Published on: Wednesday, November 18, 2009 |
Kota Kinabalu: Sabah is hampered by limitations in logistics and shipping when it comes to export receipts under Malaysia's Free Trade Agreements with other countries.
This explains why it recorded a smaller export value compared to some states, accounting for only RM1.126billion between January and July this year.
The overall figure for exports under all Malaysian FTAs was valued at RM34.19 billion for the period, said Malaysian External Trade Development Corporation (Matrade) Deputy Chief Executive Officer (Development), Mohamad Kamarudin Hassan.
Illustrating Sabah's problem, he said, in the peninsula, for instance, the downstream process is more advanced than in Sabah in terms of palm oil because the industry was established long ago whereas Sabah's was done slightly later.
"I recognise the problem that you have but I believe that Sabah, in time, will be in the forefront in this area," said Mohamad.
"But I think in order to exploit the resources more of your companies should probably look more at going downstream to move towards higher value of products.
"Sabah is a very important State that contributes to the country's exports," he said, adding, "your exports are mainly wood-based products and this is because of the advantage you have in raw materials."
"Apart from this Sabah is also exporting marine food products," he told reporters at a media conference after launching the Matrade seminar on Optimising Opportunities Under Malaysia's Free Trade Agreements that was held for the first time (in Sabah) here, Tuesday.
Some 90 representatives from Sabah companies, government departments, chambers of commerce, professional bodies and associations attended the seminar.
Mohamad lamented that few companies are using the benefits of Malaysia's FTAs with other countries, largely due to the lack of awareness on the mechanism of the FTAs.
He said companies need to know more about Malaysia's FTAs with other countries so that they can take advantage of the benefits and that it is crucial to do so by next year when the Asean Free Trade Area (AFTA) is expected to be fully implemented.
Mohamad added that apart from awareness of benefits that FTAs can provide, companies also need to know the threats that come with it.
"Apart from the opportunities from FTAs that Malaysian companies should be aware of are the threats they may face from it if they fail to participate.
"Up to date, Malaysia has signed FTAs with numerous countries, which will open up imports of products to Malaysia more freely. This will make these products more competitive compared to ours, thus the need for more companies to take advantage of the opportunities from FTAs.
"Malaysia has signed bilateral FTAs with Japan and Pakistan and in the Asean stage with China, Korea, India and the latest being Australia and New Zealand.
"It is important for Malaysian companies to be fully aware of the benefits of FTA because of the anticipated full implementation of AFTA in 2010, where tariffs would be lowered or levied fully as a step to make Asean countries more competitive as a production base in the world market.
"We want to create awareness so that companies can take advantage of the FTA to conduct exports. At this time, the utilisation, although is rising, is still low and there is plenty of room to exploit," said Mohamad.
Elaborating on the lack of awareness, he said Malaysian companies in fact know about the benefits they stand to gain from participating in the FTAs but that many choose not to do so because of a perception that they have that is not accurate.
"In order to benefit from FTAs there is a set of procedures that need to be complied with.
"For example the exports must be accompanied by a Certificate of Origin (CoO), for which there is a prescribed procedure to obtain.
"You have to disclose what is the cost of your production, the inputs that go into your products and where the inputs come from. This information is required because the authorities need to make sure that the goods are originally made from Malaysia. But maybe some companies see this as a hassle.
"I think it is the perception of the companies that it is difficult and time consuming to get approval from the government for the Certificate of Origin that hinders them from applying for the CoO.
"It is also important to know that when the authorities issue the CoO's there are certain procedures to follow, otherwise it would be open to abuse resulting in our CoO's not being recognised by the importing countries.
"This is the reason for the stringency, which is to ensure that the certificates are authentic. I still think it is the perception, the thought of it being difficult. In fact the processing of the certificates is very fast, within a matter of days," said Mohamad.
CoO certifies the country of origin of a particular product. Its main function is to enable importers from other countries to take advantage of the preferential tariff rate of duty from the country of origin, for example Malaysia.
It is also to satisfy trade requirements such as supporting letters of credit.
CoO is also used as supporting documents for certification by another chamber.
Meanwhile, when asked if there could be a way to simplify the procedure to help attract more participation, Mohamad said: "It is not for Matrade to issue the certificates".
"This is under the purview of the Ministry of International Trade and Industry (Miti). I believe Miti has taken all necessary steps to minimise the procedures to make it as simple as possible but without overlooking the requirement set by the importing countries," he added.
