WT/TPR/M/292/Add.1 30 April 2014 (14-2633) Page

194 Pages·2014·1.27 MB·English

WT/TPR/M/292/Add.1

30 April 2014
(14-2633) Page: 1/194
Trade Policy Review Body Original: English/Spanish
3 and 5 March 2014 anglais/espagnol
inglés/español

TRADE POLICY REVIEW
MALAYSIA
MINUTES OF THE MEETING
Addendum
Chairperson: H.E. Mr. Joakim Reiter (Sweden)
This document contains the advance written questions and additional questions by WTO
Members, and replies provided by Malaysia.1

Organe d'examen des politiques commerciales
3 et 5 mars 2014
EXAMEN DES POLITIQUES COMMERCIALES
MALAISIE
COMPTE RENDU DE LA RÉUNION
Addendum
Président: S.E. M. Joakim Reiter (Suède)
Le présent document contient les questions écrites communiquées à l'avance par les
Membres de l'OMC, leurs questions additionnelles, et les réponses fournies par la Malaisie.1

Órgano de Examen de las Políticas Comerciales
3 y 5 de marzo de 2014
EXAMEN DE LAS POLÍTICAS COMERCIALES
MALASIA
ACTA DE LA REUNIÓN
Addendum
Presidente: Excmo. Sr. Joakim Reiter (Suecia)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito y
las preguntas adicionales de los Miembros de la OMC, así como las respuestas facilitadas por
Malasia.1

1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.
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CONTENTS
QUESTIONS FROM ARGENTINA ........................................................................................ 3
QUESTIONS FROM ASEAN ................................................................................................ 4
QUESTIONS FROM AUSTRALIA ......................................................................................... 6
QUESTIONS FROM BRAZIL ............................................................................................. 19
QUESTIONS FROM CANADA ............................................................................................ 22
QUESTIONS FROM CHILE ............................................................................................... 27
QUESTIONS FROM CHINA .............................................................................................. 30
QUESTIONS FROM COLOMBIA ........................................................................................ 49
QUESTIONS FROM COSTA RICA ...................................................................................... 57
QUESTIONS FROM HONG KONG, CHINA ......................................................................... 62
QUESTIONS FROM ECUADOR .......................................................................................... 64
QUESTIONS FROM EGYPT ............................................................................................... 71
QUESTIONS FROM THE EUROPEAN UNION ..................................................................... 72
QUESTIONS FROM INDONESIA .................................................................................... 108
QUESTIONS FROM JAPAN ............................................................................................. 118
QUESTIONS FROM THE REPUBLIC OF KOREA ............................................................... 125
QUESTIONS FROM MEXICO .......................................................................................... 129
QUESTIONS FROM NEW ZEALAND ................................................................................ 134
QUESTIONS FROM NORWAY ......................................................................................... 138
QUESTIONS FROM PAKISTAN ....................................................................................... 139
QUESTIONS FROM PERU .............................................................................................. 143
QUESTIONS FROM THE PHILIPPINES ........................................................................... 145
QUESTIONS FROM SINGAPORE .................................................................................... 146
QUESTIONS FROM SWITZERLAND ................................................................................ 154
QUESTIONS FROM THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU,
KINMEN AND MATSU .................................................................................................... 159
QUESTIONS FROM THAILAND ...................................................................................... 163
QUESTIONS FROM TURKEY .......................................................................................... 168
QUESTIONS FROM THE UNITED STATES ....................................................................... 172
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QUESTIONS FROM ARGENTINA
What are the most significant changes expected in the automotive industry from the new
guidelines for the sector presented in January, considering that a reduction in tariffs in the
segment of the most efficient vehicles will mean lower costs and expanding the supply of units for
sale?
Answer:
The question posed does not fall under the period for review. Nevertheless, the National
Automotive Policy (NAP) 2014 has been introduced to promote a more competitive and
sustainable automotive industry particularly in making Malaysia the regional automotive
hub for Energy Efficient Vehicles (EEV). Key directions and strategies outlined under
NAP 2014 are expected to address and resolve structural issues affecting the industry as
well as to enable the industry to meet global quality, cost and delivery requirements.
