Questions On Malaysia - Japan EPA (MJEPA)

QUESTION

ANSWER

1.

What are the benefits that can be derived from MJEPA?

The main benefits of the FTA are as follows:

- eliminates tariffs on all Malaysia's export products including electrical and electronic products, textiles and apparel and auto parts by 2016.

- addresses non-tariff measures, in particular technical barriers, including stringent SPS measures.

- facilitates trade through the establishment of mutual recognition agreements of product standards and tests, particularly for agricultural products and environmental goods.

- provides access for Malaysian services providers to Japan’s market including:

·         business and professional services

·         education services

·         communication services

·         tourism and travel related services

·         health related and social services

- provides a framework to further facilitate cross-border investments between the two countries through commitments on national treatment, most-favoured nation treatment, as well as protection of investors and investments.

- provides a framework for economic and technical cooperation. A major example is the cooperation undertaken under the Malaysia-Japan Automotive Industry Cooperation (MAJAICO)

2.

What are the conditions exporters need to fulfill to enjoy the preferential tariff?

Compliance to Rules of Origin is important in exporting products under the preferential trading arrangements. In order for Malaysian and Japanese importers to enjoy preferential treatment, the products need to fulfill the general Rules of Origin Qualifying Value Content (QVC) of not less than 40% or Change in Tariff Classification.

3.

How to apply for MJEPA?

Guidelines to Apply for Preferential Certificates of Origin

Approval For Cost Analysis

Conditions and Procedures for Application:

(i)     The company must be registered with the Companies Commission of Malaysia (SSM).

(ii)    Eligible Products

-  Products for export as stipulated in the list of products of the importing countries of respective schemes.

-  Products for export must fulfill the condition of the rules of origin under the respective schemes.

(iii)   How to Apply

-   Obtain the ASEAN Harmonised Tariff Nomenclature (AHTN) or Harmonised System (HS) code from the Royal Customs of Malaysia for every product and raw material used.

-   Application must be submitted with:

§  Form BAK 1(a): Details of Exporter/Manufacturer and Products

§  Form BAK 1(b): Product's Cost Analysis

§  Form BAK 1(c): Letter of Indemnity

§  A Copy of the following documents:

-   Certificate of company's registration.

-   Invoices of raw material purchasing.

-   Sample/photograph/products catalogue.

-   Flow chart of production process.

(iv)  Application Forms of BAK 1(a), BAK 1(b) and BAK 1(c) Forms can be obtained from:

-   MITI Website - http.//www.miti.gov.my.

-   Service Counter (Ground Floor), MITI office Kuala Lumpur.

-   MITI's branch offices in respective states.

Completed application forms must be submitted to:

Ministry of International Trade and Industry (MITI)

Trade Cooperation and Industry Coordination Section

Ground Floor (Service Counter), Block 10

Government Offices Complex, Jalan Duta

50622 Kuala Lumpur

Tel.: 03-6203 3022

Fax: 03-6201 3351

or

MITI's branch offices in respective states

(v)   Notification letter will be issued to applicant within 7 working days upon receipt of completed application form.

(vi)  Once your application is approved, Malaysian exporters have to submit the Form MJEPA which can be purchased from Federation of Malaysian Manufacturers (FMM). For further details, please contact:

Tel : 03 - 6286 7200

Fax : 03 - 62741266 / 7288

www.fmm.org.my

4.

What are the likely challenges and the implications to domestic industrial sectors?

The main challenge resulting from the implementation of the MJEPA will be increased competition to the domestic industry especially where Japan has a comparative advantage.

However, this increased competition is expected to spur our industries to increase their competitiveness through increased productivity and efficient utilization of resources by shifting limited resources away from less economic viable activities to areas where Malaysia has a comparative advantage. Furthermore, the FTA will contribute to lower costs of inputs as Malaysian industry will be able to source cheaper inputs from Japan.

Nevertheless, Malaysia has negotiated progressive liberalization with longer phased-in tariff elimination/reduction for sensitive products to allow Malaysian producers time to prepare to face the increased competition.

5.

What are the main elements of the MJEPA?

The MJEPA is a comprehensive Agreement that covers Trade in Goods, Trade in Services, Investment, Competition, Intellectual Property Rights and Economic Cooperation.

6.

What are the Malaysia's and Japan's commitments under the MJEPA?

a. Trade in Goods:

Malaysia's offer:

-       Progressive reduction or elimination of tariffs on substantially all agricultural and industrial products by 2016.

-       Tariff capping for sensitive products.

-       Automotive products –

·         phasing out of tariffs for CBUs by 2015.

·         MPVs and 3000cc by 2010.

-       Steel Products

·         Import duty exemptions for certain steel products,

·         duty elimination by 2016

·         tariff capping to 20% by 2016 and 15% by 2021

-       Chemical Products

·         Duty elimination by 2016

·         Tariff capping (at 5% by 2016)

Japan's offer:

-       Progressive reduction or elimination of tariffs on substantially all agricultural and industrial products.

·         Japan to maintain duty free treatment on 6,613industrial products, tropical fruits and forestry products.

·         Japan to reduce and eliminate duties on fishery products, rubber and leather footwear and cocoa products over 8 years.

-       Major products of interest to Malaysia include rubber products, E&E products, chemical and chemical products, and furniture.

-       TRQ for bananas.

b. Trade in Services

Both Malaysia and Japan have also committed to liberalization their respective services market.

Malaysia's offer covers commitments in sectors such as:

-       early implementation of WTO offers.

-       AFAS fourth package.

-       51% equity in leasing, repair, maintenance of equipment and machinery.

Japan's offer to Malaysia include:

-       Japan will accord to Malaysia same treatment as that given to other FTA   partners.

-       Malaysia will have market access in sectors of interest such as:

·         business and professional services

·         education services

·         communication services

·         tourism and travel related services

·         health related and social services

c. Investment

MJEPA provides for a framework for expansion & facilitation of freer cross-border investment between the 2 countries, through commitments on national treatment, MFN treatment & enhanced protection of investors & investment. MFN treatment is provided to each other investors except for ASEAN and specific reservations. Standstill commitment for liberalization measures undertaken prior to the implementation of MJEPA.

7.

What are the products excluded by Malaysia under the MJEPA?

Malaysia has excluded 42 tariff lines from the tariff concession under the Exclusion List (EL). These products are excluded for health, safety and moral reasons. Among the products are firearms, bullet, rice, tobacco and liquor.

8.

Where are the areas where strategic partnership can be forged between Malaysian and Japanese companies?

MJEPA provides for platform to encourage and develop strategic partnerships through various cooperation projects.

In  automotive sector, 10 automotive projects will be implemented under the Malaysia – Japan Automotive Industry Cooperation (MAJAICO) with the view to enhance the competitiveness of the sector:

·         The Automotive Technical Experts Assistance Programme;

·         Enhancement of the Mould and Die Centre in Malaysia;

·         Capacity building for Malaysian auto parts suppliers to enhance their ability to ensure conferment with Vehicle Type Approval;

·         Setting up of an Automotive Skill Training Centre in Malaysia

·         Malaysian workers to be exposed to the latest technology and production system in Automotive Skill Training Centre in Japan;

·         Establishment of a Components and Parts Testing Centre in Malaysia;

·         Business Development Programme to strengthen ties and to increase sales of auto parts from Malaysian companies;

·         Cooperation in automotive market information;

·         Cooperation in auto exhibition; and

·         Consultation on joint-venture contracts.

Other cooperation areas include:

·         Agriculture, fisheries, forestry and commodities

·         Information and communication technology

·         Education and human resource development

·         Science and technology

·         SMEs

·         Tourism

·         Environment