourism, 
transport, business services, and computer and re lated services.  The Government also announced 
relaxation on foreign investment in financial serv ices on 27 April 2009;  fore ign equity limits were 
increased from 49% to 70% for investme nt banks, insurance companies, and takaful  (Islamic 
insurance) operators.  A higher foreign equity lim it beyond 70% is considered on a case-by-case basis 
for insurance companies.  More operational flexibiliti es are also given to locally incorporated foreign 
banks, insurance companies, and takaful  operators (Chapter IV(6)). 
 
Para 35  
  In comparison with manufacturing (with exception of automobiles), services activities have been relatively closed to international competition, with FDI restrictions being major obstacles.  To 
increase productivity, and thus competitiveness in services, the authorities have been progressively 
liberalizing foreign investment in the sector.  On 22 April 2009, the Government announced the 
elimination, with immediate effect, of foreign equity restrictions on 27 services subsectors;  in the 
areas of health and social services, tourism, transport, business services, and computer and related services.
24  A week later, restrictions were relaxed on foreign investment in financial services 
(Chapter II(6)).  These liberalization initiatives ha ve been complemented with a support programme 
for the domestic services industry;  a services sector capacity development fund of RM 100 million 
(US$28 million) has been established under th e First Economic Stimulus Package.   
  The reports discuss Malaysia's efforts to libe ralize Islamic banking, but not the lack of 
progress on conventional commercial banking.   12. Could Malaysia please answer why it did not choose to change the existing 30% limit on 
foreign investment in the conve ntional commercial banking sector? 
 
Answer: 
 
Foreign presence in the conventional commercial banking sector is very high with foreign 
commercial banks controlling 24.06% of the con ventional commercial banking sector assets, 21.53% 
of loans, 23.38% of deposits and 35.5% of total profitability.  Malaysia also has 13 100% 
locally-incorporated foreign banks in Malaysia.   The recent liberalisation package that was 
announced in April 2009 already covers significant  measures in both conventional and Islamic 
finance which include the issuance of 5 new commer cial banking licences to foreign players that can 
strengthen linkages and bring significant value propositions to Malaysia.  
 
                                                     
 
 23 For example, in 2007, PEMUDAH was set up to improve transparency, an d thus the business 
environment (section (3 )(ii)).  And as of 1 December 2008, manufact uring licences were is sued automatically 
(with a few exceptions) to reduce businesses' operation costs (Chapter IV(5)(i)).  
24 Prime Minister Office online information.  Viewed at:  http://www.pmo.gov.my/?menu=news& 
page=1729&news_id=39&news_cat=4 [12.10.2009].  WT/TPR/M/225/Add.1 
 Page 21 
 
 
  Para 62  
  The Government is currently formulating the Tenth Malaysia Plan (2011–2015) with a view 
to shift the economy towards a high-income econom y, with focus on innovation, creativity and 
productivity.  Focus will continue to remain on build ing a resilient economy.  At the same time the 
private sector will continue to spearhead growth, a nd to support this, the Government will continue to 
undertake further liberalisation in an effort to a ttract FDI and spur private investment activities.  
While the manufacturing sector will continue to rema in as one of the leading contributor to growth, 
efforts will be intensified to promote the developm ent of the services sector as the next engine of 
growth. 
 
13. What "efforts will be intensified to promote the development of the services sector as the next 
engine of growth"?    14. Could Malaysia please specify details? 
 
Answer: 
 Under the Third Industrial Master Malaysia Plan (IM P3), Malaysia has identified the services sector 
as a major contributor to the growth of the natio n economy. The sectors are targeted to contribute 
60% in 2020 with an annual average growth of 7.5% . Eight services sub-sector s have been targeted 
for greater development and promo tion. The sub-sectors are:  
− Business and Professional services; 
− Logistics services; 
− ICT services; 
− Distributive Trade services; 
− Construction services; 
− Education and Training services; 
− Healthcare services; and 
− Tourism services. 
 Among the measures undertaken by the Governme nt to further develop the services sector:  
− Liberalisation of the services sector: 
− 22 April 2009 – Immediate liberalisation of 27 services sector; 
− 27 April 2009 – Liberalisati on of financial sector including Legal Practise in 
Islamic Finance; 
− 30 June 2009 – Removal of equity requirement under the Foreign Investment 
Committee (FIC) guidelines.  
− Negotiations in various fora, WTO,  ASEAN and regional anbilateral FTAs. 
− Other measures include building capacity of domestic service  suppliers to promote 
export of services; and 
− Review of domestic rules and regulations to facilitate market access and movement of 
professionals. 
 
Para 7
 
 
 For the purpose of enhancing transparency and disseminating regulatory information, the Government is considering an official on e-stop website for laws and regulations.   
 15. When does the Government of Malaysia  foresee such a website being launched? 
 WT/TPR/M/225/Add.1 
Page 22  
 
  Answer: 
 
The first phase of publishing the Laws of Malaysi a has been implemented, and currently awaiting for 
the system to be further enhanced.  Further de tails are available at http://www.agc.gov.my. 
 Para 45
 
  Although considering FDI positive to economic  development and grow th, the Government 
insists that local participation needs to be main tained in some areas in order to promote domestic 
capabilities and capacities.  In particular, sectors with "national interest" (i.e. sectors with an impact 
on national security and overall socio-economic wellbei ng) are not to be liberalized.  Even under the 
reform package launched on 30 June 2009, the repeal of FIC guidelines does not eliminate 
bumiputera participation requirements in banking and in surance, certain manufacturing sectors (such 
as fabrics and apparel of batik, and integrated Portland cement), agriculture, defence, energy, 
telecommunication, and water.  Also, foreign invest ors are not allowed to acquire properties below a 
specified value:  RM 500,000 for commercial prope rties and RM 250,000 (increased to RM 500,000 
as of 1 January 2010) for residential properties.    16. Could Malaysia please provide  additional information rega rding existing participation 
requirements in banking, insurance and certain ma nufacturing sectors (such as fabrics and apparel of 
batik, and integrated Portland cement), agriculture, de fence, energy, telecommunication, and water?  
 
17. In particular, could Malaysia  explain upon what criteria these sectors were determined to still 
require bumiputera participation requirements and foreign participation restrictions?  
 18. Further, does Malaysia have a plan fo r the gradual removal of such remaining 
requirements/restrictions? 
 
Answer: 
 Sectors where foreign participation restriction is still applied would include sectors necessary for 
national security and public interest, as well as those sectors that involve the utilization of public fund 
and to preserve culture and heritage.  
 Information on banking and insura nce is available at http://www.bn m.gov.my.  For the other sectors, 
information is available on the website of  the respective ministries.  Please refer to 
http://www.malaysia.gov.my. 
 
Manufacturing license for manufacturing of Ba tik fabrics and apparels will be issued only for 
projects with certain threshold of Malaysian 
equity participation.  The policy on local equity 
requirement is to ensure preservati on of its culture, authenticity and heritage of the industry as an 
important cottage and handicraft industry.  
There is no equity restriction in the manufacturi ng of cement.  However manufacturing licenses are 
issued only for integrated projects producing bo th clinker and cement.  The policy is to address the 
current situation where local cement industry is facing a surplus in installed capacity.  
 
Para 40
 
  During the period under review, Malaysia restri cted or prohibited imports of a number of 
products from certain countries on health and safet y grounds.  The products include poultry products 
and live birds (suspicion of avian flu), beef and animal products (BSE), milk (foot and mouth disease 
as well as melamine), and live horses (equine flu) (section (4)(iv)).  WT/TPR/M/225/Add.1 
 Page 23 
 
 
  19. Would Malaysia please provide the sanitary reasons for Malaysia's restrictions on pork 
imported from Canada?  20. Are these restrictions based upon an assessment of the risks to human or animal health, as 
required in article 5 of the Agreement on Sanitary and Phytosanitary Measures? 
 Answer:  There is no restriction for import of pork products from Canada.  In fact, Canada is one of the 
countries approved for export of pork products to Malaysia.   
 Para 62
 
  The Department of Standards Malaysia (S tandards Malaysia) continues to function as 
Malaysia's national standardization and accreditati on body.  SIRIM Berhad, a wholly state-owned  
company, remains the sole national standards development agency under the provisions of the 
Standards of Malaysia Act.  The Malaysian Standards and Accreditati on Council is the advisory body, 
established under the Act to advise the Minister of  Science, Technology and Innovation on matters 
relating to standards and accreditati on.  Malaysia participates in the activities of the International 
Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).
25   
 
Para 63  
  Malaysian standards are voluntary unless referred to in specific technical regulations.  At end 
2008, about 3.2% (173 out of 5,444) of Malaysian standards were compulsory.
26  The authorities state 
that a number of foreign standards and international standards are referred to in Malaysia's technical 
regulations;  the exact number of such standard s is not available.  The National Standards and 
Strategy Action Plan, published in 2004, continu es to serve as a guideline to enhance Malaysia's 
standardization activities until 2020.27  
  Canada notes that the organisation SIRIM Be rhad is also the TBT Enquiry Point for 
Malaysia;  however, elaboration on Malaysia 's transparency activities is not provided. 
 
21. Could Malaysia please explain how the au thorities (e.g. WTO Enquiry Point/Notification 
Authority) monitor the creation or modification of TBT technical regulations/conformity assessment 
procedures in its country in order to determin e whether a WTO notification is required under the 
transparency obligations of the TBT Agreement?   
 
22. When a determination is made, what is  the mechanism (e.g. interdepartmental/inter-
ministerial collaboration) for the preparation of notifications?    
                                                     
 
 25 Malaysia participates in the Council, Technical Management Board, and various technical 
committees and sub-committees of th e ISO and various technical committ ees and sub-committees of the IEC 
System for Conformity Testing and Certification of Electrical and Electronic Components, and Explosive 
Atmosphere Schemes (IECEX Schemes).  
26 Goods subject to technical regulations include pa lm oil, certain vegetables and flowers, certain 
chemicals and materials, materials related to building and civil engineering, elect rotechnical engineering,  
mechanical engineering, information technology, petroleum and gas, road vehicles, goods related to fire safety 
and prevention, and iron and steel.  In November 2008, technical regulations were imposed on iron and steel, 
covering 57 tariff lines, with a view to ensuring sa fety and to prevent "deceptive practices", when import 
licensing requirements on thes e products were eliminated. 
 27 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=93&Itemid=209 [04.08.2009]. WT/TPR/M/225/Add.1 
Page 24  
 
  Answer: 
 
Malaysia undertakes the following actions to ensure  the fulfilment of the notification obligations of 
the TBT Agreement:   
− A national committee with a membership of all major regulatory agencies and relevant 
ministry officials and chaired by the National Standards Body has been established to oversee 
the implementation of the WTO/TBT Agreement, in cluding the notification obligations.  This 
committee determines the requirements for notific ation.  The regulatory agency issuing the 
regulation and the TBT/Enquiry and notification au thority draft the notifications jointly.  
 
− Regular circulars are issued and briefings are held  for regulatory agencies to inform them of 
notification obligations by staff of the TBT Enquiry Point;  and 
 
− A national Coordinating Committee on Mandatory Standards and Techni cal Regulations has 
been established to oversee the implementation of technical regulations and compliance with 
WTO/TBT Agreement obligations.  
 
Para 64
 
  The authorities state that a basis for Mala ysian national standards is the adoption of 
international standards.  Criteria for adoption of standards are determined by the relevant "standard 
development committees";  the views of interested parties, including industry, government agencies, 
and consumers are considered.  Foreign interests ar e considered in the adoption of new or revised 
standards through the "public comment" procedures on any draft standards made publicly available on 
the websites of Standards Malaysia and SIRIM Be rhad.  Certain tax deductions are accorded for 
expenditure incurred by private companies when participating in international standardization 
activities.
28 
 
Para 65  
  Some 58.1% of Malaysian standards were ali gned with international standards in 2008, up 
from 51% in 2005 (Table III.5).  This increase ma y reflect the authorities ' stance that, when 
developing or revising standards, adoption of intern ational standards is the primary option.  Malaysia 
has been actively involved in the development of in ternational standards thro ugh its participation in 
bodies such as the ISO and IEC.   The Secretariat reports states that "The authorities state that a basis for Malaysian national standards is the adoption of international standards.  Criteria for adoption of standards are determined 
by the relevant "standard de velopment committees"; (…)"  
 
23. Who are the relevant "sta ndard development committees"?  
 24. What do they use as a basis for determining their criteria for adoption of standards?  Answer: 
 
Malaysia has established a system of standards co mmittee that develop national standards on the 
basis of consensus.  In general, MyNSC and MyNI EC are at the highest level and oversee the whole 
system of committees which comprise of S ector Committees and Technical Committees. 
                                                     
 
 28 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=79&Itemid=103 [06.08.2009].  WT/TPR/M/225/Add.1 
 Page 25 
 
 
  The structure of the committee system and and the criteria of adoption of international or selected 
foreign standards as Malaysian standards are ava ilable at http://www.standardsmalaysia.gov.my and 
http://www.sirim.gov.my.  
Para 67
 
 
 Malaysia intends to play a leading role in th e development of halal certification;  there have 
been no changes in halal-related policies during the review period.  All meat, processed meat 
products, poultry, eggs and egg products, domestically produced or imports, must receive halal 
certification from the Department of Islamic Deve lopment Malaysia (JAKIM) to be distributed in 
Malaysia.  The certificate is issued on the join t recommendation of the Malaysian Department of 
Veterinary Services (DVS) and JAKIM following an on-site inspection.    Para 68
 
 
 The slaughtering of animals and production of liv estock-based products (other than swine) for 
export to Malaysia must be conducted according to  halal specifications.  The DVS, together with 
other relevant agencies, such as JAKIM and the Ministry of Health, inspects slaughterhouses and 
processing plants overseas periodically, to ensure th at they meet Malaysia's halal requirements.  
Inspection is usually once a year or once in two year s, but varies depending on the risk involved in the 
particular country.  With regard to inspection of slaughterhouses outside Malaysia, JAKIM accredits 
the Islamic organization in the exporting country/ economy.  Once accredited by JAKIM, the Islamic 
organization monitors the halal process in th e slaughterhouse and produces halal certificates for 
export to Malaysia.  Malaysia had no mutual rec ognition arrangements with foreign standardization 
bodies on standardization and inspection for halal certification.  
25. Could Malaysia please define the type of risk  analysis the DVS, together with other relevant 
agencies, would conduct to determine if particul ar countries would require Inspection once a year, 
once in two years, or an alternate schedule?  
Answer: 
 
The risk analysis conducted is based on the disease situation in that particular country and for Halal 
conformity purposes.  To determine when the review audit will be, Malaysia will monitor the 
performance of the Islamic organisation ba sed on the biannual report submitted to DVS . 
 Para 70
 
 
 The regulatory framework under which SPS measu res are implemented h as remained largely 
unchanged since Malaysia's previous Review;  the relevant laws and regula tions include the Plant 
Quarantine Act 1976, the Plant Quarantine Regulations 1981, the Animal Act 1953 (Revised 2006)29, 
the Fisheries Act 1985, the Food Act 1983, and Food Regulations 1985.  
26. Could Malaysia please explain what changes have been made to the regulatory framework 
under which SPS measures are implemented since Malaysia's previous Review? 
 
                                                     
 
 29 The previous Animal Ordinance 1953 was revised in 2006 to become the Animal Act 1953 
(Revised 2006). WT/TPR/M/225/Add.1 
Page 26  
 
  Answer: 
 No changes have been made, except for minor ad ministrative changes in the Animal Act 1953 
(Revised 2006).  This however, does not affect any of  the SPS measures implemented by Malaysia for 
livestock and livestock products. 
 Para 72
 
  The Ministry of Agriculture and Agro-based Industry (MOA) is responsible for matters 
relating to plants, livestock, and fisheries;  its Department of Agriculture (DOA), Department of 
Veterinary Services (DVS), and Department of Fish eries (DOF) are responsible for matters relating to 
plants, livestock products, and fisheries, respectively.   The Ministry of Health (MOH) is responsible 
for food safety matters.  On 1 August 2008, th e Malaysian Quarantine and Inspection Services 
(MAQIS) was established as a one-stop centre for qua rantine and inspection regarding imports and 
exports of agricultural products.  The objectives of the MAQIS include:  to act as a single body to 
conduct all inspection and quarantine matters at a ll national borders;  to facilitate exports of 
agricultural products, and to improve the delivery of inspection and quarantine services.    27. Could Malaysia please specify how the aut horities (e.g. WTO SPS Enquiry Point/Notification 
Authority) monitor the creation or modification of  SPS measures from the institutions responsible for 
various areas under the SPS Agreement (e.g. those noted in paragraph 72 responsible for plant, 
animal, etc) in order to determine those to notify to the WTO. 
 28. When a determination is made, what is  the mechanism (e.g. interdepartmental/inter-
ministerial collaboration) for the preparation of notifications?    Answer: 
 
Ministry of Agriculture and Agro-based Industry Ma laysia is the focal point of monitoring the 
creation, modification and preparation of SPS notification by the relevant agencies. 
 
Para 73
 
 
 During the period under review, Malaysia made eleven SPS notifications related to seven SPS 
regulations.30   
 
 Among the identified notifications are G/SPS/N/MYS/19 (3 April, 2008), G/SPS/N/MYS/19/Add.1 (9 June, 2008) and G/SPS/N/ MYS/19/Add.2 (25 August, 2009), relating to 
implementation of inspection fees for inspection servi ces at foreign abattoir and processing plants that 
request to export meat and product of animal orig in to Malaysia.  As per Malaysia’s notification 
G/SPS/N/MYS/19/Add.2, Malaysia is to implemen t, on January 1, 2010, a processing fee of 
RM 5,000 per meat establishment visited.  Of not e, any meat establishment wanting to export to 
Malaysia has to be visited and the validity period of the approval to export is one year – but may be 
extended for an additional 2 years, subject to some requirements. 
 
                                                     
 
 30 These notifications are:  G/SPS/N/MYS/16 /Add.1, 17 March 2006;  G/SPS/N/MYS/19, 
3 April 2008;  G/SPS/N/MYS/19/Add .1, 9 June 2008;  G/SPS/N/MYS /19/Add.2, 25 August 2009;  
G/SPS/N/MYS/20, 6 July 2009;  G/ SPS/N/MYS/20/Add.1, 14 September 2009;  G/SPS/N/MY S/20/Corr.1, 
31 August 2009;  G/SPS/N/MYS/21, 25 August 2009;  G/SPS/N/MYS/22, 25  August 2009;  G/SPS/N/MYS/23, 
25 August 2009; and G/SPS/N/MYS/24, 13 October 2009.     WT/TPR/M/225/Add.1 
 Page 27 
 
 
  29. Could Malaysia please provide a detailed breakdown of the calculations used to determine the 
processing fee to be charged for the purpose of co nducting a compliance or review audit of foreign 
abattoirs and processing plants?  30. Could Malaysia please provide clarificat ion as to what the processing fee will cover? 
 
31. Could Malaysia please provide an explanation of  how these fees are consistent with Article 8 
and Annex C, paragraph 1 (f) of the Agreement of  Sanitary and Phytosanitary Measures (WTO SPS 
Agreement), in which paragraph 1 (f) states:  "Any fees imposed for the procedures on imported 
products are equitable in relation to any f ees charged on like domestic products or products 
originating in any other Members and should be no higher than the actual cost of service; (…)." 
 
Answer:  The processing fee of RM 5,000 is the consolidat ed fee for document management, Halal inspection 
and Hazard Analysis and Critical Control Points (H ACCP) inspection with validity of 1 year.  
 The new inspection fees of RM 5,000 (US$1,450) pr oposed by Malaysia are in  fact, commensurate 
with charges imposed on local producers as Mala ysia imposes inspection fees on local abattoirs 
depending on the size of establishment. The charges imposed vary from RM 3,335 for small establishments to RM 5,205 for large establishments.   
 
Para 81
 
  Malaysia does not yet have a comprehensive competition law, but the authorities recognize that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDT CC) is responsible for formulating a  competition policy 
for Malaysia.
31  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.32  The authorities state that Malaysia  is currently in the final process 
of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.
33  It is not clear whether GLCs will be 
covered by the FTPB and FTCB.  32. How does the lack of a competition policy aff ect Malaysia's shift to liberalization of the 
services sector?  
 
                                                     
 
 31 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 32 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any 
conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or 
market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.    
33 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public. WT/TPR/M/225/Add.1 
Page 28  
 
  33. Though authorities say they are in the final st ages of drafting the Fair Trade Practices Bill 
(FTPB) and the Fair Trade Commission Bill (FTCB) , will services companies be affected in the 
meantime?   34. How long will the drafting and approval process take? 
 
Answer: 
 Lack of competition act has not hampered Malaysia' s efforts towards liberalizing the services sector.  
 
The FTPB and FTCB (now known as the Competition Bill and Competition Commission Bill) are at the final drafting stage and will be tabled to Parliament in 2010.  
 
Once the Bills is finalised, they would have to be presented to the Cabinet and then Parliament for 
three readings before getting the royal assent from the King.  The process can take anytime between 
six months and a year provided there are no objections  to the various issues laid down in the law. 
 
Para 4
 
 
 The services sector has been the largest contri butor to GDP.  Compared with manufacturing 
(with the notable exception of automobiles), servi ces has been relatively closed to international 
competition, with FDI restrictions comprising the major obstacles.  However, the Government has 
recently been relaxing or removing foreign inv estment restrictions in services, although more 
measures are needed to promote competition.   
 
 Though both reports described measures taken in  the relaxing or removing of restrictions to 
promote the services sector, the WTO indicates that "more measures are needed to promote 
competition".   
35. Could Malaysia please indicate whether it inte nds to entertain further promotion measure?  
 36. What types of measures is the WTO sugges ting that have not already been taken into 
account?  Answer: 
 
One of the measures to enhance the level of co mpetitiveness is the on going liberalisation of the 
services sector.  Efforts will also focus on creating a conducive business environment to attract 
investments and technology.  In addition, initiatives to review domestic rules and regulations are also 
on going. 
 
Para 11
 
  Malaysia began to apply tariff-rate quotas on 18 tariff lines at the HS 9-digit level from 
April 2008, covering poultry products, pork produc ts, fresh milk, and cabbage (Table AIV.1).
34  
Quotas are allocated on a first come, first served b asis, and some quotas were overfilled while others 
were not taken up.  The authorities state that TRQs are applied to allow a "reasonable" time for the industry to restructure, and are in line with Malaysia's commitments under the WTO.  
                                                     
 
 34 Prior to April 2008, the authorities state that no  TRQ had been enforced although Malaysia has the 
right to implement TRQ on 73 lines at HS 9-digit level under its Uruguay Round commitments.  WT/TPR/M/225/Add.1 
 Page 29 
 
 
   The Secretariat report refers to indications  from state authorities that "some quotas were 
overfilled while others were not taken up." 
 37. Could the Government of Malaysia please cl arify which agricultural products were overfilled 
and which were underfilled? 
 
38. Could the Government please explain the reason for underfilled agricultural products? 
 
Answer: 
 
Overfilled quotas are for poultry cuts and offal and liquid milk.  Underfilled quotas are for live swine 
and swine carcasses and live fowls and eggs.  The underfilled quota is due to lack of demand. 
 
Para 33
 
 
 During the period under review, the services s ector has been the main driving force of 
Malaysia's economic growth, growing at 7.2% in 2008 (Table I.2).  In 2008, services accounted for 
45.3% of GDP and 52.0% of total employment, indi cating that labour productivity in the sector is 
considerably lower than in the economy on average.   However, a World Bank study found that the 
sector has been catching up with Korea and Ch inese Taipei in terms of productivity, and has 
contributed significantly to employment:  it has account ed for more than 85% of the increase in jobs 
since 1996.35  Trade in services recorded its first surplu s in 2007, and remained in surplus in 2008.36 
  The report by the Government of Malaysia states that services, as the largest contributor to GDP, accounted for 55% of GDP in 2008 (see question # 10), while the Secretariat report states that services accounted for 45.3% of the GDP in 2008—a significant difference.  
 
39. Could Malaysia please account for the large 10 point discrepancy?  
Answer: 
 
Both numbers are correct and there is no dispute be tween both figures:  45.3% of GDP in 2008 is 
based on current prices, whereas 55% of GDP is based on constant prices. 
 
Para 35
 
  In comparison with manufacturing (with exception of automobiles), services activities have 
been relatively closed to international competition, with FDI restrictions being major obstacles.  To 
increase productivity, and thus competitiveness in services, the authorities have been progressively 
liberalizing foreign investment in the sector.  On 22 April 2009, the Government announced the 
elimination, with immediate effect, of foreign equity restrictions on 27 services subsectors;  in the areas of health and social services, tourism, transport, business services, and computer and related services.
37  A week later, restrictions were relaxed on foreign investment in financial services 
(Chapter II(6)).  These liberalisation initiatives have  been complemented with a support programme 
for the domestic services industry;  a services sector capacity development fund of RM 100 million 
(US$28 million) has been established under th e First Economic Stimulus Package.   
 
                                                      
 35 World Bank (2008).   
 36 Trade in services amounted to RM 201.8 billion in  2008, an increase of 1.3% from 2007.  In 2008, 
Malaysia was the 30th leading exporter and importer of services. 
 37 Prime Minister Office online information.  Viewed at:  http://www.pmo.gov.my/?menu=news& 
page=1729&news_id=39&news_cat=4 [12.10.2009]. WT/TPR/M/225/Add.1 
Page 30  
 
   The Secretariat report states that on 22 Apr il 2009 the Government announced liberalisation 
initiatives in 27 subsectors in health  and social services, tourism se rvices, transport services, business 
services and computer and related services, and a week  later the Government relaxed restrictions on 
foreign investment in financial services.  The liberalisation initiatives in these subsectors are 
welcome.  However, as indicated in Part IV. Trad e Policy by Sector: (6) Services: (vii) Distribution 
services:  paragraph 92-94, page 69, distribution services remain highly regulated.  
 40. Could the Government of Malaysia please indicate if it is planning to take similar 
liberalisation initiative in the distribu tion sector and provide more details?  
 
41. If not planning any liberalisation, could Malaysia please elaborate on the reasons for 
excluding distribution services from liberalisation initiatives?  
Answer: 
 
The Distributive Trade Services sector, such as  commission agents, wholesale, retail and franchise 
has been liberalised except for the hypermarket segment where the bumiputera (indigenous group) 
equity requirement of 30% still remains.  
Para 69
 
 
 Retail prices for fixed-line services are regulated by the Government through the 
Communications and Multimedia (Rates) Rules 2002.   Under the rules, maximum prices are set, 
below which companies are free to set their tariffs;  these ceilings have not been changed since 2002.  
The tariffs for fixed-line telecom services have been declining over the past few years, particularly for 
long-distance and international calls.  Retail rate s for mobile phone services are not regulated, and 
have also been declining.  The Government re gulates access and interconnection between all service 
providers.  "Call back service" is prohibited.  On the issue of cross-subsidization, the Communications 
and Multimedia Act 1998 stated that rate setting sh ould be based on costs, and cross-subsidies in 
general should be eliminated.  This principle, how ever, applies only to rates not regulated by the 
Government.   
 Canada understands that the Communications  and Multimedia Act 1998 stated that rate 
setting should be based on costs, and cross-subsidies in  general should be eliminated.  This principle, 
however, applies only to rates not regulated by the Government.   42. Could Malaysia please explain if they intend to  apply this principle to rates regulated by the 
Government in the future? 
 
Answer: 
 
There is a possibility in the future that the Government may apply the principle of rate setting in the 
Communications and Multimedia Act 1998 to regulated rates.   
 
 
CHILE
 
 
General Questions 
 1. What is Malaysia's legal regi me regarding export subsidies? 
  WT/TPR/M/225/Add.1 
 Page 31 
 
 
  Answer: 
 None 
 
2. Are some of Malaysia's economic sectors subsidized? 
 Answer:  Malaysia provides subsidy to specific sectors/ec onomic activities for purpose of food security, price 
stability, rural development and poverty eradication. 
 
3. Are there sectors of the national economy restri cted by Malaysia in its WTO Schedule of 
Commitments on account of an existing measure or legi slation that have now been liberalized through 
the lifting of the restriction?  Answer:  None 
 
4. The authorities state that Malaysia is currently in the final process of drafting the Fair Trade 
Practices Bill and the Fair Trade Commission Bill.  Would this legislation provide for a central 
authority and laws applicable to all economic sector s?  What would be the key aspects covered by the 
future law on competition?  
Answer: 
 
The policy is currently being formulated and the draft le gislation is still in the dr afting stage.  The full 
coverage can only be determined then. 
 
5. Are there any studies conducted by the authoriti es or independent ins titutions that assess the 
level of competition in Malaysia in general or in specific sectors?  Answer:  In formulating policies and strategies, the Go vernment does undertake eva luation, including 
consultation with stakehold ers to enhance competitiveness. 
 6. Are there any activities (production, marketing or distribution, for example) reserved for 
certain enterprises?  
Answer: 
 None, except for importation of rice by BERNAS.   
 
WTO Secretariat Report 
 
Comment
:  Generally speaking, there is more inform ation on the development of standards than on 
that of technical regulations.  It would be inter esting to have further de tails regarding technical 
regulations, primarily on the process involved in developing technical regulations and conformity 
assessment procedures in Malaysia.  7. Please explain the mechanisms of internal coordination with government agencies that 
prepare technical regulations and/or conformity assessment procedures, primarily in terms of the WT/TPR/M/225/Add.1 
Page 32  
 
  mandatory international obligations of, inter alia , transparency, or is there a national 
TBT Committee?  
Answer: 
 
Malaysia undertakes the following actions to ensure the fulfillment of the notification obligations of 
the TBT Agreement:  
i) Specific regulatory agencies and ministries of the government prepare technical 
regulations. The consultations with interest ed parties and inter-ministerial -consultation 
takes place during the preparation stage. Usua lly technical regulations are issued under 
provisions of national laws promulgated  by parliament. Upon approval by the 
government, these are published in the official Government Gazette. 
 
ii) A national committee with a membership of all major regulatory agencies and relevant 
ministry officials and chaired by the Nationa l Standards Body has been established to 
oversee the implementation of the WTO/ TBT Agreement, including the notification 
obligations.  This committee determines the requirements for notification.  The 
notifications are drafted jointly by th e Regulatory agency and the TBT/Enquiry and 
notification authority.  
 
iii) Regular circulars are issued and briefings a re held for regulatory agencies to inform 
them of notification obligations by staff of the TBT Enquiry Point  
 
8. Is there any coordination with the productive sect or on these matters, and, if so, is there a 
coordinating body, such as a committee or similar entity? 
 
Answer: 
 A National Mirror Committee on WTO TBT (NMC WTO TBT) on Mandatory Standards and 
Technical Regulations has been established to o versee the implementation of technical regulations 
and compliance with WTO/TBT Agreement obligations. Committee chaired by STANDARDS 
MALAYSIA and the membership includes all affect ed government Ministries and the regulatory 
agencies. 
 
9. Is there a website where Malaysia's tec hnical regulations and conformity assessment 
procedures can be viewed?  Or do the government ag encies that prepare the latter make them publicly 
available on their respective websites? 
 
Answer: 
 
Technical regulations that have been published are available at http://www.lawnet.com.my. 
Additional information is available on the we bsites of individual regulatory agencies. 
 
Para 65 (WTO Secretariat Report)
 
  Some 58.1% of Malaysian standards were ali gned with international standards in 2008, up 
from 51% in 2005 (Table III.5).  This increase ma y reflect the authorities ' stance that, when 
developing or revising standards, adoption of intern ational standards is the primary option.  Malaysia 
has been actively involved in the development of in ternational standards thro ugh its participation in 
bodies such as the ISO and IEC.   WT/TPR/M/225/Add.1 
 Page 33 
 
 
  10. According to paragraph 65, some 58.1% of  Malaysian standards were aligned with 
international standards in 2008, up from 51% in 2005. Is this due to  the trade facilitation measures 
adopted by the Government, as mentioned in  paragraph 37 of document WT/TPR/G/225? 
 
Answer:  
 
Yes.  
 
Para 66  
 
 There have been no changes in Malaysia's system of conformity assessment since its previous 
Review.  Standards Malaysia is the sole authorit y in Malaysia responsible for the accreditation of 
organizations involved in conform ity assessment on behalf of the Government.  The accreditation of 
laboratories is carried out under the Laboratory A ccreditation Scheme of Malaysia (SAMM).  At 
end 2008, a total of 405 laboratories had been accred ited, based on the international standard ISO/IEC 
17025:2005, and five based on ISO 15189:2007.  
 11. Paragraph 66 describes the process or criteria for adoption in developing a standard.  Does 
this also apply to technical regulati ons and conformity assessment procedures? 
 
Answer: 
 
The procedure for development of standards does not  apply to technical regulations.  Specific 
agencies and Ministries develop their own technical re gulations.  This includes conformity assessment 
procedures associated with the technical regula tions.  In several sectors third party conformity 
assessment services from accredited conformity assessment bodies is used for this purpose.  Such 
services are based on International Standards.  
12. Regarding Table III.5, which lists Malaysian st andards aligned to international standards, 
what is the percentage or proportion of standa rds that have become technical regulations? 
 
Answer: 
 
The last review in October 2009 indicated that  there are 228 mandatory standards.  This is 
approximately 4.5 % of the total number of Malaysian standards.  
 
13. Is there some guide or similar document to explain how to obtain "halal" certification? 
 
Answer: 
 The detailed requirements and procedures to obtain Halal certification are accessible at 
http://www.islam.gov.my 
 Paragraph 87
 
  The Intellectual Property Corporation of Malaysia (MyIPO) is the principal agency responsible for IPR policy development and admini stration.  Changes to Malaysia's laws and 
regulations on intellectual property since its previ ous Review include an amendment to the Patents 
Act 1983, which entered into force on 16 August  2006.  The amendment was intended to assure WT/TPR/M/225/Add.1 
Page 34  
 
  consistency with Malaysia's accession to the Patent Cooperation Treaty (PCT).
38  O t h e r  m a i n  
IPR-related laws and regulations have remained largely unchanged. 
 Footnote 49
 
 
 These include the Trade Mark Act 1976 and Trade Marks Regulations 1977, the Copyright 
Act 1987, the Industrial Design Act 1996 and the I ndustrial Designs Regulations 1999, the Layout 
Designs of Integrated Circuits Act 2999, and the Geographical Indications Act 2000.  Unauthorized 
use and disclosure of trade secrets continue to be protected under common law. Section 3(a) of the Geographical I ndications Act 2000 provides that the protection afforded by the Act 
covers geographical indications regardless of whether they are registered under the Act. 
 14. What is the effect of a geographical indication being registered in accordance with the 
procedure laid down in the Geogr aphical Indications Act 2000?  
 Answer:  When a geographical indication is being registered in accordance with the procedure laid down in 
the Geographical Indications Act 2 000, a certificate of registration i ssued under this Act shall be 
prima facie evidence of the facts stated in the ce rtificate and of the validity of the registration by 
virtue of section 20(2) of the Act. 
 
15. Is it compulsory to register foreign geographi cal indications or appellations of origin in 
Malaysia to ensure their protection?  
Answer: 
 
Under section 3(a) of the Geographical Indication Act 2000, protection of geographical indications 
shall be given, regardless whether or not the geogr aphical indication is registered.  However, it is 
encouraged for foreign geographical indication to be registered because the registration certificate 
will be a prima facie evidence to prove right of use.  
 16. If so, that is to say, if registration in Mala ysia is necessary in order to protect a foreign 
geographical indication, would Malaysia please e xplain the consistency of this registration 
requirement with the provisions of Section 3(a)  of the Geographical Indications Act 2000, which 
establishes that geographical indications are protect ed even if they have not been registered? 
 Answer:  Yes, protection will be accorded regardless whethe r or not a geographical indication is registered. 
Foreign geographical indications are encouraged to register their geographical indication in 
Malaysia because the registration certificate will be  a prima facie evidence in any institution of 
proceedings for injunction and damages in court. 
 
Under the Geographical Indications Act 2000:  17. Is it possible for registered and non-register ed homonymous geographical indications to 
co-exist? 
 
                                                     
 
 38 The authorities maintain that Malaysia's IPR laws have been in conformance with the international 
standards and the TRIPS Agreement since 2002.  WT/TPR/M/225/Add.1 
 Page 35 
 
 
  Answer: 
 Yes, it is possible for registered and non-registered homonymous geographical indications to co-exist.  
 
18. Is it possible for homonymous geographical indications to co-exist in the case of spirits? 
 
Answer: 
 Yes. 
 Para 37 (Government Report)
 
  Through collaboration with APEC economies, Malaysia seeks to facilitate trade and reduce 
the cost of doing business.  Among the measure s adopted are reduction in  tariffs and non-tariff 
barriers, simplifying business regulations, as well as enhancing supply chain connectivity across the 
border by improving logistics and transport networks.  Key initiatives in the area of trade facilitation 
include the implementation of the Customs Singl e Window, the expansion of the APEC Business 
Travel Card Scheme, harmonization of food safety sta ndards and work in the area of data privacy to 
protect the integrity of e-commerce.  To furt her improve the business environment, APEC has 
identified priority areas for regulatory reforms based on the World Bank Ease of Doing Business indicators.  These include starting a business, acc ess to credit, trading across borders, enforcing 
contracts and dealing with permits.   
 19. With reference to paragraph 37, section (v ) (Asia Pacific Economic Cooperation (APEC)), 
could Malaysia please specify some of the measures implemented to reduce non-tariff barriers?  Answer:  Some of the measures to reduce non-tariff barriers include the implementation of the Customs Single 
Window, APEC Business Travel Card Scheme, harmoni zation of food safety standards and intensify 
use of e-commerce for trade activities.   
 
CHINA
 
 
WTO Secretariat Report 
 1. It was mentioned both in the Government's Repor t and the Secretariat's Report that Malaysia 
introduced economic stimulus packages to fight ag ainst the economic downturn.  Would Malaysia 
share the policy designs and their role on helping the economy?  
Answer:  
 
First Economic Stimulus Package:-   Worth RM 7 billion, focuses on three main strategi es aimed at strengthening the resilience of the 
economy, as follows:  
Strategy 1:  Ensuring the well-being of all Malaysians 
Strategy 2:  Developing Quality Human Capital Strategy 3:  Strengthening the Nation’s Resilience  WT/TPR/M/225/Add.1 
Page 36  
 
  Other measures introduced under the First Economic Stimulus Package include:  
 i) Reprioritising Government projects to focus on those with a high multiplier effect and low 
import content; 
ii) Providing a conducive business and investment environment as well as creating more 
sustainable job opportunities in the private sector, including: 
- Abolishing the import duty on cement and lib eralising imports of long iron and steel 
products;  
- Allowing the purchase of commercial properties above RM500,000 by foreigners;  
- Providing micro financing to commercial banks and Amanah Ikhtiar Malaysia 
(AIM); 
- Issuing work permits directly to know ledge workers in critical fields;  
- Facilitating the development of health and education tourism, particularly through 
injecting human capital by simplifying immigration procedures; 
- Encouraging the employment of professionals and skilled Malaysians affected by the 
global financial turmoil through the Gr aduate Employability Management Scheme 
(GEMS) implemented through the Go vernment-linked companies (GLCs); and 
- Extending business hours for shopping malls and hypermarkets. 
 The Second Economic Stimulus Package:- 
 
The second Stimulus Package, spread over 2 yea rs – 2009 and 2010 –  is significantly larger and 
more comprehensive, encompassing various econo mic sectors and target groups.  The measures 
outlined not only focus on boosting the economy in  the short-term, but also strive to balance 
short-term requirements with building capacity for the future.   
It comprises RM15 billion in a fiscal injection,  RM25 billion in Guarantee Funds, RM10 billion in  
equity investments, RM7 billion in private finance in itiative (PFI) and off-budget projects, as well as 
RM3 billion in tax incentives.  
 
The Package focuses on training and job creation, easing the burden of the populace, in particular 
the vulnerable groups, sustaining credit flows to s upport the private sector and building capacity for 
the future.  
 
More details are available at :  http://www.treasury.gov.my 
 
2. The Secretariat's Report briefs on Malaysia's  trade agreements and arrangements through 
Page 15 to 19.  It is noticed that Malaysia has different rules of origin under different agreements. 
Would Malaysia please elaborate on these rules?  A comparison of the differenc es would be helpful.  
 
Answer:  
 
Malaysia generally have a common rules of origin  (ROO) namely 40% Value Added and Change in 
Tariff Classification (CTC) in all FTAs.  However, to cater for specific needs of the negotiating 
partners, certain exceptions are made to the rule.  These Product Specific Rules, however are kept to 
a minimum of 10%- 20% of tariff lines.  These Product Specific Rules are also standardised in the sense that they are applied in all FTAs.  
 
Para 4
 
 
 Import duty exemptions or drawbacks are pr ovided for intermediate goods used in the 
production of exports so that the import duties do  not feed through to become implicit taxes on 
exports.  The exemptions or drawback s greatly reduce, or eliminate, th e implicit export taxes, but they  WT/TPR/M/225/Add.1 
 Page 37 
 
 
  tend to increase the complexity of the border taxation.  Rebates of internal sales taxes are also used to 
ensure that exported goods are not taxed tw ice (in both Malaysia and importing country). 
 3. The Secretariat's Report comments in Paragra ph 4 on Page 23 that import duty exemption or 
drawbacks for intermediate goods greatly reduce, or el iminate, the implicit export taxes, but they tend 
to increase the complexity of the border taxation.   Would Malaysia explain in brief how the duty 
exemption and drawbacks operate?  
Answer:  
 
Manufacturing companies involved in value adde d activities located anywhere in the country are 
given duty and tax exemption on raw materials,  components and machines which are basic and 
directly used in the manufacture of the finished go ods.  The refund is given for the amount of import 
duty paid on the materials and components upon export of the manufactured goods.   
The process are as follows: 
 i) Companies apply to the Custom Authorities (Cus toms Act 1967, Section 99) for pre-approval 
to use the drawback facility, before importation,  indicating the component and material as 
well as finished goods to be exported; 
ii) To notify intention to claim refund upon exportation;  and 
iii) To submit claims after the goods have left the country.  
 
Para 2
 
  Malaysia has a generally liberal trade regi me for agricultural products, with an average 
applied MFN tariff at 2.8% (WTO definition) in 2009, although some non- ad valorem  tariffs tend to 
conceal relatively high rates.  In addition, import licensing applies to some agricultural products, and 
rice may only be imported by BERNAS.  As a monopsony buyer of rice, BERNAS has the market power to negotiate lower prices with its supplie rs.  Malaysia began to apply tariff-rate quotas on 
agricultural products in 2008.  Import tariffs are ze ro for mineral resources and oil and gas, which are 
not subject to any import licensing requirements.  Export taxes, however, apply to some mineral 
products, and to crude oil and condensate. 
 4. It was noted in Paragraph 2 of Page 48 of the Secretariat's Report that Malaysia began to 
apply tariff-rate quotas on agricultural products in  2008.  Could Malaysia share what is the 
implication on trade of this policy change? 
 
Answer:  
 
The implementation of tariff-rate  quotas on agricultural products does not affect trade between 
trading partners of Malaysia.  
 5. In the same paragraph, it is mentioned that "r ebates are given for buyers replacing vehicles 
over ten years old with national brands."  Would Ma laysia specify the amount of rebates involved on 
this measure?   
Answer:  
 
The amount of rebate given was RM 5,000 per vehicle.  The measure was terminated in November 2009.  WT/TPR/M/225/Add.1 
Page 38  
 
  Para 7
 
  During the period under review, labour productivity in agriculture, together with forestry and 
fisheries, has been improving, although it remains su bstantially lower than the national average.  The 
sector's contribution to GDP increased from 8.4% in 2005 to 10.2% in 2008, wh ile its share of total 
employment fell from 12.9% to 12.0% (Table I.2).  However, a labour shortage continues to force the 
sector to rely on foreign labour, which accounts for around 20% of total agriculture employment.  The 
sector also faces challenges such as increasing food im ports, greater competition in export markets, 
and the small size of farms (which inhibits mechan ization and the attainment of scale economies).   
 
