European External Action Service

02/08/2023 | Press release | Distributed by Public on 02/08/2023 10:09

EU Statement at the Trade Policy Review of Malaysia, 08 February 2023


EU Statement at the Trade Policy Review of Malaysia, 08 February 2023

EU Statement delivered by Deputy Permanent Representative, Hiddo Houben

Thank you, Mr Chairman.

On behalf of the European Union, I would like to welcome the Delegation of the Malaysia for the 8th Trade Policy Review, led by the Secretary General Mr. Datuk Isham Ishak (Ministry of International Trade and Industry), as well as the large delegation in attendance from Kuala Lumpur. Our appreciation is extended to the Discussant, Ambassador H.E. Mr. Alparslan Acarsoy (Türkiye), for his remarks.

While the economy was dampened by the COVID-19 pandemic,Malaysia's economy has since rebounded. According to World Bank the country is now projected to transition from its current upper-middle-income economy to a high-income economy between 2024 and 2028 provided the government successfully carries through reforms revitalising long-term growth, boosting competitiveness, diversification, modernising institutions and promoting inclusion.

During the review period, Malaysia has also acceded to the Regional Comprehensive Economic Partnership Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, both facilitating access and promoting regional trade. Malaysia has further launched a New Investment Policy to reinvigorate and catalyse its investment ecosystem with a strong pivot towards environmental, social, and governance issues.

The EU would also like to commend Malaysia for its active participation in the work of the WTO and for its commitment and support to the multilateral trading system. Furthermore, we acknowledge Malaysia's constructive participation in the Joint Statement Initiatives in E-commerce and Investment Facilitation for Development and encourage Malaysia to join the Services Domestic Regulation JSI as well as the WTO's initiatives on trade and sustainability.

Mr Chairman, despite these very positive aspects, the EU would like to raise a number of issues regarding Malaysia's trade and investment policies. These are similar to the ones raised in the previous Trade Policy Review of Malaysia, and therefore we would encourage further compliance of these policies.

First, the EU continues to note a general lack of transparency, both ex ante and ex post, which deters EU traders and investors from doing business in Malaysia.

Second, we also remain concerned by the wide use of non-automatic import licensing, which the Secretariat report confirms, as well as by the lack of predictability and transparency of the Malaysian licensing regime in general. In particular, we consider that the Approved Permit system in the automotive sector is a blatant example of a quota regime that is not compliant with WTO rules. The EU would like to know more about Malaysia's plans to ensure compliance with WTO rules and to further open up its national automotive policy to competition, and these are issues that will not be a surprise to the delegation present here today.

Third, although the EU recognises that Malaysia has moved in the right direction in terms of reform and liberalization of its services sector, we think that further efforts are necessary. For instance, we would like to see Malaysia pursuing liberalisation in services sectors where foreign equity caps have remained for decades. Linked to this is a more general concern over a set of discriminatory domestic policies that negatively affect Foreign Direct Investment, but also other sectors.

Fourth, we reiterate our concern about the discrimination our providers face when trying to access Malaysia's public procurement market. In some important sectors - such as civil engineering and infrastructure development - our suppliers are extremely rarely allowed to tender. Unlike several other Asian economies at a similar, or lesser level of economic development, Malaysia is only an observer to the Government Procurement Agreement. The EU strongly encourages Malaysia to make its procurement market more open and transparent, and to consider joining the GPA. Furthermore, we would like to extend to Malaysia the invitation to join the MPIA arrangement.

Finally, while we appreciate Malaysia's ambition to become a hub for halal products, the EU once again encourages Malaysia to pursue this ambition whilst allowing EU operators to export non-halal meat products to Malaysia as well. In addition, EU halal meat products should be permitted to compete on the Malaysian halal market under the same conditions as Malaysian operators.

The EU would like to thank Malaysia for the responses to the advance questions we have put forward today on these and other issues that we are currently examining. On behalf of the EU, I wish Malaysia a very successful 8th review.

Thank you, Mr Chairman.