South East Asia is the center of the trade and the Malaysia is one of the trade hubs of the Asia. Malaysia stands as a developing country for its long standing commitment to maintain a relatively open trade and investment policy regime. Under the virtual free trade regime the protection regime is characterized and the trade policy regime includes the high degree of dispersion. The Malaysian trade policies have changed many times after the independence in 1957 according to the financial conditions of the country.

Trade policies of Export

Export is an important part of international trade. After independence, Malaysia’s main export item were Rubber and Tin contributing of 60% and 12% respectively in total export of Malaysia. After independence it has made many changes and diversifies his country in agriculture as well as in manufacturing sector too. Trade policies were promoted with fiscal incentives; to develop this free trade zones and the export processing were created by which foreign investment can be attracted. In year 1994 Malaysia’s manufactured goods reach 77.4% of all Malaysian exports and the same year Malaysia has joined the world trade organization (WTO). During the period of 1997-2003 Malaysia maintains a trade surplus despite the world financial crisis. The exports of Malaysia have increased up to 80% after the independence that shows the incredible growth of the country (trade chakra, 2008).

Trade policies of import

Under the current import trade policy of Malaysia, a specific import licenses are required for certain controlled items like as for importing plants, motor vehicle, tin ore, firearms and explosives, some pharmaceuticals, soil samples and certain food stuff. On heavy construction equipment iron and steel products a restrictive licensing regime has been charged. This custom terrify regime is based on Harmonized Commodity Description and Coding System of goods classification. A higher duty is charged on luxury items like liquor and cigarettes and generally the duties are 2% to 60% and the average tariff level of 15%.malaysia also prohibits some corrosive chemicals and all items from Yugoslavia and Israel (allMalaysiainfo, 2010).

Trade policies for FDI

Malaysia is one of the most successful countries in the Asia in attracting foreign direct investment. FDI is also plays a vital role in developing the export of Malaysia. Some of the earlier major investment in electrical and electronics industries has made many changes in the export market of Malaysia. Malaysia has always endeavor the competitiveness of FDI determinants and for this many instruments has been set up. The foreign direct investment in Malaysia has set up that at least 10% of the total equity can be hold by a non-resident investor in a resident company (Trade chakra, 2008).

Major Export-Import Trading Partners

Sr. no. Major Trading Partners Export Trade Value Import Trade Value

United States 27M 15.5M

Singapore 22.5 M 14.5M

Japan 13 M 16.5M

China 11M 15M

Thailand 8M 6.9M

Hong Kong 7.4M 3M

Korea 5.6M 6.3M

India 4.8M —

TABLE: 1 Major Countries (Michigan state university, 2010)

The above table represents the major trading partners of the Malaysia. Malaysia export near about $27 million to US which is the highest in comparison to other countries and on the other hand it imports more from Japan which is near about $16.5 million.

Major Export-Import Trading Products

Sr. No. Products Export trade value Import trade value

Palm oil 4.4M —-

Crude oil 7M —-