6. Paragraph 7 on Page 49 of the Secretariat's Re port states that Malaysia's agriculture is 
confronted with labor shortage a nd about 20% of total agriculture em ployment relies on foreign labor.  
Would Malaysia please explain its polic y on foreign labor in agriculture?  
 
Answer:  
 
Foreign labour in the agriculture sector is permitted if there is unavailability of local workers. 
Para 8
 
  The Government maintains price supports, and grants subsidies to inputs through government 
service programmes to promote the development of agriculture (Table IV.2).  Among these support 
programmes, the financing of a minimum price for rice has persistently been the biggest outlay (or 
one of the biggest), although in 2008 it was surpass ed by support allocated on drainage and irrigation 
facilities (Box IV.1).  In addition, Malaysia mainta ins retail price controls on:  sugar, some milk 
products (e.g. sweetened condensed milk), wheat fl our, cooking oil, some vegetables, and chicken 
(Chapter III).  Soft loans are available in the form of:  3F (Fund for Food), small and medium 
industries fund, and various other schemes, such as  the oil palm replanting scheme and the paddy 
credit scheme.
39 
 7. Paragraph 8 on the same page says that Malaysia maintains retail price controls on some milk 
products, e.g. sweetened condensed milk, among others .  Could Malaysia elaborate on the purpose of 
this control and how it is implemented? 
 
Answer:  
 Price control on these items have been lifted: 
- bread (1/1/10); 
- sweetened condensed milk (1/4/09);  and 
- chicken (1/6/08). 
 Some essential goods such as general purpose wheat flour, cooking oil (pure and blended palm oil), 
petrol, diesel, and liquefied petroleu m gas, are subject to administra tive price control.  The purpose 
of the control is to ensure that prices of essen tial goods are capped at a reasonable level.  The price 
trends of these goods are monitored and c onsidered before the ceiling price is set.  
 
Para 15
 
  Foreign equity participation of up to 100%  is permitted in the extraction, mining or 
processing of mineral ores.  When approving these projects, the Government considers:  the 
                                                     
 
 39 Other schemes are the agriculture entrepreneur scheme for graduates, the bumiputera  community 
trade and industry scheme, the food production credit scheme, and the agro-youth scheme.  WT/TPR/M/225/Add.1 
 Page 39 
 
 
  investment level, technology, and risk involved ; availability of Malaysian expertise;  and the 
value-added level.  Companies must also obtain approval from state governments (e.g. for exploration 
rights).  8. It is noted in Paragraph 15 of Page 52 that when approving foreign participation in the 
extraction, mining or processing of mineral ores, the Government would consider some detailed 
conditions of the project.  Would Malaysia please specify which government agency is referred to 
here? Is the approval made at the fe deral level or the state level?  What are the criteria for approval? 
 
Answer: 
 
For extraction and mining of min eral ores, approval is given at  the State level(State Mineral 
Resources Committee) based on the following criteria:  
- submission of mine feasibility study; 
- rehabilitation plan of mine;  and  
- environmental impact assessment (EIA), as stipulated under the Environment Quality 
Act (EQA) 1974.  
 For downstream processing of mineral o res (e.g. smelting) the criteria are: 
- a Manufacturing License issued by Minist ry  of International Trade and Industry 
under the Industrial Coordination Act;  
- approval for location and infrastructure availability from the relevant State 
authority;  and 
- environmental impact assessment (EIA). 
 
Para 45
 
 
 Although considering FDI positive to economic  development and grow th, the Government 
insists that local participation needs to be main tained in some areas in order to promote domestic 
capabilities and capacities. In particular, sectors with "n ational interest" (i.e. sectors with an impact on 
national security and overall socio-economic wellbeing)  are not to be liberalized.  Even under the 
reform package launched on 30 June 2009, the rep eal of FIC guidelines does not eliminate bumiputera 
participation requirements in bank ing and insurance, certain manufacturing sectors (such as fabrics 
and apparel of batik, and integrated Por tland cement), agriculture, defence, energy, 
telecommunication, and water.  Also, foreign invest ors are not allowed to acquire properties below a 
specified value:  RM 500,000 for commercial prope rties and RM 250,000 (increased to RM 500,000 
as of 1 January 2010) for residential properties. 
 
9. Could Malaysia provide the list of the sectors with  "national interests"?  Is this list subject to 
adjustment?  
Answer:  
 
"National interest" sectors refer s to sectors which are necessary fo r national security and public 
interest, as well as those sectors that involve the utilization of public fund and to preserve culture and 
heritage.  Economic Planning Unit is finalising the list.  
 
Para 65
 
 
 There has been no significant change in teleco m-related legislation since the previous Review 
of Malaysia in 2006.  The main legislation on telecommunications services comprises:  the 
Communication and Multimedia Act 1998;  the Communications and Multim edia Commission Act WT/TPR/M/225/Add.1 
Page 40  
 
  1998;  and the Digital Signature Act 1997.  The sector is regulated by the Ministry of Information, 
Communication and Culture (MICC), and the Communications and the Multimedia Commission.  10. The telecommunication sector of Malaysia is re gulated by the Ministry of Information, 
Communication and Culture (MICC), and the Communications and the Multimedia Commission. 
Please explain the separate duties and authorities of the Ministry of Information, Communication and 
Culture and the Multimedia Commission as well as their power division and relationship.  
Answer:  
 
The duties of the Minister and the Malaysian Co mmunications and Multimedia Commission (MCMC) 
are clearly outlined in the Communications and Multimedia Act 1998 (CMA).   The MCMC is responsible on matters relation to ge neral competition practices, access, control, 
planning and administration of numbering and electr onic addressing and investigation.  In addition, 
MCMC asses and make recommendations to the Mi nister on matters pertaining to licensing, 
implementation of universal services, reso lving disputes, issue of spectrum. 
 For full details of the duties and authorities of the Ministry and MCMC, can be referred at the CMA which is available at http://www.skmm.gov.my 
 Para 67
 
  Telecom services suppliers must obtain a licence from the Minister of Information, Communication and Culture;  licence conditions are th e same for local and foreign service suppliers. 
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  
Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed. 
 11. Malaysia's GATS commitments specified that fore ign participation of up to 30% is allowed in 
telecommunications services, but in practice, pa rticipation of up to 49% may be allowed for 
"individual network service provider licenses", and "class application service provider licenses".  
Please clarify the specific meanings and contents  of "individual network service provider licenses", 
and "class application service provider licenses".  
Answer:  
 
Network service providers provid e the basic connectivity and bandwidth to support a variety of 
applications.  Network services enable connectiv ity or transport between different networks.  
 Applications service providers provide particular f unctions such as voice services, data services, 
content-based services and electronic commerce.  A pplications services are essentially the functions 
or capabilities, which are delivered to end-users. 
 
Individual licence allow for close monitoring and cont rol of activities, while class licence is designed 
to promote industry growth and development by removing unnecessary regulatory barriers.  
Individual licences must be applied for and are grante d by the Minister, while a class licence merely 
requires registration, which is an administrative process.    
 
Para 69
 
  Retail prices for fixed-line services are regulated by the Government through the 
Communications and Multimedia (Rates) Rules 2002.   Under the rules, maximum prices are set,  WT/TPR/M/225/Add.1 
 Page 41 
 
 
  below which companies are free to set their tariffs;  these ceilings have not been changed since 2002.  
The tariffs for fixed-line telecom services have been declining over the past few years, particularly for 
long-distance and international calls.  Retail rate s for mobile phone services are not regulated, and 
have also been declining.  The Government re gulates access and interconnection between all service 
providers.  "Call back service" is prohibited.  On the issue of cross-subsidization, the Communications 
and Multimedia Act 1998 stated that rate setting sh ould be based on costs, and cross-subsidies in 
general should be eliminated.  This principle, how ever, applies only to rates not regulated by the 
Government.  12. Please describe such provisions and the implementation of cross-subsidies in real practice. 
 
Answer:  
 The Communications and Multimedia Act 1998 (CMA) stipulates that rates should be oriented towards cost and, in general cross subsidies should be eliminated.  The CMA also has provision for 
the Minister to set rates as the public interest ma y require.  However, in practice, cross subsidies are 
not implemented.   
13. In order to develop regional economy, Malaysia  has established 5 economic growth corridors.  
Could Malaysia elaborate on its foreign investment promotion policies in these corridors?  Answer:   Each regional economic growth corri dor has its own specific investme nt promotion policies with the 
objective of promoting new economic activity in specific sectors.  For further details please refer to:  
 
i) Northern Corridor Economic Region (NCER) at:  www.ncer.com.my 
ii) Iskandar Malaysia in Southern Johore at:  www.iskandarmalaysia.com 
iii) East Coast Economic Region (ECER) at:  www.ecerdc.com.my 
iv) Sabah Development Corridor (SDC) at:  www.sdc.gov.my 
v) Sarawak Corridor of Renewable Energy (SCORE) at:  www.sarawakscore.com.my 
 
14. Please provide the information on policies prom oting the development of SMEs and their 
implementation:  i) detailed information on developmen t of SMEs in 2008 and 2009; 
ii) laws, polices and supporting measures launche d as from 2008 to support the development of 
SMEs; and 
iii) the government budget for SMEs funds and the e ffect of their support of the development of 
SMEs. 
 
Answer:  
 
Please refer to http://www.smecorp.gov.my  
 WT/TPR/M/225/Add.1 
Page 42  
 
  CHINESE TAIPEI
 
 
WTO Secretariat Report 
 
Para 81 (Footnote 43)  
 
 The Malaysian Communications and Multimedia  Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Ac t 1998;  the Act contains a general prohibition 
of any conduct that has the purpose of "substa ntially lessening competition" in a communication 
market (Sections 133-144).  The Act also prohibits co llusive agreements to fix rates, share market, or 
boycott suppliers or competitors.  Thus far, MCMC has published the"Guidelines on Substantial 
Lessening of Competition" and "Guidelines on Domina nt Position in a Communication Market".  In 
the energy sector, the role of the Energy Commi ssion, as defined by Energy Commission Act 2001, is 
to promote and safeguard competition and fair and efficient market conduct;  and in the absence of a 
competitive market, to prevent the misuse of monopoly or market power in respect of the generation, 
production, transmission, distribution, and supply of electricity and the supply of gas through 
pipelines.    1. Could we please have more information on what  measures are being taken by the Malaysian 
government to design a competitive electrical pow er market, and what are its main concerns? 
 Answer:   Before designing a competitive electrical power market , Malaysia needs to address basic structural 
issues faced by the electricity supply industry.  Ma laysia will also need to strengthen its institutional 
and legal framework in preparati on for the introduction of a comp etitive electrical power market.  
Recognising these constraints, the Government is ta king an initiative to build a reform platform for 
the electricity supply industry with the aim of creating a more robust, efficient and sustainable 
industry.   In this context, one of the Energy Commission f unction is to oversee and promote competition in the 
energy sector particularly in Electricity Supply In dustry and Gas Supply Industry at reticulation level, 
as stated in Section 14(1)(h), Energy Commission Act 2001.  Specifically fo r the electricity supply 
industry, the Electricity Supply Act 1990 provides fo r the Commission to promote competition in the 
generation and supply of electricity (subsection 4(c)). 
 
Currently, the Government is looking into the am endment of Electricity Supply Act 1990 which will 
accommodate a more transparent and competitive en vironment for investors and industry players 
particularly in Electricity Supply Industry. 
 
Para 81
 
  Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.
40  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.41  The authorities state that Malaysia  is currently in the final process 
                                                      
 40 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 41 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any 
conduct that has the purpose of "substantially lessening competition" in a communication market  WT/TPR/M/225/Add.1 
 Page 43 
 
 
  of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in 
accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.42  It is not clear whether GLCs will be 
covered by the FTPB and FTCB. 
 2. On the assumption that the authority of th e FTPB will apply to competition matters 
throughout the whole economy, will the Energy  Commission Act 2001 and the Energy Commission 
remain as the regulatory vehicle and supervisory body respectively for market competition in the 
energy sector in Malaysia? 
 
Answer:  
 The policy is currently being formulated and the draft legislation is still in the drafting stage.  Once 
they are finalised, they would have to be presente d to the Cabinet and then Parliament for 
three readings before getting the royal assent from th e King.  The length of the process can take at 
least six months provided there are no objections to the various issues laid down in the law.  The full 
coverage can only be determined then.  
 
Para 42
 
 
 Price controls are used on a number of produc ts.  Under the Price Control Act 1946, coarse 
grain, white refined sugar, and fine grain white re fined sugar have been declared by the MDTCC as 
goods subject to price control.  Goods subject to  administrative price controls include:  general 
purpose wheat flour, cooking oil (pure and blended palm  oil), white bread, petrol, diesel, and liquefied 
petroleum gas.  Price controls on steel bar and b illet, ordinary Portland cement, and chicken were 
eliminated in 2008.  The price of rice is controlle d by law and is administered by the Ministry of 
Agriculture under the Rice (Grade and Price Control) Order 1992.  3. Could Malaysia please elaborate further on what it expects the influence of the Fair Trade 
Practices Bill to be on the price control regime, when it is passed? 
 
Answer:  
 Since the Competition Bill (previously known as the Fair Trade Practices Bill) are still at the final 
drafting stage and has not been finalised, the influence on the price control regime cannot be 
determined at this juncture.  
Para 47
 
  The Labuan International Business and Financial Centre (IBFC), Malaysia's only international 
financial centre, was set up in 1990 with a view to strengthening the financial services sector in 
                                                                                                                                                                    
 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or 
market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.    
42 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public. WT/TPR/M/225/Add.1 
Page 44  
 
  Malaysia.  Under the Offshore Banking Act 1990, offshore financial services are regulated by the 
Labuan Offshore Financial Serv ices Authority (LOFSA), which is in charge of, inter alia , the 
incorporation and registration of companies in Labua n.  There are no foreign-ownership restrictions 
for offshore banks in the IBFC.  Offshore companies and financial institutions in Labuan benefit from, 
inter alia , tax and non-tax incentives.  For example, under the Labuan Offshore Business Activities 
Tax Act 1990, offshore companies and financial institutions may choose to  pay tax at a rate of 3% of 
its net profits or a fixed amount of RM 20,000, instead of a statutory corporate income tax at 25%.  This policy was revised in 2008, and offshore companies may choose to be taxed at the statutory rate of 25% and benefit from Malaysia's tax treaties.  Malaysia has recently announced more liberalisation 
measures to provide a more flexible business envi ronment for offshore financial institutions:  from 
2010, offshore banking institutions meeting certain criteria may have a physical presence onshore. 
 4. Could Malaysia please provide a brief descripti on of the liberalisation measures relating to 
offshore financial institutions, and the criteria that  offshore banking institutions are required to fulfil 
in order to have a physical presence on-shore? 
 
Answer:  
 Offshore banking institutions and offshore insuran ce companies licensed by the Labuan Offshore 
Financial Services Authority (LOFSA) that meet the predetermined criteria are allowed to establish 
physical presence onshore in 2010 and 2011 respectively.  This flexibility is aimed at enhancing the 
operating efficiencies of Labuan financial institutions by leveraging, among others, on the 
infrastructure, human capital, professional servic es, recreational and residential facilities that are 
available onshore.  The 'Guidelines on Co-location of Labuan Banks' was issued by LOFSA on 19 January 2010.  Further 
details relating to the ‘Guidelines on Co-loc ation of Labuan Banks' are available at 
www.lofsa.gov.my. 
 
5. If the relevant regulations have been finalized, could we please have details of the content 
thereof? If the regulations are not yet finalized, it woul d be appreciated if Malays ia could inform us of 
its intended schedule in this respect. 
 
Answer:  
 Further details relating to the 'Guidelines on Co-location of Labuan Banks' that was issued by LOFSA on 19 January 2010' are available online at www.lofsa.gov.my. 
 
The relevant guidelines relating to offshore insuran ce companies are expected to be issued in early 
2011.    
 
Para 67
 
 
 Telecom services suppliers must obtain a licence from the Minister of Information, 
Communication and Culture;  licence conditions are th e same for local and foreign service suppliers.  
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  
Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed.43   
 
                                                      
 43 Higher equity participation is allowed for "indi vidual network service provider licenses", and "class 
application service provider licenses".  WT/TPR/M/225/Add.1 
 Page 45 
 
 
  6. Would the Malaysian government consider rela xing restrictions further and allowing more 
foreign capital participation in telecom services?  
Answer:  
 
The Government is currently looking into rel axing the restriction on foreign equity for the 
telecommunications sector.  
 
Para 94
 
 
 An equity restriction of 30% applies to foreign investors in direct selling business.44  
Department stores, supermarkets, and shopping malls must reserve 30% of the shelf space for 
products made by Malaysian SMEs.  These restrictions and reserva tions are currently under review by 
the Government.  
7. We are concerned about the a bove-mentioned restrictions, and would like to know when the 
government review will be completed and when these measures will be lifted.   
Answer:  
 For direct selling business, the 30% equity restrict ion is no longer applicable.  The hypermarket 
segment will continue to be subject to the 30% bum iputera (indigenous group) equity condition.  The 
30% shelf space for products made by Malaysi an SMEs will continue to be in effect. 
  COLOMBIA
 
 
WTO Secretariat Report 
 
Para 18  
  Malaysia's cross-border sales (exports) and purchases (imports) of services both reached 
US$30 billion in 2008 (Table I.3).  The services acc ount of the balance of payments turned into a 
surplus in 2007, reflecting a substantial increase in exports of tourism (travel) services;  the surplus 
slightly decreased in 2008.  Tourism has grown stea dily since the late 1980s and is now Malaysia's 
main services export.  
 According to this paragraph, tourism has grown steadily since the late 1980s, and is now 
Malaysia's main services export.  1. What mechanisms or policies has the Govern ment of Malaysia implemented to enable 
tourism to grow steadily since the end of the 1980s?  
2. Would the Government of Malaysia be prepar ed to share its successful experience in the 
tourism sector with the authorities and operators of Colombia? 
3. If so, how would we go about organizing a cooperation project in this area? 
 
                                                     
 
 44 Pyramid selling is prohibited;  only single-level marketing, multilevel marketing, and mail order are 
permitted.   WT/TPR/M/225/Add.1 
Page 46  
 
  Answer:  
 1. Malaysia has aggressively promoted the nation as tourism destination by having Visit 
Malaysia Year Campaign (VMY) twice, in 1990 and 2007.  Apart from VMY, Malaysia consistently 
promotes the nation through 44 Tourism Malaysia' s office and marketing representatives located 
worldwide. 
 Malaysia has came out with Tourism Master Plan and Policy, i.e:  - Rural Tourism Master Plan in October 2001  - Malaysia National Tourism Policy in December 2004 
 
The Master Plan and Policy, inter alia is a guidelines in achieving the mission of the tourism industry as the nation’s main source of income for the socio-economic development of the country. 
 2. Yes 
 
3. Through Agreement or Memorandum of Underst anding on Cooperation in the Field of 
Tourism between Malaysia and Colombia.  
Para 19
 
 
 During 2001-08, Malaysia received a net inflow of FDI worth 3.1% of GDP;  the stock of FDI 
increased from RM 129 billion to RM 253.8 billion (about 34.4% of GDP).  Net FDI inflows decreased to RM 26.7 billion in 2008, from RM 29.1 billion in 2005.  According to a report by the 
Bank Negara Malaysia, whereas about 45% of inwa rd FDI was channelled into manufacturing (and 
26% into oil and gas) in 2008, only 27% went into  services;  the recent relaxation of restrictions on 
foreign investment, especially in services, should he lp redress this imbalance.  Malaysia's outward 
FDI rose to RM 50.2 billion in 2008, from RM 38.2 billion.  According to the authorities, outward FDI was mainly in finance and insurance, communi cation, electricity, oil and gas, water, process 
equipment manufacturing, electrical and electronic manufacturing, and cement. 
 According to this paragraph, in 2008 a bout 45% of inward FDI was channelled into 
manufacturing, 26% into oil and gas, and 27% in to services.  Malaysia's outward FDI rose from 
RM 38.2 billion to RM 50.2 billion in 2008, and was mainly in finance and insurance, 
communication, electricity, oil and gas, water, electrical and electronic manufacturing, and cement.  4. The Government of Colombia would like to know whether in view of the relative shortage of 
labour in Malaysia the Government is promoti ng investment in Malaysian enterprises in other 
countries, in labour-intensive goods. 
 5. How much have Malaysian enterprises invested  in Latin America and in what sectors? 
 6. Would the Government of Malaysia be able to  exercise any leadership  in encouraging its 
entrepreneurs to invest in Latin America? 
 
Answer:  
 
4. At present, Malaysia is promoting high valu e-added, capital intensive and high technology 
projects for the manufacturing and manufacturing-rel ated services sector.  As such, the Government 
is encouraging that labour intensive projects be undertaken in neighbouring countries.  Malaysian 
companies are encouraged to invest abroad where there are enough supply and cheaper cost of 
labour supply in order to sustain their competitiveness.   WT/TPR/M/225/Add.1 
 Page 47 
 
 
  5. Data on Malaysia's outward investment for various  sectors in Latin America are available in 
Bank Negara Malaysia's Mont hly Statistical Bulletin at http://www.bnm.gov.my.  
 6. The Malaysian government encourages and su pports Malaysian comp anies to venture 
overseas, and to become part of the global produc tion network.  Outward investments are being 
promoted to all potential FDI destinations, incl uding to Latin America for outsourcing, to expand 
markets, acquire technology, and tap investment opportunities, particularly  those arising from 
regional and various bilateral agreement.   
Para 2
 
 
 To achieve these objectives, the Government h as unilaterally liberalized its services sector 
and lowered its applied MFN tariffs (Chapter III(2)(ii )).  Malaysia continues to consider the WTO a 
priority in realizing its trade objectives.  Although WTO Agreements play a pivotal role in the formulation of Malaysia's trade and trade-rela ted policies, Malaysia also considers regional 
arrangements, notably those involving the Associat ion of South East Asian Nations (ASEAN), and 
various bilateral agreements, to be important.  ASEAN, of which Malaysia is a member, has RTAs 
with Australia, China, India, Japan, Korea, and New Zealand.  Two bilateral FTAs with Japan and 
Pakistan entered into force in 2006 and 2008, an d one with New Zealand signed in October 2009 and 
expected to be implemented in 2010.  Malaysia is also negotiating bilateral FTAs with Australia, 
Chile, India, and the United States.   
 
 According to this paragraph, Malaysia h as been negotiating trade agreements in the 
framework of ASEAN as well as bilateral agreements  with countries chiefly in the Asian region, and 
with Chile in Latin America.  
7. Does Malaysia have any short or medium-term pl ans to negotiate free trade agreements with 
other Latin American countries? 
 
Answer:   Currently, a feasibility study on ASEAN-MERCOSUR FTA is ongoing and expected to be completed 
by August 2010.  There is no immediate or medium term plan for ASEAN to enter into FTA with Latin 
American countries.    
Para 36
 
 
 Data provided by the authorities indicate that  about a quarter of Malaysia's tariff lines 
(principally with regard to an imal and vegetable products, wood, machinery, vehicles and transport 
equipment, and arms) are subject to import licensi ng, most of which is non-automatic.  Automatic 
licensing is intended for data collection.  The au thorities maintain that non-automatic licences are 
mainly for sanitary and phytosanitary reasons (fo r those concerning agriculture).  Non-automatic 
licensing is also intended to regulate the flow of imports and to promote selected strategic industries 
(such as passenger and commercial vehicles and motorc ycles) that have been identified to achieve 
certain socio-economic objectives;  imports of CF Cs are regulated in accordance with Malaysia's 
obligations under the Montreal Protocol.45 
  The report states that according to data provided by the authorities, about 25% of Malaysia's 
tariff lines are subject to import licensing, most of which is non-automatic. 
 
                                                     
 
 45 WTO document G/LIC/N/3/MYS/4, 17 October 2008. WT/TPR/M/225/Add.1 
Page 48  
 
  8. Bearing in mind that the objective of the non-automatic licences is to regulate import flows 
and promote strategic industries, what WTO provisi on has Malaysia invoked in connection with these 
licences?  On the basis of what criteria does it allo cate these licences?  How does it avoid exercising 
discretion?  Answer:  
 
Import licences will be issued as stipulated in th e Customs (Prohibition of Imports) Order 2008 based 
on  the following:   
i) SPS requirements; 
ii) Imports’ monitoring; and  
iii) Human health and environmenta l precautionary measures.    
 All import license imposed are in line with Ma laysia's commitment under WTO hence it does not 
hamper access for imports to its domestic market.  
 
Para 48
 
  The number of lines subject to Malaysia's e xport taxes has remained largely unchanged since 
its previous Review.  In 2009, out of 10,389 tariff lines at the 9-digit level, 515 lines were subject to 
export duties;  most of the rates are ad valorem,  ranging from 5% to 20% (except for nine lines, which 
are subject to specific rates).
46  Products subject to export taxes include timber, live animals, ash and 
residues, precious metals, copper, and ferrous waste and scrap.  According to the authorities, the main 
objective of these taxes is to promote the u se of locally produced commodities in domestic 
downstream industries as well as to conserve the envi ronment.  The authorities are of the view that 
export taxes on timber allow them to better manage sustainable development of Malaysian forest.  
However, such taxes tend to increase the domes tic supply of the products concerned, and as a 
consequence, their domestic prices tend to be lowe r than would otherwise be the case;  thus, export 
taxes assist domestic downstream processing of the produc ts concerned.  In 2007 (the latest year for 
which data were made available), Malaysia 's revenue from export duties amounted to 
RM 2,296 billion, up from RM 1,133 billion in 2001. 
 
 The Secretariat report refers to the maintenance of ad valorem  taxes ranging from 5 to 20% 
and specific duties on certain products to promote the use of local products in higher value-added 
industries and to conserve the environment.  
9. Have the Malaysian authorities thought of rationa lizing the use of export taxes?  Have they 
assessed the impact of these taxes on th e competitiveness of their enterprises? 
 
Answer:  
 Export taxes and licensing requirements are to ensure availability of raw materials in a sustainable 
manner. 
 The imposition of export ta x and licensing requirement is also to ensure adherence to sustainable 
forest management as well as to conserve the limit ed forest resource.  States set an annual coupe to 
prevent over logging.  Export taxes will ensure ade quate supply of logs for domestic consumption 
which will in turn avoid the need to source for supply through over logging and illegal means. 
                                                     
 
 46 Most lines are subject to duty rates betwee n 5% and 15%.  Only one item is subject to ad valorem  
duty of 20%.  In 2006, 512 lines out of 10,580 tariff lines (based on the 2002 Harmonized System (HS)) were 
subject to export taxes.  WT/TPR/M/225/Add.1 
 Page 49 
 
 
  There is no assessment underta ken on the impact of compe titiveness of enterprises.  
 
Para 75  
  Malaysia's government procurement continues to be used as an instrument to support national 
objectives, such as encouraging greater participation of the bumiputera  in the economy, transfer of 
technology to local industries, reducing the outfl ow of foreign exchange, creating opportunities for 
local service-oriented companies, and enhancing ex port capabilities.  The margin of preference that 
bumiputera  supplies receive has not been changed during the review period.
47  Malaysia is not a party 
to the WTO Agreement on Government Procurement; the authorities are of the view that Malaysia has 
yet to attain the level of economic development that  would enable it to benefit from this Agreement.  
In 2008, Malaysia's government procurement amou nted to about 11.9% of GDP (11.4% in 2005) 
(Table III.7).    According to the Secretariat report, local s uppliers receive a margin of preference between 
2.5% and 10%. 
 10. Does this preference go exclusively to bumiputera companies and products, or is it for all 
Malaysian nationals?  Are there any figures for th e share of preferential procurement in total 
procurement, and the share of foreign products a nd services?  The preferences do not apply to the free 
trade agreements concluded by Malaysia. 
 
Answer:  
 Government procurement is a tool to increase the opportunities of local suppliers and contractors, to 
boost the domestic economy and increase the participation of locals in economic development, as well 
as to develop capacity building.  Priorities in Gove rnment procurement are given to local suppliers 
and manufacturers.  In addition, margin of preference between 2.5% and 10% are given to Bumiputera suppliers and between 3% and 10% are given to Bumiputera manufacturers which aim to develop the growth of Bumiputera entrepreneurs in  trade and manufacturing activities as well as 
enhance their capabilities.    
Government Procurement is excluded from Malaysia' s FTA.  Nonetheless, foreign companies can still 
participate in local tenders, provided they incor porate a local company in Malaysia and also fulfill 
the requirement for local companies.  With regards to procurement data, detail s on procurement data are not available. 
 Para 22
 
  The Government continues to improve the investment environment in manufacturing, and both border and internal measures are used as part of Malaysia's industrial development policy.  
Malaysia's import duties are mostly ad valorem , although a few specific duties are imposed.
48  I n  
2009, 53.5% of tariff lines for manufacturing imports (ISIC Rev 2) were duty free, and the average 
tariff for manufacturing products was lowered fro m 9.6% in 2005 to 8.7%.  The Government 
encourages manufacturers to obtain raw material s as well as machinery and equipment locally.  
                                                      
 47 For supplies and services contracts between RM 100,000 and RM 15 million, bumiputera  suppliers 
receive a margin of preference between 2.5% and 10%;  the margin is inversely proportional to value.  
Furthermore, preferential treatment is given to bumiputera  manufacturers for locally produced goods;  the 
margin is up to 10% for contracts valued below RM 10 million and up to 3% for contracts valued above RM 10 million.  No preferences are provid ed for purchases exceeding RM 15 million. 
 
48 Non- ad valorem  duties apply to 55 lines at the HS 9-digit level for manufacturing imports.   WT/TPR/M/225/Add.1 
Page 50  
 
  However, raw materials, components, and machiner y and equipment that are not available locally 
may be imported duty free.  In addition, some  manufactured goods are subject to non-automatic 
import licensing (Chapter III):  these include some motor vehicles and motorcycles, batik sarong, and 
some steel flat product.
49 
 
 According to this paragraph, the Government  of Malaysia encourages manufacturers to obtain 
raw materials as well as machinery and equipment loca lly.  However, raw materials, components, and 
machinery and equipment that are not available locally may be imported duty free.  11. Could the Government of Malaysia provide deta ils on the mechanisms and incentives used to 
encourage manufacturers to buy raw materials and machinery locally? 
 12. What are the penalties for enterprises in Malays ia that purchase raw materials and machinery 
abroad even though they are produced locally? 
 
Answer:  
 No specific mechanisms or incenti ves are used to encourage manufa cturers to buy raw materials and 
machinery locally.  Import duty exemptions can be  considered for the use of raw materials and 
machinery that are not locally produced regardless of  whether the finished products are produced for 
the export or domestic market.  The exemption is granted to both local as well as foreign-owned 
manufacturing companies.  
 No penalties or restrictions are imposed on co mpanies for importation of raw materials and 
machinery even though they are produced locally.   
 
 
COSTA RICA
 
 
Para 62  
  The Department of Standards Malaysia (S tandards Malaysia) continues to function as 
Malaysia's national standardization and accreditati on body.  SIRIM Berhad, a wholly state-owned 
company, remains the sole national standards development agency under the provisions of the 
Standards of Malaysia Act.  The Malaysian Standards and Accreditati on Council is the advisory body, 
established under the Act to advise the Minister of  Science, Technology and Innovation on matters 
relating to standards and accreditati on.  Malaysia participates in the activities of the International 
Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).
50   
 1. Has SIRIM Berhad , the agency in charge of standardization in Malaysia, accepted the Code of 
Good Practice for the Preparation, Adoption and App lication of Standards laid down in Annex 3 to 
the WTO Agreement on Technical Barriers to Trade? (p. 44, para. 62) 
Answer: 
 
SIRIM Berhad complies with the Code of Good Practice.  
 
                                                     
 
 49 WTO document G/LIC/N/3/MYS/4, 17 October 2008. 
 50 Malaysia participates in the Council, Technical Management Board, and various technical 
committees and sub-committees of th e ISO and various technical committ ees and sub-committees of the IEC 
System for Conformity Testing and Certification of Electrical and Electronic Components, and Explosive 
Atmosphere Schemes (IECEX Schemes).  WT/TPR/M/225/Add.1 
 Page 51 
 
 
  Para 63  
  Malaysian standards are voluntary unless referred to in specific technical regulations.  At end 
2008, about 3.2% (173 out of 5,444) of Malaysian standards were compulsory.
51  The authorities state 
that a number of foreign standards and international standards are referred to in Malaysia's technical 
regulations;  the exact number of such standard s is not available.  The National Standards and 
Strategy Action Plan, published in 2004, continu es to serve as a guideline to enhance Malaysia's 
standardization activities until 2020.52  
 2. Is there a fee for voluntary standards that b ecome compulsory through technical regulations or 
are they made available to economic operators so that they can comply with the mandatory 
regulations applicable to goods im ports?  When a Malaysian technical  regulation refers to foreign 
standards, are such standards made available for information concerning product requirements?  Is 
there a website on which Malaysian standards and technical regulations can be viewed? (p. 45, 
para. 63) 
 
Answer: 
 
All standards, whether voluntary or referenced in technical regulations are available for purchase 
from STANDARDS MALAYSIA, SIRIM Berhad or at http://www.msonline.gov.my.  
 
No.  Foreign standards have to be sourced from th e specific standards body due to copyright reasons. 
 Malaysian Standards (MS) that have been published are available at http://www.msonline.gov.my. 
Technical regulations are available at http://www.la wnet.com.my.  Additional information is usually 
available on the websites of individual regulatory agencies. 
 Para 64
 
  The authorities state that a basis for Mala ysian national standards is the adoption of 
international standards.  Criteria for adoption of standards are determined by the relevant "standard 
development committees";  the views of interested parties, including industry, government agencies, 
and consumers are considered.  Foreign interests ar e considered in the adoption of new or revised 
standards through the "public comment" procedures on any draft standards made publicly available on 
the websites of Standards Malaysia and SIRIM Be rhad.  Certain tax deductions are accorded for 
expenditure incurred by private companies when participating in international standardization 
activities.
53 
 
3. What has been Malaysia's experience in using the tax deduction mechanism for companies 
participating in international st andardization activities?  Has Malaysia promoted the companies' 
participation in such forums? (p. 45, para. 64)  
                                                     
 
 51 Goods subject to technical regulations include pa lm oil, certain vegetables and flowers, certain 
chemicals and materials, materials related to building and civil engineering, elect rotechnical engineering,  
mechanical engineering, information technology, petroleum and gas, road vehicles, goods related to fire safety 
and prevention, and iron and steel.  In November 2008, technical regulations were imposed on iron and steel, 
covering 57 tariff lines, with a view to ensuring sa fety and to prevent "deceptive practices", when import 
licensing requirements on thes e products were eliminated. 
 52 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=93&Itemid=209 [04.08.2009].  
53 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=79&Itemid=103 [06.08.2009]. WT/TPR/M/225/Add.1 
Page 52  
 
  Answer: 
 
The take up by companies has been limited.  Promo tion of participation in international standards 
continues on an on-going basis. 
 Para 67
 
  Malaysia intends to play a leading role in th e development of halal certification;  there have 
been no changes in halal-related policies during the review period.  All meat, processed meat 
products, poultry, eggs and egg products, domestically produced or imports, must receive halal 
certification from the Department of Islamic Deve lopment Malaysia (JAKIM) to be distributed in 
Malaysia.  The certificate is issued on the join t recommendation of the Malaysian Department of 
Veterinary Services (DVS) and JAKIM following an on-site inspection.    4. As regards "halal" certification, do ILAC's mechanisms for the accreditation of testing and 
calibration permit the necessary tests to be conduc ted through conformity assessment bodies in the 
exporting country?  If not, what is the applicable procedure? (p. 46, para. 67) 
 
Answer: 
 
Inspection for Halal does not involve testing and cali bration.  There are specific standards for Halal 
and sanitary that the plant needs to comply with as incorporated in MS 1500:2009.  
Para 69
 
  Malaysia participates in voluntary mutual r ecognition arrangements under:  the Asia Pacific 
Laboratory Accreditation Cooperation and Intern ational Laboratory Accreditation Cooperation 
(APLAC/ILAC) MRA for testing and calibration;  and Pacific Accreditation Cooperation and the 
International Accreditation Forum Multi-Latera l Agreement (PAC/IAF MLA) for the quality 
management system (QMS) and the environmental management system (EMS) programme.  It also 
participates in the ASEAN Electrical and Electronic MRA as well as ASEAN MRA on Pharmaceutical Inspection.   
 
5. Concerning ILAC's multilateral recognitio n arrangement, does Malaysia automatically 
recognize the results of tests and trials conducted in other countries having signed the arrangement?  
What happens in the case of the IAF? (p. 47, para. 69)  Answer: 
 
Since this MRA is voluntary and not between govern ments, the acceptance and recognition of test and 
calibration reports (under APLAC and ILAC MRA) and certificate (under PAC and IAF MLA) are at 
the discretion
 of the regulatory bodies. 
  
ECUADOR
 
 
Para 12  
 
 Malaysia's trade policies are intended to:  improve market access for goods and services; 
promote the global competitiveness of its exports;  expand and diversify trade with existing trade 
partners;  and explore new markets.  Since its pr evious Review, Malaysia has introduced a notable 
change in its trade objectives:  to promote servi ces and reduce reliance on manufactured exports.  To 
achieve these objectives, Malaysia has unilaterally liberalized its services sector and lowered its  WT/TPR/M/225/Add.1 
 Page 53 
 
 
  applied MFN tariffs.  The Government continues to  consider the WTO a priority in realizing these 
objectives, as the multilateral trading system pr ovides for predictability and transparency in 
establishing trade rules and has a mechanism for trad e disputes.  The authorities state that Malaysia 
will continue to push for greater market access, while recognizing the need to achieve national 
objectives. 
 
 Paragraph 12 states that since its previous Re view Malaysia has introduced a notable change 
in its trade objectives.  1. What are the reasons that prompted Malaysia to change its trade objectives? 
 
Answer :  
 
The shift towards the servi ces sector, stimulating new sources of growth as well diversifying the 
exports base and exports markets is aimed at divers ifying the economy to enhance its competitiveness 
and resilience.  This shift is also aimed at movi ng the economy up the value chain and shifts it from a 
middle income economy to a high income economy. 
 
 This section mentions that Malaysia has an  Economic Partnership Ag reement with Japan, a 
Closer Economic Partnership Agreement with Pakistan, and a Free Trade Agreement with 
New Zealand. 
 
2. Would Malaysia please explain whether there are any differences in terms of goods and 
services coverage between these three types of  trade agreements used by Malaysia? 
 
Answer:  
 
The coverage for Economic Partnership Agreemen t with Japan, Closer Economic Partnership 
Agreement with Pakistan and Free Trade Agree ment with New Zealand is comprehensive and 
substantial, covering trade in goo ds and services as well as investment.  Nevertheless, depth of 
liberalisation would vary depending on the level of development of the FTA partner countries.    
 Para 45
 
  Although considering FDI positive to economic  development and grow th, the Government 
insists that local participation needs to be main tained in some areas in order to promote domestic 
capabilities and capacities.  In particular, sectors with "national interest" (i.e. sectors with an impact 
on national security and overall socio-economic wellbei ng) are not to be liberalized.  Even under the 
reform package launched on 30 June 2009, the repeal of FIC guidelines does not eliminate 
bumiputera participation requirements in banking and in surance, certain manufacturing sectors (such 
as fabrics and apparel of batik, and integrated Portland cement), agriculture, defence, energy, 
telecommunication, and water.  Also, foreign invest ors are not allowed to acquire properties below a 
specified value:  RM 500,000 for commercial prope rties and RM 250,000 (increased to RM 500,000 
as of 1 January 2010) for residential properties.   
 According to paragraph 45, the Government in sists that local participation needs to be 
maintained in some areas in order to promote do mestic capabilities and capacities and, in particular, 
sectors with "national interest" are not to be liberalized.  
3. What are the reasons why the Malaysian Government does not encourage foreign direct 
investment in some areas of the economy?  4. What are the criteria for defining a sector as being of "national interest"? WT/TPR/M/225/Add.1 
Page 54  
 
  Answer : 
 
"National interest" sector refers to sectors which are necessary for national security and public 
interest, as well as those sectors that involve the utilization of public fund and to preserve culture and 
heritage.  The Government needs to ensure some sectors of the economy categorised as national 
interest are protected so as to sa feguard the interest of the locals. 
 
Para 4
 
  Import duty exemptions or drawbacks are pr ovided for intermediate goods used in the 
production of exports so that the import duties do  not feed through to become implicit taxes on 
exports.  The exemptions or drawback s greatly reduce, or eliminate, th e implicit export taxes, but they 
tend to increase the complexity of the border taxation.  Rebates of internal sales taxes are also used to 
ensure that exported goods are not taxed tw ice (in both Malaysia and importing country). 
 
 Paragraph 4 states that import duty exemptions  or drawbacks are provided for intermediate 
goods used in the production of exports.  5. What do these import duty exemptions or drawb acks consist of in qua litative and quantitative 
terms?  
Answer :  
 
Qualitative
:  
- Evaluation of applicants for drawback faciliti es is processed within 21 days.  Drawback 
claims are speedily processed within 7 days (only for applicants with Express Claims Status).   
- Exemption is granted immediately upo n submission of complete documents. 
 Quantitative
: 
- Drawback or exemption is based on total value of duty involved. 
 
Para 9  
 
 Government-linked companies (GLCs) continue to play an important role in the Malaysian 
economy through their involvement in the provision  of essential services, such as transport, energy, 
telecommunications, and financial services.  The Gove rnment aims to improve productivity of GLCs.  
As in the case of government procurement, GLCs  are encouraged to pu rchase from locally owned 
businesses.  
  According to paragraph 9, Government-linked co mpanies continue to play an important role 
in the Malaysian economy through their involvement  in the provision of essential services, such as 
transport, energy, telecommunications, and financial services.  
6. Does the structure of Government-linked companies allow any form of participation by the 
private sector?  
Answer:  
 
As far as the GLC Transformation (GLCT) Pr ogramme is concerned, all 34 GLCs under the 
programme are listed entities, which effectively means  the private sector are participating together as 
shareholders, whilst the Governme nt-linked Investment Companies (GLICs) hold various percentages 
of the shares.  As listed entities, GLCs are bound by the market governance framework as well as the 
regulatory framework that are relevant to the in dustry where the GLCs operate.  Under the GLCT  WT/TPR/M/225/Add.1 
 Page 55 
 
 
  Programme, the GLC Boards are required to adopt a shareholders' perspective, while balancing all 
valid stakeholder interests, incl uding minority shareholders. 
 Private sector participation has, in recent years , increased as the Government continues its 
divestment trends.  Aside from divestments, partn erships between GLCs and the private sector (both 
local and foreign) are not new.  Although GLCs have been traditionally entr usted with the task of 
providing mission-critical services, private sector  firms have a long establis hed presence in these 
industries as well, providing a welcomed competitive edge to the GLCs, to ensure that the GLCs strive 
to continuously be competitive in regard to their cost structure, operations, products and services to 
their customers, shareholders and stakeholders. 
 
Para 26
 
  There has been little change in Malaysia's tari ff bindings since its previous Review;  about 
20% of Malaysia's tariff lines are unbound.
54  The relatively high proportion of unbound lines creates 
a degree of unpredictability as there is signifi cant scope for the authorities to raise tariffs.55  T h e  
authorities maintain that they will consider increasing  the binding coverage s ubstantially in the Doha 
round of negotiations.   Paragraph 26 notes that about 20% of Malaysia's tariff lines are unbound. 
7. Would Malaysia please explain why 20% of its tariff lines remain unbound if, in practice, this 
is not the means whereby tariffs are raised? 
 Answer :  
 
Although 20% of tariff lines remain un bound, Malaysia has no intention to  raise the tariff in the near 
future as Malaysia is committed to lib eralise its tariffs under the WTO. 
 
