The First Malaysia-Thailand Joint Trade Committee (JTC) Meeting took place in Kuala Lumpur on 30 May, 2005.  The objectives of the JTC are five-fold, namely to:

i.   Identify and implement measures to enhance bilateral trade and investment links; 
ii.  Address trade and investment issues affecting both countries; 
iii. Assist the private sectors to establish business ventures; 
iv. Provide consultations and exchange information in trade and other related areas; 
v.  Recommend measures aimed at the expansion and diversification of trade between the two countries to respective Governments.

Malaysian Minister of International Trade and Industry, H.E. Dato’ Rafidah Aziz met with the (then) Thai
Minister of Commerce, H.E. Thanong Bidaya.  The delegations of both Governments included officials from the relevant ministries and departments, as well as representatives from the private sectors such as the Federation of Malaysian Manufacturers, and the Federation of Thai Industries.

In the meeting, both Ministers noted with satisfaction the good bilateral relations between Malaysia and Thailand. They further noted that efforts need to be intensified, especially as both Malaysia and Thailand stand to mutually benefit by cooperating in taking advantage of the on-going economic integration and liberalization initiatives under ASEAN, as well as through ASEAN’s links with dialogue partners.

The Meeting discussed bilateral economic cooperation initiatives/activities with focus on areas where both countries can mutually benefit from increased collaboration. The meeting reviewed the present level of trade and investment situation, agreeing that there is ample scope for expansion of trade and investment relations.  Summary of the discussions are as follows:

Bilateral Trade – Statistics

1) Volume of exports: Malaysia’s exports to Thailand grew by 33% in 2004 to record US$6.1 billion from US$4.6 billion in 2003. Conversely, Thai exports to Malaysia increased by 37 % to US$5.3 billion in 2004 from US$3.8 billion in 2003. 
2) Trade partnership ranking: Thailand currently ranks as Malaysia’s 6th largest trading partner, 5th largest export market and 6th largest source of imports.  Malaysia was the 7th largest foreign investor in Thailand in 2004 behind Japan, the EU, the United States, Singapore, the Netherlands, and Hong Kong.
3) Value of investments: 39 Malaysian projects, mainly in areas of agricultural products, mineral and ceramics, light industries and textiles, metal products and machinery, and electric and electronic products, were approved for investment promotion by the Board of Investment of Thailand (BOI) with the total value of US$300 million. Conversely, Malaysia was the 21st destination for Thailand’s investment.  Total Thai investment in Malaysia approved by the Malaysian Industrial Development Authority (MIDA) was US$9.7 million in 2004.

The Meeting noted that two-way trade flow continued to rise.

Areas of Cooperation – Government Sector

1. Bilateral Payments Arrangements (BPA): The Meeting discussed the level of trade transaction under the BPA, and noted that there is potential to further expand the scheme. The Meeting agreed on the need to have more promotional campaigns to encourage increased business transactions under the BPA.  Other alternative trade financing mechanisms can be considered to promote two-way trade.
2. Customs cooperation: satisfactory progress has been made to facilitate clearance of goods at the common border entry/exit points, including on-going work on the development of a single inspection system to expedite clearance of goods at the common border points. There is also on-going work at ASEAN level to establish an "ASEAN Single Window" in 2006 to facilitate trade and clearance of goods within the region.
3. Small and Medium Enterprises (SME):  The Meeting agreed to enhance SME collaboration between both countries towards creating competitive supporting industries for mutual benefits. The Small and Medium Industries Development Corporation (SMIDEC), Malaysia, and the Office of Small and Medium Enterprises Promotion (SME), Thailand, will cooperate and work closely in forging SME collaboration.  Both countries agreed to conduct joint exhibitions abroad to promote SME products, particularly automotive components and parts, and engineering components and parts.
4. Mutual Recognition Arrangements (MRAs) on Agricultural Products: The Meeting noted the proposal to establish the Mutual Recognition Arrangements (MRAs) on Agricultural Products agreed by the Leaders of both countries, to facilitate import and export of agricultural products between the two countries. In this regard, Thailand proposed that the Thai National Bureau of Agricultural Commodity and Food Standards would be the focal point on the Thai side. Similarly, the Ministry of Agriculture Malaysia would be the focal point for Malaysia.
5. Free movement of goods: the Meeting discussed problems encountered by both countries on the movement of goods over land, particularly the need to transfer goods into different trucks at the border, including goods in transit.  The Meeting agreed that both countries will work expeditiously towards an agreement on transit and transport of goods for mutual benefit of both countries.

Areas of Cooperation – Private Sector

Both countries will continue to support private sector initiatives aimed at enhancing trade and investment ties, including encouraging exchanges of trade and investment missions.

The Federation of Malaysian Manufacturers and The Federation of Thai Industries have taken initiatives to identify areas for possible cooperation. The initiatives include:

1. Harmonization and synchronization of product coding in the food sector to improve efficiency and traceability; 
2. Encouraging of standards harmonization and MRA of electrical and electronic products; and
3. Promotion and development of the halal food industry in both countries.

Thailand will host the next JTC meeting in 2006.

By Mr. Khoo Boo Seng
Economic Councellor, Malaysian Trade Office

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