Download Liberalisation in Services Sector

LIBERALISATION IN
SERVICES SECTOR
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Outline
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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
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Overview of Malaysia’s Services
Industry
• 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 (NonGovernment 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
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the period.
IMP3 Targets
GDP
Contribution (%)
GDP Growth
(% p.a.)
Investments
(billion)
IMP3
Targets
2007
2006
2005
59.7
46.7
45.3
44.6
9.7
7.2
5.4
RM65.4
RM55.5
RM57.7
(Y 2020)
7.5 p.a.
construction:
5.7%)
RM45.8
(p.a.
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Trade Performance of the
Services Sector
Jan-June
2008
(RM bil.)
2007
(RM Bil.)
%
Growth
2006
(RM Bil.)
%
Growth
2005
(RM Bil.)
Total
Trade*
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
Trade
Balance*
1.51
1.4
n.a
(6.5)
n.a
(8.6)
*Based on DOS and covered 3 categories: travel, transport and others.
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Modes 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
undertaken through four modes of supply:
is
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4 Modes of Supply
MODES
Mode 1:
Cross-border
trade
Mode 2:
Consumption
abroad
CRITERIA
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 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.
SUPPLIER
PRESENCE
Service supplier
not physically
present within
the territory of
another Member
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4 Modes of Supply
MODES
Mode 3:
Commercial
presence
CRITERIA
Service delivered by a service
provider of one country through
commercial presence in another
country. E.g. FDIs
Service delivered by a service
personnel of one country who
Mode 4:
travels to another country to
Movement of
provide the service. E.g. services
natural
provided by expatriates, business
persons
and professionals and foreign
workers.
SUPPLIER
PRESENCE
Service supplier
physically
present within
the territory of
another Member
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Liberalisation of Malaysia’s
Services 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.
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Preparation for Liberalisation of
Services 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
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Preparation for Liberalisation of
Services 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
partnerships
access
opportunities
abroad
through
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AFAS
• Signed in 1995
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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) .
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Progress of Services
Liberalisation Under AFAS
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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.
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Equity Targets and Parameters
(Mode 3)
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%
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Services Negotiations in the WTO:
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Covered by the General Agreement on Trade in
Services (GATS) of the WTO.
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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.
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Services negotiations undertaken on “requestoffer” approach, on bilateral and plurilateral
basis.
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Liberalisation of commitments of members are
multilateralised (applicable to all Members)
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Market Access Negotiations
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Developed countries seek ambitious
access commitments and want:
market
- Members
to
bind
existing
autonomous
liberalisation
- foreign equity ownership of at least 51%
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Developing countries want:
- progressive liberalisation of services sectors
- market opening in sectors where they
have export interest
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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.
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Approach to Services
Negotiations 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
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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
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•
A need for all Ministries to prepare a road-map for
liberalisation of services under their respective
purview
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A need for a coordinated approach for the
development of the services sector e.g. through
Malaysia Services Development Council (MSDC)
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To
undertake
stakeholders
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To assist export-ready companies
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To compile comprehensive data on services
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To review of existing rules and regulations
outreach
programmes
to
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THANK YOU
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