Para 31
 
  Since 1 April 2008, Malaysia has applied tariff-ra te quotas (TRQs) on 18 products to meet the 
requests of domestic small producers.  As a result,  these items, whose tariff rates used to range from 
0% to 5%, are now subject to in-quota rates ra nging from 0% to 25% and out-of-quota rates ranging 
from 20% to 90%.  The authorities maintain that they had suspended the implementation of TRQs, which was part of Malaysia's tariff concessi ons during the Uruguay R ound, until March 2008. 
  According to paragraph 31, Malaysia ha s been applying tariff-rate quotas (TRQs) on 
18 products to meet the requests of domestic small producers. 
 8. Which are the 18 products on which Malaysia ha s been applying TRQs at the request of 
domestic small producers?  9. Is there a mechanism for channelling requ ests from domestic small producers to the 
Government? 
                                                     
 
 54 Following its participation in the Information Technology Agreement (ITA), Malaysia reduced and 
bound at duty-free levels its import duties on a number of products (WTO document WT/Let/176, 19 September 1997).  Malaysia revised its schedule of tariff bindings to reflect the Second Amendment to the 
Harmonized System Nomenclature (HS96);  the revised schedule was made effective on 6 September 2005.  
WTO document WT/Let/498, 11 October 2005.  
55 The authorities maintain th at unbound tariffs give them some space to raise tariffs, but this has rarely 
been done. WT/TPR/M/225/Add.1 
Page 56  
 
  10. What are the criteria for accepting or refusing a request from domestic small producers for the 
application of TRQs?  11. Which domestic production sectors benefit from the application of TRQs? 
 Answer:  
 
Please refer to the Table AIV.1 in Chapter 4 of the WTO Secretariat Report for products or tariff lines 
which have been subjected to TRQs since April 2008.  
Feedback from producers is obtained through consu ltation with the relevant stakeholders.  The 
Government will take into account the views of a ll relevant stakeholders before implementing TRQs, 
taking into account factors such as the level of the development of the industry, size of the small 
holders and income level.   
 Para 3
 
  Malaysia's manufacturing sector is relativel y open to trade and foreign investment; the 
average tariff for manufacturing products was 8.7% in 2009 and 100% foreign equity participation is 
generally allowed.  However, a notable excepti on is the automotive sector, which has long been 
sheltered from foreign competition by both tariff and non-tariff measures.  Although the sector has 
been successful in taking a large share of the domestic market, its exports are modest, indicating a 
lack of external competitiveness.  In October 2009, following a review of Malaysia's National 
Automotive Policy, the MITI announced liberali sation measures;  the Government intends to 
encourage investment, promote exports, and enhan ce the competitiveness of Malaysia's cars in the 
global market.  Nonetheless, it seems the sector conti nues to be protected;  in particular, in response to 
an economic downturn after the global crisis, reba tes are given for buyers replacing vehicles over 
ten years old with national brands.   Paragraph 3 states that rebates are given for buyers replacing vehicles over ten years old with 
national brands.  
12. Would Malaysia please provide further details conc erning the types of rebate referred to in 
the Secretariat Report, which correspond to an econom ic incentive for buyers to replace vehicles over 
ten years old with national brands?  13. Would this constitute a violation of the principle of national treatment? 
 
Answer:  
 The amount of rebate given was RM 5,000 per vehicle.  The measure was terminated in 
November 2009. 
 Para 22
 
  The Government continues to improve the investment environment in manufacturing, and both border and internal measures are used as part of Malaysia's industrial development policy.  
Malaysia's import duties are mostly ad valorem , although a few specific duties are imposed.
56  I n  
2009, 53.5% of tariff lines for manufacturing imports (ISIC Rev 2) were duty free, and the average 
tariff for manufacturing products was lowered fro m 9.6% in 2005 to 8.7%.  The Government 
encourages manufacturers to obtain raw material s as well as machinery and equipment locally.  
                                                      
 56 Non- ad valorem  duties apply to 55 lines at the HS 9-digit level for manufacturing imports.    WT/TPR/M/225/Add.1 
 Page 57 
 
 
  However, raw materials, components, and machiner y and equipment that are not available locally 
may be imported duty free.  In addition, some  manufactured goods are subject to non-automatic 
import licensing (Chapter III):  these include some motor vehicles and motorcycles, batik sarong, and 
some steel flat product.57 
 
 According to paragraph 22, the Governme nt encourages manufacturers to obtain raw 
materials as well as machinery and equipment locally.  14. Would Malaysia please specify what mechanis ms the Government employs to encourage 
manufacturers to use domestic raw materials and equipment? 
 
Answer:  
 To enhance its competitiveness in the global market, Malaysia has pr ogressively reduced eliminated 
import duties on raw materials and equipment.  Loca l manufacturers can either source raw materials 
and equipment locally or from abroad. 
 No specific mechanisms are used to encourage  manufacturers to use domestic raw materials and 
components.  Duty exemptions can be considered  for raw materials and components that are not 
available locally regardless of whether the finishe d products are produced for the export or domestic 
market.  The exemption is granted to both local as well as foreign owned manufacturing companies.  
 Para 24
 
  However, Malaysia maintains certain export restrictions:  a number of manufactured goods 
are subject to export licensing and export taxes, with a view to discouraging their exportation 
(Chapter III).
58  Reduced exports may divert some supply of these inputs to the domestic market, 
leading to downward pressure on domestic prices  and thus acting as an implicit subsidy for the 
domestic processing industries (Chapter III).   In paragraph 24, which relates to manufact uring, the Secretariat Report indicates that 
Malaysia maintains certain export restric tions on a number of manufactured goods. 
 
15. What are the manufactured goods subject to licensing or export duties and what percentage of 
locally manufactured goods is purchased domestically? 
Answer:  
 
For manufactured products, only exports of cement are subject to export licence requirement to 
ensure the quality of exports as well as sufficient s upply of cement in the country.  Approximately 78% 
of locally manufactured cement is  sold in the domestic market. 
 
Para 36
 
 
 The approval procedure for foreign investment has also been simplified.  Until June 2009, 
foreign acquisitions, mergers, and takeovers of Malaysian companies had to be approved by the 
Foreign Investment Committee (FIC).  Howeve r, on 30 June, the Government announced the 
deregulation of the FIC guidelines, including the repeal of FIC's bumiputera  participation 
requirement.  Thus, the FIC no longer processes any acquisitions, mergers or takeovers;  nor does it 
                                                      
 57 WTO document G/LIC/N/3/MYS/4, 17 October 2008. 
 58 For 2009, export duties apply to 62 tariff lines at the HS 9-digit level, mainly covering basic metal 
products. WT/TPR/M/225/Add.1 
Page 58  
 
  impose any equity conditions, alth ough the equity conditions impo sed by sector-specific regulators 
continue to apply.  Equity restrictions are no l onger imposed on sectors not considered "strategic";  
strategic sectors, nonetheless, will not be liberalized  (Chapter II(6)).  The Government also set up a 
private equity fund, Ekuiti Nasional Berhad (EKU INAS) to promote investment in sectors with 
growth potential (notably in services). 
 
16. What are the Committee's functions? 
 
Answer:  
 
The Foreign Investment Committee was deregulated on 30 June 2009. 
 ECUADOR (ADDITIONAL)
 
 
Para 7  
 
 For the purpose of enhancing transparency and disseminating regulatory information, the Government is considering an official on e-stop website for laws and regulations.   
  According to paragraph 7, Mala ysia is considering an official one-stop website for laws and 
regulations. 
 
1. When does Malaysia expect this  activity to be implemented? 
 
Answer:  
 
The first phase of publishing the Laws of Malaysi a has been implemented, and currently awaiting for 
the system to be further enhanced.  Further de tails are available at http://www.agc.gov.my. 
 
Para 2
 
  The tariff is the main border measure affecting imports.  The simple average applied MFN 
tariff was 7.4% in 2009;  about 60% of tariff lines were duty free.  Around one fifth of tariff lines 
were unbound, and the simple average bound MFN rate  was roughly double the applied rate, leaving 
considerable scope for the authorities to employ prot ective measures, such as raising tariffs within the 
bound levels.  Although the authorities have raised tariffs in only a few cases, these involve tariff rate 
quotas, which Malaysia has started applying to several tariff lines since 1 April 2008.
59  Patterns of 
MFN tariff dispersion and escalation have changed little since 2006.  Malaysia grants preferential 
access to imports from Japan, China, the Republic of Korea, Pakistan, and other ASEAN countries 
under preferential bilateral/regional free-trade agreements.     Paragraph 2 notes that "[a]round one fifth of  tariff lines [are] unbound" and emphasizes "the 
simple average bound MFN rate" … and the "scope fo r the authorities to employ protective measures" 
…" 20% … unbound" (paragraph 26 - Tariff bindings). 
 2. Where does the binding of this large number of tariff lines stand in the Doha Round 
negotiations?  
                                                     
 
 59 The authorities maintain that these tariff rates are within Ma laysia's commitments under the Uruguay 
Round.  WT/TPR/M/225/Add.1 
 Page 59 
 
 
  Answer:  
 
Malaysia is currently reviewing the binding of unbound lines in line with the on-going Doha 
negotiations. 
 
Para 3  
  Apart from import prohibitions, implemented, inter alia,  for national security, religious, and 
environmental reasons, various non-ta riff border measures are also used as instruments of Malaysia's 
trade and industrial policy.  A considerable portio n of Malaysia's tariff lines are subject to import 
licensing, most of which is non-automatic.  While automatic licensing is intended for data collection, 
the authorities maintain that non-automatic licences ar e mainly for sanitary an d phytosanitary reasons 
(for agriculture);  non-automatic licensing is also intended to regulate the flow of imports and to 
promote selected strategic industries identified fo r certain socio-economic objectives.  During the 
period under review, Malaysia initiate d a variety of anti-dumping actions against 10 Members;  in the 
same period, 13 Members took anti-dumping actions  against Malaysian pro ducts.  Malaysia has 
introduced a Safeguards Act 2006 and Safeguards Regulations 2007.  Para 36
 
 
 Data provided by the authorities indicate that  about a quarter of Malaysia's tariff lines 
(principally with regard to an imal and vegetable products, wood, machinery, vehicles and transport 
equipment, and arms) are subject to import licensi ng, most of which is non-automatic.  Automatic 
licensing is intended for data collection.  The au thorities maintain that non-automatic licences are 
mainly for sanitary and phytosanitary reasons (fo r those concerning agriculture).  Non-automatic 
licensing is also intended to regulate the flow of imports and to promote selected strategic industries 
(such as passenger and commercial vehicles and motorc ycles) that have been identified to achieve 
certain socio-economic objectives;  imports of CF Cs are regulated in accordance with Malaysia's 
obligations under the Montreal Protocol.60 
 
 According to paragraphs 3 a nd 36, Malaysia maintains import prohibitions on a considerable 
portion of tariff lines through non-automatic import licensing for sanitary and phytosanitary reasons, 
in order to regulate the flow of imports a nd to promote selected strategic industries. 
 3. Does Malaysia have plans in the short term  to eliminate such barriers to trade? 
 
Answer:  
 
Malaysia has progressively reduced import licensing requirement to facilitate trade and industry. 
Malaysia will continue to study and conduct consultations with the i ndustries on future elimination of 
import licensing requirements taking into cons ideration national socio-economic, security and 
religious interests.  
Para 5
 
  Explicit export taxes and export promotion measures  also continue to play an important role 
in Malaysia's industrial policy.  Export taxes and/ or export licence requirements, which are applied to 
certain goods (such as timber), have the effect of discouraging the export of those products and 
reducing their domestic prices, thereby assisting dow nstream processing of the products concerned.  
Export promotion measures include export processing zones, concessionary credits, insurance, and 
guarantees, as well as government-sponsored promotion and marketing assistance.   
                                                     
 
 60 WTO document G/LIC/N/3/MYS/4, 17 October 2008. WT/TPR/M/225/Add.1 
Page 60  
 
  Paragraph 5, export promotion measures. 
 4. Would Malaysia please elaborate on the conditions to be met in order to benefit from such 
measures?  Answer:  
 
In general, export promotion measures are aimed at  developing SMEs to facilitate exports of SMEs. 
For details please refer to http://matrade.gov.my and  http://smecorp.gov.my.   
 5. Would it also elaborate on technical assistance activities and what types of activity are carried 
out under this programme?  
Answer:  
 
Technical assistance include training, product devel opment and promotion.  For details please refer 
to http://matrade.gov.my and  http://smecorp.gov.my.   
 
Para 11
 
  Malaysia does not have a comprehensive compe tition law;  however, it is in the process of 
drafting such a law.   
 Para 81
 
  Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.
61  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.62  The authorities state that Malaysia  is currently in the final process 
of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.
63  It is not clear whether GLCs will be 
covered by the FTPB and FTCB.  
 According to paragraphs 11 and 81, Malaysia does not have  a comprehensive competition 
law. 
                                                     
 
61 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
62 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any 
conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or 
market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.   
63 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public.  WT/TPR/M/225/Add.1 
 Page 61 
 
 
  6. When does Malaysia expect this law to be enacted? 
 
Answer:  
 
The policy is currently being formulated and the draft legislation is still in the drafting stage.  Once 
they are finalised, they would have to be presente d to the Cabinet and then Parliament for 
three readings before getting the royal assent from th e King.  The length of the process can take at 
least six months provided there are no objections to the various issues la id down in the law. 
 
Para 23  
 
 Malaysia extends at least MFN treatment to a ll of its trading partners while providing tariff 
preferences to China (under th e ASEAN–China FTA), Japan (unde r the Malaysia–Japan FTA and 
ASEAN–Japan Comprehensive Economic Partnership (CEP)), Pakistan (under the Malaysia–Pakistan 
FTA), the Republic of Korea (under the ASEAN–Ko rea FTA), and other A SEAN countries (under the 
ASEAN Common Effective Preferential Tariff (CEPT)).64  The simple average applied MFN tariff 
rate was approximately 7.4% in 2009, compared wi th 8.1% in 2005;  the simple average bound rate 
was 15.6% (Tables III.1 and AIII.1).  Malaysia re views its tariff rates annually, mainly during the 
process of formulating its national Budget:  the authorities seek feedback from industry associations 
during the review.  Tariff rates are also reviewed  during multilateral, regional, and bilateral trade 
negotiations. 
 
 According to paragraph 23, Ma laysia extends at least MFN treatment to all of its trading 
partners;  however, according to paragra ph 2, a high percentage of lines is unbound. 
 7. Would Malaysia please specify what criteria ar e used for the application of tariffs (to 
countries with which it has no trade agreements) on these unbound tariff lines;  how high do these 
tariffs go and to which products do they apply?  
Answer:  
 
For the unbound tariff lines the applicable duty is the MFN duty. 
 
Para 46
 
  Export proceeds must be repatriated to Malaysia in full as per the sales contract within six months from the date of export.  R esidents of Malaysia require permission ( ex ante ) to offset 
export proceeds against other payables due to non-resi dents, or to receive export proceeds later than 
six months from date of export.  Since 2005, resi dents have been allowed to retain any amount of 
foreign currency export receipts maintained with  licensed onshore banks.  Permission (ex ante) is 
required for residents to retain export proceeds in  foreign currency accounts in international Islamic 
banks or offshore banks.   
 According to paragraph 46, palm oil and select ed palm products, inter alia, are subject to 
export licensing (paragraph 53).  8. Does Malaysia have plans in the short term to dismantle this kind of measure, which directly 
affects exports? 
                                                     
 
 64 No exact data regarding the value of imports subject to MFN applied ta riff rates, or preferential tariff 
rates were provided by the authorities.  Malaysia's imports from other ASEAN countries, Japan, Pakistan, 
China, and Korea, with which it has FTAs, accounted for about 55% of total imports in 2008 (the share only 
serves as a proxy for the share of imports subject to preferential tariff rates).    WT/TPR/M/225/Add.1 
Page 62  
 
  Answer:  
 
These measures will be reviewed periodically. 
 
Para 48
 
 
 The number of lines subject to Malaysia's e xport taxes has remained largely unchanged since 
its previous Review.  In 2009, out of 10,389 tariff lines at the 9-digit level, 515 lines were subject to 
export duties;  most of the rates are ad valorem,  ranging from 5% to 20% (except for nine lines, which 
are subject to specific rates).65  Products subject to export taxes include timber, live animals, ash and 
residues, precious metals, copper, and ferrous waste and scrap.  According to the authorities, the main 
objective of these taxes is to promote the u se of locally produced commodities in domestic 
downstream industries as well as to conserve the envi ronment.  The authorities are of the view that 
export taxes on timber allow them to better manage sustainable development of Malaysian forest.  
However, such taxes tend to increase the domes tic supply of the products concerned, and as a 
consequence, their domestic prices tend to be lowe r than would otherwise be the case;  thus, export 
taxes assist domestic downstream processing of the produc ts concerned.  In 2007 (the latest year for 
which data were made available), Malaysia 's revenue from export duties amounted to 
RM 2,296 billion, up from RM 1,133 billion in 2001.   Paragraph 48 deals with export taxes, charges,  and levies, the main objective of which is "to 
promote the use of locally produced commodities in  domestic downstream industries as well as to 
conserve the environment", as a result of which domest ic prices tend to be lower than those of like 
non-Malaysian products from third countries.  9. Could Malaysia please provide further information on the subject? 
 
Answer:  
 
The imposition of export tax and licensing requiremen t is to ensure adherence to sustainable forest 
management, conserve the limited forest resource an d ensure adequate supply of raw materials as 
well as for food security.  
 
The Government sets an annual coupe for the States to prevent over logging. Export taxes will ensure 
adequate supply of logs for domestic consumption wh ich will in turn avoid the need to source for 
supply through over logging and illegal means. 
 10. Could this be regarded as unfair competition vis-à-vis  imported products? 
 
Answer:  
 
The purpose of export tax is not to create unfair competition but rather to conserve the environment 
through sustainable production. 
 
 
                                                     
 
 65 Most lines are subject to duty rates betwee n 5% and 15%.  Only one item is subject to ad valorem  
duty of 20%.  In 2006, 512 lines out of 10,580 tariff lines (based on the 2002 Harmonized System (HS)) were 
subject to export taxes.  WT/TPR/M/225/Add.1 
 Page 63 
 
 
  EGYPT  
 
Para 14  
 Reform of corporate sector, including government-linked companies  
 
 "The Government continues to play an active role in the development and industrialization of 
the Malaysian economy... ......................  N onetheless, the Government appears to place more 
emphasis on competition than previously, making efforts to draft competition-related laws 
(Chapter III(4)(vii)).  The corporate sector too has been strengthened further by, inter alia , the 
introduction of revised rules on corporate govern ance and an amendment to the Companies Act 
introducing more stringent requirements for corpor ate executives.  Concu rrently, "the Putrajaya 
Committee on GLC High Performance" (a committ ee comprising Khazanah, the Government's arm 
for holding and overseeing 34 partially state-owned firms, or government-linked companies (GLCs), 
and other government-affiliated entities), has be en pursuing programmes to make GLCs more 
competitive, in accordance with the GLC Transformation Program."   
 1. Can Malaysia provide more information concerning the GLC Transformation Program? 
 
Answer:  
 
Details on each of the G-20 performance can be found in Appendix V of the "GLC Transformation 
Programme Mid-Term Progress Review" publishe d in March 2009.  The 2010 update will be 
published by end of 1Q10 or early 2Q10 (ple ase visit the Putrajaya Committee on GLC High 
Performance website, http://www.pcg.gov.my/).   
2. Can Malaysia explain whether the competition rela ted laws are already issued and applied, if 
not when?  
Answer:  
 The Competition Laws are in the final stages of dr afting and are targeted for completion in 2010. 
 
Para 15
 
  "Malaysia has continued to shift customs cl earance from clearance-based controls to post 
clearance audit controls;  it has also been adopti ng measures to coordinate the activities of the various 
agencies involved in border controls". 
 3. What are the measures that have been taken by  Malaysia to achieve the coordination among 
the relevant agencies involved in border controls in this regard? 
Answer:  
 
The measures include:  
 1. Setting up of Customs, Immigration, Quarantines and Security (CIQS) under one roof;  and 2. Integration of system between perm it-issuing agencies and Customs (e-permit). 
 Para 21
 
  The Customs (Values of Imported Completely Built-up motor vehicles (New)) Order 2006 gives the Minister of Finance power to fix the valu e of imported CBU cars, as  deemed appropriate, in WT/TPR/M/225/Add.1 
Page 64  
 
  accordance with Section 12 of the Customs Act 1967, with a view to tackling under-declaration.  
Importers of CBU cars must submit information in cluding the transaction value of the goods, to the 
Valuation Section of Customs Headquarters.  A committee comprising officers from the Ministry of 
Finance review all documents and prices submitted before recommending the value to the Minister for 
approval.  
 
4. Can Malaysia explain how does fixing "the  value of imported CBU cars, as deemed 
appropriate, in accordance with Section 12 of the Cu stoms Act 1967" conform w ith the provisions of 
the WTO Agreement on Customs valuation?  Answer:  
 
All the articles of the WTO Agreement on Customs Va luation were considered in the Customs (Rules 
of Valuation) Regulation 1999.  The value fixed under Section 12 of the Customs Act 1967 normally will be based on the panel proposal.  Panel will re view all the relevant importation documents and 
data or information which is available in Malaysia.   Customs value will be derived on the basis of 
hierarchy order of valuation rules as follows:  
a) Transaction value or Transaction value plus  adjustment under regulation 4 and 5; 
b) The transaction value of identical goods under regulation 6; 
c) The transaction value of similar goods under regulation 7; 
d) The deductive value of the imported goods under regulation 8; 
e) The computed value of the imported goods under regulation 9 (not applicable in the 
cases of imported CBU cars);  and 
f) Flexible valuation allowed 
 Para 36
 
  It is mentioned that Malaysia imposes non-automatic import licences on passenger and 
commercial vehicles and motorcycles.  5. What are the reasons for this and what are th e procedures to obtain an import license in that 
regard? 
 Answer :  
 
The non-automatic import licences on passenger and commercial vehicles and motorcycles primarily 
used as a monitoring and data collection measure.  
Application can be made obtain through online application  by visiting MITI’s webpage at 
http://www.miti.gov.my 
 
Para 75
 
 
 "Malaysia's government procurement continues to be used as an instrument to support 
national objectives, such as encouraging greater participation of the bumiputera in the economy, 
transfer of technology to local industries,.."  
6. Egypt would like to ask Malaysia to explai n how it uses the government procurement as an 
instruments to support the promotion of the lo cal suppliers, including SMEs?  And explain its 
experience in transferring the technology to local industries?   WT/TPR/M/225/Add.1 
 Page 65 
 
 
  Answer:  
 
Government procurement is a tool to increase the opportunities of local suppliers and contractors, to 
boost the domestic economy and increased the participa tion of locals in economic development, as 
well as to develop capacity building.  Government is also encouraging SME to come on board and 
participate in Government procurem ent for capacity building.   
 Local suppliers including SMEs will benefit from transfer of technology through offsets program.  
This is not a mandatory requirement, but is enco uraged as it will help local companies to gain 
knowledge and expertise on new technologies.  Offset s requirement is imposed  on selective high value 
procurement, normally for defence items.   
 
Para 36
 
  "With regard to the private equity fund that  the government set, Ekuiti Nasional Berhad 
(EKUINAS) to promote investment in sectors w ith growth potential (notably in services)". 
 7. Which sectors does Malaysia cons ider of growth potential? 
 
Answer :  
 Malaysia has identified the services sector as a ma jor contributor to the growth of the nation 
economy.  Sectors with growth potential include:  
− Business and Professional services; 
− Logistics services; 
− ICT services; 
− Distributive Trade services; 
− Construction services; 
− Education and Training services; 
− Healthcare services; and 
− Tourism services. 
 Para 43
 
  "With regard to the precautionary measures that the government has been adopting to overcome the financial crisis such as providing full  guarantee for bank deposits.  This full guarantee 
was mentioned to be provided until December 2010".  
8. How the Government of Malaysia intend to deal with such measures where the global 
economic environment is witnessing recovery signs?  Answer :  
 The precautionary measures introduced by the Government are intende d to preserve overall 
confidence in the Malaysian financial system in view  of the heightened uncertainties in the global 
financial system, rather than to address weaknesses and vulnerabilities in the domestic system.  These 
measures include the finite period Government blanket guarantee on deposits placed with banking 
institutions regulated by Bank Negara Malaysia. 
 WT/TPR/M/225/Add.1 
Page 66  
 
  Malaysia also implemented additional measures to ensure continued smooth functioning of financial 
intermediation in order to support economic reco very and future growth.  These encompass the: 
 
− extension of Bank Negara Malaysia liquid ity facility to insurance companies and 
takaful operators; and 
− ensuring of adequacy of US dollar liquidity particularly for trade financing. 
 In addition, Bank Negara Malaysia also allowed a one-off reclassification of trading securities to the 
investment portfolio, in line with the amended In ternational Accounting Standards 39 (this flexibility 
has expired at end-2009).  These measures were not widely utilised given th e sustained capacity of the Malaysian financial 
institutions during the period. 
 Malaysia is closely monitoring domestic and global developments to assess the need and timing to 
remove such measures, while ensuring continued access to credit and funding, as well as preserving 
overall financial stability at all times.  A coordinated  strategy for a scheduled exit from the blanket 
deposit guarantee by the end of 201 0 is being mapped out by a tri partite working group consisting of 
the Hong Kong Monetary Authority, Bank Negara  Malaysia, and the Monetary Authority of 
Singapore. 
 
Para 66
 
 
 "Malaysia's fixed-line market continues to be  dominated by Telekom Malaysia Berhad (TM), 
a government-linked company, accounting fo r 98% of the market.  Competition in 
telecommunications (particularly in fixed-line services) is limited".  9. Does Malaysia intend to change the current situ ation in telecommunications sector and allow 
for competitors to access the market? 
 
Answer :  
 
Malaysia already has an access framework that allows other service providers to access fixed 
network.  In addition, Malaysia has a technology  neutral licensing framework that allows service 
providers to deploy fixed network.  
 
Para 71
 
  Regarding air transport services, "The Gove rnment is the majority shareholder of MAS 
Malaysian Airlines (69%), while foreign investors hold 1.88%." 
 10. What form does the rest of the ownership take? 
 Answer :  
 
As at 31 December 2009, the shareholding of MAS is: 
− Government-69.33%;  
− Local institutions and Individuals-27%;  and 
− Foreign investors-3.67%. 
  WT/TPR/M/225/Add.1 
 Page 67 
 
 
  Para 8  
  "The Government maintains price supports , and grants subsidies to inputs through 
government service programmes to promote the deve lopment of agriculture (Table IV.2).  Among 
these support programmes, the financing of a minimum price for rice has persistently been the biggest 
outlay (or one of the biggest), although in 2008 it was surpassed by support allocated on drainage and 
irrigation facilities (Box IV.1).  In addition, Malaysia  maintains retail price controls on:  sugar, some 
milk products (e.g. sweetened c ondensed milk), wheat flour, cooking oil, some vegetables, and 
chicken (Chapter III).  Soft loans are available in the form of:  3F (Fund for Food), small and medium 
industries fund, and various other schemes, such as  the oil palm replanting scheme and the paddy 
credit scheme." 
 11. Can Malaysia elaborate more on how the program  of financing of minimum price for rice 
operates and how it complies with the Green Box provisions of the Agreement on Agriculture? 
 
Answer :  
 
While the Government is reviewing the program of financing of minimum price for rice (GMP) it is to 
note that there have been no Government spending to  maintain the program which has been in 
existence since 1949 and in reality it acts as a "psychol ogical" floor price for farmers.  Further, since 
1995, paddy price records showed that nationa l paddy prices had not fallen below the GMP.  
 
Malaysia is a rice importing country where it produces onl y 65% to 70% of its domestic consumption. 
Between [600,000 to 1 million tons] are imported ann ually to meet this need.  The import of rice has 
increased steadily from [518,659 tons in 2004 to 1, 097,109 tons in 2008], which indicates that rice 
can be easily exported to Malaysia.  Under such a circumstance, the policy instruments utilized for 
this sub-sector are unlikely to contribute  to distortions in global rice trade. 
 
12. Can Malaysia provide more deta ils on the operation of its policy of retail price controls on:  
sugar, some milk products (e.g. sweetened condensed milk), wheat flour, cooking oil, some vegetables, and chicken?  
 
Answer :  
 
Price control on these items have been lifted: 
− bread (1/1/10); 
− sweetened condensed milk (1/4/09);  and 
− chicken (1/6/08). 
 Some essential goods such as general purpose wheat flour, cooking oil (pure and blended palm oil), 
petrol, diesel, and liquefied petroleu m gas, are subject to administra tive price control.  The purpose 
of the control is to ensure that prices of essen tial goods are capped at a reasonable level.  The price 
trends of these goods are monitored and c onsidered before the ceiling price is set.   
Para 43
 
 
 "Malaysia's only state-trading enterprise, w ithin the meaning of Article XVII:4(a) of 
GATT 1994, remains Padiberas Nasional Berhad (BER NAS).  BERNAS has the sole right to import 
rice until 2011, with an option of a five-year extensi on;  it also performs social obligations on behalf 
of the Government, such as maintaining a rice st ockpile, purchasing paddy from farmers, and acting 
as a buyer of last resort for paddy farmers". WT/TPR/M/225/Add.1 
Page 68  
 
  13. Can Malaysia provide more details concer ning the operation of BERNAS and how it 
complies with the WTO rules including Article XVII of GATT 1994?  Answer :  
 Currently, commercial activities of BERNAS include:  i) paddy seed production,  
ii) paddy farming,  
iii) paddy procurement and rice processing,  
iv) distribution and trading of rice and its by products;  and  
v) rice importation.  
 The non-commercial activities (performed on behalf of Government) include:  
i) To conserve, maintain and manage the National Paddy/Rice Stockpile; 
ii) To undertake the purchase of paddy from paddy farmers at the Guaranteed Minimum Price 
(GMP) as determined by Government from time to time; 
iii) To act as the Buyer of Last Resort for paddy farmers; 
iv) To undertake the management of the disbursem ent of subsidies to paddy farmers under the 
Paddy Price Subsidy Scheme;  and 
v) To undertake the management of th e Bumiputera Rice Millers Schemes. 
 The importation of rice as part of the food security a rrangement of the country is closely linked to the 
rice stockpile operations as well as Malaysia im port rice to supplement the deficit of the local 
production.  This arrangement is to ensure su fficient supply and price stability of rice.  
 
BERNAS is also subject to the same laws and rule s as other rice millers and traders in the country. 
Nevertheless, the Government is reviewing its current policy on BERNAS.  
Para 48
 
 
 "On 22 April 2009, the Government announced the liberalisation of 27 subsectors in the 
health and social services, tourism services, tr ansport services, business services and computer and 
related services."  14. Does the Malaysian government intend to reflect the liberalisation of these 27 subsectors in 
its WTO final offer in the current round of negotiations? 
 Answer :  
 
Malaysia has already made commitments in mo st of the sub-sectors under the Uruguay Round. 
Further improvements will be made to these areas for the Doha Round.  
 
 EUROPEAN UNION
 
 
WTO Secretariat Report 
 
Para 12  
  The Government has continued to take action to address structural weaknesses, by fostering 
improvements in productivity, and thereby establish a more solid basis for future growth.  The Ninth  WT/TPR/M/225/Add.1 
 Page 69 
 
 
  Malaysia Plan aims at 6% annual growth in 20 06-10 with the ultimate objective of becoming a fully 
developed nation by 2020.  The goals of the "Na tional Mission", a policy framework for the period 
2006-20, which includes the Ninth Malaysia Plan (NMP), are:  moving the economy up the value chain;  raising Malaysia's capacity for know ledge and innovation;  addressing persistent 
socio-economic inequalities;  improving the standa rd and sustainability of quality of life;  and 
strengthening the institutional and im plementation capacity of the country .  In the mid-term review of 
the NMP in 2008, with a view to achieving th e National Mission, the authorities stressed, inter alia,  
the importance of pursuing multilateral trad e arrangements and free-trade agreements. 
  According to our information, the new Econom ic Model (NEM) is about to be unveiled in 
early February 2010.  
 1. Could Malaysia describe the main thrust and the main elements of the NEM? 
 
Answer:   
 
The NEM aims to promote innovation, creativity and transforming the economy from a middle income 
economy to a high income economy.  The Gover nment is expected to make an announcement in 
February 2010.  Details will be made  public during the announcement.  
 
Para 22
 
 
 Malaysia has substantial trade with APEC member s (Tables AI.3 and AI.4).  It participates in 
the APEC forum and supports  its open regionalism goals.66  In 2007, APEC members formulated an 
Investment Facilitation Action Plan (IFAP) for 2008- 10, to enhance the investment climate and 
emphasize capacity building to narrow the economic  gaps among members.  In accordance with the 
IFAP, Malaysia is adopting measures to enhance the transparency and predictability of its trade and 
investment regime.67  Malaysia, like other APEC members, al so submits an annual Individual Action 
Plan (IAP);  its latest IAP plan was submitte d in 2008, with its peer Review in 2009. 
 2. Could Malaysia share with all WTO member s the results of the 2009 peer review of 
Malaysia's Individual Action Plan (IAP) within the APEC IFAP framework? 
 
Answer:  
 Resulting from the 2009 Malaysia's Individual Ac tion Plan (IAP) peer review, Malaysia generally 
maintains an open and transparent system which c ontributes to a predictable trade and investment 
environment in the APEC region.  Malaysia's current me asures are in-line with the APEC IFAP 
principles which include elements of predictability and transparency. 
 
Para 24
 
  The ASEAN Free Trade Area (AFTA) aims at  eliminating import barriers on all products 
within the region for free flow of goods.  Tariff elimination is undertaken through the Common 
Effective Preferential Tariff (CEPT) Scheme.  Mala ysia, as one of the ASEAN-6, has committed to 
                                                     
 
 66 To achieve Bogor Goals, Trade Facilitation Acti on Plan (TFAP) II set a target to reduce trade 
transaction costs by 5% across the APEC region from 2007 to 2010, inter alia , by establishing an APEC single 
window, facilitating travel in a secure environment, and protecting data privacy.  Before this, the target under 
Trade Facilitation Action Plan (TFAP) I was to reduce tr ade transaction costs by 5% across the APEC region 
from 2002 to 2006.  
67 Further, in 2008, the APEC's Committee on Trade and Investment (CTI) began its study of a possible 
Free Trade Agreement for Asia Pacific (FTAAP).  The author ities state that this study is still in its initial stage. WT/TPR/M/225/Add.1 
Page 70  
 
  eliminate tariffs on 99.4% of its tariff lines by 1 January 2010.
68  Malaysia's average tariff under the 
AFTA was 0.95% in 2008, down from 1.04% in 2007.69  The basic principle for granting origin status 
to a product is 40% regional/local-c ontent threshold.  Free flow of goods also requires the removal of 
non-tariff barriers (NTBs) and the adoption of trad e facilitation measures.  Removal of all NTBs by 
2010 is required for ASEAN-5, including Malaysia.70  Trade facilitation measures involve 
harmonizing product standards and technical regulati ons, and establishing mutual recognition of tests 
and certificates.71 
 3. What concrete, effective steps has Malaysia take n to fulfil the objective of removing all NTBs 
by 2010, as foreseen within the framework of ASEAN? 
 
Answer:  
 Malaysia does not impose NTB, however Malaysia has removed import licensing requirement for: 
− 29 products under HS Code 84 in the first tranche (2008); 
− 6 products under HS Code 84 in 2009 for the second tranche (2008);  and 
− 10 products under HS Code 7204, 722 7 and 7228 under third tranche (2009). 
 
Para 21
 
  Since its previous Review, Malaysia has intensif ied its efforts in regional and bilateral trading 
arrangements to complement its pursuit of market access in the WTO.  The au thorities maintain that, 
being a small and open economy, Malaysia seeks al l possibilities to promote its economic growth;  
this includes arrangements that provide mutual be nefits among signatories, ar e consistent with WTO 
rules, and allow for sufficient flexibility to a ddress specific sectoral and development concerns. 
 Para 23
 
  Malaysia is a founding member of ASEAN.  Trade with other ASEAN members accounted 
for around 25% of Malaysia's total trade in 2008.  The ASEAN Economic Minist ers agreed to realize 
an ASEAN Economic Community (AEC) by 2015;  i.e. to establish a single market and production 
base in the ASEAN region, with free flow of goods, services, and skilled labour, as well as freer flow of capital.
72 
 
Para 25  
  Free flow of trade in services is one of the catalysts in realizing the AEC.  Restrictions on trade in services for four priority sectors (air trans port, e-ASEAN, healthcare, and tourism) are to be 
removed by 2010, for logistics by 2013.  ASEAN members are also negotiating mutual recognition 
agreements (MRAs), and have signed MRAs on ar chitectural, accountancy, and engineering services, 
                                                     
 
 68 ASEAN-6 are Malaysia, Br unei, Indonesia, Philippines, Singapore, and Thailand.  For 89 lines in the 
General Exception List covering mainly alcoholic beverages and arms and ammunition, their duties are not to be 
lowered.   
 69 Based on the Malaysian tariff schedule (at HS 9-digit), Malaysia's average tariff under the AFTA 
was 0.8% in 2009. 
 70 ASEAN-5 are Malaysia, Brunei, Indonesia, Singapore, and Thailand. 
 71 Trade facilitation also involves creating an AS EAN Single Window to process trade documents 
electronically at national and regional levels.  The Sing le Window integrates national single windows of 
member countries;  however, the authorities indicated th at its operation has been de layed.  ASEA N-6 countries 
are required to establish their national single window s by 2008, and ASEAN-4 by 2012.  Malaysia's single 
window started operation on 1 January 2009. 
 72 ASEAN online information.  Viewed at:  http://www.aseansec.org/21083.pdf [02.11.2009].  WT/TPR/M/225/Add.1 
 Page 71 
 
 
  dental practitioners, medical practitioners, nur sing services, and surveying qualifications.73  O n  
investment, an ASEAN Comprehensive Investment Ag reement (ACIA) was signed in February 2009.  
The ACIA streamlines the existing ASEAN investment  agreements, with a view to attracting more 
foreign investment into ASEAN and increasing intr a-ASEAN investment.  The authorities consider 
that the ACIA complements Malaysia's efforts to attract FDI and helps to promote Malaysian outward 
investment into the ASEAN region. 
  Malaysia is a member of ASEAN and it has recently concluded three bilateral FTAs, with 
Japan, New Zealand, and Pakistan, and negotiatin g others with Australia, Chile, India and the 
United States.   
4. Could Malaysia explain whether social and labour issues are addressed within the above 
mentioned regional and bilateral trad e agreements, and if so, how?  
 
Answer:  
 
Malaysia does not include social or labour issues in  any of the regional or bilateral trade agreements. 
In the negotiations with Chile and New Zealand, these issues are dealt through a Memorandum of 
Understandings.  
Para 27
 
 
 The authorities maintain that, while intr a-ASEAN trade remains the core of ASEAN 
members' trade policies, Malaysia also pursues bila teral FTAs to enhance its comparative advantage, 
which is different from other ASEAN members.  Thus, when Malaysia negotiates bilateral FTAs, 
expanding and facilitating trade is a priority, a nd rules-of-origin must be liberal and simple. 
 
 The report notes that while intra-ASEAN trade remains the core of ASEAN's members' trade 
policies, Malaysia also pursues bilateral FTAs to  enhance its comparative advantage which is 
different from other ASEAN Members.   5. Could Malaysia explain how it combines the ne gotiations of FTAs, as  a group with ASEAN, 
and individually?  
 
Answer:  
 ASEAN is not a Customs Union and therefore in al l FTAs with dialogue partners, ASEAN maintains 
10 separate schedules of commitments while the di alogue partner maintains one common list for all 
ASEAN Member States.  The modalities for tariff cuts are negotiated collectively by ASEAN and 
variations in modalities are allowed subject to  the individual country's level of economic 
development.    ASEAN allows countries to individually negotiate bilateral FTAs as long as it is WTO consistent.  
 6. Is Malaysia of the opinion that this practice may further tangle up the RTA network, and if 
not, why?  
                                                     
 
 73 MITI Weekly Bulletin , 3 July 2008.  Viewed at:  http://www.miti.gov.my/ 
cms/documentstoragecom.tms.cms.document.Document_38a101f7-c0a81573-5d8c5d8c-bca26c91/MITI%20 
WEEKLY%20BULLETIN%20(Vol.%202)%2003 %20July%202008.pdf  [26.02.2009]. WT/TPR/M/225/Add.1 
Page 72  
 
  Answer:  
 Bilateral and regional FTAs complement each other.   Bilateral FTAs may involve higher and deeper 
liberalisation commitments i.e. fast er pace of tariff elimination/reduction.  Implementation of the rules 
of origin remains the same except the benefit of a ccumulation for rules of or igin is provided for 
regional FTAs. 
 
7. How does Malaysia ensure that Malaysian exporters  do not bear increased transaction costs?   
 
Answer:  
 
With the establishment of bilateral and regional FTAs, Malaysian exporters have various options to 
enjoy preferential treatment depending on their m odes of operation and production i.e. local or 
regional.  There is no additional transaction cost invol ved as exporters can either use the bilateral or 
regional route depending on which appr oach provides the maximum benefit. 
 8. Could Malaysia describe the main diffe rences between Japan-ASEAN FTA, and 
Japan-Malaysia FTA, and the systemic implications of maintaining both in place?  
Answer:  
 
The ASEAN-Japan Comprehensive Economic Partnersh ip Agreement combines all the bilateral FTAs 
signed by Japan with the ASEAN members individually .  There is no difference, accept with regards 
to the accumulation element for rules of origin which is only available under the regional FTA. 
 
Para 44
 
 
 Most notably, on 30 June 2009, the Governme nt announced the liberalization of the Foreign 
Investment Committee (FIC) guidelines, including the repeal of FIC Guidelines on the acquisition of interests, mergers, and takeovers.  The Guidelines had originally imposed bumiputera  equity 
requirement, whereby bumiputera  (ethnic Malays) had to hold a combined 30% stake in locally 
incorporated companies.
74  Following the repeal of the FIC guide lines, for newly listed companies, the 
bumiputera  requirement is 12.5% (50% of the Securities Commission's 25% public spread 
requirement), and this can be further reduced if mo re shares are issued later.  Also, foreign equity 
limits were raised from 49% to 70% for stock-br oking firms and unit trust management companies, 
and from 70% to 100% for fund management compan ies providing wholesale services.  In addition, 
there was some relaxations on the acquisition of property, as some property transactions involving 
foreign investment no longer require approval from the FIC.  As part of the package, the Government 
set up a private equity fund, Ekuiti Nasional Berhad (EKUINAS) to promote investment in sectors with growth potential, and to ensure participation by bumiputera .
75   
 Para 36 (Chapter 4)
 
 
 The approval procedure for foreign investment has also been simplified.  Until June 2009, 
foreign acquisitions, mergers, and takeovers of Malaysian companies had to be approved by the 
Foreign Investment Committee (FIC).  Howeve r, on 30 June, the Government announced the 
deregulation of the FIC guidelines, including the repeal of FIC's bumiputera  participation 
requirement.  Thus, the FIC no longer processes any acquisitions, mergers or takeovers;  nor does it 
impose any equity conditions, alth ough the equity conditions impo sed by sector-specific regulators 
                                                      
 74 Bumiputera  refers to a Malay or other indigenous ethnic group in Malaysia. 
75 The Government provided an initial endowment of RM 500 million to EKUINAS, with a target of 
expanding EKUINAS to become a RM 10 billion fund.  WT/TPR/M/225/Add.1 
 Page 73 
 
 
  continue to apply.  Equity restrictions are no l onger imposed on sectors not considered "strategic";  
strategic sectors, nonetheless, will not be liberalized  (Chapter II(6)).  The Government also set up a 
private equity fund, Ekuiti Nasional Berhad (EKU INAS) to promote investment in sectors with 
growth potential (notably in services).  
 The approval procedure for foreign direct invest ment has also been r ecently modified and the 
Foreign Investment Committee (FIC) guidelines rep ealed (with the exception of some "national 
interest" sectors e.g. banking, insurance, en ergy, telecommunications, agriculture, etc.) 
 9. Could the Malaysian authorities share their assessment of the impact on investment flows, 
both as registered to date and as forecast, of the modification to the approval procedure for FDI? 
 
