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Malaysia - India Comprehensive Economic Cooperation Agreement (MICECA)

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Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA)

Background

·         Malaysia and India established the Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA) on 24 September 2010. MICECA came into force on 1 July 2011.

 

·        MICECA is a comprehensive agreement that covers trade in goods, trade in services, investments and movement of natural persons. It value-adds to the benefits shared from ASEAN-India Trade in Goods Agreement (AITIG) and will further facilitate and enhance two-way trade, services, investment and economic relations in general.

 

Trade In Goods

Under MICECA, both Malaysia and India will progressively reduce or eliminate tariffs on their respective industrial and agricultural products. Modality for tariff liberalisation for good under MICECA is AITIG plus, with fewer product being exempted from tariff concession (reduction or elimination) and shorter timeframe for reduction or elimination of tariff.


Key features of the tariff liberalisation package under MICECA are:

·         Elimination or reduction of tariff will gradually from the date the Agreement enters into force as of 1 July 2011. The modalities of tariff elimination reduction are as follows:

 

o    Normal Track 1 (NT1): tariffs on all products listed in NT1 will be eliminated by 30 September 2013, i.e., three months in advance of AITIG;

o    Normal Track 2 (NT2): tariffs on all products listed in NT2 will be eliminated by 30 June 2016, i.e., six months in advance of AITIG; and

o    Sensitive Track (ST): tariffs on all products listed in ST will be reduced to 5% by 30 June 2016, i.e., six months in advance of AITIG.

 

·         Malaysia has been granted better concessions for palm oil and palm oil products under MICECA:

o    India will bind tariffs on refined palm oil (RPO) at 45% by 31 December 2018 (one year earlier than India’s committed timeline under AITIG).

o    India will bind tariffs on 3 palm products at 45% by 31 December 2018 (these 3 products were excluded from tariff concessions under AITIG). 

For Exclusion List (EL), India has excluded 1,225 products under MICECA compared with 1,298 under AITIG.  Malaysia has excluded 838 products under MICECA, compared with 898 under AITIG.

Rules of Origin

In order for your product to enjoy the preferential duties, it must fulfil the Rules of Origin (ROO) criteria under MICECA which are:

  • It must be wholly obtained from the country of origin OR
  • It has undergone substantial transformation in term of change of tariff classification in t the subheading at the six digit level of the HS AND
  • Qualifying Value Content of not less than 35% of the FOB value

Investment

  • MICECA provides a framework to further facilitate cross border investments between the two countries through commitments on national treatment as well as protection of investors and investments through expropriation, transfers and subrogation provisions.

Services

  • India has committed to allow Malaysian foreign equity shareholding ranging from 49 to 100% in 84 services sub-sectors, including in professional services, healthcare, telecommunications, retail and environmental services.  In return, Malaysia has made commitments to allow Indian foreign equity shareholding in 91 services sub-sectors. 

 

  • MICECA also contains a dedicated chapter that facilitates the temporary entry of installers and servicers, contractual service suppliers, independent professionals and business visitors (including potential investors) from Malaysia into India, and vice versa.  

Economic Cooperation

  • MICECA also provides for economic cooperation.  Areas of cooperation include: infrastructure development; human resource development (HRD);
    • SMEs;
    • tourism;
    • science and technology;
    • creative industries;
    • finance; and
    • business facilitation

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