The tariff reduction given to manufacturers/assemblers of CKD hybrid and electric
vehicles will boost sales of these fuel-efficient and environment-friendly vehicles in the
Malaysian market.
One of the topics of greatest interest to Argentina in the bilateral economic relationship is the
Malaysian protocol by which the income of Argentina beef to Malaysia for failing to prevent
exclusive establishments using to slaughter the process that results in the range "halal". In this
regard : What are the chances that a refrigerator where part of his job is carried out under
processing "halal" without being an establishment exclusively enabled to that effect has been
authorized to export meat to Malaysia?
Answer:
Malaysia imposes halal dedicated establishments as part of the halal regulations for
every establishment that has interest to enter the Malaysian market. These regulations
apply to all halal meat exporting countries without exception.
The regulations are clearly spelt out in the Para 4.2 of the Malaysia Protocol for Halal
Meat and Poultry Productions:
4.2.1 Approved establishments shall be dedicated to produce halal meat, poultry and
their products throughout the entire supply chain from slaughtering to transportation
according to Shariah Law at all times;
In the past, Malaysia has approved Argentinian establishments to export halal meat into
the country. Therefore, establishing dedicated halal establishments should not be an
issue.
Malaysia does not have any plan to allow the export of halal meat from any non-
dedicated halal establishments into the country. At this point in time, Malaysia is
satisfied with the performance of the approved overseas dedicated halal establishments.
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QUESTIONS FROM ASEAN
Page 4, Para 1.15-1.16
ASEAN notes that Malaysia has undergone and introduced some initiatives to achieve its
Vision 2020 by launching the New Economic Model (NEM) which is made up of the Economic
Transformation Programme, Government Transformation Programme, "1Malaysia, People First,
Performance Now" concept and the 10th Malaysia Plan 2011-2015.
The reforms implemented intend to make Malaysia more competitive in the global market place
and aims to make it a high income nation. As such, can Malaysia provide some more specific
information on these reforms and the type of programmes it has introduced to achieve their goals
towards the Vision 2020?
Answer:
Four core transformation programmes have been introduced: the Government
Transformation Programme (GTP); the Economic Transformation Programme (ETP); the
Rural Transformation Programme (RTP); and the Political Transformation Programme
(PTP). These have been implemented in stages, keeping in mind the short and long term
objectives.
GTP focusses on the Government's commitment to improve the delivery of public goods
and services in areas identified as National Key Result Areas (NKRAs). Six NKRAs were
identified and targeted for improvement over three phases; 2010-2012, 2012-2015 and
2015-2020. The six areas are 1) reducing crime; 2) fighting corruption; 3) improving
student outcomes; 4) raising living standards of low-income households; 5) improving
rural basic infrastructure; and 6) improving urban public transport and addressing the
cost of living problem.
The ETP is formulated based on the New Economic Model, designed to drive Malaysia
forward to be a high income economy that is both inclusive and sustainable. Seven
strategic reform initiatives (SRIs) have been outlined under the ETP:
1. Benchmarking to international standards and undertaking liberalization;
2. Rationalizing the role of government in business;
3. Strengthening human capital development;
4. Enhancing public service delivery;
5. Narrowing the inequality gap;
6. Reforming public finance; and
7. Unleashing economic growth through the 12 National Key Economic Areas (NKEAs).
Please visit the following websites for the details:
 www.pemandu.gov.my; and
 www.epu.gov.my.
Pg. 8, Paragraph 2.17-2.18
With the SME Masterplan 2012-2020, Malaysia expects to improve, among others, the GDP,
employment and exports according to the contribution of SMEs to Malaysia's economy.
There has been a growing trend to connect SMEs into the Global Value Chains. Could Malaysia
share some of the programmes and initiatives under this Masterplan to better understand
Malaysia's plans on SME development?