Answer: 
 The Government has yet to undertake an assessment of investment inflows, as investors require time 
to undertake market research before investing.  
 
10. Are there plans to extend the new regime also  to those sectors currently excluded by the 
review of approval procedures?  If so, what sectors would be covered and when?  
Answer:  
 
Currently, there are no plans to extend the modificati on to other sectors, as the deregulation of the 
FIC Guidelines is a recent development.  
Para 21
 
 
 The Customs (Values of Imported Completely Built-up motor vehicles (New)) Order 2006 
gives the Minister of Finance power to fix the valu e of imported CBU cars, as  deemed appropriate, in 
accordance with Section 12 of the Customs Act 1967, with a view to tackling under-declaration.  
Importers of CBU cars must submit information in cluding the transaction value of the goods, to the 
Valuation Section of Customs Headquarters.  A committee comprising officers from the Ministry of 
Finance review all documents and prices submitted before recommending the value to the Minister for 
approval.  
 
 It is stated that "[t]he Customs (Values of Imported Completely Built-up motor vehicles 
(New)) Order 2006 gives the Minister of Finance pow er to fix the value of imported CBU cars, as 
deemed appropriate, in accordance with Section 12 of the Customs Act 1967, with a view to tackling 
under-declaration".   
11. Could Malaysia explain how the procedure to  fix the value of imported CBU cars complies 
with Articles 1 (customs value of imported goods shal l be the transaction value), 8 (adjustments to the 
price paid or payable) and 7(2)(f) (no customs valu e shall be determined  on the basis of minimum 
customs values) of the Agreement on Impl ementation of Article VII of GATT?   
 
Answer:  
 
The Royal Malaysian Customs Department (RMCD) had set-up the Panel for Price Review/ Proposal 
for imported new Completely Built-up (CBU) motor vehicles, comprising officers from Ministry of 
Finance (MOF), Ministry of International Trade and Industry (MITI), and RMCD.  This panel will undertake a monthly review on all relevant importation documents, which are submitted by the importers in advance.  WT/TPR/M/225/Add.1 
Page 74  
 
  To determine customs value, the panel uses the Customs Regulations (Rules of Valuation) 1999 as 
well as additional information available to support im porter's application.  The basic value is derived 
from the methods of valuation set out in Regulation 4 to 10.  The proposed value is then submitted to 
MOF for Minister's decision/approval.  
 The customs authorities may only reject the tr ansaction value if the declared value does not 
represent the total amount actually paid or payable for the imported goods, adjusted, if needed, in 
accordance with the provisions of Article 8.  In case of rejection, Articles 2 to 7 in their established 
hierarchy apply.   
 12. Does Malaysia apply the "Decision regardi ng cases where Customs Administrations have 
reasons to doubt the truth or accuracy of the declared value"? 
 
Answer:   
Yes, it is provided for under Regulation 3(2) of Customs (Rules of Valuation) Regulations 1999.  
 
Para 26
 
  There has been little change in Malaysia's ta riff bindings since its previous Review; about 
20% of Malaysia's tariff lines are unbound.
76  The relatively high proportion of unbound lines creates 
a degree of unpredictability as there is signifi cant scope for the authorities to raise tariffs.77  T h e  
authorities maintain that they will consider increasing  the binding coverage s ubstantially in the Doha 
round of negotiations.   The report notes that "about 20% of Malaysia's tariff lines are unbound". 
 
13. Does Malaysia have any plan to bind all or  part of its tariff lines that remain unbound? 
 
Answer:  
 Malaysia will further review the unbound lines and in crease the level of binding in the Doha Round. 
 Para 31
 
  Since 1 April 2008, Malaysia has applied tariff-ra te quotas (TRQs) on 18 products to meet the 
requests of domestic small producers.  As a result,  these items, whose tariff rates used to range from 
0% to 5%, are now subject to in-quota rates ra nging from 0% to 25% and out-of-quota rates ranging 
from 20% to 90%.  The authorities maintain that they had suspended the implementation of TRQs, which was part of Malaysia's tariff concessi ons during the Uruguay R ound, until March 2008. 
  The report notes that since 1 April 2008, "Ma laysia has applied tariff-rate quotas (TRQs) on 
18 products to meet the request of domestic small producers." 
 
                                                     
 
 76 Following its participation in the Information Technology Agreement (ITA), Malaysia reduced and 
bound at duty-free levels its import duties on a number of products (WTO document WT/Let/176, 19 September 1997).  Malaysia revised its schedule of tariff bindings to reflect the Second Amendment to the 
Harmonized System Nomenclature (HS96);  the revised schedule was made effective on 6 September 2005.  
WTO document WT/Let/498, 11 October 2005.  
77 The authorities maintain th at unbound tariffs give them some space to raise tariffs, but this has rarely 
been done.  WT/TPR/M/225/Add.1 
 Page 75 
 
 
  14. Could Malaysia indicate which 18 products are subject to TRQs?  Could Malaysia elaborate 
further on the "requests of domestic small producers"?  
Answer:  
 
For the 18 products, please refer to the Table AIV.1 in Chapter 4 of the WTO Secretariat Report. 
 Domestic small producers are small scale farmers/producers who depend on livestock farming for 
their livelihood and are low income earners.  Influx of these products will have an impact on their livelihood. 
 Para 48
 
  The number of lines subject to Malaysia's e xport taxes has remained largely unchanged since 
its previous Review.  In 2009, out of 10,389 tariff lines at the 9-digit level, 515 lines were subject to 
export duties;  most of the rates are ad valorem,  ranging from 5% to 20% (except for nine lines, which 
are subject to specific rates).
78  Products subject to export taxes include timber, live animals, ash and 
residues, precious metals, copper, and ferrous waste and scrap.  According to the authorities, the main 
objective of these taxes is to promote the u se of locally produced commodities in domestic 
downstream industries as well as to conserve the envi ronment.  The authorities are of the view that 
export taxes on timber allow them to better manage sustainable development of Malaysian forest.  
However, such taxes tend to increase the domes tic supply of the products concerned, and as a 
consequence, their domestic prices tend to be lowe r than would otherwise be the case;  thus, export 
taxes assist domestic downstream processing of the produc ts concerned.  In 2007 (the latest year for 
which data were made available), Malaysia 's revenue from export duties amounted to 
RM 2,296 billion, up from RM 1,133 billion in 2001. 
 
15. Could Malaysia indicate its quantitative assessment  of the impact on trade flows of the export 
taxes currently in place on certain goods?   
 
Answer:  
 
There is no quantitative assessment undert aken on the impact of trade flows.  
 
16. Is there any plan to review th e export taxes currently in place? 
 Answer:  
 
Currently, Malaysia does not have any plan to review its export taxes. 
 
Para 67
 
 
 Malaysia intends to play a leading role in th e development of halal certification; there have 
been no changes in halal-related policies during the review period.  All meat, processed meat 
products, poultry, eggs and egg products, domestically produced or imports, must receive halal 
certification from the Department of Islamic Deve lopment Malaysia (JAKIM) to be distributed in 
Malaysia.  The certificate is issued on the join t recommendation of the Malaysian Department of 
Veterinary Services (DVS) and JAKIM following an on-site inspection.    
                                                     
 
 78 Most lines are subject to duty rates betwee n 5% and 15%.  Only one item is subject to ad valorem  
duty of 20%.  In 2006, 512 lines out of 10,580 tariff lines (based on the 2002 Harmonized System (HS)) were 
subject to export taxes. WT/TPR/M/225/Add.1 
Page 76  
 
  17. Could Malaysia share its assessment of the actual and/or potential impact on trade flows of 
Halal requirements? In particular, do the Malaysia n authorities share the view and the objective that 
all requirements having an actual or potential impact on trade must meet the criteria of transparency and least trade restrictiveness?  If so, what is the Government's assessment of the lack of 
internationally recognised and transpar ently established Halal requirements?  
 
Answer:  
 Under the Halal requirements, all meat and animal ba sed products to be exported to Malaysia must 
be from abattoirs inspected by the Department of Veterinary Services (DVS) and JAKIM.  The Halal 
requirement is a voluntary standard.   
 Malaysia Halal Standard MS 1500 is transparent as it has been published in the website and notified 
to the TBT Committee.   
 The EU understands that Halal requirements do not only concern products of animal origin, 
but can affect actually all products (e.g . olive oil, mineral water, etc).  
 18. Is there a positive, exhaustive list of products subject to Halal requirements in Malaysia? 
 
Answer:  
 
The Halal certification is on a voluntary basis and applies to all.  
19. Does the Malaysian Government play any role in the drafting of this list and on the 
establishment of Halal requirements?  
Answer:  
 The Government is fully involved in establishing  the Halal requirements and Halal Certification in 
Malaysia.   
20. Does Malaysia share the view that it would be be neficial to aim to establish all trade-related 
requirements (including those necessary to protect pu blic morals and/or pursu ant to religious beliefs) 
in a predictable and transparent manner, whilst full y respecting any country/na tion's religious beliefs?  
 
Answer:  
 
Yes.  
 
 The report notes that during the period under review, "Malaysia has made eleven SPS 
notifications related to seven SPS regulations".    As regards the notification on implementation of inspection fees on foreign meat 
establishments (G/SPS/N/MYS/19/Add.2), it seems that  this new legislation may require unjustified 
financial and administrative conditions for those ex porters whishing to list establishments to export 
meat products into Malaysia, a nd bearing thus additional costs and burdens.  The EU suggests 
Malaysian authorities to review this measure in or der to establish a more trade-friendly system of 
inspections that results in a high level protec tion for imported commodities with minimum negative 
trade effects.  
 21. Could Malaysia inform whether it will review its recent notified measure while taking into 
consideration the concerns expressed on numerous occasions by the EU and other WTO Members?  WT/TPR/M/225/Add.1 
 Page 77 
 
 
  Answer:  
 Malaysia will take onboard Members'  views in the review and implementation of the revised fees.  
 
22. Furthermore, could Malaysia confirm whether trade will not be disrupted immediately after 
this new import condition enters into force?  
 
Answer:  
 The implementation of the fee will not disrupt tr ade because it is only applicable to new application 
and review audit will be conducted this year (2010).  Existing plants that have been approved before 
the implementation (1 January 2010) will not be affected.   
Para 74
 
 
 During the period under review, Malaysia rest ricted imports of livestock products due to 
diseases reported in the respective exporting countries (Table III.6).    The EU understands that Malaysia only accepts impo rt of certain parts of the pig (low value) 
such as pork belly, back fats, scalded stomach, jowl s, maws, spare ribs, pork trotters, tails, stomach 
and uteri.  The EU is not aware of any sudden saf ety requirement that may trigger the limitation of 
imports only to these products.   
 23. Could Malaysia confirm that it has carried out a risk assessment based on science to justify 
the limitation of imports to only certain parts of the pi g and, in the affirmative, share this with trading 
partners?  
Answer:  
 Malaysia has indeed conducted risk ass essment for the import of pig products. 
 
 Furthermore, the Department of Veterinary  Services does not accept th e health certificates 
from all EU countries, only from some.  We woul d like to stress that the EU has a harmonised 
legislation in place, thus guaranteeing that the sam e level of protection is applied in all 27 EU 
Member states.  The reasons why Malaysia only accep ts health certificates from some Member States 
are thus not clear.  Furthermore, trade of pork and pork meat is at times suddenly blocked from some 
EU countries despite health certificates being in place.  To date, the Department of Veterinary 
Services has not provided any justification for hamperi ng trade in this manner.  This arbitrary control 
on imports is not in line with WTO – SPS agreemen t as no scientific based risk assessment has been 
provided, and as the whole procedure is consider ed not transparent, unpredictable and trade 
disruptive.   Therefore, the EU reiterates its request to Ma laysia to review its import conditions and to 
bring them in line with international standards or to provide its risk assessment based on science for 
deviating from international standards as require d under Malaysia's obligations of the WTO-SPS 
agreement.  24. Could Malaysia inform whether it will revi ew its import conditions for pork and pork 
products in line with the relevant OIE sta ndards and if so, indicate when and how? 
 
Answer:  
 The import conditions for pork and pork products are already in line with OIE standards. WT/TPR/M/225/Add.1 
Page 78  
 
   Malaysia's import requirements for poultry and pou ltry products are stricter than foreseen in 
the OIE standard in relation to avian influenza.  Malaysia deviates from the standard for putting a 
country-wide ban in place whenever there is any notif ication of avian influenza virus detection in one 
EU Member state.  The OIE code foresees clearly a different approach depending on whether there is 
an outbreak of Highly Pathogenic Avian Influenza (H PAI) and Low Pathogenic Avian Influenza.  It is 
also specified that in those cases when there is an outbreak in the wild bird populations, there should 
be no trade measures on poultry or its products.  Furthe rmore, in case of outbreak of HPAI in a certain 
zone, trade should not be hampered for a number of products treated in a manner that the virus is killed as the trade could continue in safe conditions.  The OIE standard also foresees clearly the usage 
of the principle of regionalisation.  The EU has harmonised legislation in place, guaranteeing that in 
every EU Member state there are strict control measur es in place in order to ensure that the virus is 
not spread outside the affected area.  As a con sequence, trade measures (if necessary and justified) 
should only apply to the affected zone or even compartment.     Therefore, the EU reiterate its request for Ma laysia to review its import conditions and to 
bring them in line with international standards or to provide its risk assessment based on science for 
deviating from international standards as require d under Malaysia's obligations of the WTO-SPS 
agreement.  Malaysia should also recognise the re gionalisation principle under its obligations of the 
WTO-SPS agreement.  25. Could Malaysia inform whether it will review  its import conditions for poultry and its 
products in line with the rele vant OIE standards and whether it will recognise the regionalisation 
principle and if so, indicate when and how?  
Answer:  
 
Import conditions for poultry and poultry products are already in line with OIE standards and hence 
we recognise regionalisation and compartmentalisation.   
 Malaysia applies an import ban on animals and a range of animal products in case it considers 
that there is a risk of Bovine spongifo rm encephalopathy (BSE), or other diseases.  
 
 It is worth noting that Malaysia allows impor t from some other countries which have the same 
OIE risk status as EU Member States, the EU considers this a discriminatory treatment which is not justified and certainly not in line with Malays ia's obligations under the WTO-SPS agreement.  
Furthermore, Malaysia's restrictions on beef a nd beef products go beyond the relevant international 
standards.  Article 11.6.1 of the OIE Terrestrial An imal Health Code stipulates the list of commodities 
which should not require any BSE related restrict ive trade conditions, regardless of the BSE risk 
status of the cattle population of the exporting countr y.  This list includes inter alia deboned skeletal 
muscle meat regardless the age of the animal, milk  and milk products, seme n and in vivo, derived 
cattle embryos collected and handled in accordance  with the recommendations of the International 
Embryo Transfer Society, hides and skins and gela tine and collagen prepared exclusively from hides 
and skins.  The OIE Terrestrial Animal Health C ode also clearly describes the trade conditions for 
other commodities from the cattle population related to the OIE-BSE country risk status.  
  Therefore, the EU reiterates its request for Ma laysia to lift the longstanding import ban due to 
BSE and to fully align with the OIE standard or  to provide its risk assessment based on science for 
deviating from the international standard as requi red under Malaysia's obligations of the WTO-SPS 
agreement. 
 26. Could Malaysia confirm whether it has carried out a risk assessment based on science and in 
the affirmative share this with all WTO Members?    WT/TPR/M/225/Add.1 
 Page 79 
 
 
  Answer:  
 Malaysia has indeed conducted risk assessment.  
27. Could Malaysia inform whether it will bring its import conditions for BSE in line with the 
relevant OIE standard on BSE and if so, indicate when and how? 
 
Answer:  
 The import conditions are already in line with OIE standards. 
  Malaysia has a general requirement that all food should be free of pathogenic organisms.  
Since 1 July 2008, Malaysia requires that ev ery imported consignment of cheeses must be 
accompanied by a Health Certificate and a Certificat e of analysis for bacterial parameter Listeria 
monocytogenes where absence of listeria in a probe  of 25g should be demonstrated.  These measures 
are applied on all imports of soft and semi soft cheeses made from pasteurised milk and all types of 
cheeses made from unpasteurised milk.  In June  2009, Codex Alimentarius, the international 
organisation for food safety, has published an intern ational standard on Listeria which foresees the 
usage of another approach than this 'zero-tole rance' accepting 100 cfu/g throughout the shelf-life of 
ready-to-eat products, in which growth of L. m onocytogenes could occur under certain conditions.   
 
 This measure is not in line with Codex standard s and therefore not justified. Malaysia has not 
provided any scientific justification for deviating fro m the international standard.  Such a system is 
not trade-friendly and not in line with Malaysia's  obligations under WTO-SPS agreement.  The EU 
recalls that the Ministry of Health has confirmed that since the safeguard measure has been put in 
place by Malaysia, there are no positive findings detected anymore on cheese products exported from 
the EU to Malaysia.  
  The EU reiterates its request to lift the measure in place since 1 July 2008 and to revise its import conditions and bring them in line with the in ternational standard of CODEX.  Alternatively 
Malaysia should provide its risk assessment based  on science for deviating from the international 
standard as required under Malaysia's ob ligations of the WTO-SPS agreement.  
 
28. Could Malaysia indicate whether it will review its measure and bring it in line with the 
relevant international Standard and if so, indicate when and how? 
 
Answer:  
 
Malaysia will consider reviewing the me asure when deem ed necessary. 
 
Para 75
 
  Malaysia's government procurement continues to be used as an instrument to support national 
objectives, such as encouraging greater participation of the bumiputera  in the economy, transfer of 
technology to local industries, reducing the outfl ow of foreign exchange, creating opportunities for 
local service-oriented companies, and enhancing ex port capabilities.  The margin of preference that 
bumiputera  supplies receive has not been changed during the review period.
79  Malaysia is not a party 
                                                      
 79 For supplies and services contracts between RM 100,000 and RM 15 million, bumiputera  suppliers 
receive a margin of preference between 2.5% and 10%;  the margin is inversely proportional to value.  
Furthermore, preferential treatment is given to bumiputera  manufacturers for locally produced goods;  the 
margin is up to 10% for contracts valued below RM 10 million and up to 3% for contracts valued above 
RM 10 million.  No preferences are provid ed for purchases exceeding RM 15 million. WT/TPR/M/225/Add.1 
Page 80  
 
  to the WTO Agreement on Government Procurement;  the authorities are of the view that Malaysia 
has yet to attain the level of economic developm ent that would enable it to benefit from this 
Agreement.  In 2008, Malaysia's government proc urement amounted to about 11.9% of GDP (11.4% 
in 2005) (Table III.7).   
 The EU understands that the de bate on reforming procurement rules is ongoing. However, for 
the time being, no concrete measure has been announ ced.  According to our information, all parties 
involved seem to recognise the economic need s for reform, as the present system of Bumiputera  
preferences is costly for the budget and occasionally produced lack of quality and lack of governance. 
However, the timing of the reform remains unclear.  
 
29. Could Malaysia shed some light on the state of pl ay of this debate and on the next steps of the 
reform of the public procuremen t regime and legislation?  
 
Answer:  
 
To date, many initiatives have been put in place to improve the government  procurement system and 
enhance transparency in its processes.  Amongst the initiatives are procurement of supplies and 
services to be done online via ePerolehan system, in formation of successful  bidders are to be 
published in the procuring Agencies' websites,  and public opening of tender is a mandatory 
requirement for all supplies and services tend ers above RM 30 million and works tenders above 
RM 50 million.   
 
30. Could Malaysia clarify the treatment of fore ign supplies under its public procurement regime 
and if changes are foreseen in the context of the on-going reform?  
Answer:  
 
Foreign companies may participate in local tenders, pr ovided they incorporate a local company in 
Malaysia. International tenders are only invited if goods and services cannot be procured locally.    
 
Para 81
 
 
 Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.80  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.81  The authorities state that Malaysia  is currently in the final process 
of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in 
accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
                                                      
 80 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 81 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and "Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and 
efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.    WT/TPR/M/225/Add.1 
 Page 81 
 
 
  government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.82  It is not clear whether GLCs will be 
covered by the FTPB and FTCB.   Competition law in Malaysia is currently indus try specific. However, this does not necessarily 
mean that all industries have their own compet ition law.  It seems that only the following 
two industries that have specific competition re quirements:  (i) Communications & Multimedia 
(Communications & Multimedia Act 1998);  (ii) Electricity Supply (Energy Commission Act 2001).   We understand that a comprehensive national comp etition law is currently in the making.  As 
a matter of fact, it has been in th e drafting phase for several years.  
 31. Could Malaysia specify when the "Fair Trade Pr actices Bill" will be finalised and its current 
state of play?   Answer:   The policy is currently being formulated and the dra ft legislation is still in the drafting stage. Once 
they are finalised, they would have to be presente d to the Cabinet and then Parliament for 
three readings before getting the royal assent from th e King.  The length of the process can take at 
least six months provided there are no objections to the various issues la id down in the law. 
  It is our understanding that the Bill will be based on the CMA 1998.  
 32. Could Malaysia confirm this info rmation and shed some light on the main features of the bill?  
In particular, could Malaysian authorities indicate if and how the bill will also be applicable to 
Government Linked Companies (GLCs)? 
 
Answer:  
 The Bill is still at the final drafting stage and has  not been finalised, the applicability upon GLC's 
cannot be assessed at this point of time.  
 Para 29
 
  Malaysia's National Automotive Policy, intr oduced in March 2006, aims to build a 
competitive automotive sector in Malaysia and prom ote exports of automotive products.  To achieve 
these objectives, the Government lowered border pr otection for the automobile industry:  in 
March 2006, import duties were lowered to 30%  for complete built-up (CBU) vehicles (from 
35-50%), and remained at 10% for complete knocked-down (CKD) vehicles.  Lower duties apply to imports from ASEAN countries, and under Malaysia's bilateral agreements with Japan and Pakistan 
(Table AIV.2).
83  The Government welcomes foreign investme nt in the automobile section, and 100% 
foreign equity is allowed.  
                                                      
 82 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public. 
 83 Automobiles from ASEAN countries, and European, Japanese, and U.S.-made cars produced in 
ASEAN countries with a minimum 40% local content, are  subject to the ASEAN Co mmon Effective Tariff 
(CEPT) rate of 5%, and are to be exempted from import duties in 2010.  Import duties are zero for CKDs from 
ASEAN countries.  Under the MJEPA, duty rates for CBUs and CKDs from Japan are 30% and 0, respectively.  Tariffs on imported cars above 2,000cc from Japan are exp ected to be eliminated by 2011;  this offers some 
space for Proton and Perodua, as both  mainly manufacture cars below 2, 000cc.  The MJEPA also covers WT/TPR/M/225/Add.1 
Page 82  
 
   The National Automotive Policy Review was announced in October 2009.   
 33. Could Malaysia share its assessment of the lik ely impact on trade and investment flows?  
 
Answer:  
 
With the National Automotive Policy Review, investme nts and trade in automotive sector are expected 
to increase favourably.  Since the announcement of the NAP in 2006, there was a positive impact on trade especially on 
automotive components and parts and CKD units, within the ASEAN market. 
 The aim of the NAP is for Malaysia to be a reg ional hub focusing on niche areas and complementary 
activities. Malaysia has established itself as a vi brant automotive manufacturing centre, including 
manufacture of components and parts over the past decade.  Global auto manufacturers and parts 
suppliers are aware that the well-developed automo tive infrastructure, the availability of quality 
components and parts and the proximity to major reg ional markets are important factors for them to 
locate in Malaysia.   
Para 35
 
 
 In comparison with manufacturing (with exception of automobiles), services activities have 
been relatively closed to international competition, with FDI restrictions being major obstacles.  To 
increase productivity, and thus competitiveness in services, the authorities have been progressively 
liberalizing foreign investment in the sector.  On 22 April 2009, the Government announced the 
elimination, with immediate effect, of foreign equity restrictions on 27 services subsectors;  in the 
areas of health and social services, tourism, transport, business services, and computer and related 
services.84  A week later, restrictions were relaxed on foreign investment in financial services 
(Chapter II(6)).  These liberalization initiatives ha ve been complemented with a support programme 
for the domestic services industry;  a services sector capacity development fund of RM 100 million 
(US$28 million) has been established under th e First Economic Stimulus Package.   
 
 In April 2009, the Malaysian Government a nnounced a series of liberalization measures in 
some services sub-sectors, falling under the broade r categories of, among others:  financial services, 
computer and related services, health and social services, tourism services, transport services and business services.  Overall, equity conditions have b een relaxed or eliminated and new licenses are to 
be issued.  More measures in more sect ors have been announced as forthcoming.  
 
34. Could the Malaysian Government confirm that  all measures announced are already in force 
and implemented?  In case there was some sort of  staggered implementation calendar for any of the 
sectors, could the Malaysian Government provide the Parties with an overview of implementation 
timeframes sector-by-sector?  Answer:   All measures announced are already in force and being implemented. 
                                                                                                                                                                    
 
economic and technical cooperation to improve capacity building in the automotive sector in Malaysia.  The 
authorities hope that, through assistance from Japanese expe rts in the field of testing, training, and cooperation, 
the international competitiveness of Malaysian automotive industry can be enhanced.  Duty rates for CBUs and 
CKDs from Pakistan remain at 30% and 10%, respectively.  
84 Prime Minister Office online information.  Viewed at:  http://www.pmo.gov.my/?menu=news& 
page=1729&news_id=39&news_cat=4 [12.10.2009].  WT/TPR/M/225/Add.1 
 Page 83 
 
 
  35. Could Malaysia provide an assessment of the act ual impact, both as registered to date and as 
forecast, in terms of trade and investment flows of the recently announced measures? 
 
Answer:   
The Government has yet to undertake an assessment of investment inflows, as investors require time 
to undertake market research before investing.  
36. Could the Malaysian Government give account of the new licenses issued to foreign operators 
in the various sectors affected by the liberalisation measures?   Answer:   Information on the licenses issued is currently being compiled.  Many of the sub-sectors announced 
are not regulated and do not require issuance of licences.  
 37. Could the Malaysian authorities indicate in which sectors and by when new liberalisation 
measures will be taken? 
 
Answer:   
Liberalisation of the other se rvices sub-sectors will be undert aken on an on-going basis and 
roadmaps for liberalisation and further d evelopment are currently being drawn up. 
 Potential sectors for furt her liberalisation will include those areas which require high technology, 
substantial investment and niche expertise.  
 Para 35
 
  In comparison with manufacturing (with exception of automobiles), services activities have been relatively closed to international competition, with FDI restrictions being major obstacles.  To 
increase productivity, and thus competitiveness in services, the authorities have been progressively 
liberalizing foreign investment in the sector.  On 22 April 2009, the Government announced the 
elimination, with immediate effect, of foreign equity restrictions on 27 services subsectors;  in the areas of health and social services, tourism, transport, business services, and computer and related services.
85  A week later, restrictions were relaxed on foreign investment in financial services 
(Chapter II(6)).  These liberalization initiatives ha ve been complemented with a support programme 
for the domestic services industry;  a services sector capacity development fund of RM 100 million 
(US$28 million) has been established under th e First Economic Stimulus Package.   
  Malaysia is about to adopt new guidelines regulating Distributive Trade.  It is the EU's understanding that the new guidelines will contain significant limits on the possibility to open new 
hypermarket outlets.  In particular, the EU is c oncerned with the introduction of limits on the store 
sizes and the linkage with the size of local population.   Furthermore, it appears that the constraints on 
new outlets will only apply to foreign investors, not  to domestic ones.  Whilst Malaysia has not taken 
commitments in this sector under GATS, the proposed guidelines appear not in conformity with the principle of non-discrimination.  
38. Could Malaysia shed some light on the state of play and next steps in this area?  When will 
the new guidelines come into force? 
                                                     
 
 85 Prime Minister Office online information.  Viewed at:  http://www.pmo.gov.my/?menu=news& 
page=1729&news_id=39&news_cat=4 [12.10.2009]. WT/TPR/M/225/Add.1 
Page 84  
 
  Answer:  
 The review was concluded in late 2009.  On 6 January 2010, the Government has liberalised the 
equity condition for distributive trade services, such as commission agent, wholesale, retail and 
franchise.  For hypermarkets, the bumiputera (indi genous group) equity requirement remains at 30%. 
The Guidelines will come into  force in March 2010.    
 
39. Has Malaysia taken into account the comments and concerns expressed by other countries, 
including the EU, over the last few months as regard s the discriminatory nature of the new guidelines 
and their lack of economic soundness?  If so, how? 
 
Answer:  
 The equity condition and requirement for shelf spa ce for SME products is maintained to promote 
local hypermarkets as well as products pr oduced by small and medium enterprises.  
 
Malaysia maintains 30% bumiputera (indigenous group)  equity in the hypermarket segment as it is a 
contributor to employment at all levels, uses te chnologically advanced means in its supply chain, 
allows locals to have a share of the economic pie as  well as to allow transfer of technology in this 
area so as to enable the local segment  of this sector to develop eventually. 
  
HONG KONG, CHINA
 
 
Para 20  
 
Since April 2009, Malaysia has been unilatera lly liberalizing its services sectors.  The 
Government intends to improve its  offers in areas where domestic services suppliers are ready to 
compete with foreign suppliers.  Malaysia considers that an agreement on emergency safeguard 
measures in GATS could mitigate the impact of lib eralization on domestic services suppliers.  The 
Government also considers that negotiations on dom estic regulations must be completed to ensure 
there is no disguised restriction to trade in services. 
 1. We are encouraged to note Malaysia has kept up its liberalization efforts in trade in services.  
We note from the Secretariat Report that the Malays ian government intends to improve its offers in 
areas where domestic services suppliers are ready to compete with foreign suppliers.  Could Malaysia 
enlighten us more on its plan, including the potential areas for improved offers? 
 
Answer: 
 
The Government will continue to undertake binding commitments in the WTO based on the 
progressive liberalisation provision provided for und er the GATS and in tandem with the capacity of 
domestic services providers.  
 
Malaysia's improved offers made during the Signali ng Conference in July 2008, included the area of 
financial services, transport, professional services, e ducation and environmental services.  Malaysia's 
final offer for the Doha Round will reflect new impr ovements taking into account the overall balance 
in the negotiations. 
 
Para 37
 
  As in the previous Review, government-linke d companies (GLCs) continue to play an 
important role in financial, transport, and te lecommunication services.  The Government has placed  WT/TPR/M/225/Add.1 
 Page 85 
 
 
  some GLCs into the GLC Transformation Programme to increase their efficiency and competitiveness 
(Chapter III(4)(vi)).  Para 66
 
 
 Malaysia's fixed-line market continues to be dominated by Telekom Malaysia Berhad (TM), a 
government-linked company, accountin g for 98% of the market.  TM separated its fixed-line and 
mobile phone business into two companies in 2008, and no longer provides mobile phone services.  
Malaysia currently has four mobile phone operators.    
Para 67
 
  Telecom services suppliers must obtain a licence from the Minister of Information, Communication and Culture;  licence conditions are th e same for local and foreign service suppliers.  
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  
Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed.
86   
 Para 68
 
  Competition in telecommunications (particularly in fixed-line services) is limited.
87  
However, the authorities consider that competition was introduced in the fixed-line sector in early 
1990s, when five additional licences were issued in  line with the National Telecommunication Policy 
to encourage competition.  2. We note from the Secretariat Report that gove rnment-linked companies (GLCs) continue to 
play an important role in telecommunication services, particularly in fixed-line services, and 
competition in the sector is limited.  We would be gr ateful if Malaysia coul d brief us on how the GLC 
Transformation Programme could increase the efficien cy and competitiveness of the GLCs, and what 
other measures Malaysia is considering to promote competition in the sector?   We also note from the Secretariat Report that  Malaysia's GATS commitments specified that 
foreign participation of up to 30% is allowed in telecommunications services, whilst in practice 
participation of up to 49% may be allowed.  We would like to know if Malaysia has any plan to 
further liberalize this infrastructural sector and whether it would consider reflecting its de facto 
regime in its next services offers.  Answer:  Details on each of the G-20 performance can be found in Appendix V of the "GLC Transformation 
Programme Mid-Term Progress Review" publishe d in March 2009.  The 2010 update will be 
published by end of 1Q10 or early 2Q10 (ple ase visit the Putrajaya Committee on GLC High 
Performance website, http://www.pcg.gov.my/).   
 
Malaysia is currently reviewing its foreign equ ity policy for the telecommunications sector.  
 
                                                     
 
 86 Higher equity participation is allowed for "indi vidual network service provider licenses", and "class 
application service provider licenses". 
 87 The efficiency of the tel ecom sector is affected by, inter alia , the equity cap on foreign investment, 
the requirement that companies must have a bumiputera  equity participation of 30%, and the uncertainty and 
lengthy procedure for obtaining a licence. WT/TPR/M/225/Add.1 
Page 86  
 
  WTO Government Report 
 
Summary Observation 
 
Para 7
 
 
 Malaysia's overall economic policy objectiv es shifted during the review period towards 
developing services;  consequently its trade objec tives also changed to reflect the Government's 
efforts to relax barriers to trade in services and reduce reliance on manufactured exports.  Other major 
trade objectives include:  improving market access for goods and services, promoting the global competitiveness of Malaysian exports , expanding and diversifying trad e with existing partners, and 
exploring new markets.  To achieve these objectiv es, the Government has unilaterally liberalized 
Malaysia's services sector and lowered its applied MFN tariffs.  Malaysia continues to consider the 
WTO a priority in realizing its trade objectives.  Although WTO Agreements play  a pivotal role in the 
formulation of Malaysia's trade and trade-rela ted policies, Malaysia also considers regional 
arrangements to be important, notably those involvi ng the Association of Southeast Asian Nations 
(ASEAN), as well as various bilateral agreements.  ASEAN, of which Malaysia is a member, has 
RTAs with Australia, China, India, Japan, Korea, and New Zealand.  Two bilateral FTAs, with Japan 
and Pakistan, entered into force during the pe riod under review, and one with New Zealand was 
signed in October 2009 and is expected to be im plemented in 2010.  Malaysia is also negotiating 
bilateral FTAs with Australia, Chile, India, and the United States.   
 Para 8
 
 
 The Government continues to encourage FDI,  and has been relaxing foreign investment 
restrictions in services.  Since April 2009, 100% fo reign equity has been allowed in 27 services 
subsectors and foreign investment restrictions in some  financial services have been relaxed.  Also, in 
June 2009, the Government announced the modifi cation of the Foreign Investment Committee 
guidelines on the acquisition of interests, mergers, and takeovers;  this incl uded in particular the 
repeal of its bumiputera (ethnic Ma lay) participation requirement.   
 
3. Malaysia currently maintains, among others, an MFN exemption relating to measures limiting 
foreign equity or interests in businesses.  The exemp tion applies to all sectors and is of an indefinite 
intended duration, which is not in line with the GATS Annex on Article II Exemptions that requires 
all MFN exemptions maintained by Members be revi ewed from time to time and be in principle not 
more than 10 years in duration.  
 As Malaysia has announced in April 2009 th e immediate elimination of foreign equity 
restrictions on 27 services subsectors, will Malaysia  also consider removing or limiting the scope (e.g. 
applicable sectors) or duration of the above MFN exemption? 
 
Answer: 
 
At present the Government has no intention to remo ve the duration of the MFN exemption relating to 
foreign equity.  The Government will continue to  undertake binding commitments in the WTO based 
on the progressive liberalisation provisi on provided for under the GATS.  
 
Para 37
 
  As in the previous Review, government-linke d companies (GLCs) continue to play an 
important role in financial, transport, and te lecommunication services.  The Government has placed 
some GLCs into the GLC Transformation Programme to increase their efficiency and competitiveness 
(Chapter III(4)(vi)).  WT/TPR/M/225/Add.1 
 Page 87 
 
 
  Para 66  
  Malaysia's fixed-line market continues to be dominated by Telekom Malaysia Berhad (TM), a 
government-linked company, accountin g for 98% of the market.  TM separated its fixed-line and 
mobile phone business into two companies in 2008, and no longer provides mobile phone services.  
Malaysia currently has four mobile phone operators.   
 Para 67
 
  Telecom services suppliers must obtain a licence from the Minister of Information, 
Communication and Culture;  licence conditions are th e same for local and foreign service suppliers.  
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  
Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed.
88   
 
Para 68  
  Competition in telecommunications (particularly in fixed-line services) is limited.
89  
However, the authorities consider that competition was introduced in the fixed-line sector in early 
1990s, when five additional licences were issued in  line with the National Telecommunication Policy 
to encourage competition. 
 
4. We note from the Secretariat Report that gove rnment-linked companies (GLCs) continue to 
play an important role in telecommunication services, particularly in fixed-line services, and competition in the sector is limited.  We would be gr ateful if Malaysia coul d brief us on how the GLC 
Transformation Programme could increase the efficien cy and competitiveness of the GLCs, and what 
other measures Malaysia is considering to promote competition in the sector? 
  We also note from the Secretariat Report that  Malaysia's GATS commitments specified that 
foreign participation of up to 30% is allowed in telecommunications services, whilst in practice 
participation of up to 49% may be allowed.  We would like to know if Malaysia has any plan to 
further liberalize this infrastructural sector and whether it would consider reflecting its de facto 
regime in its next services offers. 
 
Answer: 
 Details on each of the G-20 performance can be found in Appendix V of the "GLC Transformation 
Programme Mid-Term Progress Review" published in March 2009. The 2010 update will be 
published by end of 1Q10 or early 2Q10 (ple ase visit the Putrajaya Committee on GLC High 
Performance website, http://www.pcg.gov.my/).    Malaysia is currently reviewing its foreign equ ity policy for the telecommunications sector.  
 Para 84
 
  Malaysia has been adopting measures to  further promote the tourism industry, inter alia , by 
removing or reducing foreign equity restrictions, pr oviding tax incentives, and offering loans at low 
                                                     
 
 88 Higher equity participation is allowed for "indi vidual network service provider licenses", and "class 
application service provider licenses". 
 89 The efficiency of the tel ecom sector is affected by, inter alia , the equity cap on foreign investment, 
the requirement that companies must have a bumiputera  equity participation of 30%, and the uncertainty and 
lengthy procedure for obtaining a licence. WT/TPR/M/225/Add.1 
Page 88  
 
  interest rates.  From April 2009, 100% foreign e quity is allowed in:  theme parks, convention and 
exhibition centres (seating capacity above 5,000);  tr avel agencies and tour operators (for inbound 
travel only);  and hotel and restaurant services (fo r 4 and 5 star hotels).  Tax incentives have been 
granted to enterprises engaged in "priority sectors" , including hotel accommodation and other tourist 
projects, and the development of "wellness" zones in Port Dickson, Negeri Sembilan.
90   
 
5. We note from the Secretariat Report that ta x incentives have been granted to enterprises 
engaged in "priority sectors" in the tourism industry.   Would Malaysia enlighten us on whether these 
incentives are provided to both local and fore ign enterprises on a non-discriminatory basis? 
 Answer:  Malaysia provides incentives to all eligible  enterprises on a non-discriminatory basis. 
 
 INDIA
 
 
Para 1  
  In 2009, the Government started to relax rest rictions on foreign investment in services, 
including health and social services, tourism, tr ansport, business services, and computer and related 
services and yet FDI in services accounted for only about a quarter of the total FDI.   
 1. What are the main reasons for such a low le vel of FDI in the services sector and the steps 
Malaysia proposes to take to address the situation? 
 
Answer: 
 Malaysia's sectoral development policy in the pas t has focussed largely on the manufacturing sector, 
resulting in FDI being skewed towards this sector.   Apart from the recent liberalisation measures, unila teral liberalisation and deregulation of the FIC 
guidelines, the Government will further prom ote the services sector by reviewing domestic 
regulations, administrative procedures and guidelines to facilitate trade, promote talent development 
and enhance productivity and efficiency.  
 In addition, to facilitate inbound investment, the Ma laysian Industrial Development Authority (MIDA) 
has been appointed as the one stop centre to coordinate, promote and approve investment in the 
services sector.  The 3
rd Industrial Master Plan has also outlined measures to promote FDI in the 
services sector.    Apart from unilateral liberalisation, Malaysia has  made commitments to liberalise services sector 
under the ASEAN Framework Agree ment on Services (AFAS), the World Trade Organisation (WTO) 
and Regional and Bilateral Free Trade Agreements.  More sub-sectors will be progressively liberalise 
to foreign investment.  A roadmap is also being cu rrently prepared to libera lise the services sector. 
 
 The goal is to increase services' share of GDP from around 50% to 60% by 2020. 
 
                                                     
 
 90 Ministry of Tourism online information.  Viewed at:  http://www.motour.gov.my/index.php/ 
english/tax.html [01.12.2008].  The development of wellness zones are to fulfil the Government's plan to make Malaysia a health centre in the region;  the incentives ar e provided to attract more operators and investors from 
the medical and health industry.  WT/TPR/M/225/Add.1 
 Page 89 
 
 
  2. We would appreciate Malaysia to share specific plans it has to achieve this ambitious target. 
 
Answer:  The services sector contributes 55% of the GDP in 2 008.  The Government is promoting liberalisation 
of the services sector as a policy tool to furt her develop the sector.  Apart from the unilateral 
liberalisation, including the recent announcement to  liberalise the 27 services sub-sectors, financial 
services and the deregulation of the Foreign Investment  Committee (FIC) Guidelines, Malaysia will 
also liberalise the services sector based on commitments under the AS EAN Framework Agreement on 
Services (AFAS), the World Trade Organisation (WTO) and Regional and Bilateral Free Trade 
Agreements. Roadmaps for liberalisation and furth er development are currently being drawn up.  
In addition, several new sources of growth have been identified such as Islamic finance, tourism and 
health services to further promote th e development of the services sector.   
 
Para 4
 
 
 The economy remains vulnerable to downturns in the United States, Europe, and Japan, its 
top export destinations and key sources of foreign investment.  3. We would like Malaysia to share with us spec ific steps it has taken to diversify its export 
destinations and export basket during the period under review. 
 Answer:  The Government is intensifying its effort to pr omote and facilitate Malaysian exporters of products 
and services to traditional and non-traditional markets.   Among the activities undertaken are specific 
targeted trade missions, trade fairs, specific  buying missions and matchmaking activities with 
potential buyers.  To enhance market access, Malaysi a has entered into bi lateral and regional Free Trade Agreements 
(FTAs) or Preferential Trading Arrangements (PTAs)  with ASEAN, China, Korea, Japan, Pakistan 
and Australia/New Zealand.  Malaysia is also ne gotiating FTAs with Australia, Chile, and India and 
exploring FTAs with other trading partners.  
 The export basket of merchandise has also been expanded by promoting hi gh value-added and high 
technology activities such as bio-technology , renewable energy, pharmaceuticals and medical 
devices.   
 
 Significant challenges for Malaysia include the speed at which new domestic sources of 
growth are found;  this depends to a large extent  on gains in total factor productivity (TFP) and 
resolving the problem of the shortage of skills.  4. What are the specific steps Malaysia proposes to take to resolve the problem of the shortage 
of skills through its HRD programmes and openi ng such sectors to foreign skilled professionals? 
 
