Trade with Malaysia targeted at $15 billion

India established diplomatic relations with the Federation of the erstwhile Malaya in 1957. During the visit of Prime Minister Manmohan Singh to Malaysia last October, both countries agreed to work on a Framework for Strategic Partnership, which aims to elevate bilateral relations to the level of a long-term and strategic partnership. Also, the first-ever India-Malaysia CEOs Forum, comprising 18 CEOs from both sides, was jointly launched by Singh and his counterpart, Dato’ Seri Mohd Najib, to develop enhanced partnership and cooperation at the business level. The second meeting of the CEOs Forum took place in Mumbai in May and will be followed by a third, likely in November 2011, in Kuala Lumpur.

Talking to FE, Dato’ Tan Seng Sung, high commissioner of Malaysia in New Delhi, said he is working towards forging closer ties with India and achieving an ?ambitious? trade volume target of $15 billion. ?Our two-way trade volume with India has been on an increase by almost 14.6% this year. In the first five months of the current year, bilateral trade registered $3.99 billion, double the amount for the same period in 2010. This is comparable to figures of the same period last year.? And based on these projections, it will cross the $10-billion mark this year.

?With the CECA (comprehensive economic cooperation agreement) coming into effect from July 1, 2011, the bilateral trade has good prospects of increasing further,? said Tan. The CECA will facilitate temporary movement of business people, including contractual service suppliers and independent professionals in accounting, architecture, engineering services, medical and dental, nursing and pharmacy, computer services and management consulting. Bilateral trade has increased 17 times, from $0.6 billion in 1992 to $10.5 billion in 2008, and has more than doubled, from $5 billion to $10.5 billion, between 2005 and 2008.

The global economic crisis, however, hit bilateral trade, which declined to $7.3 billion in 2009. However, in 2010, there was a significant recovery, as was evident from a 25% increase in trade, to $8.94 billion (India?s exports $2.47 billion and India?s imports $6.47 billion).

Malaysia, which is a pioneer in highway construction, will also collaborate with Indian companies to give a new look to the country’s expanding road network. In fact, Malaysian highway toll company PLUS will have a joint venture with Hyderabad-based Nagarjuna and would together apply for a tender in Andhra Pradesh. Malaysia is currently the 24th largest investor in India with foreign direct investment (FDI) inflows from 1998 to 2010 standing at $2 billion, as per the statistics of the Department of industrial Policy and Promotion (DIPP).

Malaysian FDI in India is primarily focused on roads and highways, telecommunications, oil and gas, power plants, tourism and human resources. The highest investment proposals have been in telecommunications, followed by the fuels (power and oil refinery) sector and roads and highways. The Construction Industry Development Board (CIDB) of Malaysia indicates that Malaysian companies have so far completed 52 construction projects worth $2.33 billion in India, while 22 projects valued at $2.3 billion are currently under various stages of implementation.

At present, there are more than 77 Indian companies, including 70 Indian joint ventures, operating in Malaysia. Cumulative Indian investments in Malaysia from 1980 to 2010 are about $2.04 billion. Indian companies, too, have started making sizeable investments in Malaysia. Tan said bilateral ties could also get a big impetus from people-to-people contacts, underlined by the growing number of tourists visiting each other?s country. Around 520,000 Indian tourists visited Malaysia last year while, this year, Malaysia expects some 600,000 visitors from India. ?The launch of Air Asia flights to and from India would give a strong boost to traffic to Malaysia,? Tan said.

The Malaysian government has announced plans to set up seven new visa application centres (VACs) to add to the existing two centres in Mumbai and Hyderabad. These new VACs aim to further enhance the image of Malaysia as a round-the-year destination for all travel segments of Indian tourists.

Tan said that major Malaysian companies maintain strong links with India. Malaysia Airports Holdings Berhad has, for example, been involved in the New Delhi International Airport?s Terminal 3, which has received wide acclaim from aviation circles. Malaysia can also take advantage of India?s infrastructure needs and can engage in projects in which Malaysian companies have an edge over other competitors. Scomi, which bagged a prestigious monorail project in Mumbai, illustrates the point. Low-cost housing projects for low-income Indians also provide ample opportunities for Malaysian construction companies.