UAE and Malaysia edge closer to free trade deal

Hou Yu/China News Service/VCG via Reuters Connect

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The UAE is expected to sign a free trade deal with Malaysia by the end of the year as it strengthens its ties with countries in south-east Asia.

The update was delivered by Tengku Zafrul Aziz, Malaysia’s minister of investment, trade and industry, at the ninth annual Belt and Road summit in Hong Kong. Aziz said the two countries were close to signing a comprehensive economic partnership agreement (Cepa).

After several rounds of discussions, which started last year, Zafrul Aziz said they are “on track to conclude” the trade deal by the end of 2024.

The UAE is Malaysia’s second-largest trading partner in the Middle East after Saudi Arabia, making up around a third of its overall trade with Arab nations, while Malaysia is ranked eighth among non-Arab Asian countries for UAE exports.

In 2023, Malaysia and the UAE shared non-oil trade worth $4.7 billion dollars, maintaining the record levels achieved in 2022.

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“We see considerable potential for greater trade and investment flows, particularly in high-growth sectors such as energy, logistics, manufacturing and financial services, and believe we can collaborate to further develop the Halal economy,” said Dr Thani bin Ahmed Al Zeyoudi, minister of state for foreign trade, on a visit to Malaysia in June.

The UAE-Malaysia relationship is part of growing ties with the wider Asean bloc of 10 countries that also incorporates Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

In May 2022 the UAE signed a Cepa with Indonesia, which came into force in September 2023, while a similar agreement with Cambodia was activated at the end of January.

Negotiations are also well underway with the Philippines and Vietnam, the latter finalising terms on a deal to build on bilateral trade worth nearly $9 billion.

UAE President Sheikh Mohamed bin Zayed Al Nahyan announced plans earlier this month to start negotiations with Japan on a Cepa.

The UAE has signed 11 such agreements with countries across the world so far since launching its Cepa programme in September 2021. The programme aims to increase the country’s non-oil foreign trade to AED4 trillion ($1 trillion) by 2031.