Answer:  Steps taken to resolve skills shortage: 
 
− Upgrading of polytechnics, community colleges and training institutes to increase the number 
and enhance skills of the workforce.  WT/TPR/M/225/Add.1 
Page 90  
 
  − Intensification of retraining and skill-upgr ading programme through training schemes 
provided by Human Resources Development Fund  (HRDF), as well as overseas training in 
advanced and new technologies.  
− Industrial Attachment Programme for all degree and diploma programmes.  
− National Dual Training System (NDTS) has been implemented starting from the year 2005. 
NDTS was introduced for the purpose of increasing the supply of skilled manpower, through 
a comprehensive training approach and using the la test available technology that meets the 
prevailing demands from industries. 
− On-going review of guidelines and procedures on movement of natural person which includes 
professionals, skills and talents in order to  facilitate entry of skilled manpower.  
− Simplifying the granting of Permanent Reside ncy status to highly talented and skilled 
individuals to accelerate technology transfer.  
Foreign skilled professionals are allowed in the following areas: 
 
− Manufacturing and manufacturing related services sectors; 
− ICT related professionals for companies lo cated in Multimedia Super Corridor; 
− Health Sector; 
− Financial institutions;  and 
− Education sector. 
 Setting up of a one stop centre to facilitate the entr y of foreign skilled professionals in these areas by 
expediting the approval process and reducing red tape. 
 
Para 8
 
 
 In June 2009, the Government announced the modification of the Foreign Investment 
Committee guidelines on the acquisition of interest s, mergers, and takeovers;  this included in 
particular the repeal of its bumiputera  (ethnic Malay) participation requirement.   
 5. We would appreciate Malaysia to share with us if such modifications are proposed in other 
sectors of its economy, including timelines. 
 
Answer:  Currently there are no plans to extend the modificati on to other sectors, as the deregulation of the 
FIC Guideline is a recent development. 
 
Para 14
 
  The publication of estimates of tax revenues forgone as well as studies evaluating the 
cost-effectiveness of incentives would improve fiscal transparency in Malaysia and contribute to a 
more effective tax policy.  6. Does Malaysia propose to publish estimates of tax revenue forgone in future? 
 
Answer: 
 
Currently, the Government has no plans to publish es timates of tax revenue forgone due to lack of 
data.    WT/TPR/M/225/Add.1 
 Page 91 
 
 
  Para 22  
  Malaysia's manufacturing sector is relatively open to trade and foreign investment;  the 
average tariff for manufacturing products was 8.7% in 2009 and 100% foreign equity participation is 
generally allowed.  However, a notable excepti on is the automotive sector, which has long been 
sheltered from foreign competition by both tariff and non-tariff measures. 
 7. Does Malaysia propose to reform and liberalise its automotive sector to attract greater FDI, 
upgrade technology to meet its domestic dema nds as well as expand its automotive exports? 
 Answer:  Beginning 1 January 2010, under the review of the National Automotive Policy, Malaysia has undertaken several measures to reform and liberalise th e automotive sector.  Measures that are being 
implemented include: 
 
i) Lifting of the freeze on issuance of new M anufacturing License for selected automotive 
segments with no equity condition imposed: 
− luxury passenger vehicles with engine capacity of 1,800 c.c and above and on the 
road prices not less than RM150,000; 
− pick-up trucks and commercial vehicles; 
− hybrid and electric vehicles; 
− motorcycles with engine capacity of 200 c.c. and above. 
 
ii) Emphasis on promoting investments in high va lue-added and high technology activities.  
 
Para 23
 
  The services sector has been the largest contri butor to GDP.  Compared with manufacturing 
(with the notable exception of auto mobiles), the sector has been rela tively closed to international 
competition, with FDI restrictions comprising the major obstacles.  However, the Government has 
recently been relaxing or removing foreign inv estment restrictions in services, although more 
measures are needed to promote competition.  8. Does Malaysia have time-bound plans to open up its services sector?  We would like to hear 
details from Malaysia. 
 
Answer: 
 In 2009, Malaysia has taken measures to libera lise its services sectors, including 27 services 
sub-sectors, some financial services and the deregulation of the foreign investment guidelines.  The 
objective is to: 
− enhance the level competitiveness of the services sector; 
− create a conducive business environment to attract investments, technology;  and  
− create higher value employment opportunities. 
 Liberalisation of the other se rvices sub-sectors will be undert aken on an on-going basis and 
roadmaps for liberalisation and further d evelopment are currently being drawn up. 
 
Malaysia has time-bound plans to open up it s services sector under the ASEAN Framework 
Agreement on Services (AFAS).  Targ eted time line for services equity liberalisation under AFAS is as 
follows: WT/TPR/M/225/Add.1 
Page 92  
 
   
Sectors AFAS time line 
Priority sectors: e-ASEAN, healthcare and tourism services  51% :  2008 
70% :  2010 
Logistics 51% :  2010 
70% :  2013 
Other sectors, excluding finance 51% :  2008 
70% :  2015 
 
Para 14  
 
 The Government continues to play an active ro le in the development and industrialization of 
the Malaysian economy.  This includes significan t state investment, a number of policies and 
programmes to improve the economic status of indigenous communities 
 9. Does Malaysia plans to dilute the current activ e role of the Government in the development 
and industrialisation of its economy with more pa rticipation of private s ector both domestic and 
foreign in the coming years? 
 
Answer:  
The Government policy is to encourage the partici pation of the private sector, both domestic and 
foreign, to be the main driver of the country’s econom y.  The role of Governme nt will be to facilitate 
private sector participation rather than partic ipating directly in economic activities.  
 On the funding mechanism of a devel opment project, privatisation method  and Private Finance 
Initiative (PFI) will be given priority.  A total of  RM 20 billion PFI has been allocated during the 
9
th Malaysia Plan and additional RM 2 billion PFI Facilitation Fund under the stimulus package.  
 Other measures that have been ta ken to facilitate private sector  investment are as follows: 
i) Special Taskforce to Facilitate Business or PEMUDAH; 
ii) Liberalisation of Foreign Investment Committee Guidelines;  and 
iii) Liberalisation of 27 services sub-sectors. 
 
Para 24
 
  Given that these duties conceal relatively high AVEs, the level of applied tariff protection 
could be considerably higher than the simple average of all ad valorem  rates of 7.4% in 2009. 
 10. We would appreciate Malaysia to inform how  it proposes to bring in greater degree of 
transparency related to duties wh ich conceals relatively high AVEs. 
 
Answer: 
 
Malaysia is currently reviewing the non-ad valo rem duties in line with the on-going Doha 
negotiations. 
 
Para 79
 
  Currently, Malaysia has 34 GLCs; since 2006, some have been subject to the GLC Transformation Program, which aims to make GL Cs as competitive as non-GLC competitors in the 
Malaysian market.  The March 2009 mid-term progress review of the programme indicated that the  WT/TPR/M/225/Add.1 
 Page 93 
 
 
  performance of 19 large GLCs improved in terms of earnings and shareholder returns, although some 
apparently underperformed rela tive to top regional competitors. 
 11. We would request Malaysia to share details of  the performance of the GLCs and the specific 
initiatives it proposes to take to remedy the situation of under performing GLCs.  Answer: 
 
The performance of GLCs can be found in Appendi x V of the "GLC Transformation Programme Mid-
Term Progress Review" published in March 2009.  The 2010 update will be pub lished by end of 1Q10 
or early 2Q10 (please visit the Putrajaya Committee on GLC High Performance website, 
http://www.pcg.gov.my/).   
 
Para 15
 
 
 Foreign equity participation of up to 100%  is permitted in the extraction, mining or 
processing of mineral ores.  When approving these projects, the Government considers:  the investment level, technology, a nd risk involved; availability of  Malaysian expertise; and the 
value-added level.  Companies must also obtain approval from state governments (e.g. for exploration 
rights).  
12. We would appreciate Malaysia to share with us details of the FDI in the mining and quarry 
sectors during the period of the Review. 
 
Answer:  
FDI in the mining and quarrying subsector is mainly  in the oil and gas industry.  FDI in this 
sub-sector accounted for 17% or US$3,111.36 million (BOP basis from  2005 to 2007) out of the total 
FDI inflows of US$1,8427.56 million (B OP basis for the same period).  
 FDI in other mining subsectors cover gold and tin mini ng. Investment in this sector is approved by the 
respective States.  Equity of foreign participation on the approved projects varies from 70%-100%. 
 
Para 20
 
  The share of manufacturing in Malaysia's in ternational trade continued to fall during the 
period under review, from 74.5% in 2005 to 54.2 % in 2008 of total exports, and from 79% to 65.3% 
of total imports. 
 13. Could Malaysia inform us in detail the causes fo r the fall in the share of manufacturing in its 
international trade and the steps it h as taken to rectify the situation? 
 
Answer: 
 
The fall in the share of the manufacturing sector in  Malaysia's international trade during the period 
2005 to 2008 were due to:  
− fall in exports of E&E because of the reduced  demands from our major trading partners and 
compounded by the recession that started in the US from 2007; 
− increase in exports of commodities and mini ng goods.  The commodities which showed 
significant increases were palm oil, crude and  refined petroleum and liquefied natural gas 
(LNG);  and  WT/TPR/M/225/Add.1 
Page 94  
 
  − the growing importance of the contribution of the services sector. 
 Although the share of manufacturing in Malaysia' s international trade has fallen from 2005 to 2008, 
it is of less concern as Malaysia's priority is on increasing its trade value.  Exports of Malaysia's 
manufactured goods increased from US$105,509 million in 2005 to  US$107,774 million in 2008, 
while imports increased from US$90,288 million to  US$102,000 million for the same period.   
 Malaysia is intensifying efforts to increase the va lue of manufactured expor ts through promotion of 
investments in higher value-added and high-technolog y products and penetratio n into non-traditional 
markets. 
Para 1
 
 
 Between 2005 and 2008, Malaysia's economy c ontinued to grow steadily, although the speed 
of growth slowed in the fourth quarter of 2008 (Tab le I.1).  In the first quarter of 2009, the economy 
deteriorated markedly, as in many other countries, re flecting the global financial crisis and associated 
sharp fall in exports.  The Govern ment responded promptly, with bot h macroeconomic and structural 
policies.  In 2009, the Government relaxed restricti ons on foreign investment, particularly in services.  
This relaxation reflects an intensification of the G overnment's efforts to promote services, in addition 
to high-tech manufacturing.  Malaysia also inte nds to reduce reliance on exports of manufactured 
goods that are dependent on semi-skilled and low-co st labour.  The goal is to  increase services' share 
of GDP from around half to 60% by 2020.   
14. In Paragraph 1 under "Economic Environment"  in "Summary Observations", it has been 
mentioned that "Malaysia also intends to reduce reliance on exports of manufactured goods that are 
dependent on semi-skilled and low-cost labour" and re peated again in paragraph 7 under "Institutional 
Framework".  India would like to know the type  of these manufactured goods and whether this  
includes footwear and leather goods?  Answer:  The policy of not encouraging labour-intensive industries cuts across all manufacturing projects and is not confined to selected industries.  As such, Ma laysia does not classify certain types of activities as 
labour intensive industries.  As a general rule , any projects (including footwear and leather 
manufacturing companies) with capital investment per employee (CIPE) ratio of less than RM 55,000 
would be classified as labour intensive and thus will not qualify  for a manufacturing license.  
 
Para 28
 
 
 Malaysia has concluded three bilateral free-trade agreements (with Japan, New Zealand, and 
Pakistan), and is negotiating others (with Au stralia, Chile, India, and the United States) 
(Table AII.4).91  Its objectives in negotiating FTAs are to:  seek better market access and enhance the 
competitiveness of its exports;  further facilitate  and promote trade, investment, and economic 
development;  and improve capacity building in sp ecific areas through technical cooperation.  To 
achieve these objectives, its FTAs are not confin ed to market-opening measures for goods and 
services;  rather, they include investment, trade facilitation, intellectual property rights (IPR), and 
other areas, such as competition policy, standards, and conformity assessment. 
 
                                                      
 91 Malaysia's two bilateral FTAs with Japan and Pa kistan are operational and consideration of these 
FTAs by the relevant WTO Committees was completed in  2009 pursuant to the Transparency Mechanism for 
RTAs (WTO documents WT/REG216/M/1, 4 May 2009;  WT/REG265/M/1, 29 September 2009;  and 
WT/COMTD/RTA/M/3, 21 October 2009).  WT/TPR/M/225/Add.1 
 Page 95 
 
 
  15. In paragraph 28 of Chapter II on "Policy Regime - Framework and Objectives", it is stated that 
Malaysia has signed 3 FTAs with Japan, New Zeal and and Pakistan.  Have these FTAs been notified 
to the Committee on RTAs? If so, h as the CRTA deliberated upon these FTAs? 
 
Answer: 
 
The FTAs with Japan have been notified to the Co mmittee on RTAs under the Article XXIV of GATT 
while notification for Pakistan is under the Enabling Clause.  These FTAs had b een recently reviewed 
by the CRTA in 2009.  The bilateral FTA with New Zealand has just been concluded and implementation is expected to begin in early 2010.  Malaysia and New Zealand are making 
preparations to notify the CRTA. 
Para 34
 
  Malaysia receives GSP (Generalized System of  Preferences) treatment from Belarus, the EC, 
Norway, Russian Federation, Switzerland, and Turkey.
92  The authorities state that no Malaysian 
exporter has used the GSTP (Global Syst em of Trade Preferences) facility.  
 16. In paragraph 34 of Chapter II on "Policy Regime- Framework and Objectives", it is 
mentioned that Malaysian exporters have not used the GSTP facility.  Can Malaysia throw light on the 
usage of GSTP facility by other count ries while exporting to Malaysia? 
 Answer:  A total of 23 countries have utilised the GSTP schem e to export woven fabric  involving 158 lines.   
 
Para 24
 
 
 Malaysia's tariff classification systems, for preferential and MFN tariffs, are aligned to the Harmonized System at 9-digit level; preferentia l tariffs for intra-ASEA N trade remain under the 
AHTN classification system.  The current Malaysian customs nomenclature (for MFN duties) is based 
on the 2007 Harmonized System (HS).  The Malaysian tariff comprises 10,389 lines at the 9-digit level.  Almost all rates (99.2%) are ad valorem ;  the remainder are specific, compound, or alternate 
duties.  Malaysia has no plans to convert all of its non- ad valorem  duties to ad valorem  duties
93;  it 
continues to maintain non- ad valorem  duties for agricultural products  to protect small and rural 
farmers.  Given that these duties conceal relativel y high AVEs, the level of applied tariff protection 
could be considerably higher than the simple average of all ad valorem  rates of 7.4% in 2009.94  
In 2009, 32 of the top 50 tariffs entailed non- ad valorem  rates. 
 
                                                      
 92 EU member states agreed to a revised GSP Scheme as of 1 January 2009.  Under the revised 
programme, tariff rates were reduced by 3.5% for "sensitive products", exempted for "non-sensitive products", 
and suspended on all products of Chapter 93.  For Malaysia, three sectors previously graduated (wood, consumer electronics, and plastics and rubber products) were reinstated into the GSP Scheme. 
 
93 The authorities state that they do not plan to convert specific duties applied to alcoholic beverages 
into ad valorem  duties. 
 94 In view of transparency, the authorities provided ad valorem  equivalents (AVEs) for 46 out of 
80 non- ad valorem  tariff lines;  AVEs for 73 ta riff lines are based on import data for 2003-05, and those for 
7 lines on data for 2005-07.  AVEs were not provided for alcoholic beverages, possibly indicating the prohibitive nature of tariff rates for these products.  If the AVEs provided are included, the simple average MFN 
applied tariff rate becomes 9.1% (7.4% excluding AVEs) , and the simple average MFN applied rate becomes 
18.1% for agricultural products (WTO definition) (2 .8% excluding AVEs) and 7.9% for non-agricultural 
products (also 7.9% excluding AVEs).  Three tariff lines have AVEs exceed ing 1,000%;  they involve bananas 
and tobacco refuse.  The simple average of AVEs provided is 392%. WT/TPR/M/225/Add.1 
Page 96  
 
  17. In paragraph 24 of chapter III on "Trade Policies and Practices by Measure", it is stated that 
Malaysia maintains some specific, compound or a lternate duties.  India would like to know the 
products on which these non ad valorem duties are maintained?  
Answer: 
 
The non AVE lines covering specific and compound tariffs are as follows: 
− Tropical fruits – compound tariffs; 
− Tobacco products– specific and compound tariffs;  and 
− Alcoholic beverages – specific tariffs.  
 
Para 64
 
 
 The authorities state that a basis for Mala ysian national standards is the adoption of 
international standards.  Criteria for adoption of standards are determined by the relevant "standard 
development committees";  the views of interested parties, including industry, government agencies, 
and consumers are considered.  Foreign interests ar e considered in the adoption of new or revised 
standards through the "public comment" procedures on any draft standards made publicly available on 
the websites of Standards Malaysia and SIRIM Be rhad.  Certain tax deductions are accorded for 
expenditure incurred by private companies when participating in international standardization 
activities.95 
 18. In paragraph 64 of Chapter III on "Trade Po licies and Practices by Measure", Malaysia 
specifies the criteria for adoption of standards.  Indi a would like to know if "interested parties" located 
outside the territory of Malaysia can particip ate by giving their views during the process of 
formulation of standards? 
 
Answer:  
Participation in the standardisation process shall be accessible to all interested parties through 
representation at Industry Standards Committees , Technical Committees and Working Groups or 
through the comment process as appropriate.   
 
Para 75
 
 
 Malaysia's government procurement continues to be used as an instrument to support national 
objectives, such as encouraging greater participation of the bumiputera  in the economy, transfer of 
technology to local industries, reducing the outfl ow of foreign exchange, creating opportunities for 
local service-oriented companies, and enhancing ex port capabilities.  The margin of preference that 
bumiputera  supplies receive has not been changed during the review period.96  Malaysia is not a party 
to the WTO Agreement on Government Procurement;  the authorities are of the view that Malaysia 
has yet to attain the level of economic developm ent that would enable it to benefit from this 
Agreement.  In 2008, Malaysia's government proc urement amounted to about 11.9% of GDP (11.4% 
in 2005) (Table III.7).   
                                                     
 
 95 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=79&Itemid=103 [06.08.2009].  
96 For supplies and services contracts between RM 100, 000 and RM 15 million, bumiputera  suppliers 
receive a margin of preference between 2.5% and 10%;  the margin is inversely proportional to value.  
Furthermore, preferential treatment is given to bumiputera  manufacturers for locally produced goods;  the 
margin is up to 10% for contracts valued below RM 10 million and up to 3% for contracts valued above 
RM 10 million.  No preferences are provid ed for purchases exceeding RM 15 million.  WT/TPR/M/225/Add.1 
 Page 97 
 
 
  19. With reference to government procurement (p aragraph 75 of Chapter III of the Secretariat 
report), does Malaysia intend to be an Observe r to the Agreement on Government Procurement 
(GPA)? 
 
Answer: 
 
Malaysia is not a party to the WTO Agreement on Government Procurement.  Though Malaysia is 
neither a member nor an Observer to the agreement, Malaysia has adopted its procurement practices 
based on the principles of transparency, public accoun tability, value for money, fair dealing as well 
as open and fair competition.    
 
Para 27  
  Companies with shareholders' funds below the RM 2.5 million threshold (e.g. SMEs) are exempted from obtaining manufacturing licences.  Al so, given Malaysia's small labour force, the 
Government no longer promotes labour-intensive ma nufacturing operations:  if a new manufacturing 
project has a capital investment/employee ratio be low RM 55,000, it is considered labour intensive 
and does not qualify for a manufacturing licence.
97  The authorities consider that MITI, through its 
Malaysian Industrial Development Authority (MI DA) and SME Corporation Malaysia, facilitates 
companies (with or without manufacturing licenses) by, for example, "handholding" these companies 
until their projects are implemented. 
 
20. In paragraph 27 of Chapter IV on "Trade Po licies by Sector", it has been stated that 
"Companies with shareholders' funds below the RM  2.5 million threshold (e.g. SMEs) are exempted 
from obtaining manufacturing licences.  Also, given Malaysia's small labour force, the Government no longer promotes labour-intensive manufacturing oper ations:  if a new manufacturing project has a 
capital investment/employee ratio below RM 55,000, it is considered labour intensive and does not 
qualify for a manufacturing licence".  India would like to know the sectors in which manufacturing units or projects would normally qualify as labour  intensive.  Are there footwear and leather 
manufacturing units classified as labour intensive? 
 
Answer: 
 
The policy of not encouraging labour-intensive industries cuts across all manufacturing projects and is not confined to selected industries.  As such, Ma laysia does not classify certain types of activities as 
labour intensive industries.  As a general rule , any project (including footwear and leather 
manufacturing companies) with capital investment per employee (CIPE) ratio of less than RM 55,000 
would be classified as labour intensive and thus will not qua lify for a manufacturing license. 
 
 
JAPAN
 
 
Para 48  
 
 The number of lines subject to Malaysia's e xport taxes has remained largely unchanged since 
its previous Review.  In 2009, out of 10,389 tariff lines at the 9-digit level, 515 lines were subject to 
export duties;  most of the rates are ad valorem,  ranging from 5% to 20% (except for nine lines, which 
are subject to specific rates).  Products subject to  export taxes include timber, live animals, ash and 
residues, precious metals, copper, and ferrous waste and scrap.  According to the authorities, the main 
                                                      
 97 Exemptions include:  if the value added is 20% or more;  if the project falls within the List of 
Promoted Activities and Products;  if the company is high-tech;  if the company is located in the promoted 
areas;  and if the managerial, technical, and supervisory (MTS) index is 15% or more. WT/TPR/M/225/Add.1 
Page 98  
 
  objective of these taxes is to promote the u se of locally produced commodities in domestic 
downstream industries as well as to conserve the envi ronment.  The authorities are of the view that 
export taxes on timber allow them to better manage sustainable development of Malaysian forest.  
However, such taxes tend to increase the domes tic supply of the products concerned, and as a 
consequence, their domestic prices tend to be lowe r than would otherwise be the case;  thus, export 
taxes assist domestic downstream processing of the produc ts concerned.  In 2007 (the latest year for 
which data were made available), Malaysia 's revenue from export duties amounted to 
RM 2,296 billion, up from RM 1,133 billion in 2001.  1. Please explain in details the export taxes on wood  (HS44) for each line.  We understand that 
among wood, non-stripped wood and roughly squared wood are charged export taxes besides the 
export surcharges (Cess).  The rates of export tax es vary according to the region of destination.  
Please include in the explanations the details for su ch taxes (lines and expor t tax rates by region of 
destination).   Answer:   Malaysia imposes a 15% duty on export of logs (HS 4403) in the form of baulks, saw logs and veneer 
logs.  The same rate of duty is applicable to all destinations.  
2. According to the Secretariat's report, one of the reasons for maintaining the export taxes on 
wood is "to conserve the environmen t."  However, as the Secretariat's report indicates, such taxes tend 
to lower the domestic price of wood by increasing th e domestic supply of the products, resulting in an 
increase of the domestic supply of the products concer ned.  In addition, while charging export taxes 
on raw materials, their processed products are charge d with no or lower export taxes.  Japan is 
concerned by the effects of the support for the domestic industry (a trade distorting measure) 
disguised as an environmental conservation measure.  Please provide your evaluation of the effects of 
these export taxes.  
Answer:  
 As part of its commitment under Sustainable Forest  Management (SFM), Malaysia imposes annual 
coupe for timber felling which limits the pr oduction of timber from natural forest.  
 The imposition of export taxes will also ensure ade quate raw materials for domestic needs and to 
prevent any illegal practices. 
 Para 53
 
  The Customs (Prohibition of Exports) Order 2008 sets out current export prohibitions, restrictions, or licensing requirements.
98  Under the Order, prohibited e xports include arms and related 
materials of all types, turtle eggs, and rattan fro m Peninsular Malaysia.  Revisions to the export 
licensing requirements since Malaysia's previous Review include:  introducing export controls on 
toxic and/or hazardous wastes products, in line with the Regulation under the purview of the 
Environmental Quality Department (Custo ms (Prohibition of Exports) Order 2006, 
21 December 2006);  introducing export controls on beta-agonist used as an ingredient in animal feed 
(Customs (Prohibition of Exports) Order 2007, 31 May 2007);  transfer of the issuing authority for 
export permits for mineral products from the Ministry  of International Trade and Industry (MITI) to 
                                                      
 98 Goods subject to export licensing  include animals and animal products, fish, dairy products, rubber, 
palm oil products, pineapples, vegetables, rice, cocoa, minerals and ores, cement clinkers, Portland cement, metal wastes, some chemicals, cinematographic films, r oofing tiles, timber, plywood veneer chips, waste paper, 
textiles, military clothing and equipment, br icks, tin ingot, sugar, and iron and steel.  WT/TPR/M/225/Add.1 
 Page 99 
 
 
  the Ministry of Natural Resources and Environmen t (Customs (Prohibition of Exports) (Amendment) 
(No. 2) Order 2007, 10 September 2007);  amendmen ts in line with the chan ges in Customs Duties 
Order 2007 (Customs (Prohibition of Exports) Orde r 2008, 31 March 2008);  and transfer of the 
issuing authority for export licences for oil and fats of  palm oils from the MITI to the Malaysia Palm 
Oil Board (Customs (Prohibition of Exports) (A mendment) (No. 2) Order 2008, 29 April 2008). 
 
3. With regard to the exporting licensing of the agricultural products (dairy products, rubber, 
palm oil products, pineapple, ve getables, rice, cocoa, and sugar) , please provide the information on 
the following items:   
i) the details for the export licensing syst em for each agricultural products.  
ii) whether there are any cases of declining th e license, and if so the reason for the 
refusal.  
iii) whether there are any plans to review or abolish the licensing system. 
 Answer:   Further information on export licensing requirements  for the listed agriculture products are available 
in the following websites:  
− Rubber – http://www.lgm.gov.my; 
− Palm oil – http://www.mpob.gov.my; and 
− Cocoa – http://www.koko.gov.my. 
− Dairy products – http://www.dvs.gov.my; 
− Pineapple – http://www.lpnm.gov.my;  
− Vegetables – http://www.fama.gov.my; 
− Rice – http://www.moa.gov.my;  and 
− Sugar – http://www.miti.gov.my. 
ii) Applications will be approved if all the cond itions are met.  For some products, licenses are 
not issued to ensure price stability and food security.   iii) The Government does not plan to review  or abolish the Export Licence system. 
 Para 81
 
  Malaysia does not yet have a comprehensive competition law, but the authorities recognize that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.
99  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.100  The authorities state that Malaysia is currently in the final 
                                                      
 99 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 100 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any 
conduct that has the purpose of "substantially lessening competition" in a communication market (Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and 
efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or WT/TPR/M/225/Add.1 
Page 100  
 
  process of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in 
accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.
101  It is not clear whether GLCs will be 
covered by the FTPB and FTCB. 
 4. According to the Secretariat's report, Malaysia is  "currently in the final process of drafting the 
Fair Trade Practices Bill (FTPB) and the Fair Tr ade Commission Bill (FTCB)".  Please provide the 
information on the timeframe for any further pr ocedures including enactment and enforcement of 
these bills.  
 
Answer:  
 The policy is currently being formulated and the dra ft legislation is still in the drafting stage. Once 
they are finalised, they would have to be presente d to the Cabinet and then Parliament for 
three readings before getting the royal assent from th e King.  The length of the process can take at 
least six months provided there are no objections to the various issues laid down in the law.  
Subsequently, the Acts will be implemented after a two year advocacy period. 
 
5. According to the Secretariat's report, 'the Communications and Multimedia Act 1998 (CMA)' 
and 'the Energy Commission Act 2001 (ECA)' stipul ates rules against anti- competitive measures for 
the communications and multimedia sectors as well as for the energy sector.  After the enforcement of 
the FTPB and FTCB, which law is applied to the anti-competitive conduct in the communications, 
multimedia and energy sectors?  In other wo rds, which is the case among the followings?  
a) only FTPB is applied 
b) both FTPB and CMA or ECA are applied, or 
c) only either CMA or ECA is applied. 
 
Answer:  
 The policy is currently being formulated and the dra ft legislation is still in the drafting stage. Once 
they are finalised, they would have to be presente d to the Cabinet and then Parliament for 
three readings before getting the royal assent from th e King.  The length of the process can take at 
least six months provided there are no objections to the various issues laid down in the law.  The full 
coverage can only be determined then.  
 6. We understand that FTPB does not contain business combination regulation, which is one of 
the major components of comprehensive competition la w.  Please explain the reason for the exclusion 
of the business combination regulation.  
Answer:  
 
Since the FTPB are still at the final drafting stage and has not been finalised, the exclusion of the 
business combination regulation cannot be  determined at this juncture.  
 
                                                                                                                                                                    
 
market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.   
 101 Some working documents outlining the main objectives of the bills and their substantive 
prohibitions were presented during the consultations;  these documents were not made available to the general 
public.  WT/TPR/M/225/Add.1 
 Page 101 
 
 
  Para 86  
  Malaysia is currently undertaking a study of  its legal services framework with a view to 
further liberalizing the sector.  The practice of Mala ysian law is restricted to Malaysian citizens or 
permanent residents who have served an apprenticesh ip with a Malaysian lawyer, are competent in 
Bahasa Malaysia (an official langua ge), and have been admitted to the Malaysian Bar pursuant to the 
Legal Professional Act 1976.  Under Malaysia's GATS commitments, foreign lawyers can practise in 
Malaysia only through a corporation incorporated in Labuan, and are restricted to advisory and 
consultancy services relating to home country laws, international law, and offshore corporation laws 
of Malaysia.
102  No "GATS plus" commitment in legal services has been made in Malaysia's bilateral 
and regional FTAs. 
 7. According to the Secretariat's Report, the Government of Malaysia is undertaking a study on 
its legal services framework with the intention to fu rther liberalize the sector.  Please provide its work 
plan and timeframe if available.  
 
Answer:  
 The Attorney General Chambers, t ogether with the Bar Council Malaysia, are reviewing existing laws 
and regulations that govern the legal profession in Ma laysia in order to realise the plan to liberalise 
the legal services sector.  The review process is st ill on-going with intensive consultations with the 
relevant stakeholders.  
Para 92
 
  The Ministry of Domestic Trade, Co- operatives and Consumerism (MDTCC) regulates 
distribution services in Malaysia.  Its Committee on  Distributive Trade considers applications from 
foreigners intending to undertake distribution services in Malaysia.
103  All applications involving 
foreign investment, including opening of new branches, relocation, expansion of existing 
branches/outlets, and buying over/taking over of outlet s of other operators, require approval from the 
Committee on Distributive Trade.  All applicants  must also obtain approval from the Committee 
before purchasing any land, premises or assets to operate distribution services.   
 
Para 93  
  Companies must be locally incorporated, w ith 30% of equity reserved for bumiputera.  
Minimum capital investment requirements vary accord ing to the type of distribution service:  i.e. 
RM 50 million for hypermarkets, RM 20 million for department stores, RM 25 million for 
superstores, RM 5 million for direct selling, and RM 1 million for each specialty outlet.
104 
 
                                                      
 102 WTO document GATS/SC/52, 15 April 1994. 
 103 The Committee comprises members from regulatory agencies such as  the ministries of Finance, 
International Trade and Industry, Home Affairs, Housing and Local Government, Agriculture and Agro Based 
Industry, Rural and Regional Development, the Economic Planning Unit, and the Federal Territory Ministry.  
The MDTCC serves as the se cretariat to the Committee. 
 104 APEC online information.  Viewed at:  http ://www.apec-iap.org/docume nt/MAS_2008_IAP.htm. 
[20.03.2009]. WT/TPR/M/225/Add.1 
Page 102  
 
  Para 94
 
  An equity restriction of 30% applies to  foreign investors in direct selling business.
105  
Department stores, supermarkets, and shopping malls must reserve 30% of the shelf space for 
products made by Malaysian SMEs.  These restrictions and reserva tions are currently under review by 
the Government. 
 8. Japan commends the easing of the foreign investment restriction in 2009 and the movement 
toward the review of the Bumiputera policy.  On th e other hand, as the Secretariat's report states, the 
restriction over foreign investment and other measu res still exist in the distribution services.  As for 
the review of such restrictions and reservation currently conducted, please provide information on the 
following items.  a) the area for review (commission agent, wholesale, retail, franchise) 
b) the entity and measures of the review (the entity  or organization of review, and its member 
etc.) 
c) the direction of the review (whether it inte nds to strengthen or ease the restrictions and 
reservations, or what kind of means (ex. excl usion of capital restriction under the Bumiputera 
policy) 
d) the timeframe of the review (including the expected time for conclusion) 
 Answer:   The review was concluded in late 2009 and the deci sion to liberalise distribu tive trade services was 
made on 6 January 2010.  Components of di stributive trade services include among others 
commission agent, wholesale, retail and franchise.  The Government has liberalised the equity 
conditions for the distributive trade services except for those who operate as hypermarkets where the 
bumiputera (indigenous group) equity requirements remains at 30%. 
 
 
KOREA
 
 Para 4
 
  In 2008, the surge in commodity prices led to sharp upward adjustments in domestic food and retail fuel prices.  This caused inflation to reach its  26 year peak of 8.5% in July 2008.  This trend, 
however, moderated towards the end of the year as the contraction in global demand and rapid 
declines in global commodity prices led to the modera tion in domestic inflation to 4.4% by December.  
For the year as a whole, headline inflation averaged at 5.4% in 2008 compared to 3% in 2005. 
 Para 14
 
  Malaysia's trade continued to record a surplu s since November 1997.  Exports registered an 
average of 8.5% growth for the period 2005-2008.  In  2007, exports expanded, albeit at a lower rate of 
2.7% due to decline in demand for manufactured g oods.  However, the surge in commodity prices 
helped to push export value up by 9.6% in 2008.  The US, Japan, China and ASEAN member 
countries continued to be Malaysia's major trading partners with a combined average share of 60.0% 
of total exports from 2005-2008. 
 
                                                     
 
 105 Pyramid selling is prohibited;  only single-level marketing, multilevel marketing, and mail order are 
permitted.    WT/TPR/M/225/Add.1 
 Page 103 
 
 
  1. Given that the global commodity prices are declin ing (page 5, para 4), what is the future 
forecast of the trade balance?  Does Malaysia foresee this trend to continue?  
Answer: 
 
Recognizing fluctuation in commodity prices, Ma laysia has embarked on expanding the export basket 
and not depending on commodities.  With regard to the trade balance, continued growth  in the manufacturing sector is expected to 
contribute positive trade balance. 
 
Para 38
 
  During the review period, the manufacturing sector continued to remain as one of the major contributor to economic growth.  The competitiv eness of the manufacturing sector will be further 
enhanced by focusing on higher value added a nd high-technology activities as well as promoting 
productivity driven growth.  The Third Industrial M aster Plan (IMP3) has ou tlined the strategies for 
the period 2006–2020, to promote the development of  12 targeted sectors, namely petrochemicals, 
pharmaceuticals, rubber and rubber products, wood-based products, o il palm-based industry, food 
processing, electrical and electronics (E&E), medical devices, textiles and apparel, machinery and equipment, metals industry and transport equipment.  
 
2. Could Malaysia provide further information on the strategies that are a part of the "Third 
Industrial Master Plan (IMP3)"?  Given that IMP3 includes 12 targeted sectors, it would be highly appreciate if detailed strategies for each of the 12 targeted sectors are provided.  Answer:  Information on IMP3 is available at  MITI website http://www.miti.gov.my. 
 
Para 43
 
 
 During the period under review, various measures were adopted to attract FDI.106  M o r e  
recently, restrictions on foreign investment in services have been removed or reduced (Malaysia 
already allowed 100% foreign equity in manufacturi ng (Chapter IV(5)).  As of 22 April 2009, 100% 
foreign equity is allowed in 27 services subsectors , covering health and social services, tourism, 
transport, business services, and computer and re lated services.  The Government also announced 
relaxation on foreign investment in financial serv ices on 27 April 2009;  fore ign equity limits were 
increased from 49% to 70% for investme nt banks, insurance companies, and takaful  (Islamic 
insurance) operators.  A higher foreign equity lim it beyond 70% is considered on a case-by-case basis 
for insurance companies.  More operational flexibiliti es are also given to locally incorporated foreign 
banks, insurance companies, and takaful  operators (Chapter IV(6)). 
 
Para 44  
  Most notably, on 30 June 2009, the Governme nt announced the liberalization of the Foreign 
Investment Committee (FIC) guidelines, including the repeal of FIC Guidelines on the acquisition of interests, mergers, and takeovers.  The Guidelines had originally imposed bumiputera  equity 
requirement, whereby bumiputera  (ethnic Malays) had to hold a combined 30% stake in locally 
                                                     
 
106 For example, in 2007, PEMUDAH was set up to  improve transparency, and thus the business 
environment (section (3 )(ii)).  And as of 1 December 2008, manufact uring licences were is sued automatically 
(with a few exceptions) to reduce businesses' operation costs (Chapter IV(5)(i)). WT/TPR/M/225/Add.1 
Page 104  
 
  incorporated companies.
107  Following the repeal of the FIC guidelines, for newly listed companies, 
the bumiputera  requirement is 12.5% (50% of the Se curities Commission's 25% public spread 
requirement), and this can be further reduced if mo re shares are issued later.  Also, foreign equity 
limits were raised from 49% to 70% for stock-br oking firms and unit trust management companies, 
and from 70% to 100% for fund management compan ies providing wholesale services.  In addition, 
there was some relaxations on the acquisition of property, as some property transactions involving 
foreign investment no longer require approval from the FIC.  As part of the package, the Government 
set up a private equity fund, Ekuiti Nasional Berhad (EKUINAS) to promote investment in sectors with growth potential, and to ensure participation by bumiputera .
108   
 
3. Could Malaysia provide more information on the initiative adopted in June of 2009 that 
involves the de-regulation of investment guidelines?   What measures were deregulated?  Furthe rmore, to what degree were these measures 
deregulated? 
 
 What is the expected effect of these measur es, in particular on attraction of foreign 
investment?   What is the expected positive effect of the removal of the bumiputera participation 
requirements? 
 
 In connection to the above, could Malaysia clar ify the explanations provided in para 43 and 
para 44 of page 21 of the Secretariat report?    While para 43 states that 100% foreign equity in manufacturing was already allowed and 
recently foreign investment restrictions in several  services sectors were removed, para 44 details the 
bumiputera  participation requirements that are still in pl ace and those that have been removed/reduced 
more recently.  Is it to be understood that there are two different sets of foreign equity restrictions in 
place?  
Answer: 
 
For details please refer to the EPU website h ttp://www.epu.gov.my,  http://www.seccom.com.my and 
http://www.bnm.gov.my.  With the abolition of Foreign Investment Committee (F IC) on 30th June 2009, the FIC Guidelines, 
namely Guideline on the Acquisition of Int erest, Mergers and Takeover and Guideline on the 
Acquisition of Properties by Foreign and Local Interests were deregulated, except for sectors 
categorized as national interest and/or strategic (s uch as those involving issuance of licenses in 
banking, insurance or stock-broking). National int erest and/or strategic sectors will be regulated by 
the respective agencies/sector regulators.  
 Para 14
 
  Tax incentives have long been an important instru ment of Malaysia's industrial policy.  Direct 
and indirect tax incentives apply, inter alia,  to investments in the manufacturing, agriculture, tourism 
and approved services sectors, R&D, training, and en vironmental protection activities.  No estimates 
have been available of total tax revenue forgone as a result of these  incentives.  Experience in other 
                                                     
 
 107 Bumiputera  refers to a Malay or other indigenous ethnic group in Malaysia. 
 108 The Government provided an initial endowment of RM 500 million to EKUINAS, with a target of 
expanding EKUINAS to become a RM 10 billion fund.  WT/TPR/M/225/Add.1 
 Page 105 
 
 
  countries suggests that tax incentives are rarely cost -effective.  The publication of estimates of tax 
revenues forgone as well as studies evaluating th e cost-effectiveness of incentives would improve 
fiscal transparency in Malaysia and cont ribute to a more effective tax policy. 
 4. The Secretariat reports states that  "no estimates are available of  total tax revenue foregone as 
a result of these (tax) incentives", and hence reco mmends that "publication of estimates of tax 
revenues forgone as well as studies evaluating th e cost-effectiveness of incentives would improve 
fiscal transparency in Malaysia and cont ribute to a more effective tax policy." 
  What is Malaysia's view on the recommendation of the Secretariat? 
 
 Are studies on this subject matter being contemplated?  
Answer: 
 
Currently, the Government has no plans to publish es timates of tax revenue forgone due to lack of 
data.  Studies if needed may be considered in the future. 
 
Para 36
 
  Data provided by the authorities indicate that  about a quarter of Malaysia's tariff lines 
(principally with regard to an imal and vegetable products, wood, machinery, vehicles and transport 
equipment, and arms) are subject to import licensi ng, most of which is non-automatic.  Automatic 
licensing is intended for data collection.  The au thorities maintain that non-automatic licences are 
mainly for sanitary and phytosanitary reasons (fo r those concerning agriculture).  Non-automatic 
licensing is also intended to regulate the flow of imports and to promote selected strategic industries 
(such as passenger and commercial vehicles and motorc ycles) that have been identified to achieve 
certain socio-economic objectives;  imports of CF Cs are regulated in accordance with Malaysia's 
obligations under the Montreal Protocol.
109 
Para 39  
  Malaysia maintains quantitative restrictions on  imports of certain products including firearms 
and ammunition, bullet-proof vests, and shrimp broodstock
110;  the current AP system applied to 
imports of motor vehicles can act as a quota restricting the number of cars that can be imported in a given year.  The authorities emphasize that th e AP system is used for monitoring purposes. 
 5. Korea notes with concern the import licensing regi me in place for roughly 25% of Malaysia's 
tariff lines.  In connection to this matter, 
  Could Malaysia explain its rationale for main taining an import licensing regime for vehicles 
and transport equipment?    As for those tariff lines subject to automatic licensing for "data collection" purposes, are there 
not other ways to collect the necessary data? 
  In regards to the "AP system" for motor vehi cles, what measures are being taken to ensure 
that the system is solely used for monitoring pur poses and do not act as a quota restricting the number 
of cars that can be imported in a given year? 
 
                                                     
 
 109 WTO document G/LIC/N/3/MYS/4, 17 October 2008. 
 110 WTO document G/LIC/N3/MYS/4, 17 October 2008. WT/TPR/M/225/Add.1 
Page 106  
 
  Answer: 
 The rationale for maintaining an import licensing regime for vehicles and transport equipment are: 
− to provide clear roadmap for gradual phase- out of imported used vehicles where 
focus will be more on value added activities su ch as assembly/manufacturing of new 
vehicles and components/parts; 
− consistent with policy to gradual phase-out   AP system for used vehicles (commercial, 
passenger and motorcycles) by 31 December 2015; 
− to provide opportunity to existing AP holders to continuously engage in the business; 
− for effective monitoring on company’s compliance with AP conditions;  and 
− conformity with Malaysia’s commitment for market liberalization under AFTA, FTA 
and WTO where the quantitative restriction (QR) should be removed. 
 Through National Automotive Policy Review, new me asure have been introduced to ensure that the 
system is solely used for monito ring purposes and do not act as a quota restricting the number of cars 
that can be imported in a given year: 
− Open AP for used vehicles (commercial, passenger and motorcycles) to be phased out 
by 31 December 2015; 
− no new applications for Open AP will be considered;  and 
− Franchise AP to be phased out by 31 December 2020. 
 
