UAE and Malaysia seek to grow $4.6bn trade with Cepa talks

Reuters

• UAE is top destination for Malaysian exports to Arab countries
• Main exports to Emirates include electronic equipment
• Country keen to export more of its palm oil to UAE market

The UAE and Malaysia will embark on negotiations for a Comprehensive Economic Partnership Agreement (Cepa) after non-oil trade between the two countries last year grew to $4.6 billion.

The Emirates are Malaysia’s 17th biggest trade partner globally and the second in the Middle East, accounting for 32 percent of Malaysia’s trade with Arab countries. 

Trade during 2022 grew by 5 percent compared to the previous year and was 18 percent up on pre-pandemic levels.

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The UAE is the top destination for Malaysian merchandise exports to Arab countries, accounting for 40 percent of its exports to the region. Malaysia ranks eighth globally for UAE exports and 19th in re-exports.

Malaysian investments in the UAE amount to $150 million, while UAE investments in Malaysia total more than $220 million, according to Dr Thani bin Ahmed Al Zeyoudi, UAE minister of state for foreign trade.

A research note from foreign direct investment consultancy Dezan Shira & Associates said the UAE’s most important exports to Malaysia are oil and mineral fuels, as well as precious stones and metals, plastics and aluminium.

Malaysia’s main exports to the UAE are electronic equipment, pearls and precious stones and machinery.

It added that Malaysia is keen to export more of its palm oil to the UAE market as well as the Middle East region. The country accounts for 24 percent of global production and 31 percent of global exports of palm oil.

Research conducted by the Malaysian Palm Oil Council said the UAE is expected to import 400,000 tonnes of palm oil by 2025. 

Reuters/Hasnoor Hussain

Tengku Zafrul Aziz, Malaysia’s minister of investment, trade and industry, said Malaysia is also an “ideal gateway” for UAE businesses to venture into the Asia Pacific market.

The country is emerging as a hub for international businesses, particularly in manufacturing, logistics, IT, conventional and Islamic financial services. 

The country is aiming to rival its neighbour Singapore as a cost-competitive alternative for access to one of the fastest-growing markets in the Association of Southeast Asian Nations region, better known as Asean, with its population exceeding 600 million.

To support its ambitions, it runs a principal hub scheme that incentivises multinational companies seeking to establish a regional HQ in Asean. 

Dr Azmi Hassan, senior fellow at the Nusantara Academy for Strategic Research, said that while the UAE currently has stronger ties with Singapore, that could change.

“UAE investors may be more comfortable with Malaysia because of the religious and cultural factors which they are familiar with,” he told the official news agency Bernama earlier this week.

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Jamal Saif Al Jarwan, secretary-general of the UAE International Investors Council, said it was keen to explore opportunities for partnership in promising sectors including the Islamic economy. 

Malaysia retained first place in the world among 81 countries in the Global Islamic Economy Indicator rankings for the ninth year in a row last year.

Emirati companies already investing in Malaysia include Mubadala Energy, First Abu Dhabi Bank, Hotpack Global and LuLu Group International.

The negotiations with Malaysia are the latest under the UAE’s ambitious foreign trade agenda, which has so far seen the conclusion of four Cepas with India, Israel, Indonesia and Turkey. Additional agreements with Georgia and Cambodia are also soon to be signed.