Answer:
The SME Masterplan (2012–2020) is a long-term plan to accelerate the growth of SMEs,
including moving SMEs up the value chain to become global players. Six areas have been
identified that will spur and boost the growth of SMEs. These are innovation and
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technology; human capital development; access to financing; access to market; legal
and regulatory environment; and infrastructure.
Specific programmes under the six areas include:
 The Technology Commercialisation Platform (TCP). This promotes innovative ideas
from proof of concept (POC) to the commercialisation stage. TCP is designed to
remove market barriers to innovation by providing SMEs links to a range of services
including infrastructure support, financing, technical assistance, market information
and capacity building;
 The SME Investment Programme (SIP). This provides early stage financing, through
the development of investment companies which will invest in SMEs with potential.
This will expedite the growth of the venture capital industry that will support
innovative SMEs and start-ups;
 The Going Export (GoEx) Programme. This provides customised assistance to new
exporters and SMEs venturing into new markets. Export-ready firms can benefit from
this comprehensive support which among others include access to market expertise
and buyers, and compliance to standards, all of which will help expedite
internationalisation of services and products;
 The Catalyst Programme. This creates home grown champions, targeting SMEs and
providing support in the areas of financing, market access and human capital
development; and
The Inclusive Innovation which is specifically designed to empower the bottom 40% of
the income group. This leverages on innovative initiatives, including microenterprise in
rural areas through handholding as well as technical and management support, leading
to transformation of communities.
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QUESTIONS FROM AUSTRALIA
Page 23, Paragraph 1.26 and Page 28, Paragraph 2.10
The Secretariat report attributes a modest easing in FDI inflows in 2012 to "the diminishing appeal
of Malaysia as a base for labour-intensive industries"
 What factors are driving this?
 To what extent does this reflect Malaysia's objective of moving towards higher value-added
and knowledge intensive activities in global value chains?
Answer:
The slight moderation in FDI inflows in 2012 was partly due to the slowdown in the
global trade and uncertainties surrounding global growth prospects that affected the
export-oriented sector as well as other sectors directly linked to external demand.
Other factors that contributed to the modest easing of FDI inflows in 2012 include
uncertainties surrounding the date of Malaysia's 13th General Election, government
policy orientation towards encouraging investment in high value added and knowledge
intensive industries as well increasing competition from neighbouring countries in
providing lower labour cost for industries.
Malaysia is adopting a targeted and selective approach in attracting niche quality
investments in high-technology projects, and not merely emphasizing value of
investments. Malaysia through MIDA has developed a sophisticated strategy in
positioning itself as a global outsourcing hub for the high-technology manufacturing
value chain.
In line with Malaysia's policy direction to focus on attracting quality investment rather
than quantity, the continued investment in new growth areas and high value-added
industries has further diversified Malaysia's exports as well as deepened Malaysia's
industries to move up the global value chain.
3.2.5.1.2 Halal certification
Page 50, Paragraphs 3.44 and 3.45
Can Malaysia please provide details on how halal certification is granted and how the foreign halal
certification body achieves recognition by the Department of Islamic Development Malaysia? A
footnote or URL link would be helpful.
Answer:
Halal Certification:
The Department of Islamic Development Malaysia (Jakim) is the competent authority to
certify halal food, goods or services. Jakim has also established the Malaysia Halal logo
and implemented the Halal Certification System.
The general requirements for halal certification can be accessed at:
http://www.halal.gov.my/v3/index.php/en/about-halal-certification/general-
requirements.
Issuance of halal certificates to industries is done upon compliance with standards and
requirements. The Malaysia Halal Standards used are:
i. MS1500: 2009 Halal Food - Production, Preparation, Handling And Storage -
General Guidelines (Second Revision)
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ii. MS2200 Part 1: 2008 for Cosmetic & Personal Care
iii. MS2400-1: 2010 Halalan-Toyyiban Assurance Pipeline – Part 1: Management
System Requirements for Transportation of Goods and/ or Cargo Chain Services
iv. MS2400-2: 2010 Halalan-Toyyiban Assurance Pipeline – Part 2: Management
System Requirements for Warehousing and Related Activities;
v. MS2400-3: 2010 Halalan-Toyyiban Assurance Pipeline – Part 3: Management
System Requirements for Retailing;
vi. MS2424: 2012 Halal Pharmaceuticals - General Guidelines
vii. MS2200: Part 2: 2012 Islamic Consumer Goods Made of Bones, Skin and Fur
The standards are available at:
https://www.msonline.gov.my/catalog.php?score=checked&istc_id=66.