Para 28
 
 
 Since its previous Trade Policy Review, Mala ysia has eliminated and reduced applied MFN 
tariffs on a range of products partly in accord ance with its WTO commitments, but mainly 
unilaterally.111  These products include some dairy products, prepared/preserved fish, preparations of 
fruits/vegetables/nuts, mineral and chemical fer tilizers, plastics and articles thereof, glass and 
glassware, electrical ignition and starting equipm ent, electric apparatus for switching/protecting 
electrical circuits, electric heating apparatus, a nd motor vehicles.  Malaysia's 2009 Budget included 
the elimination of import duties on several food ite ms (including vermicelli, biscuits, some fruit 
juices, and canned sweet corn), and the reducti on of import duties on selected consumer durables 
including blenders, rice cookers, microwave ovens, and electric kettles.  The current average applied MFN tariff (7.4%) is around half the average bound rate (15.6%);  the r esulting gap provides ample 
scope for the authorities to raise applied tariff rat es.  The only tariff-rate increases adopted since 2005 
concern tariff-rate quotas introduced in 2008 (section (e) below).  Nonetheless, as applied MFN tariff 
rates have fallen since 2005, there has been a widening of the gap between bound and applied MFN 
rates, largely owing to unilateral tariff cuts (Chart III.1).  6. Korea notes that the MFN applied rates of Malays ia for transport equipment is consistently 
roughly twice as high as its average MFN applied rates.  
  Could Malaysia provide a timeline to bring its  MFN applied rates for transport equipment in 
line with its average MFN applied rates?  
                                                     
 
 111 Reduction and elimination of tariff rates indicated in the annual Budget is effective in Malaysia's 
tariff schedule when the Budget is tabled in the Parliament.  For example, the reductions and eliminations 
indicated in the Budget 2009 were effective on the day the Budget was tabled in the Parliament (29 August 2008).  The tariff schedule will remain unchanged until the next amendment (including the tabling 
of the next annual Budget).    WT/TPR/M/225/Add.1 
 Page 107 
 
 
  Answer: 
 The MFN applied rates for transport equipment will be  reviewed taking into account the level of 
development and readiness of the industry.  
 Para 43
 
  During the period under review, various measures were adopted to attract FDI.
112  M o r e  
recently, restrictions on foreign investment in services have been removed or reduced (Malaysia 
already allowed 100% foreign equity in manufacturi ng (Chapter IV(5)).  As of 22 April 2009, 100% 
foreign equity is allowed in 27 services subsectors , covering health and social services, tourism, 
transport, business services, and computer and re lated services.  The Government also announced 
relaxation on foreign investment in financial serv ices on 27 April 2009;  fore ign equity limits were 
increased from 49% to 70% for investme nt banks, insurance companies, and takaful  (Islamic 
insurance) operators.  A higher foreign equity lim it beyond 70% is considered on a case-by-case basis 
for insurance companies.  More operational flexibiliti es are also given to locally incorporated foreign 
banks, insurance companies, and takaful  operators (Chapter IV(6)). 
 7. Korea notes the liberalization measures undertaken in 27 services sub-sectors. 
  Could Malaysia list the 27 services sub-sectors and the liberalization measure undertaken for 
each of the sub-sector? 
  For health and social services, what measures are in place (or were implemented) to ensure 
that the liberalization measure did not adversely aff ect Malaysia's existing social programs in place?   
Answer: 
 
The list of the 27 services sub-sectors liberalised is as  per Annex 1.  Malaysi a is currently preparing 
the roadmaps for each of the sub-sectors in or der to liberalise and promotes its development.  
 The liberalisation of health and social services will not jeopardise the social healthcare programmes 
outlined for Malaysians at large.  The liberalisation of private healthcare services provides an option 
to those who are willing to pay for better healthcare services.  
KOREA (ADDITIONAL)
 
 
WTO Secretariat Report 
 
Para 62  
  The Department of Standards Malaysia (S tandards Malaysia) continues to function as 
Malaysia's national standardization and accreditati on body.  SIRIM Berhad, a wholly state-owned 
company, remains the sole national standards development agency under the provisions of the 
Standards of Malaysia Act.  The Malaysian Standards and Accreditati on Council is the advisory body, 
established under the Act to advise the Minister of  Science, Technology and Innovation on matters 
                                                     
 
 112 For example, in 2007, PEMUDAH was set up to  improve transparency, and thus the business 
environment (section (3 )(ii)).  And as of 1 December 2008, manufact uring licences were is sued automatically 
(with a few exceptions) to reduce businesses' operation costs (Chapter IV(5)(i)). WT/TPR/M/225/Add.1 
Page 108  
 
  relating to standards and accreditati on.  Malaysia participates in the activities of the International 
Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).
113   
 1. Starting from August 2009, mandatory standards ar e being applied to im ported iron and steel 
products.  Korea notes, however, that the problems of clearance delay and heavy investigation costs 
arising from the complex approval procedure are fast becoming a major sources of complaint from 
industry.    In this context, are there plans to revise/strea mline/improve the relevant procedure in the near 
future?  
 
Answer: 
 Since 13 October 2009, the issues of delays in cl earance and, high testing and verification costs do 
not arise as a result of several impro vements undertaken by the Government. 
 
 
NEW ZEALAND
 
 
Para 36  
 
 Data provided by the authorities indicate that  about a quarter of Malaysia's tariff lines 
(principally with regard to an imal and vegetable products, wood, machinery, vehicles and transport 
equipment, and arms) are subject to import licensi ng, most of which is non-automatic.  Automatic 
licensing is intended for data collection.  The au thorities maintain that non-automatic licences are 
mainly for sanitary and phytosanitary reasons (fo r those concerning agriculture).  Non-automatic 
licensing is also intended to regulate the flow of imports and to promote selected strategic industries 
(such as passenger and commercial vehicles and motorc ycles) that have been identified to achieve 
certain socio-economic objectives; imports of CFCs  are regulated in accordance with Malaysia's 
obligations under the Montreal Protocol.114 
 Para 37
 
 
 According to the authorities, Malaysia removed import licensing requirements for 48 tariff lines covering machinery and equipment, and el ectrical and electronic products in 2008.
115  O n  
29 August 2008, it was decided in the 2009 Budget that import licence requirements on port cranes (such as gantry cranes, hydraulic loading cranes, and crawler cranes) and heavy machinery (such as 
bulldozers and road rollers) were to be abolished;  and imports of steel and iron products were to be 
liberalized with a view to overcoming increases in price of these products (Customs (Prohibition of Exports) (Amendment) (No. 3) Order 2008, 12 May 2008).
  
 
                                                      
 113 Malaysia participates in the Council, Techni cal Management Board, and various technical 
committees and sub-committees of th e ISO and various technical committ ees and sub-committees of the IEC 
System for Conformity Testing and Certification of Electrical and Electronic Components, and Explosive Atmosphere Schemes (IECEX Schemes). 
 
114 WTO document G/LIC/N/3/MYS/4, 17 October 2008. 
 115 Four categories of items remain subject to various levels of import restriction, as stipulated in the 
Customs (Prohibition of Imports) Order 2008;  these are:  (1) items subject to general import prohibition owing 
to religious, security, health, and environmental reasons;   (2) items requiring import licences mainly for health, 
sanitary, security, environmental protection or intellectual property reasons;  (3) items requiring temporary import restrictions to protect domestic industries;  and (4) items that may be imported only after meeting 
specific criteria.  WT/TPR/M/225/Add.1 
 Page 109 
 
 
  1. New Zealand welcomed the Ministry of Intern ational Trade and Industry's notification of 
December 2008 that import licensing requirements w ould be removed for 27 tariff lines covering iron 
and steel products and notes the outcomes of the sub sequent Iron and Steel review in 2009.  Does 
Malaysia intend to remove import licensing requirements for additional tariff lines in this or any other 
sector?  If so, is there a time-line for doing so?  Answer:  Malaysia is undertaking the review on import licensing requirement from time to time based on the readiness of the industry or sector.  Generally, im port licence is imposed for monitoring, data 
collection, safety, health and security reasons.   
 
Para 81
 
  Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.
116  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.117  The authorities state that Malaysia is currently in the final 
process of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.
118  It is not clear whether GLCs will be 
covered by the FTPB and FTCB.  
2. New Zealand notes that Malaysia is currently in the final process of drafting 'Fair Trade 
Practices' and 'Fair Trade Commission' Bills.  Is ther e a target date for the implementation of this 
legislation?  
Answer: 
 
The Fair Trade Practices and Fair Trade Commission Bill, which are now known as Competition Bill 
and Competition Commission Bill are targeted for comp letion in 2010.  Subseque ntly, the Acts will be 
implemented after a two year advocacy period. 
 
                                                     
 
 116 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 117 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and "Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and 
efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.   
 
118 Some working documents outlining the main objectives of the bills and their substantive 
prohibitions were presented during the consultations;  these documents were not made available to the general 
public. WT/TPR/M/225/Add.1 
Page 110  
 
  Para 11
 
  Malaysia began to apply tariff-rate quotas on 18 tariff lines at the HS 9-digit level from 
April 2008, covering poultry products, pork prod ucts, fresh milk, and cabbage (Table AIV.1).
119  
Quotas are allocated on a first come, first served b asis, and some quotas were overfilled while others 
were not taken up.  The authorities state that TRQs are applied to allow a "reasonable" time for the 
industry to restructure, and are in line with Malaysia's commitments under the WTO.  3. New Zealand notes that Malaysia implemented TRQs across 18 tariff lines in April 2008 to 
meet the requests of domestic producers.  Noting th at these measures are applied to allow "reasonable 
time for the industry to restructure", does Malaysia  intend to progressively remove the TRQs over the 
short/medium term?  If so, what is the time-line fo r removing them?  If not, does Malaysia intend to 
liberalise in-quota and/or out-of-quota tariff rates to f acilitate such adjustment and in light of recent 
increases in food prices?  Answer:  Currently, Malaysia does not have any plans to remo ve the TRQs over the short/medium term as it 
was only implemented on 1 April 2008.  However, e xemption from paying the in-quota tariff rate is 
given for TRQ products that are used for further processing.   
 Para 35
 
  In comparison with manufacturing (with exception of automobiles), services activities have been relatively closed to international competition, with FDI restrictions being major obstacles.  To 
increase productivity, and thus competitiveness in services, the authorities have been progressively 
liberalizing foreign investment in the sector.  On 22 April 2009, the Government announced the 
elimination, with immediate effect, of foreign equity restrictions on 27 services subsectors;  in the areas of health and social services, tourism, transport, business services, and computer and related services.
120  A week later, restrictions were relaxe d on foreign investment in financial services 
(Chapter II (6)).  These liberalization initiatives ha ve been complemented with a support programme 
for the domestic services industry; a services s ector capacity development fund of RM 100 million 
(US$28 million) has been established under th e First Economic Stimulus Package.   
 Para 36
 
  The approval procedure for foreign investment has also been simplified.  Until June 2009, 
foreign acquisitions, mergers, and takeovers of Malaysian companies had to be approved by the 
Foreign Investment Committee (FIC).  Howeve r, on 30 June, the Government announced the 
deregulation of the FIC guidelines, including the repeal of FIC's bumiputera  participation 
requirement.  Thus, the FIC no longer processes a ny acquisitions, mergers or takeovers; nor does it 
impose any equity conditions, alth ough the equity conditions impo sed by sector-specific regulators 
continue to apply.  Equity restrictions are no longer imposed on sectors not considered "strategic"; 
strategic sectors, nonetheless, will not be liberalized  (Chapter II (6)).  The Government also set up a 
private equity fund, Ekuiti Nasional Berhad (EKU INAS) to promote investment in sectors with 
growth potential (notably in services).  
                                                     
 
 119 Prior to April 2008, the authorities state that no TRQ had been enforced although Malaysia has the 
right to implement TRQ on 73 lines at HS 9-digit level under its Uruguay Round commitments.  
120 Prime Minister Office online information.  Viewed at:  http://www.pmo.gov.my/?menu=news& 
page=1729&news_id=39&news_cat=4 [12.10.2009].  WT/TPR/M/225/Add.1 
 Page 111 
 
 
  4. New Zealand commends Malaysia for the m easures announced in 2009 which liberalised 
foreign direct investment rules for 27 services s ub-sectors, some financial services, and the FIC 
regime.  To assist in growing the services sector's contribution to GDP (to 60% by 2020), does Malaysia intend to extend such liberalisation measures to other services sub-sectors?  If so, is there a 
time-line for doing so? 
 
Answer: 
 Liberalisation of the other se rvices sub-sectors will be undert aken on an on-going basis and 
roadmaps for liberalisation and further d evelopment are currently being drawn up. 
 
Malaysia has time-bound plans to open up it s services sector under the ASEAN Framework 
Agreement on Services (AFAS).  Targ eted time line for services equity liberalisation under AFAS is as 
follows:  
Sectors AFAS time line 
Priority sectors:  e-ASEAN, healthcare and tourism services  51% :  2008 
70% :  2010 
Logistics 51% :  2010 
70% :  2013 
Other sectors, excluding finance 51% :  2008 
70% :  2015 
 
 NORWAY
 
 Para 47
 
  The Labuan International Business and Financial Centre (IBFC), Malaysia's only international 
financial centre, was set up in 1990 with a view to strengthening the financial services sector in 
Malaysia.  Under the Offshore Banking Act 1990, offshore financial services are regulated by the 
Labuan Offshore Financial Serv ices Authority (LOFSA), which is in charge of, inter alia , the 
incorporation and registration of companies in Labua n.  There are no foreign-ownership restrictions 
for offshore banks in the IBFC.  Offshore companies and financial institutions in Labuan benefit from, 
inter alia , tax and non-tax incentives.  For example, under the Labuan Offshore Business Activities 
Tax Act 1990, offshore companies and financial institutions may choose to  pay tax at a rate of 3% of 
its net profits or a fixed amount of RM 20,000, instead of a statutory corporate income tax at 25%.  
This policy was revised in 2008, and offshore companies may choose to be taxed at the statutory rate 
of 25% and benefit from Malaysia's tax treaties.  Malaysia has recently announced more liberalisation 
measures to provide a more flexible business envi ronment for offshore financial institutions:  from 
2010, offshore banking institutions meeting certain criteria may have a physical presence onshore. 
 1. Is it allowed for an insurance broker opera ting within the Labuan International Business and 
Financial Centre (Labuan IBFC) to market mari ne insurance services from insurance companies not 
registered in Malaysia, when the buyer is opera ting within the Labuan IBFC? (More broadly: Is 
market access in mode 1 allowed for companies operating in the Labuan IBFC?) 
  2. Is it allowed for an insurance broker opera ting within the Labuan International Business and 
Financial Centre (Labuan IBFC) to market mari ne insurance services from insurance companies not 
registered in Malaysia, when the buyer is locat ed in Malaysia, but outside the Labuan IBFC?  
 WT/TPR/M/225/Add.1 
Page 112  
 
  3. According to Malaysia's GATS commitments, out ward reinsurance is permitted only if local 
capacity is not available.   
i) Does this limitation also apply to insurance companies operating within the Labuan 
International Business and Financ ial Centre (Labuan IBFC)?   
ii) Which procedures are used for determining whether local capacity is available? 
iii) What portion of overall reinsurance was pl aced outside of Malaysia in 2008 (or the 
latest available year)? 
 4. According to Malaysia's GATS commitments, direct placement abroad of insurance of 
movable property located in Malaysia, including an y ship registered in Malaysia, is allowed.  
However, soliciting and advertising in Malaysia is not allowed.  
 
i) Marine insurance may require extensive c ontacts between the buyer and seller of the 
insurance.  To what extent is such c ontact allowed without being classified as 
soliciting and advertising? 
ii) Could the Government of Malaysia provi de an estimate of the proportion of 
Malaysia's merchant fleet taking out in surance policies outside of Malaysia? 
 
Answer: 
 1. There is no restriction for an offshore in surance broker licensed  under the Offshore 
Insurance Act 1990 (offshore insurance broker)  to market any marine  insurance services for 
insurance companies outside Malaysia as long as the marine risk owner is operating in Labuan. 
 
2. No, insurance brokers in Labuan IBFC are not allowed to market or solicit marine insurance 
risks for insurance companies not regis tered or licensed in Malaysia.  
 
3. (i) No, this limitation applies to only insu rance companies licensed under the Insurance 
 Act 1996 and not Labuan IBFC. (ii) Licensed insurers are respons ible to ensure that prior ity has been accorded to 
optimise the retention capacity of (re)insu rers licensed under the Insurance Act 1996 
and the insurers are required to submit th e report on their reinsurance arrangement 
to Bank Negara Malaysia. 
(iii) The retention capacity of the country is very high, only a small portion are ceded out. 
 
4. The above statement is incorrect.  Direct pl acement abroad of insurance of movable or 
immovable property located in Malaysia, includi ng any ship or aircraft registered in Malaysia 
requires the approval of the Bank Negara Mala ysia, as prescribed under Section 140 of the 
Insurance Act 1996.  Approval may be granted if  the insurance of the property is not available 
from any general insurers licensed  under the Insurance Act 1996.  
 
(i) Contacts between the buyer and seller of the marine insurance policy will not be 
deemed as direct soliciting and advertising by  a foreign insurer as long as the contact 
was initiated by the buyer. 
(ii) Direct placement of merchant fleet insurance outside Malaysia requires prior 
approval of Bank Negara Malaysia, with the exception of the direct placement of 
international marine, insurance and transit risks with insurer in ASEAN countries.  
However, the Bank does not have available statistics on direct placement of 
Malaysia’s merchant fleet in surance risks offshore.  
  WT/TPR/M/225/Add.1 
 Page 113 
 
 
  Para 19  
  As Petronas is the regulator of upstream activ ities in both oil and gas, companies wishing to 
participate in the upstream sector must obtai n licences from Petronas.  Downstream petroleum 
industry activities are regulated by the Ministry of  Domestic Trade, Co-operatives and Consumerism 
(MDTCC), and the Ministry of International Trade and Industry (MITI).  MDTCC issues licences for 
the marketing, storage, and distribution of petr oleum and certain petrochemical products, and MITI 
issues licences for the processing and refining of petroleum and the manufacture of petrochemical products.  Downstream activities of the gas industry,  on the other hand, are regulated by the Energy 
Commission under the Ministry of Energy, Green Technology and Water.   
 
5. In the Trade Policy Review on Malaysia, prep ared by the WTO Secret ariat, the description 
concerning oil and gas is solely concentrated on th e regime as regards upstream oil and gas activities. 
However, in the view of Norway, the upstream regime of a country should not necessary be an 
obstacle to the possibility of delivering services in  the sector.  How does Malaysia consider the 
possibility of distinguishing between the upstream regime, the resource management regime, on the 
one side, and the services market that the oil compan ies make use of to assist in exploiting resources 
according to a license to produce oil and gas res ources?  Could you please clarify whether services 
could be provided by foreigners  on the upstream petroleum sector? 
 
Answer: 
 
Under the Petroleum Development Act, 1974 (The Act), PETRONAS has the entire ownership in 
petroleum resources in Malaysia,  and the exclusive rights to explore, develop and produce petroleum 
resources whether onshore or offshore of Malaysia.  
PETRONAS carries out upstream activities in Mala ysia through the producti on sharing contracts 
system, or commonly known as PSC, with multi national oil and gas companies such as Shell, 
ExxonMobil, Murphy, Talisman,  Nippon Oil and PETRONAS Carigali Sdn Bhd, a subsidiary of 
PETRONAS.  In the financial year ended 31 March 2009, six new PSCs were signed, bringing the 
total PSCs in operations as at 31 March 2009 to 71.  
In addition to the PSC contracto rs, the operations of the upstrea m sector in Malaysia are supported 
by various oil and gas service providers.  Partici pation is open to all domestic and international oil 
and gas service providers without exception, as long as the companies are registered as PETRONAS 
licensees.    
Key multinational companies registered include  Schlumberger, Baker Hugher, Technip, SBM 
Offshore Group and General Electric O&G Pipeline Solution.    For downstream activities and development relating to petroleum and its products, Ministry of 
International Trade and Industry (MITI) issues lic enses for the processing and refining of petroleum 
as well as the manufacture of petrochemical pro ducts while the Ministry of Domestic Trade, 
Cooperatives and Consumerism (MDTCC) issues licenses for the marketing and distribution of 
petroleum and petrochemical products. 
 WT/TPR/M/225/Add.1 
Page 114  
 
  Para 68
 
  Competition in telecommunications (particularly in fixed-line services) is limited.
121  
However, the authorities consider that competition was introduced in the fixed-line sector in early 
1990s, when five additional licences were issued in  line with the National Telecommunication Policy 
to encourage competition. 
 6. Paragraph 67 of the TPR report descr ibes a 30% cap on foreign ownership in 
telecommunication services.  More and more WTO Members choose to remove such ownership caps, based on the thinking that increased  competition creates a win-win situation.  In light of this, are there 
any plans to open for a higher degree of foreign pa rticipation in the Malaysian telecommunications 
sector?  Would any such changes become part of Malaysia's "Schedule of Specific Commitments"? 
 
Answer:  
 
Malaysia is currently reviewing its policy to relax  the foreign equity in the telecommunication 
services.   
 
Para 80
 
  Malaysia has been liberalizing its maritime sect or;  as of April 2009, 100% foreign equity is 
allowed in some maritime services.
122  Otherwise, maximum foreign ownership is 70% in Malaysian 
shipping companies, and 49% in ports.  The Govern ment also adopted measures to partially liberalize 
cabotage;  previously, domestic routes were re served for Malaysian registered vessels, although 
foreign-flagged vessels were allowed to tranship containers between the Malaysian ports of Penang 
and Port Klang, and between Pe nang, Johor, and Port Klang wit hout obtaining domestic shipping 
licence.  As of 3 June 2009, the Government allo ws foreign-flagged vessels to tranship containers 
between the ports of Sepangar, Bintulu, and Kuching,  and the ports of Klang and Tanjung Pelepas.    
 7. Malaysia's commitments on maritime trans portation exclude "governmental cargo".  There 
are several different definitions and interpretati ons of the term "governmental cargo".  Could you 
elaborate on which types of cargo you consider  as governmental?  For example, are all goods 
produced by a state owned company considered as "governmental cargo"? 
  In paragraph 80 it is stated that "as of Apr il 2009, 100 % foreign equity is allowed in some 
maritime services. Otherwise, maximum foreign ow nership is 70% in Mala ysian shipping companies 
and 49% in ports".  This liberalisation is most  welcome.  Will these changes become part of 
Malaysia's "Schedule of Specific Commitments"?  The footnote states that 100 % foreign equity is 
allowed for class C freight transportation, maritime  agency services and vessel salvage and refloating 
services.  Is this the complete list of service areas covered by this amendment?    Paragraph 80 states that "The Government also adopted measures to partially liberalize 
cabotage;  previously, domestic routes were re served for Malaysian registered vessels, although 
foreign-flagged vessels were allowed to tranship containers between the Malaysian ports of Penang 
and Port Klang, and between Pe nang, Johor, and Port Klang wit hout obtaining domestic shipping 
licence.  As of 3 June 2009, the Government allo ws foreign-flagged vessels to tranship containers 
between the ports of Sepangar, Bintulu, and Kuchi ng, and the ports of Klang and Tanjung Pelepas".  
                                                     
 
 121 The efficiency of the telecom sector is affected by, inter alia , the equity cap on foreign investment, 
the requirement that companies must have a bumiputera  equity participation of 30%, and the uncertainty and 
lengthy procedure for obtaining a licence.  
122 In particular, 100% foreign equity is allowed in:  class C freight transportation (for private carrier 
licence to transport own goods), ma ritime agency services, and vesse l salvage and refloating services.  WT/TPR/M/225/Add.1 
 Page 115 
 
 
  Opening for vessels to tranship containers domestica lly in foreign countries is an important issue for 
international maritime transport in general.  The pa rtial liberalisation in this matter is therefore most 
welcome.  What is the reasoning behind opening fo r foreign vessels to tranship containers between 
specific ports while other routes are still reserved for Malaysian registered vessels?   Answer:  
 
"Government Cargo" is defined as cargo contracted and paid for by the Government. 
 Among the 27 services sub-sectors liberalised in Ap ril 2009, those involving maritime services are 
maritime agency services, vessel salvage and refloating services, rental/leasing services of ships that 
exclude cabotage and offshore traders and rental of cargo vessels without cre w.  The Government 
will continue to undertake binding commitments in  the WTO based on the pr ogressive liberalisation 
provision provided for under the GATS and in  tandem with the capacity of domestic services 
providers.  The final offer for the Doha Round will reflect new improvements taking into account the 
overall balance in the negotiations. 
 On cabotage, the partial liberalisation on contain er transhipment cargo has been made within the 
shipping route connecting the federal ports.  The lib eralisation is designated to enhance Port Klang's 
position as a hub port and to support the emerging hub port of Tanjung Pelepas in southern Malaysia 
under the Ninth Malaysia Plan.  For East Malaysi a (Sabah and Sarawak), the partial liberalisation of 
the cabotage policy has the potential to reduce the tr ansport cost by opening up the market to players 
with best practices and comparative advantage. 
 
 
PAKISTAN
 
 
WTO Secretariat Report 
 
Para 24  
 
 Malaysia's tariff classification systems, for preferential and MFN tariffs, are aligned to the 
Harmonized System at 9-digit level;  preferentia l tariffs for intra-ASEAN trade remain under the 
AHTN classification system.  The current Malaysian customs nomenclature (for MFN duties) is based 
on the 2007 Harmonized System (HS).  The Malaysian tariff comprises 10,389 lines at the 9-digit 
level.  Almost all rates (99.2%) are ad valorem ;  the remainder are specific, compound, or alternate 
duties.  Malaysia has no plans to convert all of  its non-ad valorem duties to ad valorem duties123;  it 
continues to maintain non- ad valorem  duties for agricultural products  to protect small and rural 
farmers.  Given that these duties conceal relativel y high AVEs, the level of applied tariff protection 
could be considerably higher than the simple average of all ad valorem  rates of 7.4% in 2009.124  
In 2009, 32 of the top 50 tariffs entailed non- ad valorem  rates. 
 
                                                      
 123 The authorities state that they do not plan to conv ert specific duties applied to alcoholic beverages 
into ad valorem  duties. 
 124 In view of transparency, the authorities provided ad valorem  equivalents (AVEs) for 46 out of 
80 non- ad valorem  tariff lines;  AVEs for 73 ta riff lines are based on import data for 2003-05, and those for 
7 lines on data for 2005-07.  AVEs were not provided for alcoholic beverages, possibly indicating the prohibitive nature of tariff rates for these products.  If the AVEs provided are included, the simple average MFN 
applied tariff rate becomes 9.1% (7.4% excluding AVEs) , and the simple average MFN applied rate becomes 
18.1% for agricultural products (WTO definition) (2 .8% excluding AVEs) and 7.9% for non-agricultural 
products (also 7.9% excluding AVEs).  Three tariff lines have AVEs exceed ing 1,000%;  they involve bananas 
and tobacco refuse.  The simple average of AVEs provided is 392%. WT/TPR/M/225/Add.1 
Page 116  
 
  Para 25
 
  Regular reviews of the tariff structure and ta riff rates are held through dialogues between the 
authorities and the business community.  The Speci al Advisory Committee on Tariffs (SACT), under 
MITI, receives and considers applications for tari ff review, which may then be announced in the 
annual Budget.   
 Para 26
 
  There has been little change in Malaysia's tari ff bindings since its previous Review;  about 
20% of Malaysia's tariff lines are unbound.  The re latively high proportion of unbound lines creates a 
degree of unpredictability as there is significant scope for the authorities to raise tariffs.  The 
authorities maintain that they will consider increasing  the binding coverage s ubstantially in the Doha 
round of negotiations.  
Para 27
 
  Malaysia's final overall bound rate (i.e. for 2005) was 15.6%.  The average bound rate was 
11.0% for agricultural products (WTO defin ition) and 16.5% for non-agricultural products. 
 Para 28
 
 
 Since its previous Trade Policy Review, Mala ysia has eliminated and reduced applied MFN 
tariffs on a range of products partly in accord ance with its WTO commitments, but mainly 
unilaterally.  These products include some dairy pr oducts, prepared/preserved fish, preparations of 
fruits/vegetables/nuts, mineral and chemical fer tilizers, plastics and articles thereof, glass and 
glassware, electrical ignition and starting equipm ent, electric apparatus for switching/protecting 
electrical circuits, electric heating apparatus, a nd motor vehicles.  Malaysia's 2009 Budget included 
the elimination of import duties on several food ite ms (including vermicelli, biscuits, some fruit 
juices, and canned sweet corn), and the reducti on of import duties on selected consumer durables 
including blenders, rice cookers, microwave ovens, and electric kettles.  The current average applied MFN tariff (7.4%) is around half the average bound rate (15.6%);  the r esulting gap provides ample 
scope for the authorities to raise applied tariff rat es.  The only tariff-rate increases adopted since 2005 
concern tariff-rate quotas introduced in 2008 (section (e) below).  Nonetheless, as applied MFN tariff 
rates have fallen since 2005, there has been a widening of the gap between bound and applied MFN 
rates, largely owing to unilateral tariff cuts (Chart III.1).  
Para 29
 
  The dispersion of MFN tariff rates has been largely unchanged since 2005, judging from the coefficient of variation;  a larger dispersion can entail higher economic costs due to distortions, for 
example, between the prices of substitutes, admi nistrative complexity of the tariffs, and more 
opportunity for tariff evasion through product misclassification.  There are 19 different ad valorem  
rates, ranging from 0% to 90%, 20 specific rates, 4 alternate rates, and 9 compound rates.  As a 
proportion of all tariffs, "domestic tariff peaks" decreased slightly.  The proportion of tariffs 
exceeding 15% also decreased sligh tly, from 23.4% in 2005 to 22.2% in 2009.  About 60% of tariff 
lines are duty free, compared with 57.8% in 2005 (Chart III.2).  
Para 30
 
  Since 1 April 2008, Malaysia has applied tariff-ra te quotas (TRQs) on 18 products to meet the 
requests of domestic small producers.  As a result,  these items, whose tariff rates used to range from 
0% to 5%, are now subject to in-quota rates ra nging from 0% to 25% and out-of-quota rates ranging  WT/TPR/M/225/Add.1 
 Page 117 
 
 
  from 20% to 90%.  The authorities maintain that they had suspended the implementation of TRQs, 
which was part of Malaysia's tariff concessi ons during the Uruguay R ound, until March 2008. 
 1. Malaysia has 60% tariff lines duty free and av erage applied MFN rate in single digit. 
However approximately 20% tariff lines are unbound and in recent past it has also invoked TRQ on 
few products.  Would Malaysia like to share the reason and results of maintaining unbound lines and 
TRQ in the wake of a liberal trade policy?  
Answer: 
 
In the Uruguay Round, Malaysia bound significant number of lines compared to the Tokyo Round. 
There were certain sectors at that time which requi red a certain level of support.  Nevertheless, 
Malaysia will further review the unbound lines and in crease the level of binding in the Doha Round. 
 TRQ has been implemented since 1 April 2008 a cross 18 tariff lines given Malaysia's level of 
development and the need to develop domestic industry.   However, exemption from paying the tariff 
rate is given for TRQ products that are used for processing.   
 
Para 3 
 
  Apart from import prohibitions, implemented, inter alia, for national security, religious, and 
environmental reasons, various non-ta riff border measures are also used as instruments of Malaysia's 
trade and industrial policy.  A considerable portio n of Malaysia's tariff lines are subject to import 
licensing, most of which is non-automatic.  While automatic licensing is intended for data collection, 
the authorities maintain that non-au tomatic licences are mainly for san itary and phytosanitary reasons 
(for agriculture);  non-automatic licensing is also intended to regulate the flow of imports and to 
promote selected strategic industries identified fo r certain socio-economic objectives.  During the 
period under review, Malaysia initiate d a variety of anti-dumping actions against 10 Members;  in the 
same period, 13 Members took anti-dumping actions  against Malaysian products.  Malaysia has 
introduced a Safeguards Act 2006 and Safeguards Regulations 2007. 
 2. Would Malaysia like to share its experience with the Members as to how the procedural 
requirement of non-automatic licensing is work ing to achieve socio-economic objectives through 
trade policy instrument? 
 
Answer: 
 The use of the non-automatic licensing assisted the development of domestic industries and enhancing 
participation of indigenous entrepreneurs in cert ain sectors such as the automotive industry.  
 
Para 1
 
  During the period under review, Malaysia has been adopting measures specified under 
various plans, such as the Ninth Malaysia Plan (2006-10) and the Third Industrial Master Plan 
(2006-20), with a view to guiding the country towards global competitiveness and becoming a higher-
value added and knowledge-based economy.  Malaysia  aims to increase the share of the services 
sector to GDP to 60% by 2020, in an effort to  establish a knowledge-based economy less reliant on 
manufactured exports.    3. Malaysia aims to increase its shares of Serv ices in GDP to 60% by 2020.  What are the 
specific trade policy instruments which Malays ia would implement to achieve this goal. 
 WT/TPR/M/225/Add.1 
Page 118  
 
  Answer: 
 Among the measures undertaken by the Governme nt to further develop the services sector:  
− Liberalisation of the services sector: 
− 22 April 2009 – Immediate liberalisation of 27 services sector; 
− 27 April 2009 – Liberalisatio n of financial sector including Legal Practise in Islamic 
Finance; 
− 30 June 2009 – Removal of equity requirement under the Foreign Investment 
Committee (FIC) guidelines.  
− Negotiations in various fora, WTO, ASEAN and regional and bilateral FTAs. 
− Other measures include building capacity of domestic service  suppliers to promote export of 
services;  and 
− Review of domestic rules and regulations to  facilitate market access and movement of 
professionals. 
 
 
PERU
 
 
WTO Secretariat Report 
 
1. Are local government institutions in Malaysia  empowered to draft standards, technical 
regulations and conformity assessment procedures?  If so, do they comply with the obligations laid 
down in the WTO TBT Agreement, including the notification obligation? 
 
Answer: 
 Yes, the local government institutions in Mala ysia are empowered to draft standards, technical 
regulations and conformity assessment procedures and they do comply with the obligations laid down 
in the WTO TBT Agreement including the notifications and obligation.  
 
2. What are the main sectors in which Malays ia has aligned its technical standards and 
regulations with inte rnational standards? 
 
Answer: 
 The main sectors are Information Technology, Te lecommunication and Multimedia (93%), Medical 
Devices and Facilities for Healthcare (88%) and Po wer Generation, Transmission and Distribution 
of Electrical Energy (78%). 
 
3. What transparency procedures does Malaysia  use for the publication of its technical 
regulations?  Does the SIRIM Berhad have a cons olidated web page for the publication of such 
regulations? Are technical regula tions and conformity assessment pr ocedures published in English? 
 Answer:  Technical regulations that have been published are available at http://www.lawnet.com.my. 
Additional information is usually available on the websites of individual regulatory agencies. 
 Besides publication in the national language (Malay ), an English translation is also published. 
  WT/TPR/M/225/Add.1 
 Page 119 
 
 
  4. What period does Malaysia grant to WTO Members for comments on its draft technical 
regulations or conformity assessment procedures?  What is the average length of time between 
publication of a technical regulation and its entry into force?  
Answer: 
 
60 days as recommended by WTO TBT Committee.  On average 6 months to 1 year. 
 
5. Does Malaysia have a mechanism for publis hing replies to the comments received from 
WTO Members on draft technical regulations or conformity assessment procedures? 
 
Answer: 
 
SIRIM Berhad is appointed by the Government to manage the WTO/TBT enquiry and notification 
point.  One of the functions is to answer fo reign enquiries on any existing or proposed Malaysian 
Standards, regulations and c onformity assessment procedures.  However, WTO/TBT enquiry and 
notification point does not publish replies. 
 
6. How does Malaysia consider foreign interests in the adoption of new or revised standards 
under the procedures on draft standards published on the websites of Standards Malaysia and 
SIRIM Berhad? 
 
Answer: 
 STANDARDS MALAYSIA has adopted and implemente d the TBT Code of Good Practice.  All 
standards development projects are announced on its website and comments invited from all 
interested parties within and outside the country.  These comments are considered before finalisation 
of the standards. 
 
7. What supervisory approach does Malaysia use to ensure that the results of conformity 
assessments comply with technical regulations?  Is such supervision conducted at customs or in the 
domestic market? 
 
Answer: 
 
Enforcement by Royal Malaysian Customs Department at point of entry and by relevant enforcement 
agencies for domestic market. 
 
8. Which of Malaysia's bilateral trade agreemen ts contain provisions relating to technical 
barriers to trade?  What are the key features of such  agreements and what do th ey contribute in terms 
of the rights and obligations laid down in the WTO TBT Agreement?  
Answer: 
 
In general, Malaysia's FTAs contain a provisi on where both parties reaffirm their commitments under 
the Agreement on Technical Barriers to Trade in Ann ex 1A to the WTO Agreem ent.  Where explicitly 
expressed, the provision entails and encourages coop eration, conformity to international standards, 
conformity assessment procedures through mutual  recognition arrangements and the establishment of 
a focal point for communication purposes.  
9. Are there sectors or activities exclusively reserved for domestic suppliers? 
 WT/TPR/M/225/Add.1 
Page 120  
 
  Answer: 
 None, except for importation of rice by BERNAS.    
10. Are preferences provided for SMEs? 
 
Answer: 
 SMEs are given assistance and training for produc t development and marketing, in line with the 
overall development thrust to integr ate SMEs into the mainstream.  
 11. Are the notices and tender documentation publishe d in English and in electronic form?  Can 
bids be submitted electronically?  
Answer: 
 
Malaysia's Government procurement policies, rules and procedures as well as documents related to 
the procurement are available in the Malay L anguage only.  However, documents related to 
international tender e.g. tender notices and documen tation will be made available in the English 
Language.   
The Ministry of Finance has issued Treasury Circu lar Letter No. 6 Year 2008 which stipulates that 
Government Agencies which have been ePerolehan (el ectronic procurement) e nabled are required to 
use Modules under ePerolehan system for the purcha se of supplies and services e.g. Quotation and 
Tender Modules.  The Modules allow invitations for quotations and tenders to be done online.   
 12. What are the entities responsible for government procurement? 
 
Answer:  Federal procurement policies, rules and procedu res generally apply to State Governments, Local 
Authorities and Statutory Bodies.  However, Local Au thorities and Statutory Bodies are allowed some 
flexibility in adopting and adapting the procurement procedures provided that the principles of 
government procurement are not compromised.  
The Ministry of Finance and agencies both at the federal and state level, as well as State 
Governments, Local Authorities and Statutory Bodies are allowed to undertake government 
procurement activities.  
 
13. Are challenge procedures available to forei gners?  If so, what is the competent body? 
 
Answer:  The Ministry of Finance (MOF) has issued  a Treasury Circular Letter No. 5 Year 2007
 which 
stipulates that tender specifications should not be tailored to a particular brand/product.  A 
prospective bidder who considers that this rule has  been violated may lodge a complaint to the 
procuring Agency within 14 days from the date lo cal tenders documents are available for sale and 
within 28 days from the date internationa l tenders documents are available for sale. 
 
Bidders can submit complaints to procuring Agenci es or to the Ministry of Finance if they have been 
denied a fair deal in any procurement exercise.  Any aggrieved party may also lodge a complaint with 
the Malaysian Anti-Corruption Commission or Public  Complaints Bureau, besides the MOF.  A 
dedicated unit is also established at the MOF to attend complaints of late payments and any  WT/TPR/M/225/Add.1 
 Page 121 
 
 
  impropriety in procurement exercise.  For any c ontroversial issues that arise during the contract, 
Agencies and companies are encouraged to first resol ve the issues through mutual agreement, failing 
which, the parties concerned may refer the dispute to arbitration.  
 
14. Has Malaysia undertaken any international commitments with regard to government 
procurement (under regional trade agreements, for example)? 
 
Answer: 
 Foreign companies may participate in local tenders, pr ovided they incorporate a local company in 
Malaysia. International tenders are only invited if goods and services cannot be procured locally.   
 
15. Does a single law apply at all levels of  government, or are there several laws? 
 
Answer: 
 
Several laws are applicable in Malaysi a ie. federal laws and state laws. 
 
16. Does Malaysia use the reverse auction a nd/or the framework agreement method(s)? 
 
Answer: 
 
Malaysia has developed a reverse auction bidding module under the ePerolehan system i.e. eBidding.  eBidding is an option to Agencies to procure goods and services through the electronic procurement 
system as it is cost effective and time saving.  Comp anies will be invited via online to participate in 
the eBidding, interactively and in real time within a specified time frame.    
 
With regards to the framework agreement me thod, Malaysia currently does not implement the 
framework agreement method in government procurement.   
 
17. Is there a central register of suppliers to par ticipate in tenders in Malaysia?  Are there other 
registers?  In which cases? 
 
Answer: 
 All companies and corporate bodies, which are incorporated in Malaysia, as well as individuals intending to participate in Government procuremen t i.e. to do business with the Government, are 
required to undergo a registration process.  Registration authorities are as below: 
 Category
   Registration Authorities  
 Supplies   Government Procurement Division, Ministry of Finance Malaysia Services   Government Procurement Di vision, Ministry of Finance Malaysia 
Works   Contractors Services Centre, Mini stry of Works Malaysia; and Construction 
Industry Development Board (CIDB) Malaysia    
 
Para 67
 
 
 Telecom services suppliers must obtain a licence from the Minister of Information, 
Communication and Culture;  licence conditions are th e same for local and foreign service suppliers.  
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  WT/TPR/M/225/Add.1 
Page 122  
 
  Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed.
125   
 18. According to paragraph 67, "[t]elecom services suppliers must obtain a licence from the 
Minister of Information, Communication and Culture ;  licence conditions are the same for local and 
foreign service suppliers.  The company must be in corporated in Malaysia, with minimum paid-up 
capital of RM 500,000".  Do such conditions  also apply to resale service providers? 
 
Answer: 
 
In most cases (depending on how the service is  offered) resale services only require a class 
application service provider licence.  The conditions stated above such as minimum paid up capital 
and foreign equity limit are only applicable to individual licences and not class licences.     
 
Para 74
 
 
 Malaysia has seven international airports.126  Airport access and related services, as well as 
facilities are regulated by MOT and the DCA.  Sl ot coordination is managed by a joint committee 
headed by MAS and comprising national airlines, the DCA, ground handlers, and the airport operator.  Malaysia's airport charges are among the cheapest in the region (Table AIV.5).  The authorities state 
that the Government provides no subsidies for air port charges;  they are regulated by the Civil 
Aviation Regulations 1996, and any increase must be approved by the Government. 
 19. Paragraph 74 states that "[a]irport access and related services, as well as facilities are 
regulated by MOT and the DCA.  Slot coordina tion is managed by a joint committee headed by 
MAS and comprising national airlines, the DCA, ground handlers, and the airport operator".  Is 
foreign participation allowed in the supply of gr ound handling and ancillary air transport services? 
 
Answer: 
 At present, foreign participation is not allowed in the supply of ground handling in Malaysia.  
However, foreign participation is allowed, to some  extent, for the other anc illary services, such as 
aircraft repair and maintenance services, selling and marketing of air transport services, computer 
reservation system services, aircraft leasing without crew, aircraft leasing with crew and airfreight 
forwarding services.  The Government is reviewing th e level of foreign participation in these ancillary 
services from time to time and will gr adually liberalize the services. 
 Para 76
 
  The authorities consider maritime transport to  be a strategic sector;  more than 90% of 
Malaysia's international trade is transported by sea.  Maritime transport grew steadily during the 
period under review, although there was a downtur n in terms of total cargo handled in 2008. 
 
20. According to paragraph 76, "[m]aritime tran sport grew steadily during the period under 
review, although there was a downturn in terms of total cargo handled in 2008".  What is the volume 
of cargo handled in the past two years?  
                                                     
 
 125 Higher equity participation is allowed for "indivi dual network service provider licenses", and "class 
application service provider licenses".  
126 Kuala Lumpur International Airport (KLIA), Penang, Langkawi, Johor, Subang, Kota Kinabalu, and 
Kuching.  WT/TPR/M/225/Add.1 
 Page 123 
 
 
  Answer: 
 
Cargo handled is as follows:- 
2008 – 16,436,146 TEUs 2007 – 15,338,059 TEUs   
 
Para 81
 
  Malaysia's tourism sector continues to be a signi ficant source of export earnings.  It is one of 
the promoted services sectors under the Third Industrial Master Plan 2006-2020.  In particular, the 
National Tourism Policy (2004-10) aims to develop the tourism industry into one of the country's 
main sources of income.
127  
 21. According to paragraph 81, "[to ] date, Malaysia has signed b ilateral shipping arrangements 
with 12 countries, and has ratified 18 interna tional conventions".  What are these countries and 
international conventions? 
 
