Asean-Six to Be Totally Free Trade Area by January Next Year

Asean-6 will be a totally free trade area by Jan 1, 2010 when duties on most of the countries' products are eliminated.

International Trade and Industry Ministry senior director of Asean economic cooperation division P. Ravindran said Malaysia had committed to eliminate import duties on 2,123 products, reduce import duties to 5% for tropical fruits, tobacco and tobacco products and reduce import duties for rice and rice products to 20%.

The 2,123 products that will have import duties eliminated include fish, vegetables, palm oil, prepared food stuff, mineral products, chemical products, plastic and rubber, leather, wood products, paper products, footwear, ceramic products, precious stones, based metal (iron and steel), machinery, vehicles, manufactured items and works of art.

Ravindran said that because of Asean Free Trade Area, intra-Asean trade was US$452bil in 2007. Last year, however, this figured dropped to US$420bil. "Last year, we were able to attract inflow of investments worth US$60mil into Asean," he said.

He said that while import duties were eliminated, "the rules of regulation require the goods to have 40% local Asean content under the Common Effective Preferential Tariff as well as comply with standards and sanitary and phytosanitary regulations."

Meanwhile, RAM Holdings Bhd chief economist Dr Yeah Kim Leng said: "Similar to the European Union, this regional integration imperative now appears even more urgent and necessary for the Asean countries to collectively face the twin challenges of confronting the current global slump and the rise of China and India that have accounted for a rising share of global foreign direct investment and trade flows."

"Malaysian producers will not be able to enjoy tariff protection anymore. They will have to compete with imports from neighbouring countries. Likewise, Malaysian industries will be able to see enhanced export opportunities in the common Asean market, without being disadvantaged by import tariffs," he added.

Federation of Malaysian Manufacturers president Datuk Mustafa Mansur said that small and medium enterprises had to increase their productivity and efficiency to compete with their regional competitors.

"While it is a concern that consumers would opt for lower priced products, it should also be noted that Malaysia has always been accepted as a producer of quality products," he said.