CPTPP partner: Malaysia
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trading block that represents 495 million people with a combined gross domestic product of CAD $13.5 trillion – a full 13.5% of global GDP. Through the CPTPP, Canada has preferential access to half a billion consumers in some of the world’s most dynamic and fast-growing markets, which will strengthen Canadian businesses, grow the economy, and create more well-paying jobs for middle class Canadians.
The CPTPP entered into force for the first six countries to ratify the Agreement – Australia, Canada, Japan, Mexico, New Zealand, and Singapore – on December 30, 2018, and for Vietnam on January 14, 2019. For the remaining signatories (Brunei, Chile, Malaysia, and Peru), the CPTPP will enter into force 60 days after that country ratifies the Agreement.
Why Malaysia matters
- Malaysia’s economic growth was 4.2% in 2016 and is estimated at 5.4% for 2017.
- Malaysia has a growing middle class that will offer an ever more attractive market for Canadian exporters.
Canada-Malaysia trade snapshot
Top Canadian Exports to Malaysia (2015-2017 average, $CAD)
Canada's Top Exports to Malaysia (2015-2017 average, $CAD)
- Total value of exports to Malaysia: $725,000,000
- Agricultural products (soybeans, wheat): $214,000,000
- Fertilizers: $188,000,000
- Electronic and electrical machinery and equipment: $69,000,000
- Miscellaneous industrial products: $58,000,000
- Industrial machinery: $43,000,000
Key facts and figures
- Canadian merchandise exports: $725 million (2015-2017 average)
- Canadian merchandise imports: $2.7 billion (2015-2017 average)
- Canadian services trade exports (2016): $535 million
- Canadian services trade imports (2016): $349 million
- In 2016, Canada welcomed approximately 14,000 visitors from Malaysia.
- Approximately 54,000 Canadians travelled to Malaysia in 2015.
Canada’s top merchandise imports from Malaysia (2015-2017 average)
- Electrical and electronic machinery and equipment: $1.6 billion
- Miscellaneous industrial products: $287 million
- Agricultural products (fats and oils, cocoa): $240 million
- Rubber: $141 million
- Metals and minerals: $71 million
Canada’s imports of services from Malaysia (2016)
- Transportation and government services: $222 million
- Commercial services: $75 million
- Travel: $52 million
Canada’s top merchandise exports to Malaysia (2015-2017 average)
- Agricultural products (soybeans, wheat): $214 million
- Fertilizers: $188 million
- Electronic and electrical machinery and equipment: $69 million
- Miscellaneous industrial products: $58 million
- Industrial machinery: $43 million
Canada’s exports of services to Malaysia (2016)
- Travel: $290 million
- Commercial services: $222 million
- Transportation and government services: $23 million
How the CPTPP helps Canada-Malaysia trade and investment
- Once in force for Malaysia, the CPTPP will provide a rules-based trading environment and enhanced market access for Canadian exporters to, and investors in, Malaysia.
- The CPTPP will establish duty-free access for trade in goods between Canada and Malaysia, eliminating tariffs for key Canadian exports, including:
- agricultural goods:
- sugar and chocolate confectionary, and food preparations containing cocoa (tariffs of 15% will be eliminated upon entry into force)
- breads, cookies and other baked goods (tariffs of up to 6% will be eliminated upon entry into force)
- fresh apples (tariffs of 5% will be eliminated upon entry into force) and
- prepared potatoes (tariffs of 8% will be eliminated upon entry into force)
- fish and seafood products:
- lobster (tariffs of up to 8% will be eliminated upon entry into force) and
- herring roe (tariffs of up to 8% will be eliminated upon entry into force)
- forest products and value-added wood products:
- builders’ joinery and wood carpentry (tariffs of 20% will be eliminated upon entry into force)
- newsprint (tariffs of 10% will be eliminated within five years following entry into force)
- carton boxes and packing containers (tariffs of 25% will be eliminated within two years following entry into force) and
- plywood and veneer panels (tariffs of up to 40% will be eliminated within five years following entry into force)
- industrial products:
- metals and minerals (tariffs of up to 50% will be eliminated within 10 years following entry into force)
- chemicals and plastics (tariffs of up to 50% will be eliminated within 10 years following entry into force)
- passenger vehicles (tariffs of up to 30% will be eliminated within 12 years following entry into force) and
- industrial machinery (tariffs of up to 30% will be eliminated within 10 years following entry into force).
- To reflect North American sourcing and production patterns, Canada secured a bilateral side letter with Malaysia that establishes an alternate rule of origin for motor vehicles. This includes a lower regional value content requirement, which will allow Canadian manufacturers to benefit from preferential tariff treatment under the CPTPP.
- The CPTPP will allow companies to invest with greater confidence in Malaysia, offering protections from discriminatory treatment, and greater predictability and transparency.
- Malaysia’s commitments on financial services go beyond what it has offered in previous free trade agreements, creating new opportunities for Canadian financial service providers. For example, Malaysia will allow foreign banks from CPTPP members to establish twice the number of branch locations currently afforded to those from non-CPTPP members.
- Service providers will also benefit from improved access commitments in key sectors such as energy distribution and environmental services.
- New commitments on temporary entry of business people will make it easier for certain categories of Canadian business people to temporarily work in Malaysia, including high-skilled Canadian professionals and technicians.
- The CPTPP establishes a strong standard for intellectual property protection and enforcement, including a range of disciplines new to Malaysia’s domestic regime.
- Suppliers of goods or services will gain access to new government procurement opportunities in Malaysia that are supported by open, fair and transparent processes when bidding on government procurement contracts.
- The CPTPP also provides robust and enforceable provisions on labour and environment.
Sectoral opportunities in Malaysia
- Malaysia aims to become a leading aerospace hub in Southeast Asia, creating opportunities in maintenance, repair and overhaul, parts and components manufacturing, and training and education, as well as system integration.
- The Malaysian government is supporting foreign investments in the industry with attractive financial and tax incentives.
- Agriculture and agri-food:
- There are opportunities in halal-certified Canadian products and raw and semi-processed ingredients (such as beans and pulses and dried fruits), meat, seafood, fresh and frozen fruits, and packaged and processed foods.
- Clean technologies:
- In October 2017, the Malaysian government announced the Green Technology Master Plan Malaysia 2017-2030 blueprint, which will boost the growth of Malaysia’s green economy with target revenue of Malaysian ringgit (RM)180 billion (Can$60 billion) by 2030.
- Opportunities exist for Canadian companies in water management solutions, renewable and energy efficiency solutions, and environmental and monitoring technologies (air and water).
- In addition to student recruitment, there are opportunities for post-secondary partnerships through student and faculty mobility programs, dual degree programs, credit transfer programs, articulation programs, cotutelle (joint) doctorates and research collaborations.
- Malaysia is a significant market for quality technical and vocational education and training.
- Information and communications technology:
- Malaysia offers opportunities in e-commerce, telecommunications equipment and services, big data and analytics, and cyber and network security.
- Public sector modernization will see the Malaysian government invest in e-government front-end services and platforms, cloud infrastructure and services, cyber security and data analytics.
- The focus will be on urban and inter-city rail projects, and high-value services, including architecture, engineering consultancy and project management.
- Also expected are capacity expansion initiatives in Malaysia’s seaports, airports and intermodal logistics services.
- Oil and gas:
- A focus on aggressive cost optimization will provide opportunities for innovative technologies and collaborations that will drive down cost and improve efficiency, such as enhanced oil recovery.
- New projects in the downstream sector are expected to sustain demand for expertise in plant maintenance, upgrading and repairs.
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