Context
Recently Malaysian Prime Minister Dato Seri Anwar bin Ibrahim is scheduled to visit India from August 19-21, marking his first visit as Malaysia’s Prime Minister.
About
- India set up diplomatic relations with the Federation of Malaya (predecessor country of Malaysia) in 1957.
- The two nations had a strong relationship in the 1960s due to the personal friendship between Prime Ministers Nehru and Tunku Abdul Rahman Putra.
- Presently, India and Malaysia have developed close political, financial and socio-cultural relations.
- Malaysia is home to over 2.95 million big Indian diaspora and the second one largest PIO network in the world after the US.
Economic & Commercial Relations
- Malaysia has emerged as the 13th biggest trading partner for India while India figures between 10 biggest trading partners for Malaysia.
- A bilateral Comprehensive Economic Cooperation Agreement (CECA) covering goods, services and investment has come into effect from 2011.
- Major Exports:
- mineral fuels, mineral oils, aluminum and goods thereof, meat and edible meat products, iron and steel, copper and goods thereof, and so on.
- Major Imports:
- palm oil, mineral fuels, mineral oils, electrical equipment and device; animal or vegetable fat and oils, and so on.
- Investments:
- As per legit figures (DPIIT), Malaysia ranks as the 26th largest investor in India with FDI inflow of US$ 1.16 billion during the period April 2000 to September 2022.
- The largest presence of Malaysian innovative businesses outside Malaysia is in India.
- Indian companies have invested in around 250 innovative projects of over US$ 2.62 billion.
- Presently, there are more than 150 Indian organizations, including 61 Indian joint ventures and 3 Indian Public region Undertakings operating in Malaysia.
- Trade agreement in Indian Rupees: Trade between India and Malaysia can now be settled in Indian Rupee (INR) further to the current modes of agreement in different currencies.
Defense and Security
- India-Malaysia security relations have evolved steadily as the signing of a Memorandum of Understanding (MOU) on Defence Cooperation in 1993.
- Both nations participate in each other’s biennial defense exhibitions, LIMA and MILAN.
- Also, India is involved within the Cooperative Mechanism at the Straits of Malacca and Singapore (SOMS), contributing to projects that enhance navigational security and environmental safety.
Challenges and Prospects in India-Malaysia Economic Ties
- The economic relation between India and Malaysia faces challenges that might lead to a gradual down financial growth, along with geopolitical tensions, global demand stagnation, and higher import price lists.
- However, the strong trade ties among the 2 nations are anticipated to persist.
- Despite those challenges, India and Malaysia have formed a strong strategic partnership, with both countries being participants of vital international forums like the Commonwealth of Nations, NAM, G-15, and G-77, which assist their cooperation.
Way Ahead
- There are many opportunities to strengthen bilateral relations in addition.
- Efforts like warding off double taxation, mutual customs assistance, enhancing air connectivity, and collaborations amongst airways can improve trade and tourism.
- Also, factors such as a vibrant diaspora, regular GDP growth, a more youthful populace compared to China, expected increases in Foreign Direct Investment (FDI), and fast digitization are promising for destiny trade.
- The current revival of the India-Malaysia Joint Commission Meeting after 12 years suggests renewed dedication to cooperation.
- The upcoming trade to the Malaysia-India Comprehensive Economic Partnership Agreement (MICECA), on the way to consist of new financial regions, is geared toward reaching a trade quantity of US$25 billion in the subsequent 3 years.
- By exploring new regions, diversifying trade, and fostering useful collaborations, both nations can help India’s aim of becoming the region’s third-biggest financial system by 2027 and enhance ties with ASEAN.
Source: News on AIR