India and Malaysia on Friday signed a landmark pact that paves the way for freer flow of trade in goods and services, besides enhanced investment and economic cooperation between the two countries.
The Comprehensive Economic Cooperation Agreement (CECA) was signed by Commerce Minister Anand Sharma and his Malaysian counterpart Mustapa Mohamed and witnessed by Prime Minister Najib Razak and several leading captains of industry from both sides.
"The CECA will usher in a new era of much deeper economic cooperation. Indian Premier Manmohan Singh is very supportive of this and a very good friend of Malaysia," Najib said while standing behind the two seated ministers after the pact was inked.
The CECA marks a new era in bilateral ties, with both the ministers calling the agreement a vehicle that would serve to enhance trade and investment flows and encourage freer movement of goods, services and professionals between India and Malaysia.
India was Malaysia's 13th largest trading partner in 2010, with exports amounting to $6.5 billion and imports at $2.4 billion.
Indian investments in Malaysia were valued at $15.9 million, mostly in scientific and measuring equipment, fabricated metal products, furniture and fixtures.
This is the second trade pact India has signed in the past three days. Sharma inked a trade pact with Japan on Wednesday before flying in here last night.
The two countries envisage that with the CECA in place from July 1, 2011, bilateral trade will accelerate and touch at least $15 billion by 2015.
"The agreement is an ambitious one encompassing services, investment and trade and opening up various sectors for investment opportunities," Sharma said at a press conference after inking the deal.
"The modest trade bilateral target of $15 billion by 2015 is doable and can happen sooner by the signing of CECA," Sharma said.
He said Indian business houses have invested in the petroleum, synthetics, railways and IT sectors in Malaysia and the two countries were also working on projects in third countries.
He stressed that Asia was today the hub of economic activity and noted that the integration of Asian economies would help in realising developmental objectives.
The Malaysian trade minister said there were two factors which would push the CECA to greater heights - the direct impact of tariff reductions and the excitement and feel good factor between the two countries.
The two ministers noted that signing of the deal would also facilitate the movement of skilled professionals.
Malaysia has also agreed to higher FDI by Indian companies in the construction services and IT sectors. Mustapa said the negotiators had helped produce an agreement that had nine times more on the positive list than the negative list.
The Malaysian minister emphasised that India was a very important country for Malaysian businessmen, with trade between the two going up to $9 billion this year.
He said the impact of the CECA would extend beyond just trade and investment, projecting a huge increase in tourist arrivals.
