transactions costs in regional trade and trade facilitation - the malaysian business perspective -...

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 – Customs Committee, FMM

Chairman, FMM Malaysian Ceramic Industry Group

•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 Kearney’s 2006 Globalization Index

•3rd Most Preferred Global Services Location•AT Kearney’s Annual Global Services Location Index 2005

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 US$5,498Inflation 3.7%Labour Force 11.5 million Unemployment 3.5% Trade Surplus US$29.5 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

FACTS ABOUT MALAYSIA

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


Challenges faced by Malaysian Businesses

1. Duplication of Physical Examination of Shipment by Different Authorities/Agencies Causing Delays

• Different government agencies involved in regulating imports and exports



2. 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



3. 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



4. Increase in Cost of Doing Business

• Rising Fees/Charges Imposed by Service Providers



5. Different Level of Development within Approving Authorities

• In terms of system used, manpower/skills set

How to Address the Challenges

1.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.


2.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


3.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


4.Increase Capacity of Regional Shipping Lines Through Cooperation


5.Collaboration Between Government and Industry – Public-Private Smart Partnership

( i ) Regular Dialogues

(ii) Training for Customs Officers

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

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 !

What Can We Do ?

AT REGIONAL LEVELSharing 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

18

THANK YOUTHANK YOU

for your attentionfor your attention

transactions costs in regional trade and trade facilitation - the malaysian business perspective -...

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