Economic Thrust in the Asian Century

Spotlight

Economic cooperation between India and Malaysia is all set to scale new heights as highlighted by the positive impact of the India-Malaysia Comprehensive Economic Cooperation Agreement, says Dr Arup Barman

For the last four decades, Indian industry has been associated with Malaysia’s business transformation from the exporter of primary products to an industrialised and broad based economy . The first Indian joint venture with Godrej commenced its operation in Malaysia in 1968. In the early 70s and 80s, Malaysia hosted the largest number of Indian joint ventures in any county. Since 2000, the relationship between India and Malaysia has acquired new dimensions in commercial cooperation, and has been shaped by the landmark agreement on Free Trade, signed in Kuala Lumpur in February 2011, briefly known as India-Malaysia Comprehensive Economic Cooperation Agreement (IM-CECA).

IM-CECA: Promoting Partnership

Since its implementation on July 1, 2011, IM-CECA has fostered economic cooperation in areas of infrastructure development, creative industries, tourism, SMEs, business facilitation, S&T and human resource development. Key items of the agreement are given in Table 1.



Bilateral Trade

IM-CECA, as a trade promotion policy, has brought about a momentous change in bilateral trade between Malaysia and India. Table 2 depicts the change of bilateral trade between the two countries.



Inflow and Outflow of Investment

Malaysia-India investment collaboration witnessed a significant rise from 1991 to 2007. During this period, governments of both countries approved more than 210 FDI proposals, valued at $1836.18 million. From April 2000 to August 2012, the total FDI inflows from Malaysia are roughly $313.21 million.

Investments from Malaysia are in the telecom sector, software production, aqua-culture, ballast, radio paging systems, electrical apparatus for medical purposes, telephone equipment, food processing, heat resistant latex rubber threads, articles of apparel, industrial machinery, PVC pipes, oil palm plantations, car radio cassette players, etc.

Malaysian-Indian private enterprises have joined hands to invest in bio-technology, pharmaceutical, education and HRD, renewable energy and sustainability, real estate, housing and construction, hospitality, technology transfer and capacity building, and in professional development (see Table 4). Companies like Vivo Bio-Tech Ltd, Goldstone Technologies Ltd, Reliance Anil Ambani Group, Punj Llyod, etc have also entered into agreements to invest in sectors of their interest in Malaysian business.

Malaysia has a promising market with great potential in manufacturing for Indian pharmaceutical and bio-technology industry. In the pharmaceutical sector, the investment in Malaysia from India is estimated to be over $1 billion and the Malaysian investment in India is estimated at over $7.8 billion (Mukharjee and Dey, 2013).

Presence of Leading Companies

There are over 100 Indian companies, including 60 Indian joint ventures operating in Malaysia. (See Table 3)



India-Malaysia CEO Forums

During former Indian Prime Minister Dr Manmohan Singh’s visit to Malaysia from October 26-28, 2010, India-Malaysia established a CEO Forum comprising 18 CEOs from both countries, launched on October 27 jointly by prime ministers of both countries. The aim of the Forum was to develop enhanced partnership and cooperation at the business level. Table 4 describes areas of cooperation, proposed projects and investment by private sector.

Vibrant economic diplomacy between India and Malaysia has shown consequent positive impact on bilateral trade. There is tremendous optimism that this relationship will scale new heights in the coming decades of the Asian century.



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Author

Dr Arup Barman

Dr Arup Barman is Director (i/c) at Centre for East Asian Business Studies and Associate Professor, Department of Business Administration, Assam University. He may be reached at abgeet@gmail.com.

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    References

    Economic and Commercial Relations; available at http://www.indianhighcommission.com.my/ec.html, browsed on 27th July 2014.
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    India-Malaysia Free Trade Agreement; available at http://www.eximguru.com/exim/trade-agreement/india-malaysia-free-trade-agreement.aspx
    Malaysian Investment in India; http://www.indianhighcommission.com.my/ind_mala_investments.html
    http://www.ficci.com/international/75142/Project_docs/Malaysia.pdf
    Economic and Commercial Relations; http://www.indianhighcommission.com.my
    Mukharjee. Sharmistha and Dey. Sushmi, (2013), Indian Phrama Companies Make Malaysia A Hub to Tap ASEAN, Pharma Track and Trace

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