Malaysian trade minister on industry and globalization

Within the region, there are different levels of economic development. The region is therefore able to accommodate a whole range of manufacturing operations / activities from labor-intensive operations to high value-added activities. By establishing high value-added operations in Malaysia, companies can also outsource their labor-intensive operations to other low-cost countries within the region, and thereby enjoy the benefits under ASEAN Free Trade Agreement (AFTA).

The electronics contract manufacturing industry is now becoming an increasingly important business strategy for original equipment manufacturers (OEMs). Three trends taking shape in the electronics contract manufacturing sector are:

1. more OEMs are outsourcing production activities to contract manufacturers, who have now moved into higher value-added products;
2. OEMs are now undertaking other activities other than mere assembling products, such as systems integration and testing functions; and
3. some OEMs are outsourcing their entire operations, encompassing R&D; production, testing, marketing, distribution and their after sales services (repair activities).

Trends in the electronics industry also indicate more product segments are being outsourced specifically for medical devices; automotive components, telecommunications, and consumer products. These trends will benefit ASEAN countries through an increase in the level of technology; improvement in product quality and, the creation of business and job opportunities.

VO: What are your thoughts on free trade and fair trade?

Minister Aziz: There is no ‘free' trade in the real sense of the word. While a goods or service exported may not be subject to import duty, there may be other forms of impediments or non-tariff barriers that hinder such exports.

‘Fairer' trade is a more practical and pragmatic approach by which the international trading system could cater to the differing needs and levels of development of the global trade community.

Malaysia subscribes to the general principles of the World Trade Organisation (WTO) to develop and strengthen international trade rules to improve market access for goods and services between member countries. These rules are aimed at an open and fairer multilateral trading system.

One such rule is multilateral ‘rule-making' that will guarantee members will adopt the same standard rules for global trade -- thus helping ensure ‘fair' trade.

Liberalization has led to the reduction and elimination of barriers to trade among countries and more open markets. This has not only led to increased market access opportunities but also increased competitiveness among countries.

However, technical requirements and procedures, such as sanitary and phyto-sanitary measures as well as other similar measures to ensure the quality and safety of products, can become impediments to trade if their use is unjustifiable.

The WTO assumes a significantly important role in this as it deals with these non-tariff barriers to goods and services as well as distortions arising from dumping and subsidies.

Multilateral trade negotiations seek to further propagate a fair and open trading system: one that allows the benefits of globalization to flow to both developing and developed countries.

Developed countries have a responsibility to build the global trade system in ways that enhance participation of developing countries by enabling developing countries to enjoy a fair share of the potential gains that arise from trade. Developing countries and especially the least developed countries will have to be given assistance in building export trade capacity to take advantage of these opportunities.

The results of the Doha (1) Negotiations must reflect effective and operational special and differential treatment. If the Doha Round is to be a developmental round, the needs and aspirations of developing countries have to take center stage. The outcome of the Round must result in developing countries benefiting from global markets opening, and that their responsibilities and obligations commensurate with their level of development.

VO: Thank you for your time, Minister Aziz.

Minister Aziz: You're welcome. Thank you.

(1) The Doha round of WTO negotiations began in November 2001. This round was to have begun at the WTO Ministerial Conference of 1999 in Seattle, and was to have been called ‘The Seattle Round' but some developing countries refused to launch the second round by blocking the ‘explicit consensus' needed at the final Heads of Delegation meeting. Severe demonstrations distracted attention from the refusal of developing nations to expand the WTO after having been devastated by the Uruguay Round. The new round could only be launched at a meeting in Doha, Qatar.

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