Free Trade Agreement (FTA)

Malaysia External Trade Development Corporation www.matrade.gov.my TRADE FREE AGREEMENT FTA

FREE TRADE AGREEMENT (FTA) What is Free Trade Agreement (FTA) Free Trade Agreement (FTA) is an agreement between two or more countries, where the countries involved have agreed to provide preferential treatment in each other’s markets. Each FTA partner offers flexibility or incentives to each other for the purpose of trade, investment, service provision and trade facilities as well as economic cooperation. Why FTA Is Important FTA Covers Areas Such As: • Obtain better market access • Facilitate and promote trade, investment and economic cooperation • Enhance competitiveness of Malaysia’s exporters • Capacity building in specific areas through technical cooperation • investment • trade facilitation • Intellectual Property Right (IPR) • trade competition policy • economic-related cooperation. FTA allows Malaysian exporters to receive preferential treatment and better market access. Malaysian exporters will also enjoy cost savings from the elimination/reduction of custom duties and the removal of stringent conditions for customs procedures to facilitate trade. As for the services sector, FTA provides better market access to various commercial and professional services from Malaysia. FTA also provides better platform for Malaysian investors to invest in FTA partner countries.

REGIONAL FTAs 1993 2003 2006 2009 2010 2010 2022 2019 ASEAN FREE TRADE AREA (AFTA) ASEAN - CHINA (AFCTA) ASEAN - KOREA (AKFTA) ASEAN - JAPAN (AJCEP) ASEAN - INDIA (AIFTA) ASEAN - AUSTRALIA - NEW ZEALAND (AANZFTA) REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP) ASEAN - HONG KONG (AHKFTA) BILATERAL FTAs 2006 2008 2010 2011 2012 2013 2015 MALAYSIA - JAPAN (MJEPA) MALAYSIA - PAKISTAN (MPCEPA) MALAYSIA - NEW ZEALAND (MNZFTA) MALAYSIA - INDIA (MICECA) MALAYSIA - CHILE (MCFTA) MALAYSIA - AUSTRALIA (MAFTA) MALAYSIA - TURKEY (MTFTA) FTA Malaysia 15 Total of FTAs implemented by Malaysia 7 bilateral FTAs 8 regional FTAs * *Malaysia has signed 16 FTAs, of which 15 FTAs have been implemented. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) signed in 2018 has yet to be ratified.

• Determination of the product country of origin is a prerequisite to be eligible for the tariff concession. • Used to determine whether a product / service is from Malaysia or an FTA partner. • The ROO of a product varies by FTA (available at respective FTA section of MITI’s website). • ROO is incorporated in Cost Analysis Report (CA). 1. Applicant logs on to: http://newepco.dagangnet.com.my/dnex/login • fills out all mandatory field; and • submit to MITI. 2. Documents to be uploaded (in pdf. format). • Identified HS Code slips (Finished Product and Raw Material); • Manufacturing/Operation License; • Invoice(s) for Raw Material(s); • Catalogue of Product; • Production Flow Chart; and • Letter of Appointment (from Manufacturer to Trader). MITI Process 3. Status will be updated in system. 4. Incomplete applications will be automatically rejected. MITI Approval 5. Check the application approval/status via online system: http://newepco.dagangnet.com.my/dnex/login 6. MITI processes CA application within the Client Charter in 5 working days. How Do Companies Enjoy FTA Privileges Obtain FTA information on the country which you plan to export. Define your product Harmonised System (HS) Code from the Royal Malaysian Customs Department (www.kastam.gov.my). Check whether the product is included in tariff concessions under FTA through the Ministry of International Trade and Industry (MITI) website (www.miti.gov.my -> MITI -> Promoting Trade - > Free Trade Agreement). Check whether the products meet the Rules of Origin (ROO) criteria by submitting the Cost Analysis (CA) Report. 1 2 3 4 Rules of Origin (ROO) DESCRIPTION PROCESS FLOW START END APPLY CA ONLINE APPLICATION STATUS MITI PROCESS Awaiting MITI approval Application Approved Rejected Cost Analysis (CA) Application Process Flow:

If the products meet the specified ROO requirement, obtain a copy of the Preferential Certificate of Origin (PCO). Once approved, present the PCO together with import documents to Customs Authority of the importing party. 5 6 • The cost of production flow generated by the manufacturer used to identify the original value of the product. • The information is to determine where a good is “originating” (where it is produced). • The criteria is subject to the ROO set by each FTA. Cost Analysis Report (CA) • The document to prove the original status of the product to be submitted to the importing country customs. • Not a mandatory document for export unless to enjoy tariff concession under the FTA. • Product must meet the requirements of its respective ROO FTA. • PCO only applies for export to FTA member countries. • Valid for one year from date of issue. Preferential Certificate of Origin (PCO) 1. Upon Cost Analysis (CA) approval, applicant log on to: http://newepco.dagangnet.com.my/dnex/login • Key in mandatory fields required; and • Submit to MITI for approval. 2. Documents to be uploaded (in pdf. format). • Application of PCO before export: - Invoice; and - Packing List • Application of PCO After Export: - Invoices; - Packing List; - Bill of Lading; and - Customs Form K2 MITI Process 3. MITI will process the PCO and the Client Charter in 24 hours (within working days only) 4. Status will be updated in system: http://newepco.dagangnet.com.my/dnex/login Printing and Endorsement of PCO 5. The approved PCO need to be printed on PCO Form (Form AJ, D, AANZ, AK, E, Al, MNZ, MPCEPA, MAFTA, MCFTA, MJEPA and MICECA) by applicant and submitted to MITI for endorsement with specimen signature. DESCRIPTION PROCESS FLOW START END APPLY CO PRINT & MITI SIGNATURE MITI PROCESS Awaiting MITI approval Approved by MITI Rejected Preferential Certificate of Origin (PCO) Process Flow:

MATRADE For more information, please contact: Malaysia External Trade Development Corporation (MATRADE) Jalan Sultan Haji Ahmad Shah 50480 Kuala Lumpur, Malaysia matrade_hq MATRADE @matrade matradeHQ MATRADE www.matrade.gov.my For more information on the FTA, please visit MITI’s website at All information and data provided are accurate as at the time of printing. Published in May 2022 While every effort has been taken to ensure that the contents of this publication are accurate and current, MATRADE cannot be held responsible for any inclusion, omission or error and is not liable for any loss or dispute arising from the use of the information provided. www.miti.gov.my MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY

RkJQdWJsaXNoZXIy NjUyODU0