Halal certification workflow is available at:
http://www.halal.gov.my/v3/index.php/en/halal-certification-process-work-flow.
Recognition of Foreign Halal Certification Body:
The recognition process will take into account evaluation processes during the audit,
which involves on-site audit. The evaluation, among others, will include the capacity,
standards, certification system, syari'ah and technical expertise of the organization. The
on-site audit will also include observation and evaluation of the organization doing its
audit on its certified plants.
Procedures for appointment of Foreign Halal Certification Bodies are available at:
http://www.halal.gov.my/v3/images/stories/pdf/cb%20procedure28012014.pdf.
Para 3 9 (3.2.5.2.1 Food standards) - Page 52, Paragraph 3.53 (MOH)
It is stated that "So far, no MOUs on food safety and quality have been signed with trading
partners":
What is the intended role of MOUs in Malaysia's food safety policy?
Answer:
The establishment of Memorandum of Understandings (MOUs) on food safety and
quality between Malaysia and trading partners are intended mainly to strengthen the
cooperation between the parties. It includes provisions for sharing of information and
exchange of expertise in identified food safety areas.
Page 53, Paragraph 3.57
It is noted that Brazil and Japan raised concerns with Malaysia regarding restrictions on plant and
plant products, and Canada, the EU and the US raised concerns over pork and pork products. Did
Malaysia provide a response to these concerns?
Answer:
Yes, responses to these concerns have been provided.
Pork imports are subject to TRQs and the normal SPS requirements. Further information
can be obtained at http://www.dvs.gov.my/en/impot-/-ekspot.
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Pork cuts are imported into Malaysia from Australia, China, Canada, EU countries
(Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Spain and Sweden),
Thailand and Vietnam.
The data on the import volume of pork cuts into Malaysia:
2011: 17,186.30 MT
2012: 12,280.42 MT
2013 (January-September): 7,782.73 MT
Pages 101-102, Para 4.60
 Is excise duty applied at the same rate on domestically-manufactured vehicles and imported
vehicles?
 Do any domestic manufacturers or dealers receive any type of payment determined
according to the amount of excise duty paid on the sale of domestically manufactured
vehicles?
 Are fully reconditioned automotive parts that meet or exceed the standards of equivalent
new parts prohibited? If so, why?
Answer:
The excise duty rate is based on engine capacity and applicable for both domestically
produced and imported vehicles.
The excise duty rebate is given to all motor vehicle and motorcycle
manufacturers/assemblers incorporated in Malaysia to assist them in adjusting and
maintaining their competitiveness in light of the liberalization exercises undertaken by
Malaysia.
However, under NAP 2014, in line with the promotion of green technology, Malaysia is
looking into rationalizing the automotive tax system in order to produce a more
environment-friendly value chain, while ensuring sustainability of the competitive
automotive industry.
Under NAP 2009, importation of used parts is being gradually phased-out due to safety
and environment concerns. As a start, imports of four used parts items have been
prohibited namely brake pads, brake lining, batteries and tyres. There is no prohibition
of imports on other reconditioned automotive parts.
SUMMARY
Trade Policy Developments
Page 9, Paragraph 15
"Other support measures remain in place, such as export processing zones involving local content
requirements"
And
3. TRADE POLICIES AND PRACTICES BY MEASURE
3.3.6 Free zones and other measures
Page 60, Paragraph 3.80
"Effective 1 January 2011, FIZ companies benefit from import duty exemptions if they achieve
40% of local content value"
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Can Malaysia demonstrate how local content requirements, as articulated above, are consistent
with its international trade obligations?
