New Delhi: Malaysian Prime Minister Najib Razak on Monday called for the speedy conclusion of a free trade pact between the Association of Southeast Asian Nations (Asean) and six other countries including India, saying the regional partnership becomes all the more relevant after the US pulled out of the Trans-Pacific Partnership (TPP).
Indian and Malaysian companies on Monday signed preliminary pacts worth about $36 billion in the presence of Razak and Indian commerce minister Nirmala Sitharaman. The pacts are aimed at deepening commercial linkages between Asia’s third-largest economy and its third-largest trading partner in the fast growing Asean economic grouping.
Speaking to Indian industry representatives, Razak said the Regional Comprehensive Economic Partnership (RCEP) that Asean and six other countries—India, China, Australia, Japan, New Zealand and South Korea—gains importance now that the US led TPP has been abandoned by Washington.
The US pulled out of the TPP, a trade agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam that was stitched together by the US and aimed to ensure decreased dependency of these countries on trade with Asian giant China.
“We should give instructions to our negotiators to try to conclude RCEP by end of this year or at a very latest early next year. I hope this time table can be achieved,” Najib said.
RCEP aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights. The talks for the pact started in Phnom Penh in November 2012.
RCEP groups together 16 countries and includes more than 3 billion people with a combined GDP of about $17 trillion. The region accounts for about 40% of world trade.
This is Razak’s third visit to India since he took office as Prime Minister in 2009. Razak, who started his five-day visit to India on Thursday in Chennai, on Sunday visited Rajasthan, where Malaysian companies are engaged in road and other infrastructure projects estimated to be worth over $1 billion dollars.
Addressing three industry lobby groups in New Delhi, Razak also invited Indian companies to explore investment opportunities in Malaysia saying it held huge potential in several sectors. Shoring up economic ties between India and Malaysia has been a theme during Najib’s current visit.
“All regional states are recalibrating their regional policies at a time when there is significant uncertainty about China’s future profile and American commitments to the region. Malaysia is no exception and is looking to New Delhi to play a larger regional role,” said Harsh V. Pant, professor of International Relations, Department of Defence Studies, at London’s King’s College, in an email.
“A multicultural Malaysia is a significant player in ASEAN at a time when some members are coming under Chinese sway. Indian diaspora is important in the country as well. India’s influence in the region can only increase if it builds strong bilateral ties with regional states,” Pant said.
Malaysia is currently India’s third-largest trading partner in Asean after Singapore and Indonesia. Bilateral trade between Malaysia and India was at $12.8 billion in 2015-16 with the trade balance in favour of Malaysia. Both “prime ministers have expressed their aspiration to see this trade increase to $15 billion in the immediate future,” according to a statement issued by the India-Malaysia CEOs’ Forum that met in New Delhi on Saturday.
“In terms of investment, there has been significant growth... The total investments from Malaysia stood at around $7 billion or more as against total investments of around $2.5 billion from the Indian side,” according to the statement.