1 liberalisation in services sector. 2 outline overview of malaysia’s services industry modes of...
TRANSCRIPT
1
LIBERALISATION IN LIBERALISATION IN SERVICES SECTORSERVICES SECTOR
LIBERALISATION IN LIBERALISATION IN SERVICES SECTORSERVICES SECTOR
2
OutlineOutline
• Overview of Malaysia’s Services Industry• Modes of Supply• Liberalisation of the Services Sector• Malaysia’s Position in AFAS, WTO, FTAs• Issues pertaining to Services
3
Overview of Malaysia’s Services Overview of Malaysia’s Services IndustryIndustry
• The Services Sector has been targeted as the new engine of growth under IMP3.
• Total share of services in Malaysia’s GDP has grown by 9.7 per cent to 53.6 per cent in 2007 (Non-Government 46.7%) from 52.0 per cent in 2006 (Non-Government 45.3 %).
• IMP3 targets an increase in the GDP contribution from 50.5 per cent in 2005 to 59.7 per cent by 2020 to be achieved through:– an annual average investment of RM45.8 billion; and– an annual average growth of 7.5 per cent during the
period.
4
IMP3 TargetsIMP3 Targets
IMP3
Targets2007 2006 2005
GDP Contribution (%)
59.7(Y 2020)
46.7 45.3 44.6
GDP Growth (% p.a.)
7.5 p.a.construction:
5.7%)
9.7 7.2 5.4
Investments (billion)
RM45.8(p.a.
RM65.4 RM55.5 RM57.7
5
Trade Performance of the Services Sector
Jan-June2008
(RM bil.)2007
(RM Bil.)%
Growth2006
(RM Bil.)%
Growth2005
(RM Bil.)
TotalTrade* 98.25 192.2 16.0 165.7 21.6 153.5
Exports* 49.88 96.8 7.9 79.6 10.9 71.8
Imports* 48.37 95.4 10.8 86.1 5.4 81.7
TradeBalance* 1.51 1.4 n.a (6.5) n.a (8.6)
*Based on DOS and covered 3 categories: travel, transport and others.
6
Modes of Supply of ServicesModes of Supply of Services
• In the Trade in Goods, liberalisation is undertaken through:– reduction in tariffs; and– disbandment of Non-Tariff Barriers (NTBs).
• In the services sector, liberalisation is undertaken through four modes of supply:
7
4 Modes of Supply4 Modes of Supply
MODES CRITERIASUPPLIERPRESENCE
Mode 1: Cross-border trade
Service delivered within the territory of the Member, from the territory of another Member. The advancement of technology has made this possible. E.g. internet (e-trading)
Service supplier not physically present within the territory of another Member
Mode 2: Consumption abroad
Service delivered outside the territory of the Member to a service consumer of the another Member. It involves the consumer traveling to the country in which the service is produced. E.g. tourism and education services.
8
4 Modes of Supply4 Modes of Supply
MODES CRITERIASUPPLIERPRESENCE
Mode 3: Commercial presence
Service delivered by a service provider of one country through commercial presence in another country. E.g. FDIs
Service supplier physically present within the territory of another MemberMode 4:
Movement of natural persons
Service delivered by a service personnel of one country who travels to another country to provide the service. E.g. services provided by expatriates, business and professionals and foreign workers.
9
Liberalisation of Malaysia’s Liberalisation of Malaysia’s Services SectorServices Sector
• Liberalisation in the services sector is currently being undertaken in:
– ASEAN: through the ASEAN Framework Agreement on Services – AFAS (full liberalisation to be undertaken by 2015 and logistics 2013);
– WTO: through progressive liberalisation (General Agreement on Trade in Services -GATS);
– bilateral and regional FTAs: through progressive liberalisation and binding of commitments in GATS.