Answer: 
 The bilateral shipping arrangements are as follows:   
(i) Bangladesh  19 April 1983 
(ii) Turkey   8 September 1983 
(iii) Belgo-Luxemburge 12 February 1985 
(iv) Sri Lanka  17 June 1985 
(v) Pakistan  24 August 1985 
(vi) USSR   31 July 1987 
(vii) China   9 September 1987 
(viii) Indonesia  17 June 1988 
(ix) South Korea  21 July 1988 
(x) Romania  26 February 1991 
(xi) Viet Nam  31 March 1992 
(xii) South Africa  7 March 1997 
  The International Conventions were:- 1) Convention on the International Maritime Organization 1948 
2) Convention on the International Maritime Organization (Institutionalization of the 
Facilitation Committee) 1991 (Amendment) 
3) International Convention on Load Lines (LL) 1966 
4) Convention on the International Regulations for Preventing Collisions at Sea (COLREG) 
1972 
5) International Convention for the Safety of Life at Sea (SOLAS) 1974 
6) Protocol 1978, International Convention for the Safety of Life at Sea (SOLAS) 1974 
7) International Convention on Tonnage Measurement of Ships (Tonnage) 1969 
8) Convention on the International Mob ile Satellite Organiza tion (INMARSAT) 1976 
9) Operating Agreement on the Internationa l Mobile Satellite Organization 1976 
10) International Convention on Standards of Tr aining, Certification and Watchkeeping for 
Seafarers (STCW) 1978 
                                                     
 
 127 In 2008, international tourist arrivals grew by 5.1% to 22.05 million, surpassing the target of 
21.5 million specified under the NTP.  In terms of tourism receipts, Mala ysia received RM 49.6 billion, an 
increase of 7.6% from 2007.  Tourism revenue accounted for 6.7% of GDP in 2008.   WT/TPR/M/225/Add.1 
Page 124  
 
  11) Protocol 1978, International Convention for the Prevention of Pollution from Ships 
(MARPOL) 1973 (Annexes I / II)  
12) Protocol 1978, International Convention for the Prevention of Pollution from Ships 
(MARPOL) 1973 (Annexes V) 
13) International Convention on Oil Pollution P reparedness, Response, and Co-operation 
(OPRC) 1990 
14) International Convention on Standards of Tr aining, Certification and Watchkeeping for 
Seafarers (STCW) 1978, Amendment 1995 
15) International Convention on Civil Liabil ity for Oil Pollution Damage (CLC) 1992 
16) International Convention on the Establishment of an International Fund for Compensation 
for Oil Pollution Damage (FUND) 1992 
17) The International Convention on Civil Liab ility for Bunker Oil Pollution Damage, 2001 
(BUNKER CONVENTION 2001) 
18) The International Convention for Limitation of Liability for Maritime Claims, 1976 (LLMC 
CONVENTION 1996) 
 
Para 87
 
  Under exceptional circumstances, a foreign lawyer may apply for a special admission 
certificate from the Attorney General.  The certifi cate, approved on a case-by-case basis, allows the 
foreign lawyer to practise as a solicitor in Peninsul ar Malaysia for a specified duration, subject to 
periodic renewal.  No such certificates have been issued.   
 22. Paragraph 87 states that "[u]nder exceptional ci rcumstances, a foreign lawyer may apply for a 
special admission certificate from the Attorney General.  The certificate, approved on a case-by-case basis, allows the foreign lawyer to practise as a solicitor in Peninsular Malaysia for a specified 
duration, subject to periodic renewal.  No such  certificates have been issued".  What are the 
exceptional circumstances under which a special admission certificate may be requested and how 
many applications have been rejected?  
Answer: 
 
Generally Legal Profession Act 1976 (LPA) allows a person to be admitted to practise as an advocate 
and solicitor, in two special circumstances i.e.: (i) Section 18 of the LPA where a qualified person applying to the High Court of Malaysia to be 
admitted to practise as an advocate and solicitor in special cases and therefore, will have to show that he or she has special qualificati ons or experience not found among the Advocates 
and Solicitors in Malaysia. In addition, such  person must have been instructed by an 
Advocate and Solicitor;  and 
(ii) Part IIA of the Act which allows foreign la wyers to apply for special admission certificates 
from the Attorney General, on a "case-by-cas e" basis.  This certificate permits foreign 
lawyers to practice as solicitors in Peninsul a Malaysia for a specified duration subject to 
renewal from time to time.  The Part IIA set s out part of the substantive and procedural 
requirements relating to admission of advocate  and solicitor by Special Admission Certificate 
such as qualification for special admission and ex-parte application to High Court for 
admission.  This follows that the current Gu idelines in Relation to Special Admission 
Certificates and Certificates of Renewal under Pa rt IIA of the LPA was issued on 19 August 
1999 under the Government Gazette No. 7715 (G uidelines) in order to facilitate the 
implementation of Part IIA of the LPA. The Guidelines further lays down additional 
substantive and procedural requirements t hat a person must fulfil apart from those 
requirements under Part IIA of the LPA. 
 The guidelines allow for foreign lawyers (and loca l lawyers) to be admitted to practise as an 
advocate and solicitor of the High Court, eith er as a consultant, employee or partner of a  WT/TPR/M/225/Add.1 
 Page 125 
 
 
  local firm, but do not provide for the period a person issued with such a special admission 
certificate by the Attorney General may prac tise as an advocate and solicitor.  However, 
foreign lawyers admitted on a special certificate will have to comply with the provisions of 
the Legal Profession Act, 1976, including Part VII on disciplinary proceedings, with the exception of provisions relating to the issuance of the Sijil Annual. 
 
- So far no certificate has been issued under this Part IIA. 
 
Para 88
 
 
 Accounting services in Malaysia are regulated by the Malaysian Institute of Accountants 
(MIA), under the Ministry of Finance;  it reports  to the Accountant General Office.  Accountants, 
local or foreign, wishing to provide auditing and ta xation services in Malaysia must first register with 
the MIA.  Foreign accountants need to have  an address in Malaysia, as well as recognized 
qualifications.  Once registered, the accountant must apply for a Practicing Certificate from the MIA 
to set up a public practice, before applying for a licence  from the Ministry of Finance for certain types 
of services such as audit, liquidation, and tax.    23. Paragraph 88 notes that "[f]oreign accountants need  to have an address in Malaysia, as well as 
recognized qualifications".  What is meant by "reco gnized" qualifications?  What is the procedure for 
obtaining recognition of qualifications? 
 
Answer: 
 Information is available at http://www.mia.org.my 
 Para 92
 
  The Ministry of Domestic Trade, Co- operatives and Consumerism (MDTCC) regulates 
distribution services in Malaysia.  Its Committee on  Distributive Trade considers applications from 
foreigners intending to undertake distribution services in Malaysia.
128  All applications involving 
foreign investment, including opening of new branches, relocation, expansion of existing 
branches/outlets, and buying over/taking over of outlet s of other operators, require approval from the 
Committee on Distributive Trade.  All applicants  must also obtain approval from the Committee 
before purchasing any land, premises or assets to operate distribution services.    24. Paragraph 92 specifies that "[a]ll applicati ons involving foreign investment, including 
opening of new branches, relocation, expansion of  existing branches/outlets, and buying over/taking 
over of outlets of other operators, require appr oval from the Committee on Distributive Trade.  All 
applicants must also obtain approval from the Co mmittee before purchasing any land, premises or 
assets to operate distribution services".  How long does it take to secure approval from the Committee 
on Distributive Trade, and what are the Committ ee's criteria for the approval of applications? 
 Answer: 
 
The approval period for Committee on Distributive Tr ade (DT) is 20 working days from a completed 
submission of an application.  In  assessing the application, the DT Committee will refer to the criteria 
                                                     
 
 128 The Committee comprises members from regulatory agencies such as  the ministries of Finance, 
International Trade and Industry, Home Affairs, Housing and Local Government, Agriculture and Agro Based Industry, Rural and Regional Development, the Economic Planning Unit, and the Federal Territory Ministry.  
The MDTCC serves as the se cretariat to the Committee. WT/TPR/M/225/Add.1 
Page 126  
 
  set in the Guideline for Foreign Pa rticipation in Distributive Trade including the criteria imposed by 
other authority agencies and local authorities.  Further to the requirement for foreign owned com panies to be locally incorporated, criteria for 
foreign involvement in DT includes amongst others: 
 
1. Minimum paid up capital 
2. Administrative Condition 
3. Operational Condition 
4. Environmental and Public Interest Condition 
5. Conditions set forth by other authorities. 
 
PERU (ADDITIONAL)
 
 WTO Secretariat Report 
 
Para 8
 
  The Government maintains price supports, and grants subsidies to inputs through government 
service programmes to promote the development of agriculture (Table IV.2).  Among these support 
programmes, the financing of a minimum price for rice has persistently been the biggest outlay (or 
one of the biggest), although in 2008 it was surpass ed by support allocated on drainage and irrigation 
facilities (Box IV.1).  In addition, Malaysia mainta ins retail price controls on:  sugar, some milk 
products (e.g. sweetened condensed milk), wheat fl our, cooking oil, some vegetables, and chicken 
(Chapter III).  Soft loans are av ailable in the form of:  3F (Fund for Food), small and medium 
industries fund, and various other schemes, such as  the oil palm replanting scheme and the paddy 
credit scheme. 
 1. According to the above, the Malaysian Govern ment maintains a subsidy and price control 
policy in respect of some agricultural products.  Does  Malaysia regard this situation as a potential risk 
for international trade to the extent that its expor ts might, possibly, be subsidized or that imports 
would be at a competitive disadvantage in the Malaysian market? 
 
Answer: 
 While the Government is reviewing the program of s ubsidy and price control policy it is to note that 
Malaysia is a rice importing country where it produces only 65% to 70%  of its domestic 
consumption.  
 Between 600,000 to 1 million tonnes are imported annually  to meet this need.  The import of rice has 
increased steadily from 518,659 tonn es in 2004 to 1,097,109 tonnes in 2008, which indicates that rice 
can be easily exported to Malaysia.   
Under such a circumstance, the policy instruments utilized for th is sub-sector are unlikely to 
contribute to distortions in global rice trade and  thus no possibility the export be subsidized. 
 
Para 10
 
 
 A wide range of agricultural products are subject to import licensing and SPS measures;  
these include rice, round cabbages, unroasted coffee b eans, palm oil, and milk and sugar.  Licences 
are issued by the Ministry of Agriculture and Agro -based Industry, or the Ministry of International 
Trade and Industry (MITI), depending on the produc t.  As before, rice is imported only by BERNAS. 
  WT/TPR/M/225/Add.1 
 Page 127 
 
 
  2. The Malaysian economy also comprises agricultural products that are subject to import 
licences issued by the Ministry of Agriculture.  Do es Malaysia consider that  this would not affect 
access for other countries' exports of such product s, bearing in mind that there is always the 
possibility of the licence not being granted?  What measures might Malaysia be taking to prevent this 
system from potentially hampering access for imports to its domestic market? 
 
Answer: 
 Import licences issued by the Ministry of Agriculture  as stipulated in the Customs (Prohibition of 
Imports) Order 2008 are due to the following aspects:  
 
i) SPS requirements; 
ii) Imports' monitoring;  and  
iii) Human health and environmenta l precautionary measures.    
 
All import license imposed are in line with Ma laysia's commitment under WTO hence it does not 
hamper access for imports to its domestic market.  
 
Para 28
 
  Malaysia's car market has long been shelte red from foreign competition by both tariff and 
non-tariff measures, and has been dominated by its national cars.  Proton and Perodua jointly 
accounted for 62.4% of vehicles sold in 2008 (75.2% in 2004 and 58.5% in 2005).  Arguably, these measures have resulted in the sector's lack of inte rnational competitiveness, as total exports of motor 
vehicles accounted for only 5% of total industry vol ume.  However, the authorities maintain that 
Malaysia's automotive sector h as been successful in taking a larg e share of the domestic market. 
 
3. Malaysia's manufacturing sector is generally open to international trade with the exception of 
the automotive sector.  Has Malaysia considered the possibility of opening up this sector at some time 
in the future?  
Answer: 
 
Malaysia is gradually liberalising its automotive sector.  Import duties have been reduced or 
eliminated through the various FTAs.   Under the review of NAP the freeze of new m anufacturing license (ML) issuance on certain segments 
has been lifted with no equity conditions imposed on the ML.  
Para 85
 
  Malaysia's professional services sector, as one of the sectors identified for further growth in 
the IMP3, has been relatively clo sed to foreign competition by comparison with other sectors of the 
economy.  The Government has been reviewing the domestic laws and regulations in an effort to 
further liberalize this sector.  The ASEAN Free Tr ade Area offers more market openings within the 
region, enabling Malaysian professionals to be mo re involved in professional services in neighbouring 
countries.  A number of MRAs have been signed to facilitate the freer mobility of professional service 
providers within the region. 
 
4. Although steps are being taken to allow particip ation of professional services in Malaysia, the 
supply of legal services (practice of Malaysian law limited to Malaysian citizens or permanent 
residents) and engineering services (only up to 30%  foreign equity allowed in a company providing WT/TPR/M/225/Add.1 
Page 128  
 
  multi-disciplinary practices) is still restricted.  Has Malaysia envisaged opening up these sectors at 
some time in the future?  
Answer: 
 
The Government is currently in drawing up a ro admap to progressively liberalise the services sector, 
including the legal and engineering sectors.   
 
Para 94
 
 
 An equity restriction of 30% applies to fo reign investors in direct selling business.  
Department stores, supermarkets, and shopping malls must reserve 30% of the shelf space for 
products made by Malaysian SMEs.  These restrictions and reserva tions are currently under review by 
the Government.  
5. Restrictions in the retail sales market may cau se major distortions in the distribution business 
(obligation to reserve shelf space for products ma de by SMEs) and even constitute significant barriers 
to entry (restriction on foreign participation).  Su ch restrictions on trade and competition could limit 
access for products imported into the Malaysian market.  What measures might Malaysia be 
considering to abolish these restrictions? 
 
Answer: 
 The equity restriction no longer applies to the dist ributive trade services with the exception of the 
foreign hypermarket segment.  The 30% shelf space continues to be in force only for the foreign 
hypermarkets in line with Malaysia’s National Development Policy. 
 
 
TURKEY
 
 
WTO Secretariat Report 
 Para 29
 
  The dispersion of MFN tariff rates has been largely unchanged since 2005, judging from the coefficient of variation;  a larger dispersion can entail higher economic costs due to distortions, for 
example, between the prices of substitutes, admi nistrative complexity of the tariffs, and more 
opportunity for tariff evasion through product misclassification.  There are 19 different ad valorem  
rates, ranging from 0% to 90%, 20 specific rates, 4 alternate rates, and 9 compound rates.  As a proportion of all tariffs, "domestic tariff peaks" decreased slightly.  The proportion of tariffs 
exceeding 15% also decreased sligh tly, from 23.4% in 2005 to 22.2% in 2009.  About 60% of tariff 
lines are duty free, compared with 57.8% in 2005 (Chart III.2).  
1. Could government of Malaysia specify the prod ucts for which alternate and compound tariffs 
are used and how they are applied?  
Answer:  
 
Malaysia currently does not impose alternate tariffs.  The non AVE lines covering specific and 
compound tariffs are as follows:- 
− Tropical fruits – compound tariffs; 
− Tobacco products– specific and compound tariffs;  and  WT/TPR/M/225/Add.1 
 Page 129 
 
 
  − Alcoholic beverages – specific tariffs. 
 
Para 83  
  Price controls are used on a number of produc ts.  Under the Price Control Act 1946, coarse 
grain, white refined sugar, and fine grain white re fined sugar have been declared by the MDTCC as 
goods subject to price control.  Goods subject to  administrative price controls include:  general 
purpose wheat flour, cooking oil (pure and blended palm  oil), white bread, petrol, diesel, and liquefied 
petroleum gas.  Price controls on steel bar and b illet, ordinary Portland cement, and chicken were 
eliminated in 2008.  The price of rice is controlle d by law and is administered by the Ministry of 
Agriculture under the Rice (Grade and Price Control) Order 1992. 
 
2. Could Government of Malaysia elaborate on th e developments in domestic prices after price 
controls were eliminated for steel bar and billets , ordinary portland cement  and chickens in 2008? 
 
Answer:  
 
After the elimination of price control on steel bar and billets, ordinary portland cement and chickens, 
prices of those goods remain stable.  Market forces of supply and demand now dictate the prices of these items.  The table below indicates the current average prices vis-a-vis when it was controlled.  
 
Goods Current Average Price (RM) Government controlled price (before elimination 
of price control) (RM) 
Chicken RM 4.89 – RM 7.00/ kilogram RM 6.00/ kilogram 
Ordinary portland cement (OPC) Peninsular : RM 14.40 
Sabah : RM 16.37 
Sarawak : RM 15.20 Peninsular : RM 10.85 – RM 11.50 
Sabah : RM 15.45 – RM 16.25 
Sarawak : RM 13.75 – RM 17.60 
Billet RM 1,750/ tonne – RM 1,800/ t onne RM 1,907/tonne – RM 2,035/tonne 
Steel bars  RM 1,950/ tonne – RM 2,000/  tonne RM 2,225/tonne – RM 2,419/tonne 
 
Para 14  
  In 2008, growth in the mining and quarrying sector was negative (-0.8%) (Table I.2).  The 
development of the sector is guided mainly by the Second National Mineral Policy (NMP2) launched 
in January 2009, aimed at ensuring the sustainable development and optimum use of minerals in an 
environmentally sound and responsible manner.  A major policy objective is to raise earnings from 
natural resources by increasing the degree of domesti c processing.  Hence, the Government has been 
providing incentives to set up mineral processing plants;  corporate income tax may be fully exempted 
for ten years, and import tariffs and sales tax are exempted on all raw materials, machinery, 
equipment, and components imported for domestic processing.  Although Mala ysia abolished export 
taxes on most mineral products in the early 1990s and in 2003, it still applies export taxes at 5% on 
12 tariff lines at the HS 8-digit level.
129  These export taxes may act as implicit subsidies to 
downstream processing (Chapter III).  
3. Could the Government of Malaysia provide lis t of 12 products which are subject to export 
duties? 
                                                     
 
 129 Export duties on unroasted iron pyrites, silica sands and quartz sands;  and potash and soda feldspar, 
were abolished in 2003.  However, 12 lines at th e HS 8-digit level are subject to 5% export duty. WT/TPR/M/225/Add.1 
Page 130  
 
  Answer:  
 
The 12 minerals products subject to export duties are: 
 
Heading/ 
Subheading No Description 
26.20 Ash and residues (other than from the manufacture of iron or steel) c ontaining arsenic, metal or their 
compounds- containing mainly zinc 
2620.11 000 Hard zinc spelter 
2620.19 00 Other 
2620.21 000 Leaded gasoline sludges and leaded anti-knock Compound sludges 
2620.29 000 Other 
2620.30 000 Containing mainly copper 
2620.40 000 Containing mainly aluminium 
26.20.60 000 Containi ng arsenic, mercury, thallium or their mixtures, of a kind used for the extraction of arsenic or those 
metals or for the manufacture of their chemical compounds 
2620.91 000 Containing antimony, beryllium, ca dmium, chromium or their mixtures 
 2620.99 100 Containing mainly niobium 
2620.99  900 Other 
26.21 Other slag and ash, including seaweed ash (kelp); ash and residues from the incinera tion of municipal waste. 
2621.10 000 Ash and residue from the in cineration of municipal waste  
2621. 90 000 Other 
 
*other – Means any product other than the on e mentioned.  For example for tin slag there is no export duty but any other 
product other tin slag of the same category has an export duty of 5%. 
 
Para 16  
  Malaysia's crude oil and gas deposits are owned entirely by Petroliam Nasional Berhad 
(Petronas), a corporation wholly owned by the G overnment.  Under the Petroleum Development Act 
1974, Petronas has exclusive rights of ownership, e xploration, and production of petroleum, and is 
responsible for the planning, invest ment, and regulation of all upstream activities.  Petronas is also the 
biggest contributor to the government budget, acc ounting for 39.3% of the federal government's 
revenues in 2008, up from 36.4% in 2007.
130 
 4. Could the Government of Malaysia explai n whether PETRONAS has any global operation 
and whether it receives any support for such operations?  Answer:   Presently, PETRONAS operates in 33 countries.  The involvement of PETRONAS in these countries 
ranges from exploration to retailing.  PETRONAS does not receive support from Government for such 
operation.  
Para 23
 
  The Government continues to promote e xports of manufactured products through, inter alia,  
income tax exemptions.  If the value of exports of a manufacturing company increases by at least 50% 
                                                     
 
 130 Reportedly, the Government is to seek more funds from Petronas in 2009, due to its increased 
spending resulting from the fiscal stimulus package ( Financial Times , "Petronas profits hit by increase in 
payments to state", 25 June 2009).  WT/TPR/M/225/Add.1 
 Page 131 
 
 
  (from the previous year), 30% of its increased net e xport income may be exempted from income tax.  
If a manufacturing company succeeds in penetrating new markets, 50% of its increased net export 
income may be exempted; if it wins the Export Ex cellence Award (Merchandise Category) by MITI, 
100% of increased export value may be exempted.131  In addition, manufacturing exports have been 
facilitated by, inter alia , exemptions and drawbacks for import duties, simplified customs procedures, 
concessionary credits, and insurance and guarantees (C hapter III).  For example, free industrial zones 
and licensed manufacturing warehouses provide minimum customs formalities for export-oriented industries.  Moreover, the Government has been  encouraging the establishment of international 
procurement centres (IPCs) to make Malaysia a major distribution centre in the region. 
 
5. The Secretariat's Report mentions use of income  tax exemptions for promotion of export of 
manufactured goods.  Could the Government of Ma laysia confirm whether such exemptions are 
available for export of services or not, and if there are, could the Government of Malaysia provide 
information on such exemptions?  Answer:   Details of tax incentives for services sector are available at http://www.matrade.gov.my. 
 
6. Could the Government of Malaysia provide more information on ope rations and functioning 
of international procurement centers? 
 
Answer: 
 Malaysia is being promoted as a services hub for manufacturing related servi ces and shared services. 
MNCs are encouraged to establish International Pr ocurement Centre (IPC) in Malaysia to undertake 
supply chain management, including the procuremen t and sales of raw materials, components and 
finished products for its group of related companies and unrelated companies in Malaysia and abroad. 
 
Para 27
 
 
 Companies with shareholders' funds below the RM 2.5 million threshold (e.g. SMEs) are 
exempted from obtaining manufacturing licences.  Al so, given Malaysia's small labour force, the 
Government no longer promotes labour-intensive ma nufacturing operations:  if a new manufacturing 
project has a capital investment/employee ratio be low RM 55,000, it is considered labour intensive 
and does not qualify for a manufacturing licence.132  The authorities consider that MITI, through its 
Malaysian Industrial Development Authority (MI DA) and SME Corporation Malaysia, facilitates 
companies (with or without manufacturing licenses) by, for example, "handholding" these companies 
until their projects are implemented.  7. At footnote number 19 on page 54, the Secretar iat's Report mentions "the List of Promoted 
Activities and Products".  Could the Govern ment of Malaysia provide this List? 
 
                                                     
 
 131 The exemption is not granted if the company receives any incentives (except for deduction for 
promotion of exports) under the Promotion of Investment Act 1986, the Reinvestment Allowance, and 
Allowance for Increased Exports or Deduction for Cost on Acquisition of a Foreign Owned Company 
(MATRADE online information.  Viewed at:  http://w ww.matrade.gov.my/cms/content.jsp?id=com.tms.cms. 
article.Article_6c9d2a10-7f000010-290f290f-73c76693 [11.10.2009]). 
 132 Exemptions include:  if the value added is 20% or  more;  if the project falls within the List of 
Promoted Activities and Products;  if the company is high-tech;  if the company is located in the promoted 
areas;  and if the managerial, technical, and supervisory (MTS) index is 15% or more. WT/TPR/M/225/Add.1 
Page 132  
 
  Answer:  
 The list of the promoted activities and pr oducts are available on MIDA's website 
http://www.mida.gov.my.  
 Para 3
 
  The Secretariat Report states that:  "The Gove rnment continues to encourage FDI, and has 
been relaxing foreign investment restrictions in services.  Since April 2009, 100% foreign equity has 
been allowed in 27 services subsectors, and foreign i nvestment restrictions in some financial services 
relaxed". 
 8. Could the Government of Malaysia elaborate more on the measures taken to relax foreign 
investment restrictions in services?  Specifically , which are the 27 service sub-sectors that the foreign 
equity restrictions were abolished?  What other measures were undertaken to relax foreign investment 
restrictions in financial services? 
 
Answer:  
 The list of the 27 sub-sectors which have been unilaterally liberalised is in Annex 1.  
 
On 27 April 2009, Malaysia announced the liberalis ation package encompa ssing measures on both 
the conventional and Islamic financial sector.  The liberalisation measures entail the issuance of new 
licences for foreign banks, takaful op erator and Islamic banks to establish a presence in Malaysia, the 
enhancement of existing operational flexibilities for incumbent foreign players and increases in 
foreign equity limit for insurance companies, takafu l operators, and investment banks.  Islamic banks 
that have US$1 billion paid-up capitals are also given  such operational flexib ility.  Malaysia is very 
transparent in the policy towards granting of these new licences. 
 Press statement on the above statement liberalisat ion measures can be found on the Bank Negara 
Malaysia website http://www.bnm.gov.my 
 
Apart from the recent liberalisation measures, unila teral liberalisation and deregulation of the FIC 
guidelines, the Government will further relax forei gn investment restrictions by reviewing domestic 
regulations, administrative procedures and guidelines.  
 
Para 3
 
 
 The Secretariat Report states that "[…] non-auto matic licensing is also intended to regulate 
the flow of imports and to promote selected stra tegic industries identified for certain socio-economic 
objectives".  9. Could the Government of Malaysia provide furt her information regarding for which industries 
non-automatic import licensing applies?  What kind of socio-economic objectives are pursued through 
these measures?   
Answer:  
 
The non-automatic licensing is only applicable to raw sugar, machinery and equipment, motor 
vehicles and agriculture products.  The objective is to promote and develop indigenous manufacturers 
as well as to ensure self sufficiency in the agriculture sector. 
  WT/TPR/M/225/Add.1 
 Page 133 
 
 
  Para 21  
  The Secretariat Report notes that "The Customs (Values of Imported Completely Built-up motor vehicles (New)) Order 2006 gives the Minister of Finance power to fix the value of imported CBU cars, as deemed appropriate, in accordance wi th Section 12 of the Customs Act 1967, with a 
view to tackling under-declaration".  
 10. Could the Government of Malaysia clarify how the customs value is calculated in cases when 
the abovementioned procedures are implemented?   Answer:  
 
The Royal Malaysian Customs Department (RMCD) had set-up the Panel for Price Review/Proposal 
for imported new Completely Built-up (CBU) motor vehicles, comprising officers from Ministry of 
Finance (MOF), Ministry of International Trade and Industry (MITI), and RMCD.  This Panel will 
undertake a monthly review on all relevant importation documents, which are submitted by the 
importers in advance.   To determine customs value, the panel uses the Customs Regulations (Rules of Valuation) 1999 as 
well as additional information available to support im porter's application.  The basic value is derived 
from the methods of valuation set out in Regulation 4 to 10.  
 
Para 3 and 32
 
 The Secretariat Report states that "[…] it seems th e [car] sector continues to be protected;  in 
particular, in response to an economic downturn afte r the global crisis, rebates are given for buyers 
replacing vehicles over ten years old with national brands". 
 11. How does the Government of Malaysia ensure  the WTO compliance of the above mentioned 
measure?  Is the measure still in fo rce;  and if so, does the Malaysian Government have a timetable to 
withdraw the incentive?     Answer:   The amount of rebate given was RM 5,000 per veh icle.  This measure was terminated in 
November 2009. 
 
Malaysian Government Report 
 
Para 2
 
  The report states that "To ensure that the Ma laysian economy continued to remain resilient 
against these challenges, the Government put in place various measures, particularly in enhancing 
domestic demand and mitigating the impact of  the unstable external environment".  
 12. Could the Government of Malaysia provide specific examples of fiscal and monetary 
measures taken for stimulating domestic demand-le d growth, enhancing the competitiveness of the 
economy and stimulating new sources of growth?  WT/TPR/M/225/Add.1 
Page 134  
 
  Answer: 
 Among the measures taken are:  Fiscal Measures 
i) First stimulus package announced  on 4 Nov 2008 totaling RM7 billion 
(US$2 billion); 
ii) Second stimulus package announced  on 10th March 2009 totaling RM60 billion 
(US$17.1 billion);  and 
iii) Private Facilitation Initiatives Fund amounted to RM2 billion. 
 
Monetary Measures  
− Measures implemented to maintain stability of the financial system & stimulate growth are:  
i) All ringgit & foreign currency deposits with commercial, Islamic & investment bank 
& DFIs are fully guaranteed by Governme nt through Perbadanan Insurans Deposit 
Malaysia (PIDM) (Malaysian Deposit In surance Corporation) until Dec 2010; 
ii) Extend guarantee to all domestic  & lo cally incorporated foreign banking 
institutions; 
iii) Access to Bank Negara Malaysia’s liquid ity facility is extended to insurance 
companies & takaful operators ; 
iv) To boost stock market, RM5 bil. (US$1.4bil) injected to Value Cap Sdn Bhd (special-
purpose vehicle by government) to invest in undervalued companies; and 
v) Overnight Policy Rate cut  to stimulate loans growth  and lowering of SRR  to inject 
more liquidity in the system. 
 Other Measures  
 
− Liberalisation of services sector 
i) 27 services sub-sectors liberalised with no equity condition imposed;  and 
ii) Areas: health & social services, tourism services, transport services, business 
services & computer & related services. 
 
− Liberalisation of financial sector 
i) Issuance of new licenses  
ii) Increase in foreign equity limits from 49 % to 70% of investment banks, Islamic 
banks, insurance companies and takaful operators 
iii) Enhance operational flexibilities in foreign institutions that operate in Malaysia 
iv) Greater flexibility accorded  to Labuan offshore players 
v) Labuan Holding Companies incorporated under Offshore Companies Act 1990 will 
be given flexibility to establish an operational  & management office in Kuala Lumpur 
vi) Provide more flexible operating business environment 
vii) Greater flexibility accorded for employment  of expatriates in specialised areas  
 
Para 22
 
 
 In light of the reports by the Secretariat a nd the Government, it is our understanding that 
Malaysia has taken steps in recent years to divers ify not only its export markets but also its product 
range to reduce over-reliance on elect rical and electronic products. 
 13. Could the Government of Malaysia elaborate on the policy measures being introduced 
to diversify domestic production base?  Which dom estic sectors have been focused on primarily?  WT/TPR/M/225/Add.1 
 Page 135 
 
 
  Answer:  
 Under the Third Industrial Master Plan (IMP3), 12 manufacturing sub-sectors have been identified 
for further development and promotio n.  The sub-sectors are:   
 
(i) Electrical and electronics 
(ii) Medical devices 
(iii) Textiles and apparel 
(iv) Machinery and equipment 
(v) Metals 
(vi) Transport equipment 
(vii) Petrochemicals 
(viii) Pharmaceuticals 
(ix) Wood-based 
(x) Rubber-based 
(xi) Oil palm-based 
(xii) Food processing 
 Among the measures introduced under the IMP3 by the Government to diversify the production base 
are:  
(i) accelerating the transition towards higher va lue-added products and activities;  and 
(ii) promoting knowledge-based activities, incl uding R&D and design and development (D&D) 
and supporting the applications of leading edge technologies by industry. 
 
 UNITED STATES
 
 
Malaysian Government Report 
 
Para 46  
 
 The Government is embarking on a new economic  model, which is intended to shift reliance 
from a manufacturing base dependent on semi skilled and low cost labour to one that hinges on high technology and modern services sector  dependent upon skilled and highly paid workers.  This is in 
line with the IMP3, which laid out the policies and strategies to develop the services sector as the next 
engine of growth. 
 
1. Page 10, Paragraph 46:  The report mentions your government's efforts to transition away 
from semi-skilled and low cost labor in manufactur ing, to skilled and highly paid workers in the 
services sector.  What specific plans does the Malaysia n government have to achie ve this goal?  As it 
seeks to shift labor to the services sector, we al so note that since 2007 the Government has made 
significant amendments to the Industrial Relations Ac t that governs the basic rights of workers.  Are 
these initiatives related or coordinated?  If so, how?  What efforts are made to ensure that labor 
protections are taken into account in the deve lopment and implementation of economic strategy? 
 
Answer:  
 
Measures that have been taken by the Government  to shift away from semi-skilled labour force to 
skilled workforce are:  
i) The amendment to the Industrial increase intake at diploma, degree and post 
graduate level in various institution of higher learning;  and WT/TPR/M/225/Add.1 
Page 136  
 
  ii) provide training in various technical education and training programmes (TEVT) to 
increase number of skilled workforce. 
 
Relations Act 1967 (IRA) is a dynam ic and an ongoing process which w ill take into account the social 
needs as well as the current government policy re quirements.  The amendment made has taken into 
account the basic rights of workers and the government  will ensure the rights of labour are protected 
from time to time.  For instance, in 2007 the I RA was amended to simplify the recognition process and 
shorten the time which allows the trade union of em ployee to bargain collectively.  Apart from that, 
provisions relating to productivity  and training were also incorporated  in line with the Government's 
current policy to create more skilled workers, to in crease productivity and to improve the workers’ 
income. 
 The government through the National Labour Advisory Council has been conducting regular 
meetings with stakeholders to solicit feedback from  them on various labour issues.  The government 
will then consider and act on any complaints and sugges tions from the stakeholders, which some of it 
may require amendments be made to address the issues raised. 
 
Para 62
 
  The Government is currently formulating the Tenth Malaysia Plan (2011–2015) with a view 
to shift the economy towards a high-income econom y, with focus on innovation, creativity and 
productivity.  Focus will continue to remain on build ing a resilient economy.  At the same time the 
private sector will continue to spearhead growth, a nd to support this, the Government will continue to 
undertake further liberalization in an effort to a ttract FDI and spur private investment activities.  
While the manufacturing sector will continue to rema in as one of the leading contributor to growth, 
efforts will be intensified to promote the developm ent of the services sector as the next engine of 
growth. 
 2. Page 12, Paragraph 62:  To what extent is the Malaysian government considering further 
liberalization of its government procurement polic ies in the Tenth Malaysia Plan, including by 
allowing for greater foreign participation and by reducing the number and scope of its preference 
policies?   
 
Answer: 
 In the Tenth Malaysia Plan, Malaysia will continue  to support the development of local industries 
through government procurement e.g. to give priority to local manufacturers, suppliers and 
contractors.  Government procurement is a tool  to increase the opportunities of local suppliers and 
contractors, to boost the domestic economy and in creased the participation of locals in economic 
development, as well as to develop capacity buildi ng.  Liberalisation of government procurement 
policy will be considered once the Government is satis fied that the local suppliers and contractors are 
able to compete on an even playing field  with international players.  
 
WTO Secretariat Report  
Para 16
 
  In the interest of transparency, Malaysia makes regular notifications to the WTO 
(Table AII.3).  Since its previous Review, Mala ysia has had no trade disputes with any WTO trade 
partners for which solutions have been sought in the WTO framework.  3. On Page 15, Paragraph 16 of the Secretariat Report, Malaysia states that it makes regular 
notifications to the WTO.  However, prior to Malaysia's subsidy notification of 17 July 2009  WT/TPR/M/225/Add.1 
 Page 137 
 
 
  (G/SCM/N/186/MYS) covering the years 2007-2009, Mala ysia had not made a subsidy notification as 
required by Article 25 of the SCM Agreement since 1996 (see, G/SCM/W/546, 28 April 2009).  Therefore, to date, Malaysia has not submitted a subsidy notification covering the years 1995-2006. 
Does Malaysia intend to provide a subsidy notificatio n for the years 1996-2006?  If so, when will it be 
provided?  If not, please explain.  
 
Answer:  
 No, as the notification made for the period of  2007-2009 covers existi ng programmes to date, 
including programmes introduced prior to 2007.   
 
Para 35
 
  As a member of the Group of Developing Eight  (D-8), Malaysia signed a Preferential Tariff 
Agreement (PTA) with the other seven members in  May 2006 to gradually reduce tariffs and other 
barriers to trade on specific goods, to promote trade among members.
133  However, the PTA has not 
yet been implemented as it requir es ratification from at least four member countries;  currently, only 
Iran and Malaysia have ratified the agreement. 
 Para 36
 
 
 Malaysia signed a Framework Agreement on Trade Preferential System with members of the 
Organisation of the Islamic Conference (TPS-OIC) in 2004.134  The TPS-OIC is to be effective when 
protocols on the preferential tariff scheme (PRETAS) and rules of origin (RoO) have been signed and 
ratified by at least ten participating countries.  Seven OIC member states have signed and ratified the 
PRETAS, and four have signed and ratified the RoO.  Malaysia ratified the PRETAS in 2006, and the 
RoO in 2008.135 
 4. Page 19, Paragraphs 35-36:  The Secretariat Report mentions two par tial-scope preferential 
trade agreements – the TPS-OIC/PRETAS and the Group of Developing Eight (D-8) – both of which 
have been signed but not yet entered into force becau se they have not yet been ratified by all parties.  
What is the projected timing for the entry into fo rce of these agreements?  Please provide additional 
context on the scope and coverage of these agre ements.  Approximately what percentage of 
Malaysia's tariff lines are covered by these agreements?  What kinds of tariff preferences are provided?   
Answer: 
 
1. Trade Preferential System among Member Stat es of the Organisation of the Islamic 
Conference (TPS-OIC)  
− Enforcement of TPS – OIC  
− The TPS-OIC can only be operational after the Protocol on the Preferential Tariff 
Scheme for TPS-OIC (PRETAS) and the TPS-O IC RoO are ratified by at least 10 
members. 
                                                     
 
 133 The D-8 comprises eight Islamic countries:  Bangla desh, Egypt, Indonesia, Iran, Malaysia, Nigeria, 
Pakistan, and Turkey.  
134 So far 20 countries have signed the Framework Agreement on TPS-OIC:  Bangladesh, Cameroon, 
Egypt, Guinea, Iran, Jordan, Lebanon, Libya, Malaysia, Maldives, Morocco, Omen, Pakistan, Qatar, Senegal, 
Syria, Tunisia, Turkey, Uga nda, and United Arab Emirates. 
 135 MITI online information.  Viewed at:  h ttp://www.miti.gov.my/cms/content.jsp?id=com.tms. 
cms.section.Section_55c20a92-c0a8156f-2af82af8-b3841ecc [26.02.2009]. WT/TPR/M/225/Add.1 
Page 138  
 
  − The TPS-OIC was targeted to be fully established and operational by 
1 January 2009.  However, as of today the TPS-OIC is not enforced yet as only 
4 countries including Malaysia had ratified the TPS-OIC RoO. 
 
− Scope of TPS – OIC  
− The TPS-OIC aims to acco rd preferential tariff concession on selected goods among 
the participating OIC countries.  
− PRETAS deals with reducing tariffs under th e Scheme as well as para-tariff and non-
tariff barriers.  
− PRETAS covers 7% of the total tariff lines with tariffs above 10%, and: 
− under the tariff reduction modality (normal track - NT), products with tariffs:  
− above 25% to be reduced to 25%;  
− between 15-25% to be reduced to 15%;  and  
− between 10-15% to be reduced to 10%.  
− tariff reduction under the NT involves reduction of tariffs that will be 
implemented in:  
− four annual installments for developing countries; and  
− six annual installments for LDCs.  
− The Protocol also provides for voluntary acceleration of tariff reduction/elimination 
commitments under the Voluntary Fast Track Tariff Reduction Schedule:  
− covers all products except :  
− products in the negative list;  and  
− products with tariffs up to 10% fo r countries with average tariffs 
above 15%.  
− offers Margin of Preference (MoP) of 50% in 5 installments for developing 
countries and 7 installments for LDCs;  
− developing countries to apply MoP fo r LDCs in 3 installments;  
− the negative list :  
− 25%  of total HS lines if average tariff is 20% and above;  
− 20% if average tariff is between 15 and 20%;  
− 15% if average is below 15%;  and  
− 30% for LDCs.  
− Participating States enter into negot iations to widen product coverage and 
deepen concessions at the end of the 5th year after the Protocol on the Preferential Tariff Scheme takes effect or earlier.  
− The PRETAS also ensures:  
− longer transition period of three years for LDCs to eliminate their para-
tariffs and non-tariff barriers;  
− safeguard measures such as anti-dumping, subsidies, countervailing 
measures are consistent with relevant WTO rules;  
− a harmonized set of rules of origin as agreed under the Framework 
Agreement are used to grant concessions, until the new set of rules of origin 
are adopted by the TNC.  
− Member countries are given 3 months from the date the TPS –OIC comes into force 
to submit their offer list for tariff reduction.  
  WT/TPR/M/225/Add.1 
 Page 139 
 
 
  2. Developing Eight (D-8) Preferential Tariff Agreement (PTA)  
 
− Enforcement of D-8 PTA  
− The D-8 Preferential Tariff Agreement (PTA) is  designed to gradually reduce tariffs 
and other barriers to trade on specific goods in order to promote intra-trade among 
D-8 members.  
− All eight (8) member countries signed the D-8 PTA at the Fifth D8 Summit on 
13 May 2006 in Bali, Indonesia  
− As to date the D-8 PTA has yet to be implemented as only Malaysia and Iran had 
ratified the D-8 PTA. The D8 PTA will be implemented once it is signed and ratified by at least four Members and operational once the D-8 PTA Rules of Origin (RoO) 
concluded. 
 
− Scope of D8 -PTA  
− The D-8 PTA shall apply to trade in goods, contained in the national tariff schedules 
of concessions and originating in the territories of the Members.  
− Upon entry into force of the D-8 PTA, Members shall:  
− not increase applied tariff rates on imports of the products covered under 
D-8 PTA without approval of  Supervisory Committee;  
− notify one another their respecti ve applied tariff rates;  and  
− reduce applied tariff rates of goods sp ecified in their national schedules, 
according to the modalities.  
− D-8 PTA covers 8% of all goods with tariff rates above 10%.  Tariff reduction for 
these goods are as follows:  
− above 25% to be reduced to 25%;  
− between 15-25% to be reduced to 15%;  and  
− between 10-15% to be reduced to 10%.  
− Tariff reduction will be implemented in:  
− 8 annual installments for the LDCs;  and  
− 4 annual installments for other Members.  
− The D-8 PTA provides for:  
− longer transition period of 3 years for LDCs to eliminate their para-tariffs 
and non-tariff barriers;  
− safeguard measures such as anti-dumping, subsidies, countervailing 
measures;  and  
− a set of rules of origin used to grant concessions which is still under 
discussion.  
− Member countries are given 3 months from the date the D-8 PTA comes into force to 
submit their offer list for tariff reduction.  
 
Para 44
 
 
 Most notably, on 30 June 2009, the Governme nt announced the liberalization of the Foreign 
Investment Committee (FIC) guidelines, including the repeal of FIC Guidelines on the acquisition of interests, mergers, and takeovers.  The Guidelines had originally imposed bumiputera  equity 
requirement, whereby bumiputera  (ethnic Malays) had to hold a combined 30% stake in locally 
incorporated companies.
136  Following the repeal of the FIC guidelines, for newly listed companies, 
the bumiputera  requirement is 12.5% (50% of the Se curities Commission's 25% public spread 
requirement), and this can be further reduced if mo re shares are issued later.  Also, foreign equity 
                                                      
 136 Bumiputera  refers to a Malay or other indigenous ethnic group in Malaysia. WT/TPR/M/225/Add.1 
Page 140  
 
  limits were raised from 49% to 70% for stock-br oking firms and unit trust management companies, 
and from 70% to 100% for fund management compan ies providing wholesale services.  In addition, 
there was some relaxations on the acquisition of property, as some property transactions involving 
foreign investment no longer require approval from the FIC.  As part of the package, the Government 
set up a private equity fund, Ekuiti Nasional Berhad (EKUINAS) to promote investment in sectors 
with growth potential, and to ensure participation by bumiputera .
137   
 Para 45
 
  Although considering FDI positive to economic  development and grow th, the Government 
insists that local participation needs to be main tained in some areas in order to promote domestic 
capabilities and capacities.  In particular, sectors with "national interest" (i.e. sectors with an impact 
on national security and overall socio-economic wellbei ng) are not to be liberalized.  Even under the 
reform package launched on 30 June 2009, the repeal of FIC guidelines does not eliminate 
bumiputera participation requirements in banking and in surance, certain manufacturing sectors (such 
as fabrics and apparel of batik, and integrated Portland cement), agriculture, defence, energy, 
telecommunication, and water.  Also, foreign invest ors are not allowed to acquire properties below a 
specified value:  RM 500,000 for commercial prope rties and RM 250,000 (increased to RM 500,000 
as of 1 January 2010) for residential properties.    5. Page 21, Paragraphs 44-45:  The United St ates commends Malaysia for the June 2009 
package of liberalization measures aimed at strengthening Malaysia's competitive position and 
attracting foreign direct investment to fund manage ment, unit trust, and stoc k brokerage activities.  
When this package was an nounced, senior Malaysian officials indicat ed in their press statements that 
further liberalization measures were being evaluated.   What is the status of these efforts?  What 
additional measures are being considered a nd when will they be implemented?   
 
