International Trade and Industry Minister Datuk Seri Mustapa Mohamed said in a statement that both countries would eliminate and bind duties on 70% of the tariff lines upon entry into force of FTA.
Turkey, with a population of 74 million people, holds vast market potential. “I urge the Malaysian business community to take full advantage of the opportunities offered under this FTA, which can also help strengthen bilateral trade and economic linkages on a long-term basis,” he said.
In 2014, total trade between Malaysia and Turkey amounted to USD$969mil (RM3.69bil). Malaysia’s exports to Turkey totaled USD$752mil (RM2.86bil), while imports amounted to USD$217mil (RM826.21mil).
Key exports to Turkey comprise textiles and clothing, chemicals and chemical products, palm oil, manufactures of metal, rubber products, electrical and electronic (E&E) products. Imports from Turkey include textiles and clothing, machinery appliances and parts, iron and steel products, chemicals and chemical products, other agriculture produce, electrical and electronic products.
“Malaysian exports that will benefit from immediate duty-free treatment in Turkey include selected textiles and apparel, E&E products, chemicals, iron and steel products, machineries, wood products, leather products and all rubber products,” Mustapa said.
On other strategic products, including iron and steel, both counties will phase-out import duties in stages within an eight-year period, starting from the day the agreement enters into force. Turkey will also eliminate all existing additional duties (ranging from 20%-30%) on textiles, apparel and footwear, which currently affect more than a thousand tariff lines.
For palm oil and palm products, Turkey has offered a one-off duty reduction of 30% from the current MFN (most favoured nation) rate (0-46.8%). “Reduction of duties on these products essentially mean that Malaysian palm oil and palm products are placed at a competitive advantage in the Turkish market, over similar products originating from other countries,” Mustapa explained.
Malaysia and Turkey had negotiated on the accord since May 2010. It was agreed that the talks would initially focus on goods, and the agreement later expanded to cover investment and services. In January 2014, both sides closed the deal, having arrived at a mutually beneficial package.
The FTA with Turkey is the 13th such FTA entered into by Malaysia. Currently, the country has implemented six regional FTAs and six bilateral FTAs that cover other Asean member states, China, Japan, India, Australia, New Zealand, Pakistan and Chile.
During the signing of MTFTA in April 2014, the Prime Ministers of Malaysia and Turkey set a target of USD$5bil in total trade by 2020. The implementation of the FTA is expected to help the countries to achieve that.
Malaysian corporate players in Turkey include Malaysia Airports Holdings Bhd, which owns the Istanbul Sabiha Gokcen International Airport; and IHH Healthcare Bhd, which counts Turkey as one of its biggest markets.