Trade Scenario Between Bangladesh and Malaysia

Trade Scenario Between Bangladesh and Malaysia

Trade Agreement between the Government of the People’s Republic of Bangladesh and the Government of Malaysia was signed on 01.12.1977. The Government of the People’s Republic of Bangladesh and The Government of the Malaysia (hereinafter referred to as the "Contracting Parties"); desiring to strengthen and further develop the commercial relations existing between Bangladesh and Malaysia have resolved to conclude an agreement on the basis of equality and mutual benefit for the purpose of facilitating and extending the commercial relations between the two countries and have agreed as follows:

The Contracting Parties undertake to explore all possibilities to increase the volume of trade between the two countries. Commercial transactions within the framework of this Agreement shall be concluded between Bangladesh legal and natural persons and Malaysia Legal and natural persons.

The contracting Parties shall, subject to their respective import, export, foreign exchange and other laws, rules and regulations, endeavor to provide the maximum facilities possible for the purpose of increasing the volume of trade between the two countries.

1. Each Contracting Party shall grant the other most–favored-nation treatment in all matters relating to:-

a) customs duties and charges of any king, including the method of levying such duties and charges, imposed on or in connection with importation or Exportation, or imposition the transfer of payment for imports or exports;

b) rules, formalities and charges connected with customs clearance; and

c) All internal taxes or other internal charges of any kind imposed on or in connection with imported and exported products.

2. Each Contracting Party shall accord the other most-favoured- nation treatment in respect of issuance of import and export licences.

3. Neither Contracting Party shall impose restrictions or prohibitions on the importation

of any products from the territory of the other Contracting Party or on the exportation of any product consigned to the territory of the other Contracting Party, unless such prohibitions or restrictions are applicable to all third countries.

The provisions of the preceding paragraphs of this article shall not apply to advantages, preference or exceptions which either of the Contracting Parties has granted or may grant:-

a) to contiguous and neighboring countries in order to improve frontier traffic;

b) to countries who are members of a Customs union or a free trade zone that either of the Contracting Parties has joined or may join;

c) on the basis of membership in GATT;

d) as a result of participation in multilateral arrangement aiming at economic integration ; and

e) as a result of arrangements made for barter trade with third countries.

All current payments between the two countries shall be effected in freely convertible currency in accordance with the foreign exchange controls in force in each country

The Contracting Parties may from time to time agree by means of protocols, enter into such arrangements as may be necessary to facilitate the movement of goods between the two countries.

For the purpose of promoting trade between the two countries the Contracting Parties shall, on terms and conditions as shall be agreed upon by the competent authorities of both countries, subject to their respective laws, rules and regulations facilitate the participation in trade fairs and the organization of commercial exhibitions by either of the Contracting Parties in the territory of the other.

Legal and natural persons of each contracting Party, then engaged in commercial activities in the territory of the other, shall enjoy most-favoured- nation treatment in respect of protection of such persons and their property, provided that the enjoyment of this treatment shall be subject to the laws, rules and regulations in force in the territory of the other Contracting Party.

The provisions of the present agreement shall not limit the right of either Contracting Party to adopt or execute measures relating to the protection of: -

a) its security; and

b) public health of the prevention of diseases and pests in animals and plants.

Nothing in the present Agreement shall be construed to derogate from any obligations of other Contracting Party under any international convention or agreement entered into before or after the conclusion of the present Agreement.

The provisions of the present Agreement shall continue to govern all commercial transactions concluded, but not fully executed, before the expiry of this Agreement. 

In order to facilitate the Implementation of the present Agreement both parties agree to consult each other in respect of any matters arising from or in connection with the operation of the present Agreement .

1. The present Agreement shall be approved in accordance with the respective laws and regulations in force in either country and shall take effect from the date of exchange of Diplomatic Notes and shall remain valid for a period of one year from such date.

2. Upon the expiry of this period, the Agreement shall automatically remain in force for further period of one year, unless either Contracting Party notifies the other in writing of its intention to terminate the Agreement at least ninety days prior to the expiry of each period.

• Malaysia with a population of 28.5 million in an area of  some 3,30,000 sq. km having a GDP of US $ 337.0 billion is an important trading partner of Bangladesh. Bangladesh is the third largest trading partner of Malaysia among the South Asian nations after India and Pakistan
• According to the Statistics the two-way trade between two countries was US $ 2.22 billion in the FY 2014-15 having a huge trade imbalance. In the FY 2014-15 , Bangladesh imports from Malaysia stood at $ 2084.0 million and exports accounted for $ 135.64 million.
• Bangladesh’s major export items to Malaysia are woven and knit garment followed by items like vegetable, roots, tubers and processed foods. On the other hand main import from  Malaysia are Mineral Fuel and oil, Animal and vegetable fats, dry food, electronic equipment e.t.c.
• Malaysia is the largest ASEAN investor in Bangladesh in Telecommunications, Textiles and Financial Sector amounting about $1.6 billion
• Starting negotiation for FTA between Bangladesh and Malaysia was discussed with her counterpart during Bangladesh’s Hon’ble Prime Minister visit to Malaysia in December 2014.
• The Trade and Industry Minister of Malaysia Dato’ Sri Mustapa Mohamed made a courtesy call on the Hon’ble Prime Minister at her official resident Ganabhaban on 13 Jauary2015 and also with the Hon’ble Commerce Minister .
•   Malaysia’s major imports are from China, Japan, Singapore, USA , Thailand, Taiwan, South Korea , Indonesia , Hong Kong etc. and all these countries are getting  benefits of FTAs and other bilateral agreements
• The economy size of Malaysia is larger than Bangladesh but GDP growth rate of Bangladesh is much higher
• No preferential arrangement is present between the two countries. FDI scenario shows that Bangladesh has no FDI in Malaysia but Malaysia has significant investment in Bangladesh. Malaysia has demand for overseas workers.
• Malaysia is more efficient than Bangladesh in forming FTA. Bangladesh has a shallow export basket, exporters of Bangladesh may widen their product portfolio to tap the benefit from FTA. Bangladesh is examining the possibilities
• Cost of production in Malaysia is increasing day by day. FTA between two countries may provoke Malaysia to relocate their SMEs in Bangladesh as  77.2% of the total business establishment are SMEs.  A suitable FTA may divert Malaysia’s import from other countries .
• Malaysia already posses a good market share in Bangladesh with a high level of tariff. Bilateral FTA may decrease the revenue. Therefore , negotiation should focus aimed at seeking opportunities under different modes and sector of services
• So, in the service sector, Malaysia may be the potential export destination of Bangladesh. FTA may simplify and facilitate the movement of human resources between two countries
• Since Malaysia generally does not apply discriminatory trade measures between domestic and imported goods and services, there is an opportunity for Bangladesh products to compete with Malaysian local products.
• Malaysia is the heart of ASEAN countries. A possible bilateral FTA/ PTA will contribute to elevating the competitiveness of manufacturing industries of the two countries by improving market access.
• Besides, Malaysia has signed Trans-Pacific Partnership (TPP ) with other 11 countries which is a mega trade block and Malaysia is also trying to form a FTA with EU. So signing any preferential arrangement/ FTA  with Malaysia may develop an avenue to increase export, investment or diplomatic tie.

Export and Import Statistics Between Bangladesh and Malaysia ( Value in milliom US$)

Top 20 Exported Item in Malaysia for the year 2020-2021:                                   

                                                                                                           Total Export Amount:  306,574,425.74 USD