Answer :  
 
Following Malaysia's Budget 2010 announcement m ade on 23 October 2009, the foreign ownership 
limits in corporate finance and financial planning  companies have also been fully liberalised. 
(Previously, the foreign ownership limit in  these companies was limited to 70%). 
 
Malaysia is currently reviewing the policies on liberalisation measures on an ongoing basis. 
 
Para 17
 
 
 The Government introduced Customs Rulings on Classification and Valuation on 
1 April 2007.  The authorities consider that impl ementation of the rulings has helped the business 
community to deal with goods clearance by informi ng them in advance on the tariff classification and 
valuation system, expected duty, and permit requirements.  6. Page 25, Paragraph 17:  The Secretariat report indicates that Malaysia offers advance rulings 
on classification and valuation.  Does Malaysia al so offer such advance rulings for origin?  
 
Answer:   Currently Malaysia does not have Advance Rulings for Origin.   
 
                                                     
 
 137 The Government provided an initial endowment of RM 500 million to EKUINAS, with a target of 
expanding EKUINAS to become a RM 10 billion fund.  WT/TPR/M/225/Add.1 
 Page 141 
 
 
  Para 24  
  Malaysia's tariff classification systems, for preferential and MFN tariffs, are aligned to the Harmonized System at 9-digit level;  preferentia l tariffs for intra-ASEAN trade remain under the 
AHTN classification system.  The current Malaysian customs nomenclature (for MFN duties) is based 
on the 2007 Harmonized System (HS).  The Malaysian tariff comprises 10,389 lines at the 9-digit 
level.  Almost all rates (99.2%) are ad valorem ;  the remainder are specific, compound, or alternate 
duties.  Malaysia has no plans to convert all of its non- ad valorem  duties to ad valorem  duties
138;  it 
continues to maintain non- ad valorem  duties for agricultural products  to protect small and rural 
farmers.  Given that these duties conceal relativel y high AVEs, the level of applied tariff protection 
could be considerably higher than the simple average of all ad valorem  rates of 7.4% in 2009.139  
In 2009, 32 of the top 50 tariffs entailed non- ad valorem  rates. 
7. Page 27, Paragraph 24:  According to the Secretar iat, Malaysia does not plan to convert all of 
its non- ad valorem  duties to ad valorem  duties and it continues to maintain non- ad valorem  duties for 
agricultural products to protect small and rural fa rmers.  When does Malaysia plan to make the 
transition towards ad valorem  duties in these sectors?  
 
Answer: 
 Malaysia is currently reviewing the non-ad valo rem duties in line with the on-going Doha 
negotiations. 
 
Para 36
 
  Data provided by the authorities indicate that  about a quarter of Malaysia's tariff lines 
(principally with regard to an imal and vegetable products, wood, machinery, vehicles and transport 
equipment, and arms) are subject to import licensi ng, most of which is non-automatic.  Automatic 
licensing is intended for data collection.  The au thorities maintain that non-automatic licences are 
mainly for sanitary and phytosanitary reasons (fo r those concerning agriculture).  Non-automatic 
licensing is also intended to regulate the flow of imports and to promote selected strategic industries 
(such as passenger and commercial vehicles and motorc ycles) that have been identified to achieve 
certain socio-economic objectives;  imports of CF Cs are regulated in accordance with Malaysia's 
obligations under the Montreal Protocol.
140 
 Para 37
 
  According to the authorities, Malaysia removed import licensing requirements for 48 tariff 
lines covering machinery and equipment, and el ectrical and electronic products in 2008.
141  O n  
                                                      
138 The authorities state that they do not plan to conv ert specific duties applied to alcoholic beverages 
into ad valorem  duties. 
 139 In view of transparency, the authorities provided ad valorem  equivalents (AVEs) for 46 out of 
80 non- ad valorem  tariff lines;  AVEs for 73 ta riff lines are based on import data for 2003-05, and those for 
7 lines on data for 2005-07.  AVEs were not provided for alcoholic beverages, possibly indicating the 
prohibitive nature of tariff rates for these products.  If the AVEs provided are included, the simple average MFN 
applied tariff rate becomes 9.1% (7.4% excluding AVEs) , and the simple average MFN applied rate becomes 
18.1% for agricultural products (WTO definition) (2 .8% excluding AVEs) and 7.9% for non-agricultural 
products (also 7.9% excluding AVEs).  Three tariff lines have AVEs exceed ing 1,000%;  they involve bananas 
and tobacco refuse.  The simple average of AVEs provided is 392%. 
 140 WTO document G/LIC/N/3/MYS/4, 17 October 2008. 
 141 Four categories of items remain subject to various levels of import restriction, as stipulated in the 
Customs (Prohibition of Imports) Order 2008;  these are:  (1) items subject to general import prohibition owing 
to religious, security, health, and environmental reasons;   (2) items requiring import licences mainly for health, WT/TPR/M/225/Add.1 
Page 142  
 
  29 August 2008, it was decided in the 2009 Budget that import licence requirements on port cranes 
(such as gantry cranes, hydraulic loading cranes, and crawler cranes) and heavy machinery (such as 
bulldozers and road rollers) were to be abolished;  and imports of steel and iron products were to be 
liberalized with a view to overcoming increases in price of these products (Customs (Prohibition of Exports) (Amendment) (No. 3) Order 2008, 12 May 2008).
  
 
Para 38  
  As a part of the National Automotive Policy (NAP), in order to import foreign-built or assembled cars, trucks, and motorcycles and distribute them locally, a company must obtain import 
licences ("approved permits" (APs)) issued by MITI;  the company must submit to MITI an 
importation plan and must have a franchise agreement to distribute these vehicles locally in order to 
obtain APs.  In October 2009, after reviewing th e NAP, the Government announced that the AP 
system is to be terminated in 2015 (for open APs) , and 2020 (for franchise APs) (Chapter IV(5)(ii)). 
 
Para 39
 
  Malaysia maintains quantitative restrictions on  imports of certain products including firearms 
and ammunition, bullet-proof vests, and shrimp broodstock
142;  the current AP system applied to 
imports of motor vehicles can act as a quota restricting the number of cars that can be imported in a given year.  The authorities emphasize that th e AP system is used for monitoring purposes. 
 
Para 40
 
  During the period under review, Malaysia restri cted or prohibited imports of a number of 
products from certain countries on health and safet y grounds.  The products include poultry products 
and live birds (suspicion of avian flu), beef and animal products (BSE), milk (foot and mouth disease 
as well as melamine), and live horses (equine flu) (section (4)(iv)).   8. Page 32, Paragraphs 36-40:  We welcome Ma laysia's phasing out of some of its import 
licensing requirements during the time period of this review.  Nevertheless, we note that Malaysia 
continues an expansive use of non-automatic impor t licensing requirements for goods in a significant 
portion of its tariff schedule.  According to the Secretariat Report, "[d]ata provided by the authorities 
indicate that about a quarter of Malaysia's tariff lines  (principally with regard to animal and vegetable 
products, wood, machinery, vehicles and transpor t equipment, and arms) are subject to import 
licensing, much of which is non-automatic."  
Answer :  
 
Malaysia does not intend to continue an expansiv e non-automatic import licensing requirement and is 
in the process of reviewing the requirement for a ll products including industrial, agricultural and 
mineral products.  However, certain procedures will be maintained for: 
 
i) SPS requirements; 
ii) TBT requirements;  
iii) Security;  and  
iv) Environment.    
 
                                                                                                                                                                    
 
sanitary, security, environmental protection or intellectual property reasons;  (3) items requiring temporary 
import restrictions to protect domestic industries;  and (4) items that may be imported only after meeting specific criteria. 
 
142 WTO document G/LIC/N3/MYS/4, 17 October 2008.  WT/TPR/M/225/Add.1 
 Page 143 
 
 
  9. Page 32, Paragraphs 36-40:  Does Malaysia have additional plans to reduce its use of 
non-automatic licensing restrictions?  If so, please elaborate.  If not, why not?  
Answer:  
 
Malaysia is in the process of reviewing impor t licensing requirement for all products including 
industrial, agricultural and mineral products.  How ever, certain procedures will be maintained for: 
 
i) SPS requirements; 
ii) TBT requirements;  
iii) Security;  and  
iv) Environment.    
 
10. Page 32, Paragraphs 36-40:  What steps are ta ken to ensure that Malaysia's many import 
licensing requirements are transparent and easily accessible to the trading community, including 
SMEs that often do not have on site representation in Malaysia? 
 
Answer:  
 Malaysia has always been transparen t and continuously improving its  easy access to all information, 
especially via electronic.  On import licensi ng requirement, information is available at 
http://www.miti.gov.my, http://www.customs.gov.m y and Tariff Finder (by subscription).  Printed 
version of the Customs Duties Order (Restriction on Import and Restriction on Export) can also be purchased. 
 
11. Page 32, Paragraphs 36-40:  According to th e Secretariat report, the Malaysian government 
requires approved permits in order to regulate impor ts of cars.  We note that the Government of 
Malaysia elected to retain the approved permit syst em in its revised National Auto Policy, extending 
the planned phase-out date to 2020.   Could the Government of Ma laysia explain why the approved 
permit system continues?  What are the projected import volumes that will be allowed for different 
categories of motor vehicles under the revised Nationa l Auto Policy?  Are these permits allowed to be 
traded?  If not, what steps is the Malaysia Govern ment planning to ensure that the recipients do not 
act as middlemen and profit by re-selling the permits? 
 
Answer:  
 The approved import permits for used vehicles will be phased out by 2015 whereas for new vehicles, 
will be terminated by 2020.  This is to prov ide a clear roadmap and as an interim period for 
companies involved in the importation and distribu tion of imported vehicles to diversify and venture 
into other businesses.  The estimated import volume is 10% of the total sales of the vehicles.  The 
permits are non-tradable and periodical auditing is be ing undertaken to ensure the recipients do not 
act as middlemen and make profit by re-selling the permits. 
12. Page 32, Paragraphs 36-40:   We understand that Malaysia suspended the issuance of new 
licences for the importation of wine on Octobe r 9, 2007, and imposed new conditions on the 
importation of existing wine brands  into Malaysia.  What was the reason for these actions?  How does 
Malaysia explain the suspension of licenses and im position of additional conditions in light of its 
obligations under GATT Article 11 and under the WTO Agreement on Import Licensing Procedures? 
 Answer:  Malaysia had imposed a temporary suspension of the issuance of new licenses for the importation of 
wine on 9 October 2007 to investigate the influx of smuggled wine in the local market.  WT/TPR/M/225/Add.1 
Page 144  
 
  The adoption of this measure is provided for under Article XX of GATT para (d) (General Exception 
provision).  Malaysia had also submitted notific ation on the changes of the import licensing 
procedure on 17 October 2008 und er Article 5 of Import Licensing Procedure Agreement.  Document 
for reference is G/LIC/M/2/MYS/3. 
 13. Page 32, Paragraphs 36-40:  Are any of Malaysia's trading partners accorded special treatment 
or exemptions from licensing requirements under Mala ysia's FTAs and preferential trade agreements?  
If so, please provide a detailed explanation of such preferences.  
Answer:  
 
Malaysia does not accord any special treatment or  exemptions from licensing requirements to its 
trading partners under Malaysia's FTAs and other preferential trade agreements.   
Para 48
 
 
 The number of lines subject to Malaysia's e xport taxes has remained largely unchanged since 
its previous Review.  In 2009, out of 10,389 tariff lines at the 9-digit level, 515 lines were subject to 
export duties;  most of the rates are ad valorem,  ranging from 5% to 20% (except for nine lines, which 
are subject to specific rates).143  Products subject to export taxes include timber, live animals, ash and 
residues, precious metals, copper, and ferrous waste and scrap.  According to the authorities, the main 
objective of these taxes is to promote the u se of locally produced commodities in domestic 
downstream industries as well as to conserve the envi ronment.  The authorities are of the view that 
export taxes on timber allow them to better manage sustainable development of Malaysian forest.  
However, such taxes tend to increase the domes tic supply of the products concerned, and as a 
consequence, their domestic prices tend to be lowe r than would otherwise be the case;  thus, export 
taxes assist domestic downstream processing of the produc ts concerned.  In 2007 (the latest year for 
which data were made available), Malaysia 's revenue from export duties amounted to 
RM 2,296 billion, up from RM 1,133 billion in 2001.   Pages 34-35, Paragraph 48:  In its  report, the Secretariat states that "products subject to export 
taxes include timber, live animals, ash and residu es, precious metals, copper, and ferrous waste and 
scrap.  According to the authorities, the main objectiv e of these taxes is to promote the use of locally 
produced commodities in domestic downstream industri es as well as to conserve the environment."   
 14. To what extent do these export tariffs and li cense requirements benefit downstream producers 
of final products in Malaysia? 
 
Answer:  
 Export taxes and licensing requirements is to ensure availability of raw materials in a sustainable 
manner. 
 15. Please explain Malaysia's policy in light of its  obligations under GATT 1947, Article XX (g), 
which states that adoption or enforcement of conser vation of exhaustible natu ral resources measures 
are not to be prevented "if such measures are made  effective in conjunction with restrictions on 
domestic production or consumption ..." Please expl ain how Malaysia's export tariff and license 
requirements work to conserve the environment. 
 
                                                     
 
 143 Most lines are subject to duty rates between 5% and 15%.  Only one item is subject to ad valorem  
duty of 20%.  In 2006, 512 lines out of 10,580 tariff lines (based on the 2002 Harmonized System (HS)) were 
subject to export taxes.  WT/TPR/M/225/Add.1 
 Page 145 
 
 
  Answer:  
 The imposition of export tax and licensing requiremen t is to ensure adherence to sustainable forest 
management as well as to conserve the limited forest  resource.  States set an annual coupe to prevent 
over logging.  Export taxes will ensure adequate supply  of logs for domestic consumption which will 
in turn avoid the need to source for supply through over logging and illegal means.  
 
Para 49
 
  Exemptions or drawbacks on import duties are pr ovided for intermediate inputs for exports.  
If these import tariffs on intermediate goods used in the production of exports are not offset they 
become implicit taxes on exports.
144  Thus, drawbacks are used to reduce or eliminate these implicit 
export taxes, although they tend to be intricate a nd increase the complexity of the border taxation.  
Similarly, rebates of internal taxes (e.g. sales tax)  are used to ensure that exported goods are not 
subject to double taxation (in Ma laysia and importing countries). 
 
16. Page 35, Paragraph 49:  The Secretariat notes that "exemptions or drawbacks on import duties 
are provided for intermediate inputs for exports," a nd that those are complex.  The current Malaysian 
system appears to increase the incidence and complexity of border taxation.  
 
Answer:  
 
The current system does not increase  the complexity of border taxation.  The simple process are as 
follows:  
i) Companies apply to the Custom Authorities (Customs Act 1967, Section 99) for 
pre-approval to use the drawback facility , before importation, indicating the 
component and material as well as  finished goods to be exported; 
ii) To notify intention to claim refund upon exportation;  and 
iii) To submit claims after the goods have left the country. 
 
Para 51
 
 
 Malaysia has 16 free industrial zones (FIZs)145 and 17 free commercial zones146;  these were 
established to facilitate opera tions of export-oriented companies.  The authorities state that no data are 
compiled on the value of exports and imports from th ese zones as a percentage of total exports and 
imports.  Any goods, from overseas or within Malays ia, and services of any description, except those 
prohibited by law, may be brought into, produced or provided in the zones without payment of any 
tariffs, excises, sales or service taxes.  Enterprises lo cated in the zones are eligible for tax exemptions 
on income from promoted activities.  17. On page 36, Paragraph 51, the Secretariat's Report notes that "export-oriented companies" 
located in free industrial zones "are eligible for ta x exemptions on income from promoted activities."  
Please provide the name and explain the nature of this program, whether it is available to companies 
                                                     
 
 144 In the absence of drawbacks, it has been estimated (from 2001 data) that Malaysia's tariff was 
equivalent to an average export tax of 3.6% (Tokarick, 2006). 
 145 These are located in Sungai Way, Hulu Kelang, Kinta Jelapang II, Perai, Bayan Lepas, Sama Jaya, 
Telok Panglima Garang, Baru Berendam, Tanjung Kling, Johor Port, Pringgit, Damansara, Rantau Panjang, 
Kuching, Pulau Indah, and Tg. Pelepas. 
 146 These are located in Northport, Southport, Westport, Butterworth, Bayan Lepas, Kuala Lumpur 
International Airport, Rantau Panjang, Pengkalan Kubor, Johor Port, Tanjung Pelepas, Stulang Laut, Plentong, 
Bukit Kayu Hitam, Kapar, Seberang Perai, Penang, and Pulau Layang-Layang. WT/TPR/M/225/Add.1 
Page 146  
 
  located outside of free industrial zones and co mment on how the program is consistent with 
Article 3.1(a) of the SCM Agreement.  
Answer:  
 
Companies located in FIZ and elsewhere in Malaysia are eligible for tax incentives if they participate 
in promoted activities.  
 
Para 55
 
 
 The authorities state that Malaysia has no direct export subsidies or tax concessions to 
exporters.  18. Page 36, Paragraph 55:  According to the Secr etariat Report, Malaysia states that it has no 
direct export subsidies or tax concessions for e xporters.  In G/SCM/Q2/MYS/10 (October 10, 2006), 
the United States requested, pursuant to Article 25.8 of the SCM Agreement, inter alia , that Malaysia 
provide information regarding a pr ogram in Malaysia that appeared  to provide double tax deductions 
for expenses related to the developm ent of export markets.  Is this program still in effect?  If so, 
please describe the nature of the program and explain how it is consistent with article 3.1(a) of the 
SCM Agreement.  Answer:   Tax incentive of double deduction for export promo tion is provided under the Promotion of 
Investment Act 1986, Income Tax (Promotion of Exports)(Amendment) Rules 2001 and Income Tax 
(Deduction for Promotion of Exports) Rules 2002 a nd it is given in respect of approved expenses 
incurred by manufacturing, agricultural and tr ading companies on or after 1 January 1986.  
Expenses allowable would include expenses on pub licity and advertisement, provision of samples 
without charge, market research, preparation of te nders for the supply of goods, travelling expenses 
for negotiating or concludi ng contracts, participat ion in trade fairs and expenses for the cost of 
maintaining sales office overseas.   
The incentives are given to encourage promotional  activities in seeking new markets.  It does not 
guarantee securing export of products.  
Para 65
 
  Some 58.1% of Malaysian standards were ali gned with international standards in 2008, up 
from 51% in 2005 (Table III.5).  This increase ma y reflect the authorities ' stance that, when 
developing or revising standards, adoption of intern ational standards is the primary option.  Malaysia 
has been actively involved in the development of in ternational standards thro ugh its participation in 
bodies such as the ISO and IEC.  19. Page 39, Paragraph 65:  According to the Secr etariat, "Some 58.1% of Malaysian standards 
were aligned with international st andards in 2008, up from 51% in 2005 (Table III.5).  This increase 
may reflect the authorities' stance that, when  developing or revising standards, adoption of 
international standards is the primary option."  Wh at plans does Malaysia have to adopt the Codex 
Standard on Halal?    Answer:   The scope of Malaysian Standard on Halal (i.e. MS 1500:2009, Halal Food - Production, Preparation, Handling And Storage - General Gu idelines (Second Revision) and its earlier versions)  WT/TPR/M/225/Add.1 
 Page 147 
 
 
  is wider than the scope of the Codex Standards on Halal (CAC/GL 24-1997- General Guidelines for 
the Use of the Term Halal.   MS 1500 covers the aspects of production, preparat ion, handling and storage of halal food while 
CAC/GL 24-1997 covers only on the use of Halal Claims in food labelling.  In the deliberation of 
MS 1500, CAC/GL 24-1997 has been used as one  of the referenced documents and there are no 
current plans for its adoption. 
 
Para 67
 
 
 Malaysia intends to play a leading role in th e development of halal certification;  there have 
been no changes in halal-related policies during the review period.  All meat, processed meat 
products, poultry, eggs and egg products, domestically produced or imports, must receive halal 
certification from the Department of Islamic Deve lopment Malaysia (JAKIM) to be distributed in 
Malaysia.  The certificate is issued on the join t recommendation of the Malaysian Department of 
Veterinary Services (DVS) and JAKIM following an on-site inspection.   
 Para 68
 
  The slaughtering of animals and production of liv estock-based products (other than swine) for 
export to Malaysia must be conducted according to  halal specifications.  The DVS, together with 
other relevant agencies, such as JAKIM and the Ministry of Health, inspects slaughterhouses and 
processing plants overseas periodically, to ensure th at they meet Malaysia's halal requirements.  
Inspection is usually once a year or once in two year s, but varies depending on the risk involved in the 
particular country.  With regard to inspection of slaughterhouses outside Malaysia, JAKIM accredits 
the Islamic organization in the exporting country/ economy.  Once accredited by JAKIM, the Islamic 
organization monitors the halal process in th e slaughterhouse and produces halal certificates for 
export to Malaysia.  Malaysia had no mutual rec ognition arrangements with foreign standardization 
bodies on standardization and inspection for halal certification.  20. Page 40, paragraphs 67-68:  The Secretariat re port describes Malaysia's Halal requirements.  
Does this description reflect the revisions Mala ysia made in March 2009 to MS1500 – Halal Food: 
General Guidelines on Production, Preparation, Handling, Storage?  If not, please explain how those 
rules differ from the description of Malaysia's requi rements in the report.  In addition, please explain 
why the revision was not notified to the WTO in light of Malaysia's obligations under the WTO 
Agreement on Technical Barriers to Trade.  Answer:   The description in the Secretariat's report remains  valid with the revision of MS 1500:2009.  
Malaysia is in the process of no tifying the revision to the WTO. 
 
Para 73
 
 
 During the period under review, Malaysia made eleven SPS notifications related to seven SPS 
regulations.147   
 
                                                      
 147 These notifications are:  G/SPS/N/MYS/16 /Add.1, 17 March 2006;  G/SPS/N/MYS/19, 
3 April 2008;  G/SPS/N/MYS/19/Add .1, 9 June 2008;  G/SPS/N/MYS /19/Add.2, 25 August 2009;  
G/SPS/N/MYS/20, 6 July 2009;  G/ SPS/N/MYS/20/Add.1, 14 September 2009;  G/SPS/N/MY S/20/Corr.1, 
31 August 2009;  G/SPS/N/MYS/21, 25 August 2009;  G/SPS/N/MYS/22, 25  August 2009;  G/SPS/N/MYS/23, 
25 August 2009; and G/SPS/N/MYS/24, 13 October 2009.    WT/TPR/M/225/Add.1 
Page 148  
 
  21. Page 41, Paragraph 73:  The Secretariat stat es, "During the period under review, Malaysia 
made eleven SPS notifications related to seven SPS regulations."  Does Malaysia intend to notify the 
WTO (SPS or TBT Agreements as appropriate) of any new regulations or changes to existing 
regulations that will affect trade significantly, such as biotech regulations?  Answer:   Malaysia will notify to WTO of any new regula tions or changes pertaining to SPS matters. 
 
Para 16
 
 
 Preferential government procurement procedures c ontinue to be used as a major instrument of 
industrial policy to favour locally owned businesses;  international tenders are invited only if goods 
and services are not available locally.  Malaysia is not a party to the WTO Agreement on Government Procurement.   
 
Para 17
 
  Government-linked companies (GLCs) also c ontinue to play an important role in the 
Malaysian economy through their involvement in the provision of essential services, such as transport, 
energy, telecommunications, and financial servi ces.  The Government aims to improve GLC 
productivity notably through the GLC Transformati on Program, which aims to make them as 
productive as their non-GLC competitors.  As in the case of government procurement, GLCs are encouraged to purchase from locally owned businesses.   22. On page ix, paragraphs 16 and 17 of the Re port, the Secretariat notes that "preferential 
government procurement procedures continue to be u sed as a major instrument of industrial policy to 
favour locally owned businesses; international tenders  are invited only if goods and services are not 
available locally.  Malaysia is not a party to th e WTO Agreement on Government Procurement."  The 
Secretariat also notes that government-linked companies (GLCs) continue to play an important role in 
the Malaysian economy, and are encouraged to purchase from locally owned businesses.  Is the 
government taking any steps to limit government or  GLC procurement that favors locally owned 
businesses?  Will the Government's program of GL C competitiveness reform reduce the use of GLC 
procurement to favor local businesses?  Is Malaysia considering joining the GPA?  
Answer:  
 Currently the Government will continue to supp ort the development of local industries through 
government procurement e.g. to give priority to local manufacturers, suppliers and contractors.  
Liberalisation of government procurement policy will  be considered once the Government is satisfied 
that the local suppliers and contractors are abl e to compete on an even playing field with 
international players.    Malaysia is not a party to the WTO Agreement on Government Procurement.  Though Malaysia is 
neither a member nor an Observer to the agreement, Malaysia has adopted its procurement practices 
based on the principles of transparency, public accoun tability, value for money, fair dealing as well 
as open and fair competition.  This is  also in line with UNCITRAL Model Law. 
 To date, many initiatives have been put in place to improve the government  procurement system and 
enhance transparency in its processes.  Amongst the initiatives are procurement of supplies and 
services to be done online via ePerolehan system, in formation of successful  bidders are to be 
published in the procuring Agencies' websites,  and public opening of tender is a mandatory  WT/TPR/M/225/Add.1 
 Page 149 
 
 
  requirement for all supplies and services tend ers above RM 30 million and works tenders above 
RM 50 million.   
 
Para 81  
 
 Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDTCC) is responsible for formulating a competition policy 
for Malaysia.148  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.149  The authorities state that Malaysia is currently in the final 
process of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in 
accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associa tions, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.150  It is not clear whether GLCs will be 
covered by the FTPB and FTCB. 
 Para 82
 
  Some bilateral/regional free-trade agreem ents, such as the Japan-Malaysia Economic 
Partnership Agreement, signed in December 2005, and the ASEAN-Australia New Zealand Free 
Trade Agreement, signed in February 2009, include pr ovisions on competition.  At the regional level, 
Malaysia is a signatory to the declaration on  the ASEAN Economic Community (AEC) Blueprint, 
signed in 2007, with the aim of introducing comp rehensive competition laws  in all ASEAN member 
countries by 2015, on a best endeavour basis, a nd to establishing a network of authorities among 
member countries for discussion and coordination on comp etition policies.  Malaysia also participates 
in the ASEAN Experts Group on Competition (AEGC) , formed in 2007, which aims to develop 
capacity and a forum for discussion on competition policies in the ASEAN region.    Para 83
 
  Price controls are used on a number of produc ts.  Under the Price Control Act 1946, coarse 
grain, white refined sugar, and fine grain white re fined sugar have been declared by the MDTCC as 
goods subject to price control.  Goods subject to  administrative price controls include:  general 
purpose wheat flour, cooking oil (pure and blended palm  oil), white bread, petrol, diesel, and liquefied 
petroleum gas.  Price controls on steel bar and b illet, ordinary Portland cement, and chicken were 
eliminated in 2008.  The price of rice is controlle d by law and is administered by the Ministry of 
Agriculture under the Rice (Grade and Price Control) Order 1992. 
                                                     
 
 148 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
 149 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Guidelines on Substantial Lessening of Competition" and "Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and 
efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or market power in respect of the generation, production, tr ansmission, distribution, and supply of electricity and 
the supply of gas through pipelines.   
 
150 Some working documents outlining the main objectives of the bills and their substantive 
prohibitions were presented during the consultations;  these documents were not made available to the general 
public. WT/TPR/M/225/Add.1 
Page 150  
 
  23. Page 44, Paragraphs 81-83:  When will the Ma laysian Government complete drafting of its 
general competition law, which has been under di scussion for some time?  When will a draft be 
released to the general public and when will a bill  be introduced in the Parliament?  Will the law 
apply both to private firms and to GLCs?  If not, why not?  Answer:   The policy is currently being formulated and the draft legislation is still in the drafting stage.  Once 
they are finalised, they would have to be presente d to the Cabinet and then Parliament for 
three readings before getting the royal assent from th e King.  The length of the process can take at 
least six months provided there are no objections to the various issues laid down in the law.  The full 
coverage can only be determined then.  
 
Para 91
 
 
 Malaysia is reviewing its in tellectual property legislation in stages.  Industrial design 
legislation is at the final stage of internal revi ew, and is to be published for public consultation.  
Legislation on patents, trade mark, and copyright is  at the stage of internal discussion by the Law 
Review Committee.  While Malaysia does no t provide protection for data submitted by 
pharmaceutical companies in support of drug regist ration, the Government intends to implement 
test-data protection in Malaysia;  the exact mechan ism for doing this has not been decided yet.   
 
24. Page 46, Paragraph 91:  The Secretariat states th at "[l]egislation on… copyright is at the stage 
of internal discussion by the Law Review Committee. "  What is the status of these discussions?  What 
aspects of the law is the Government reviewing?  What is the timeframe for the Government's update 
of its copyright law?  What is the status of Malaysia's accession to the WIPO Internet Treaties? 
 
Answer:  
 The review of the copyright law is almost complete and it covers th e whole aspect of the copyright 
law.  It is expected to be tabled in Parliament in June 2010.  Malaysia will accede to WIPO Internet 
Treaties after Parliament's approval  of the amended copyright law. 
 
Para 28
 
  Malaysia's car market has long been shelte red from foreign competition by both tariff and 
non-tariff measures, and has been dominated by its national cars.  Proton and Perodua jointly 
accounted for 62.4% of vehicles sold in 2008 (75.2% in 2004 and 58.5% in 2005).  Arguably, these 
measures have resulted in the sector's lack of inte rnational competitiveness, as total exports of motor 
vehicles accounted for only 5% of total industry vol ume.  However, the authorities maintain that 
Malaysia's automotive sector h as been successful in taking a larg e share of the domestic market. 
 Para 29
 
 
 Malaysia's National Automotive Policy, intr oduced in March 2006, aims to build a 
competitive automotive sector in Malaysia and prom ote exports of automotive products.  To achieve 
these objectives, the Government lowered border pr otection for the automobile industry:  in 
March 2006, import duties were lowered to 30%  for complete built-up (CBU) vehicles (from 
35-50%), and remained at 10% for complete knocked-down (CKD) vehicles.  Lower duties apply to 
imports from ASEAN countries, and under Malaysia's bilateral agreements with Japan and Pakistan  WT/TPR/M/225/Add.1 
 Page 151 
 
 
  (Table AIV.2).151  The Government welcomes foreign inv estment in the automobile section, and 
100% foreign equity is allowed.  
Para 30  
  Further, in October 2009, after reviewing the NAP, MITI announced liberalization measures 
of the automotive sector.
152  As of 1 January 2010, the freeze on issuance of new manufacturing 
licenses are lifted on, inter alia , luxury passenger vehicles with e ngine capacity of 1.8 litres and 
above, with prices not less than RM 150,000, and h ybrid and electric vehicles.  There are no equity 
conditions imposed on these licenses.  The Government  particularly wishes to find a strategic partner 
for Proton, with a view to enhancing its compe titiveness in a global market.  To encourage exports, 
the Government increased income tax exemptions :  if the exports of an automotive company 
increased by at least 30%, 30% (from previously  10%) of the increased export income may be 
exempted from income tax;  if the exports in creased by at least 50%, 50% (from 15%) of the 
increased export income may be exem pted from income tax.  Also, Ma laysia is to gradually phase out 
its approval permits (AP) system.  The AP syst em, like import licensing, was designed to provide 
bumiputera  companies easy access into the auto mobile distribution and services sector153, and for the 
purpose of data collection and monitoring.  This sy stem is to be terminated in 2015 (for open APs), 
and 2020 (for franchise APs).    Para 31
 
 
 Nevertheless, the national car industry remains protected.  Fo r example, at the time of 
Malaysia's previous Review, excise tax rebates were accorded only to domestic manufacturers;  it was not clear to the Secretariat whether they have been revised.
154  Malaysia also started to apply a 
Vehicle Type Approval (VTA) process from January 2009, with a view to preventing the import and 
sale of "sub-standard" vehicles, as well as parts and components, in Malaysia.155  In accordance with 
the revised NAP, imports of used commercial vehi cles, which are currently allowed, are to be 
prohibited from 2016, and imports of used part s and components will be prohibited from 2011. 
 Para 32
 
  Further, some protective measures were adopted in the wake of the global crisis, to promote 
the development of national cars:  under Mala ysia's temporary auto-scrapping scheme, the 
Government rebates RM 5,000 for c onsumers replacing a car aged more than ten years with a national 
                                                     
 
 151 Automobiles from ASEAN countries, and European, Japanese, and U.S.-made cars produced in 
ASEAN countries with a minimum 40% local content, are  subject to the ASEAN Co mmon Effective Tariff 
(CEPT) rate of 5%, and are to be exempted from import duties in 2010.  Import duties are zero for CKDs from 
ASEAN countries.  Under the MJEPA, duty rates for CBUs and CKDs from Japan are 30% and 0, respectively.  Tariffs on imported cars above 2,000cc from Japan are exp ected to be eliminated by 2011;  this offers some 
space for Proton and Perodua, as both  mainly manufacture cars below 2, 000cc.  The MJEPA also covers 
economic and technical cooperation to improve capacity building in the automotive sector in Malaysia.  The authorities hope that, through assistance from Japanese expe rts in the field of testing, training, and cooperation, 
the international competitiveness of Malaysian automotive industry can be enhanced.  Duty rates for CBUs and 
CKDs from Pakistan remain at 30% and 10%, respectively.  
152 MITI online information. Viewed at:  http:// www.miti.gov.my/cms/content.jsp?id=com.tms.cms. 
article.Article_9971dce0-c0a81573-3edb3edb-686eb8ad [02.11.2009]. 
 153 The authorities regard this as a measure to achieve Malaysia's socio-economic objectives. 
 154 WTO (2006). 
 155 The authorities expect this process to enhance safety.   WT/TPR/M/225/Add.1 
Page 152  
 
  brand vehicle (Proton and Perodua) in 2009.
156  According to the authorities, part of the rebate is 
financed by Proton and Perodua. 
25. Pages 55-56, Paragraphs 28-32:  Please provide  an overview of the benefits provided to 
Malaysia's auto sector under the Industrial Adjustment  Fund.  To what extent are benefits contingent 
on local content?  Do vehicles with greater local content enjoy lower excise taxes?  Please explain 
how this program is consistent with Article 3.1(b) of the SCM Agreement. 
 
Answer:  
 The objective of the Industrial Adjustment Fund (IAF)  is to improve the competitiveness of parts and 
component manufacturers and to enhance their contri bution to the automotive industry and economy.  
All companies either local, foreign or joint ventures are eligible to apply for IAF based on two main 
criteria i.e. scale and industry linkages.  The IAF is granted to eligible local/foreign/join t venture companies with the intention to encourage 
development of domestic capacity in the automotive i ndustry.  It does not favour the use of domestic 
over imported goods. 
 
26. Page 55, Paragraph 30:  The Secretariat repor t notes that the revised National Auto Policy 
increases the income tax exemption for high value-adde d exports of motor vehicles and parts.  As we 
understand it, the income tax exemption is based on th e percentage increase in value added of exports.  
If the value added is at least 30%, then 30% of the export value is exempt from income tax;  if the 
value added is at least 50%, then 50% is exempt.  Please provide the name of this program and explain how the tax exemption is calculated.  Is the program available to other industries beyond the 
automotive industry?  Please comment on this program's consistency with Article 3.1(a) and 3.1 (b) of 
the SCM Agreement. 
 
Answer:  
 This exemption is temporary in nature and is given to encourage value added activities as well as to 
ensure sustainability of the domestic industry during the difficult economic situation.  It does not 
guarantee securing export of products and does not fav our the use of domestic over imported goods.  
This measure will be with drawn by 31 December 2014. 
Para 65
 
  There has been no significant change in teleco m-related legislation since the previous Review 
of Malaysia in 2006.  The main legislation on telecommunications services comprises:  the 
Communication and Multimedia Act 1998;  the Communications and Multim edia Commission Act 
1998;  and the Digital Signature Act 1997.  The sector is regulated by the Ministry of Information, 
Communication and Culture (MICC), and the Communications and the Multimedia Commission.   Para 66
 
 
 Malaysia's fixed-line market continues to be dominated by Telekom Malaysia Berhad (TM), a 
government-linked company, accountin g for 98% of the market.  TM separated its fixed-line and 
mobile phone business into two companies in 2008, and no longer provides mobile phone services.  
Malaysia currently has four mobile phone operators.    
                                                     
 
 156 MIER (2009).  WT/TPR/M/225/Add.1 
 Page 153 
 
 
  Para 67  
  Telecom services suppliers must obtain a licence from the Minister of Information, Communication and Culture;  licence conditions are th e same for local and foreign service suppliers.  
The company must be incorporated in Malaysia , with minimum paid-up capital of RM 500,000.  
Malaysia's GATS commitments specified that forei gn participation of up to 30% is allowed in 
telecommunications services, although in practice participation of up to 49% may be allowed.
157   
 Para 68
 
 
 Competition in telecommunications (particularly in fixed-line services) is limited.158  
However, the authorities consider that competition was introduced in the fixed-line sector in early 
1990s, when five additional licences were issued in  line with the National Telecommunication Policy 
to encourage competition.  
Para 69
 
  Retail prices for fixed-line services are regulated by the Government through the 
Communications and Multimedia (Rates) Rules 2002.   Under the rules, maximum prices are set, 
below which companies are free to set their tariffs;  these ceilings have not been changed since 2002.  
The tariffs for fixed-line telecom services have been declining over the past few years, particularly for 
long-distance and international calls.  Retail rate s for mobile phone services are not regulated, and 
have also been declining.  The Government re gulates access and interconnection between all service 
providers.  "Call back service" is prohibited.  On the issue of cross-subsidization, the Communications 
and Multimedia Act 1998 stated that rate setting sh ould be based on costs, and cross-subsidies in 
general should be eliminated.  This principle, how ever, applies only to rates not regulated by the 
Government. 
 27. Page 64, Paragraphs 65-69:  The report states that Malaysia's GATS commitments specified 
that foreign participation of up to  30% is allowed in telecommunicati ons services, although in practice 
participation of up to 49% may be allowed.  However, based on laws and regulations that are publicly 
available, there appears to be no legal impediment to foreign firms owning up to 100% equity in an 
operator.  Is that the case?  If so, the referenc e to "participation up to 49%" would appear to be 
incorrect and should instead read “participation up to  100%."  If in practice foreign firm participation 
is limited to 49%, please identify the laws, regulations or other measures that restrict foreign entry to 
below 100%?  Answer:   Although the laws and regulations do not stipulate foreign equity participation, the foreign equity 
limits are stipulated in individual licences when issued.   
                                                     
 
 157 Higher equity participation is allowed for "indivi dual network service provider licenses", and "class 
application service provider licenses". 
 158 The efficiency of the telecom sector is affected by, inter alia , the equity cap on foreign investment, 
the requirement that companies must have a bumiputera  equity participation of 30%, and the uncertainty and 
lengthy procedure for obtaining a licence. WT/TPR/M/225/Add.1 
Page 154  
 
  Para 94
 
  An equity restriction of 30% applies to  foreign investors in direct selling business.
159  
Department stores, supermarkets, and shopping malls must reserve 30% of the shelf space for 
products made by Malaysian SMEs.  These restrictions and reserva tions are currently under review by 
the Government. 
 28. Page 69, Paragraph 94:  The Secretariat's report states that the restrictions and reservations 
related to distribution services are currently under revi ew by the Government.  What is the status of 
this review?   
 
Answer: 
 The review was concluded in late 2009.  On 6 January 2010, the Government has liberalised the 
equity condition for distributive trade services, ex cept for those who operate as hypermarkets where 
the bumiputera (indigenous group) equity requirement  remains at 30%.  Components of distributive 
trade services include commission agent, wholesale, retail and franchise.  
 
                                                     
 
 159 Pyramid selling is prohibited;  only single-level marketing, multilevel marketing, and mail order are 
permitted.    WT/TPR/M/225/Add.1 
 Page 155 
 
 
  ANNEX I  
 
Q5 (KOREA) :  THE 27 SERVICES SUB-SECTORS LIBERALISED 
 
Computer and Related Services  
 
1. Consultancy services related to the insta llation of computer hardware (CPC 841). 
 2. Software implementation services - systems and software consulting services;  systems 
analysis services;  systems design services; programming services and systems maintenance 
services (CPC 842). 
 3. Data processing services - input preparation services;  data processing and tabulation services;  
time sharing services and other data processing services (CPC 843). 
 
4. Data base services (CPC 844). 
 5. Maintenance and Repair Services of Computers (CPC 845). 
 6. Other services - data preparation services;  training services;  data recovery services;  and 
development of creative content (CPC 849). 
 
Health and Social Services
 
 
7. All veterinary services (CPC 9320). 
 
8. Welfare services delivered through residential in stitutions to old pers on and the handicapped 
(CPC 93311). 
 9. Welfare services delivered through residen tial institutions to children (CPC 93312). 
 10. Child day-care services including day-care services for the handicapped (CPC 93321). 
 
11. Vocational rehabilitation servi ces for handicapped (CPC 93324). 
 Tourism Services
 
 
12. Theme Park (CPC 96194). 
 13. Convention and Exhibition Centre (seating capacity of above 5,000) (CPC 87909). 
 14. Travel Agencies and Tour Operators Services (For inbound travel only) (CPC 7471). 
 
15. Hotel and Restaurant services (for 4 and 5 st ar hotels only) (CPC 64110 and CPC 64199). 
 16. Food Serving Services (for services provided in 4 and 5 star hotels only) (CPC 642). 
 17. Beverage Serving Services for consumption on the premises (for services provided in 4 and 5 
star hotels only) (CPC 643). 
 WT/TPR/M/225/Add.1 
Page 156  
 
  Transport Services 
 
 
18. Class C Freight Transportation (Private Carrier License – to transport own goods) 
(CPC 7123). 
 
Sporting and other recreational services  
 
19. Sporting Services (CPC 9641). 
 (Sports event promotion and organisation services)  
Business Services
 
 
20. Regional Distribution Centre (CPC 87909). 
 21. International Procuremen t Centre (CPC 87909). 
 
22. Technical Testing and Analysis Services - co mposition and purity testing and analysis 
services, testing and analysis services of physical  properties, testing and analysis services of 
integrated mechanical and electrical systems, and technical inspection services (CPC 8676). 
 23. Management Consulting Services - general, fi nancial (excluding business tax), marketing, 
human resources, production and public relations services (CPC 8650).  
 
Rental/Leasing Services without Operators 
 
 
24. Rental/Leasing services of ships that exclud es cabotage and offshore trades (CPC 83103). 
 
25. Rental of cargo vessels without crew (Bar eboat Charter) for international shipping 
(CPC 83103). 
 
Supporting and Auxiliary Transport Services  
 
26. Maritime Agency services (CPC 7454). 
 27. Vessel salvage and refloating services (CPC 7454). 
 
 
__________