Free trade agreement between Pakistan and Malaysia yet to reach full potential 


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Pakistan (Commonwealth Union)_ According to a report issues by Pakistan’s trade promotion body, despite being touted as the most comprehensive bilateral deal, the 2008 free trade agreement inked between Pakistan and Malaysia to strengthen commercial relations between the two nations has not yet reached its full potential. The report released by the Trade Development Authority of Pakistan (TDAP) claims that the deal does not reflect the real trade balance, and that it is essential to diversify exports to improve market share in Malaysia by exporting additional goods and to guarantee that there is no excessive reliance on agriculture-based exports. 

The analysis indicates that the potential export value of human hair waste is $5 million; however, there are no exports from Pakistan despite the fact that this commodity is duty-free. Pakistan may join this market due to the fact that it now sells human hair waste to Vietnam for $2,063 per tonne and Myanmar for $1,093 per tonne. The price at which Malaysia buys the goods from India is $40,833 per tonne. 

According to the analysis, the export of this commodity to Malaysia would have a favorable effect on Pakistan’s trade balance. The TDAP research further indicates that pink salt from Pakistan has high demand in Malaysia, but it is now shipped at a high cost, which hinders its export. If the price of salt declines, exports can rise from the current 45 percent to 50 percent. Australia and India sell salt to Malaysia for $59 per tonne and $51 per tonne, respectively; however, the price of salt produced in Pakistan is $110 per tonne with no duties.

According to the report, Pakistan should also negotiate on building and curbstone tariff rates. Under the terms of the free trade agreement, Malaysia imposes a 30% duty on these goods from Pakistan. If the tariff rate for these items is negotiated, Pakistan’s exports to Malaysia might grow by about 50 percent. Malaysia also imposes heavy duties on footwear imported from Pakistan, ranging from 15% to 30%. Pakistan represents just $0.13 million of Malaysia’s entire footwear market, which is valued at $92 million. According to the TDAP analysis, if Pakistan can acquire 10% of the footwear industry, its export earnings will grow to $7 million.

To grow market share in Malaysia, the report urges key stakeholders to participate in trade fairs and to brand, market, and package products in accordance with international standards. According to data from the State Bank of Pakistan, after the 2008 free trade agreement between Pakistan and Malaysia was signed, Pakistan’s exports climbed from $85.091 million in 2008 to $432.695 million in the fiscal year 2021-2022.


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