Answer:
A Free Zone is an area in any part of Malaysia that is declared by the Minister of Finance
under the provision of Section 3(1) of the Free Zones Act 1990, as a Free Commercial
Zone or Free Industrial Zone. The activities and industries therein are subject to minimal
customs formalities as it is deemed under Section 2 (1A) of the customs Act 1967 to be
a place outside the Principal Custom Area except in respect of Prohibition of Imports
and Exports under Section 31 of the Customs Act 1967. Hence, products from companies
located in the Free Industrial Zones (FIZ) destined for Malaysian domestic market are
considered as imported products and subjected to import duty at MFN/applied rates.
However, effective 1 January 2011, products produced in the FIZ destined for the
Malaysian market are eligible to enjoy ASEAN or ATIGA duty rates if they complied with
the origin criteria, i.e. local content or substantial transformation.
Page 9, Para 18
"Preferential government procurement procedures and expanded countertrade/offset requirements
continue to be used as an instrument of industrial policy to favour locally owned businesses"
Pages 82-83, Para 4.5
"Preferential treatment for locally produced goods in government procurement contracts continues
to support ethnic Malay (bumiputera) manufacturers"
Can Malaysia demonstrate how preferential procurement arrangements, as articulated above, are
consistent with its international trade obligations?
Answer:
Malaysia is not bound by any international process or body when it comes to
government procurement thus any change by such processes/bodies does not directly
affect Malaysia's legislation.
However, Malaysia's government procurement practices are benchmarked against
international organisations such as UNICITRAL and UNDP. In addition, our participation
as WTO GPA observer would allow us to gain expertise from WTO GPA Parties pertaining
to the legal provisions of the text and trade implications.
Page 90, Para 4.28
"Royalty rates for non-metallic minerals may be higher for exports; for example, in the State of
Johor, royalties on rock material for export are four times higher than those for domestically used
material"
Can Malaysia demonstrate how royalties on exported minerals being higher than on minerals
destined for domestic consumption, as articulated above, are consistent with its international trade
obligations?
Answer:
Under the Federal Constitution, land and its natural resources belong to states. As such,
the states have absolute jurisdiction over imposition of royalty rates, land assessment
rates and tribute paid to the State Governments.
The Federal Government is responsible to regulate among others the mining operations,
safety, trade, import and export of minerals and mineral products.
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3. TRADE POLICIES AND PRACTICES BY MEASURE
3.1 Introduction
Page 37, Paragraph 3.5
"Export taxes (1.5% of total tax revenue in 2012) and/or restrictions, which are applied to certain
goods (e.g. timber), continue to, inter alia, discourage exports of certain commodities and
essential goods and reduce their domestic prices"
And
3.3.2 Export prohibitions, restrictions, and licensing
Page 58, Paragraph 3.73
"The Customs (Prohibition of Exports) Order 2012 (effective March 2013) sets out current export
prohibitions, restrictions, and licensing requirements"
And
3.3.3 Export duties and taxes
Page 58, Paragraph 3.75
"such taxes tend to increase the domestic supply of the products concerned, and as a
consequence, their domestic prices tend to be lower than would otherwise be the case"
And
4.1 Introduction
Pages 82-83, Paragraph 4.5
"Exports of manufactured products are assisted through as well as export licensing and export
taxes on principal commodities".
4.6 Manufacturing
Page 99, Paragraph 4.56
"Export licensing and export taxes on principal commodities (agricultural, industrial) continue to
divert supply of these inputs to the domestic market, leading to downward pressure on domestic
prices and thus acting as an implicit subsidy for the domestic processing industries (sections 3.3.2
and 3.3.3)."
Can Malaysia demonstrate how export licensing and taxes that suppress domestic prices and act
as implicit subsidies, as articulated above, are consistent with its international trade obligations?
Answer:
Export licences are issued as stipulated in the Customs (Prohibition of Exports)
Order 2012 based on the following:
i. SPS requirements;
ii. Exports' monitoring; and
iii. Human health and environmental precautionary measures.
All export licenses imposed are in line with Malaysia's commitment under WTO and are
consistent with its international trade obligations.