India-Malaysia trade should touch $50 bn by 2015.

India-Malaysia trade in 2009 shrunk by nearly a third to $7.06 billion from $10.52 billion in 2008 after being hit by the double whammy of a demand slowdown due to the global financial crisis and fall in prices of major items like oil.

To re-energise bilateral trade and investment, both countries are fast-tracking talks on a Comprehensive Economic Cooperation Agreement (CECA). The seriousness that Malaysia is according to enhancing collaboration with Indian government and businesses was underlined by the high profile India visit of Malaysian Prime Minister, Mr Mohd Najib Bin Tun Abdul Razak, in January, immediately followed by the trip of its International Trade Minister, Mr Mustapa Bin Mohamed, in March. Significantly, there are around 1.8 million Persons of Indian Origin in Malaysia.

In an interview to Business Line in New Delhi during his visit, Mr Mustapa said both countries aim to conclude the CECA in October.

“Considering the growth of the Indian economy and its burgeoning middle class, by 2015 our trade with India has to grow to the current level of our trade with China, which is over $50 billion. It may seem impossible, but that's the vision,” he said.

Excerpts from the interview:

On the highlights of his visit.

Mr Anand Sharma (Commerce and Industry Minister) and I reviewed the progress in the India-Asean FTA (Free Trade Agreement) in goods, which has been implemented since January 2010.

We found that more people are making use of this lower tariff facility. Our target now is to complete the India-Asean pact on investment and services by October.

We also want to conclude the Malaysia-India CECA in October. We have set up a Malaysia-India Joint CEO forum and hope to formally launch this when your Prime Minister (Dr Manmohan Singh) visits Kuala Lumpur in October. I invited Mr Sharma to visit Malaysia with a business delegation before Dr Singh's visit.

On the scope of Malaysia-India CECA.

The ambition level (of Malaysia-India CECA) is a lot wider and deeper than the Asean-India CECA in terms of investment and opening up of markets. The exclusion list in goods trade will be smaller, and the Malaysia-India CECA will widen the bilateral trade basket. Besides, services trade will be opened up further.

On the decline in India-Malaysia trade in 2009.

Our target in 2010 is to return to the 2008-level of $10 billion. But it is not going to be easy and we will have to work harder. The reason for the fall in 2009 is not just fall in volume due to weakening demand, but prices fell too. Petroleum is a big chunk of our exports to India. Oil prices in 2008 were very high, but it fell in 2009. Palm oil is another important export item and its prices also fell. We would like to increase our refined palm oil exports to India though India's demand is more for crude palm oil. Also, we are open to buying more of Indian non-basmati rice, though you export more of premium basmati to us.

On bilateral investments.

Malaysian companies are keen to invest in India in construction, infrastructure, highways and services. But there are not many big investments by Indian companies in Malaysia. My Prime Minister and I have met many companies here. I hope bilateral investments double in the next two or three years.

On the highways contract with Malaysia being referred to a Group of Ministers.

If India wants any changes in the contract, we can have a re-discussion if needed. But it (any change) has got to be mutually agreed. This (contract) will provide the impetus for greater collaboration in infrastructure sector. Malaysians know the Indian Government and companies very well. Malaysia is involved in highway projects worth $5 billion in India.

On Malaysian companies' interests in the $1 trillion opportunity in the Indian infrastructure sector.

Given the expertise of Malaysian companies in infra projects, we hope they get higher value infrastructure projects such as design and consultancy services in India. Hopefully we can widen this participation in such sectors as power and monorail. One of our companies has got one monorail project in Mumbai. It has submitted a few other bids. It has an advantage in this sector compared to other global companies. So we hope we can have access to more such contracts in India. Monorail project is a growing area. I know many cities like Bangalore and Delhi are considering putting in place monorail like Mumbai. We are very keen and can partner with Indian companies.

On Malaysia's new visa regime.

In Malaysia, the Government is outsourcing the online processing to avoid delays. We have officers only in three cities in India. The outsourcing project is on a pilot basis for three months. If it works, we will extend it to all of India. This will help the business travellers in particular and middle class Indians who have problems in getting a Malaysian visa. On knowledge workers, we have a liberal policy. Employing more Indian knowledge workers in the IT sector is not a problem.

On the cooperation agreement between SEBI and the Securities Commission of Malaysia.

The first stage will be sharing of information, data and best practices. Going forward, we can bring the biggest companies listed in Malaysian stock exchange to India and you can do a similar thing in Malaysia.

On luring Indians to purchase property in Malaysia.

Indians are the third largest among foreigners in terms of direct purchase of properties in Malaysia. We have a programme called ‘Malaysia My Second Home', under which we give multiple-entry visa and you can bring cars, etc. We had launched a property expo in Chennai in January to promote purchase of property in Malaysia. There will be more such expos.

Source : Business Line