Malaysia-Japan FTA boosts exports, narrow trade deficit

In a press conference to announce the country's 2006 trade performance, Rafidah said that since the Economic Partnership Agreement, as the FTA is officially known, came into effect last July, there have been ''positive effects'' on Malaysia's export performance to Japan.

Exports utilizing the preferential ''Certificate of Origin'' accorded under the agreement for the second half of 2006 were valued at 3.06 billion ringgit.

The main products exported under the preferential access included palm oil, articles of ethylene and veneered panels.

Other products that have gained better access into Japan were tropical fruit such as pineapples and watermelons, which increased fourfold during the six-month period after the implementation of the FTA, Rafidah said.

Electrical and electronic products remained Malaysia's number one export to Japan, totaling 16.47 billion ringgit, but that was 1.5 percent lower than in 2005 as Japan turned to cheaper sources such as China and Taiwan.

Liquefied natural gas was the second largest export from Malaysia with a value at 13.2 billion ringgit.

Exports of wood products, including veneer, plywood and particle board, accounted for half the increase in exports. Exports of wood products were valued at 4.81 billion ringgit last year.

Overall, as Prime Minister Abdullah Ahmad Badawi had announced late Thursday, Malaysia's total trade breached the 1 trillion ringgit mark for the first time last year at 1.069 trillion ringgit, 10.5 percent higher than the preceding year.

Exports rose 10.3 percent to 588.95 billion ringgit while imports rose 10.7 percent to 480.49 billion ringgit in 2006.

Rafidah is optimistic the growth momentum will continue in 2007 despite concern the rising ringgit will crimp exports.

The currency is now trading near a nine-year high at around 3.50 to the dollar.

''One factor that will support the (export) growth is the forecast stronger expansion of the Southeast Asian economies, from 5.2 percent in 2006 to 5.6 percent in 2007. ASEAN accounted for 26.1 percent of Malaysia's exports in 2006,'' she said.

Demand for Malaysia's electrical and electronic products that account for more than 45 percent of total exports, is also expected to remain robust as the U.S.-based Semiconductor Industry Association has forecast global semiconductor sales will expand 10 percent this year to $273.8 billion.