The establishment of diplomatic relations with the US in 1957, following Malaya’s independence, provided a catalyst for robust economic ties and, since then, both countries have consistently invested in this aspect of the bilateral relationship in a meaningful and mutually supportive manner.
Fifty-seven years on, the US has become one of the largest foreign investors in Malaysia, as well as one of Malaysia’s top trading partners. Now, Malay-sia is the US’ 25th largest trading partner. The presence of large US firms in Malaysia is particularly significant in the areas of manufacturing, electronics and energy. But today, US investments are shifting towards high-end manufacturing and research and development activities, which, it is important to point out, are undertaken by Malaysian talents.
Trade, investment and economic ties have been the pillars of the Malaysia-US relations. The fact that Malaysia and the US — two nations at different stages of economic development — can interact in such fashion reflects a mutually pragmatic approach that recognises the leadership roles of both nations at the regional and global levels. It is a relationship borne out of maturity and confidence.
Fair and freer trade drive both the economies of Malaysia and the US. As close partners, we agree on shared goals and work together to achieve these goals at the bilateral, regional and multilateral levels.
Through joint approaches, Malaysia and the US collaborate on issues of mutual interest at Asean (Association of Southeast Asian Nations), Apec (Asia-Pacific Economic Cooperation) and the WTO (World Trade Organisation) levels. We are also negotiating partners in the talks to form the Trans-Pacific Partnership (TPP).
Between 2003 and last year, Americans have invested over US$13 billion (RM42.38 billion) in Malaysia. It all started with National Semiconductor, the first US multinational corporation (MNC) in Malaysia (in Penang), in 1971. Since then, over 20 per cent of all foreign direct investments (FDIs) in Malaysia have come from the US.
Now, there are over 100 American MNCs in the country — from Motorola, Intel and Agilent to General Electric, Halliburton, Bose and Dell — giving meaningful employment to Malaysians. This has helped grow the Malaysian economy.
These firms have since gone beyond assembly to establish their research and development base in Malaysia. This in turn has contributed to the development of local suppliers with capabilities in automation systems, precision engineering and software development. The US MNCs have also had a significant impact on the up-skilling of Malaysia’s workforce. They employ more than 70,000 people in the country and support its human capital development.
Malaysia enjoys a substantial surplus in its bilateral trade relationship with the US. Over the past decade (2003-2013), exports to the US totalled US$247.5 billion, while imports amounted to US$173.3 billion. This says as much about the competitiveness of Malaysian exporters as it does about the overall importance of the US market.
Key to boosting bilateral trade and investment is the strong ties between the government and the US private sector. Malaysia’s collaboration with the US-Asean Business Council, the US Chamber of Commerce and AmCham (American Ma-laysian Chamber of Commerce) have been important in unearthing new business opportunities for local companies.
We have had years honing our strong value proposition as a long-term investment destination and trading partner. That will continue as Malaysia is committed to strengthen its business environment and image through such programmes as the Economic Transformation Programme. Coupled with that is the country’s integration into the broader single Asean market next year and beyond.
Beginning next year, Malaysia will serve as the Asean Chair. That means the country will oversee the overall Asean process during the final year of the Asean Economic Community (AEC) Blueprint ahead of its year-end deadline. The objective of the AEC is to make the region more dynamic to compete in global supply and value chains and to remain an attractive magnet of FDIs. Malaysia’s priority is the elimination of non-tariff barriers, facilitation of the movement of skilled labour and professional services, and promotion of intra-Asean investment.
The US industries recognise the benefits of a single AEC market. Washington has channelled its resources to support Asean’s objective of eliminating tariff and non-tariff barriers. A more vibrant and wholesome AEC will benefit all those who directly or indirectly do business with Asean.
The US is also investing financial and technical resources to develop Asean Connectivity — a goal Malaysia shares by hosting the Asean Infrastructure Fund.
For example, under the Asean- US Connectivity Cooperation Initiative, and supported by the US Trade and Development Agency (USTDA), the US is helping Asean implement the Master Plan on Asean Connectivity.
Malaysia and the US also collaborate closely at regional levels. Both countries are members of Apec, a forum which provides an opportunity for networking and meetings with economic ministers, officials and business leaders.
The collaboration between the two countries at Apec level includes the initiative for greater market access for green goods; business ethics for small and medium enterprises (SMEs) and in the area of good regulatory practices.
During Apec 2011, hosted by the US, the ministers endorsed the Kuala Lumpur Principles for Medical Device Sector Codes for Business Ethics (the “KL Principles”) for the region’s medical devices industry. The first of its kind, the principles aim to improve the quality of patient care, encourage innovation and promote the growth of SMEs that produce medical devices.
An important aspect of work in Apec is the deepening of the region’s economic integration. The ultimate objective is to have a free trade area (Free Trade Area of the Asia Pacific, or FTAAP) that encompasses all 21 Apec economies. And TPP is but a building block towards this end. Given the openness of both the US and Malaysian markets, the TPP, and eventually the FTAAP, will ensure that both countries benefit from this regional economic integration.
At WTO’s 9th Ministerial Conference in Bali, in December last year, Malaysia and the US jointly supported the passage of the Trade Facilitation Agreement (TFA).
The WTO TFA created binding commitments across 159 WTO members to expedite the movement, release, and clearance of goods across borders. It will improve cooperation among WTO members on Customs matters, and help developing countries fully implement their obligations.
Malaysia and the US joined like-minded WTO members in pushing through this agreement, realising the potential to increase global gross domestic product by US$1 trillion through cost-savings from trade facilitation.
All in all, Malaysia-US economic relations will continue to be robust and mutually reinforcing. US hi-tech and knowledge-intensive investments will continue to contribute to the development of our economy.
l The writer is Minister Counsellor (Economics) at the Embassy of Malaysia, Washington DC
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