A window of opportunity in Malaysia

The profile of our exports to Malaysia is also dominated by food. It was a good day for New Zealand businesses when tariffs on key products such as butter, cheese, milk powder, honey, kiwifruit and apples fell to zero as the Malaysia-New Zealand Free Trade Agreement (MNZFTA) entered into force on 1 August.

Malaysia is New Zealand’s ninth largest trading partner and based on the statistics, the profile of our exports is not dissimilar to what you would find for other export markets in Southeast Asia. 

It is only when you work in Malaysia with New Zealand companies daily do you realise there is a lot that the statistics don't show.

An ideal testing ground

Malaysia is Zespri's fastest growing market in the region. And what 'milk' we do bring in, is being transformed into high value and specialised dairy products because Malaysia, with its relatively high income and diverse racial mix, is an ideal testing ground for new flavours and formulations.

Nearly half of Fonterra’s Malaysian production is exported in value-added form to other Southeast Asian and Middle East markets.

My team in Kuala Lumpur have had an unusually high level of visits from New Zealand manufacturing firms this year and when we delved deeper, it was the tariff reductions that had brought the market onto their radar. 

These companies are selling specialised equipment and products; a far cry from New Zealand's commodity export profile.

Since the agreement entered into force on 1 August I've had a steady stream of inquiries from companies wanting our help to understand what the free trade agreement (FTA) means for them. These companies sell appliances, sophisticated electronics, clothing, and equipment for airports and include smaller SMEs and some of New Zealand's household brands. 

When you're considering establishing a concept store for your niche clothing range, an instant drop in the tariff from 20 percent to 10 percent followed by 5 percent the following year and a zero tariff by 2012 makes a considerable difference to your business argument.  

By 2016, all New Zealand companies will have this competitive advantage when 99.5 percent of tariffs on New Zealand products are eliminated (saving exporters $10 million a year based on current trade).  

Significantly this is four years faster than the ASEAN Australia New Zealand FTA (AANZFTA) which provides a window of opportunity for New Zealand exporters to Malaysia over their Australian counterparts.