Questions On Malaysia - Pakistan CEPA (MPCEPA)

The MPCEPA is a comprehensive Agreement, covering Trade in Goods, Trade in Services, Investment and Economic Cooperation. The Agreement entered into force on 1 January 2008

Malaysian exporters will have an added advantage in exporting their products to Pakistan over their competitors (companies) from other countries that do not have  FTA agreement that provides preferential tariff treatment for imports of products into Pakistan.

·       Pakistan import duties for 25% tariff lines have been eliminated since 2009 while another 18.2% tariff lines will be eliminated (zero per cent) by 2012. These tariff lines cover products such as fruits, tea, coffee, cocoa, processed food, natural rubber, chemical products, fabrics, leather, tin, iron and steel, machinery & parts, E&E products and musical instruments.

·         Additionally, Pakistan also offered to reduce its import duties to various level of 5% and 10% by 2014,  to 20% in 2009 and 2011. Details of the schedules of tariff elimination and reduction can be accessed from MITI’s website www.miti.gov.my (Schedule in Part 3 of Annex 1 of the MPCEPA).

To benefit from the lower tariff rates, exporters will need to check whether the goods are included under the tariff reduction list. This can be done by checking the product HS Code in Pakistan Schedule in Part 3 of Annex 1 of the MPCEPA.

Exporters must comply to the rules of origin (ROO) in order to benefit from the tariff concessions granted under the MPCEPA.  In order to enjoy the preferential tariff, exporters must ensure that the finished products are either wholly obtained or have undergone substantial transformation in terms of change in tariff classification at 6 digits level and fulfill the general Rules of Origin Qualifying Content (QVC) of not less than 40% or Product Specific Rules (PSR).

In addition, in order for a product exported by Malaysia to enjoy preferential treatment in Pakistan, a Certificate of Origin (CoO) issued by the Ministry of International Trade and Industry Malaysia is required. The CoO is a certificate that can be used to satisfy your buyers that the products exported originate from Malaysia. The forms can be obtained from the Federation of Malaysian Manufacturers (FMM).

Steps:

a)     Obtain the ASEAN Harmonised Tariff Nomenclature (AHTN) or Harmonised System (HS) code from the Royal Customs of Malaysia for your product as well as every product and raw material used.

b)    Check your product's eligibility under MPCEPA based on Pakistan's schedules of tariff elimination/reduction.

c)     Product for export must fulfill the condition of the rules of origin under MPCEPA.

d)    Download/get the Cost Analysis Application Forms i.e. BAK 1(a), BAK 1(b) and BAK 1(c). The forms can be obtained from:

1. MITI Website; or
2. Service Counter (Ground Floor), Block 10, MITI, Government Offices Complex, Jalan Duta, 50622 Kuala Lumpur; or
3. MITI's branch offices in respective states.

e)     Completed Cost Analysis application forms must be submitted to:

Ministry of International Trade and Industry (MITI)
Trade Cooperation and Industry Coordination Section
Ground Floor, (Service Counter), Block 10
Government Offices Complex, Jalan Duta,

50622 Kuala Lumpur

Application must be also submitted with:

i.    Form BAK 1(a): Details of Exporter/Manufacturer and        Products
ii.   Form BAK 1(b): Product's Cost Analysis
iii.  Form BAK 1(c): Letter of Indemnity
iv. A copy of the following documents:

      - Certificate of company's registration
- Invoices of raw material purchasing
- Sample/photograph/products catalogue.
- Flow chart of production process.

f)     Once your application is approved, Malaysian exporters have to submit the Form MPCEPA which can be purchased from Federation of Malaysian Manufacturers (FMM).       

Yes, Pakistan has excluded 149 tariff lines from the tariff concession under the Exclusion List (EL). These products are excluded for health, safety and moral reasons. Among the products are firearms, bullet, tobacco & liquor and swine products.

The MPCEPA is a comprehensive agreement and it covers liberalization of Trade in Services as well. Pakistan offered maximum foreign equity participation of 60% in all sectors and there is no limitations on the number of Malaysian employed per organization. Sectors of interest to Malaysia include professional services, construction and related engineering services, education services and telecommunication services.

Yes,  the MCPECA has an Investment Chapter. With provisions provided for in this Chapter, the investments of either Malaysia or Pakistan will be accorded fair and equitable treatment and enjoy full protection and security.

The MPCEPA has a provision that caters for future review of the Agreement. When the review is undertaken, Malaysia can propose and request for additional products to be accorded tariff reduction and elimination. In addition, we can also push for accelerating tariff reduction or elimination for products that we have strong export interest.

Malaysia and Pakistan have agreed to work closely in the areas the following areas:

·             Tourism:

o    Undertake joint tourism promotion and marketing through trade fairs and sales missions and share experiences in research and development.

·             Construction:

o    Malaysia offered to share expertise and technical know-how in skills training and certification, and use of rubber bearings in the construction of buildings in earthquake prone areas.

·             Healthcare:

o    Pakistan offered to provide technical assistance in academic staff/lecturers in healthcare training institutions such as medical, dental, pharmacy and nursing.

·             Telecommunications:

o    Both sides to cooperate in human resource development and manufacturing of telecommunication  equipment.

All detailed information on the MPCEPA as well as the text of MPCEPA and schedule of goods is available on MITI’s website at www.miti.gov.my