10
Preparation for Liberalisation of Preparation for Liberalisation of Services SectorServices Sector
• Strengthen domestic regulations
• For non-regulated sectors, self-regulation is advised or if required, to advise the Government on regulatory requirements
• Review regulations that impede services exports
• Identify issues that impede the growth and development of services sub-sectors. Issues can be addressed in the MSDC for long-term competitiveness
11
Preparation for Liberalisation of Preparation for Liberalisation of Services SectorServices Sector
• Propose incentives that can assist the industry to become more competitive. Incentives are currently available through MATRADE and SMIDEC
• Undertake mergers and acquisitions to strengthen the industry
• Pursue MRAs with trading countries, in particular within ASEAN and FTA partner countries
• Build local capacity and identify niche markets in areas where we have comparative advantage
• Explore market access opportunities abroad through partnerships
12
13
AFASAFAS
• Signed in 1995
- to enhance and strengthen cooperation among service suppliers in ASEAN;and
- progressively liberalise trade in services among ASEAN countries through reduction/elimination of restrictions.
• AFAS adopts the structure and approach of General Agreement on Trade in Services (GATS) .
14
Progress of Services Progress of Services Liberalisation Under AFASLiberalisation Under AFAS
• Four Rounds of Services Negotiations have been completed:
- First Round (1996-1998):1st Package – 1997; 2nd Package – 1998.
- Second Round (1999-2001): 3rd Package.
- Third Round (2002-2004): 4th Package.
- Fourth Round (2005-2007):5th Package – 2006; 6th Package – 2007.
• 7th Package signed at the end of 2008.
15
PRIORITY SECTORS(ICT, tourism, healthcare,
air travel and logistics)
OTHER SECTORS(including professional
services)
2008 51% 2008 49%
2010 70% 2010 51%
2013(Logistic Services)
70% 2015
70%
Equity Targets and Parameters Equity Targets and Parameters (Mode 3)(Mode 3)
16
17
Services Negotiations in the WTO:Services Negotiations in the WTO:• Covered by the General Agreement on Trade in
Services (GATS) of the WTO.
• Main objectives of GATS:
- increased transparency and predictability of rules and regulations on trade in services; and
- promote progressive liberalisation in services through successive rounds of
negotiations.
• Services negotiations undertaken on “request-offer” approach, on bilateral and plurilateral
basis.
• Liberalisation of commitments of members are multilateralised (applicable to all Members)
18
Market Access NegotiationsMarket Access Negotiations
• Developed countries seek ambitious market access commitments and want:
- Members to bind existing autonomous liberalisation
- foreign equity ownership of at least 51%
• Developing countries want:
- progressive liberalisation of services sectors - market opening in sectors where they have export interest
19
Malaysia’s Position
• Prepared to undertake commitments under the principle of progressive liberalisation
• Finalising the second revised Offer under Doha Round, encompassing 11 sectors and covering 85 sub-sectors.
20
21
Approach to Services Approach to Services Negotiations in FTAsNegotiations in FTAs
• Based on the principle of progressive liberalisation, commensurate with capacity of industry.
• WTO plus
• Based on domestic consultations – liberalisation to benefit domestic stakeholders
• Cooperation elements added where relevant for capacity building and transfer of knowledge/technology
22
FTAs Signed FTAs Signed
• Bilateral:
– Malaysia-Japan Economic Partnership Agreement (MJEPA)
– Malaysia-Pakistan Comprehensive Economic Partnership Agreement (MPCEPA)
• ASEAN + Dialogue Partners (where services packages have been concluded):
– ASEAN - China (ACFTA) – 1st package– ASEAN - Korea (AKFTA) – Korea yet to ratify
23
24
• A need for all Ministries to prepare a road-map for liberalisation of services under their respective purview
• A need for a coordinated approach for the
development of the services sector e.g. through Malaysia Services Development Council (MSDC)
• To undertake outreach programmes to stakeholders
• To assist export-ready companies
• To compile comprehensive data on services
• To review of existing rules and regulations
25
THANK YOUTHANK YOU