Transactions Costs in Regional Trade and Trade Facilitation - The Malaysian Business Perspective - by Raja Abd Aziz Raja Musa Vice President, Federation of Malaysian Manufacturers [FMM] Chairman

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Transactions Costs in Regional Trade and Trade
Facilitation - The Malaysian Business
Perspective - by Raja Abd Aziz Raja MusaVice
President, Federation of Malaysian Manufacturers
FMM Chairman Customs Committee,
FMMChairman, FMM Malaysian Ceramic Industry
Group
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ABOUT MALAYSIA

• Malaysia is the 19th largest trading nation in
  the world
• 23rd Most Competitive Economy in the World
• IMD World Competitiveness Yearbook 2006
• 26th Most Globally Competitive Economy in the
  World
• The Global Competitiveness Report 2006/2007 by
  World Economic Forum (WEF), Switzerland
• 19th Most Globalized Economy
• AT Kearneys 2006 Globalization Index
• 3rd Most Preferred Global Services Location
• AT Kearneys Annual Global Services Location
  Index 2005

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FACTS ABOUT MALAYSIA
Area Population GDP Growth 330,252 sq. km 26.1 million 5.8 ( 2007 est. 6)
Powered by manufacturing and services sector Per Capita Income US5,498
Inflation 3.7
Labour Force 11.5 million
Unemployment 3.5
Trade Surplus US29.5 billion

• Total trade reached RM1.069 trillion (USD0.30
  trillion)
• Exports (USD168 bn) expanded by 10.3
• Asia accounted for 61 of total exports
• North East Asia was the largest regional market,
  accounting for 27.4 of total exports
• Imports (USD137 bn) grew by 10.7 -- 12 from
  China

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• TRADE FACILITATION RELATED COSTS

DIRECT Cost of compliance related to completing certification requirements (e.g. Import Licence, Health Certificate, CIDB Certification, etc) INDIRECT Extra costs incurred due to procedural delays - Customs clearance certification procedures Inventory holding costs (storage while waiting for clearance) Opportunity cost hinder speed of doing business
Charges for trade related services (e.g. trade insurance, agents fees, etc INDIRECT Extra costs incurred due to procedural delays - Customs clearance certification procedures Inventory holding costs (storage while waiting for clearance) Opportunity cost hinder speed of doing business
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• TRADE FACILITATION RELATED COSTS
• Challenges faced by Malaysian Businesses
• Duplication of Physical Examination of Shipment
  by Different Authorities/Agencies Causing Delays
• Different government agencies involved in
  regulating imports and exports

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• TRADE FACILITATION RELATED COSTS
• Challenges faced by Malaysian Businesses
• Gap between Information System and Overall
  Resources within the Different Approving
  Inspection Authorities
• Different system and platform used by the
  different authorities lead to hitches and
  delays

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• TRADE FACILITATION RELATED COSTS
• Challenges faced by Malaysian Businesses
• Insufficient Time for Stakeholders to React to
  Regulatory Changes
• New regulations are implemented instantaneously
  as the date of entry into force stakeholders do
  not have enough time to obtain full comprehension
  on the regulatory changes and react accordingly

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• TRADE FACILITATION RELATED COSTS
• Challenges faced by Malaysian Businesses
• Increase in Cost of Doing Business
• Rising Fees/Charges Imposed by Service Providers

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• TRADE FACILITATION RELATED COSTS
• Challenges faced by Malaysian Businesses
• Different Level of Development within Approving
  Authorities
• In terms of system used, manpower/skills set

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• How to Address the Challenges
• National Single Window
• Improve intra agency/permit approving authorities
  (PIA) coordination throught the National Single
  Window (NSW) initiative to connect all PIAs into
  one common platform with traders, banks and other
  stakeholders in the logistics chain.

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• How to Address the Challenges
• Regular Dialogue between Public and Private
  Sector on Trade Facilitation
• Consultation process involving all stakeholders
  with the aim to improve efficiency
• Task Force to improve government delivery system

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• How to Address the Challenges
• Harmonization and Simplification of Customs
  Procedures Tariff Classification
• Expedite implementation of system in all Customs
  stations that binds all official Customs ruling
  made by Customs HQ one common system for all
  Customs stations

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• How to Address the Challenges
• Increase Capacity of Regional Shipping Lines
  Through Cooperation

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• How to Address the Challenges
• Collaboration Between Government and Industry
  Public-Private Smart Partnership
• ( i ) Regular Dialogues
• (ii) Training for Customs Officers

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• What Can We Do ?
• Company Level -
• It is the responsibility of the company to keep
  abreast with the latest regulatory changes and
  take the appropriate action
• Association Level-
• Play active role in disseminating information to
  the business community
• Provide avenue for companies to provide feedback
  to the authorities/government/relevant bodies
• Provide forum to enable public-private sector
  consultative process to improve government
  delivery system

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• What Can We Do ?
• Government Level -
• Regularly consult the business community on trade
  facilitation process, regulatory changes,
  delivery system, etc
• To listen to private sector and note and take
  action based on inputs from other stakeholders
• Should adopt attitude that government agencies
  are not just to regulate but to facilitate trade !

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• What Can We Do ?
• AT REGIONAL LEVEL
• Sharing of Information and Experiences
• Play Active Role in Strengthening Regional Trade
  Facilitation Initiatives
• Promote Regional Integration to Enhance
  Competitiveness of Asian Enterprises in the
  International Market Place by Actively Lobbying
  to Lower the Cost of Doing Business

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THANK YOU for your attention