Proton and the Malaysian Dilemma - Case Study

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International Investment & Economic Development

Case Study – Proton and the Malaysian dilemma

Question 5 – Assuming the finalisation of an Australia-Malaysia Free Trade Agreement, what are the potential threats and benefits from the bilateral FTA for Australian carmakers?

I actually thought this was a hypothetical question. Until I did some research and found out that Australia and Malaysia are in negotiations on a bilateral FTA, which would become MAFTA, Malaysia Australia Free Trade Agreement

So for those of you who, like myself, weren't aware of it, I'll give you some quick background info.

MAFTA – Background/update

In April last year Prime Minister John Howard and Malaysian Prime Minister Abdullah Badawi agreed to launch negotiations on a bilateral Free Trade Agreement.

The first round of negotiations on the FTA were held in May in Kuala Lumpur. The second round of negotiations took place in August last year, also in KL. There have been several inter-sessional discussion since last year but the next full negotiating round was scheduled to be held in Canberra from 13 March 2006. Negotiations will probably be concluded at the end of this year with implementation of the FTA in 2007. Other important Malaysian FTA's to look at in regards to tariff's on imported cars are the Japan-Malaysia FTA which was signed in December last year, and AFTA, the Asean Free Trade Area, which includes the CEPT (Common Effective Preferential Tariff). FTA's to look at involving Australia and automotive tariffs include AUSFTA, and TAFTA.

Current Policy

A review of Malaysia's current tariffs show that many of Australia's major exports to Malaysia enter at zero or low tariffs. However, there are a number of areas where tariff and non-tariff barriers could affect Australia's trade considerably and where significant gains could be made from improved access.

For example Transport equipment (which includes automotive...
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