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KUALA LUMPUR — India and Malaysia signed a free trade agreement Friday, the second this week for Asia's third-largest economy as it seeks to deepen its economic ties in the region.
The economic partnership agreement came just two days after India sealed a similar pact with Japan, and will pave the way for trade between Malaysia and India to reach $15 billion by 2015.
The deal signed by Indian Commerce Minister Anand Sharma and his Malaysian counterpart Mustapa Mohamed, expands upon a trade pact that came into effect January last year between India and the 10-member Association of Southeast Asian Nations.
Mustapa said in a statement that the Malaysia-India agreement is more extensive — covering services, investments and other areas that were excluded in the regional pact. It will also give better tariff concessions including for Malaysia's palm oil exports, and advance the timetable for reduction or elimination of tariffs, he said.
Under the pact, the two countries will allow up to 100 percent foreign shareholding in more than 80 areas in health care, telecommunications, retail, environmental services and other areas, the Malaysian trade ministry said in a statement.
It will also make it easier for engineers, accountants, technology experts and other professionals from both countries to gain temporary entry for contract work, it said.
Sharma said the agreement will slash tariffs for 90 percent of Indian goods and 92 percent of Malaysian products.
The agreement with Japan will about double trade between India and Japan to $25 billion by 2015, he said. Trade between Malaysia and India is expected to rise from $9 billion to $15 billion by 2015 or earlier.
With Asia emerging as a global economic power, Sharma said India was keen to deepen its economic ties in the region especially with China.
Sharma said a growing trade deficit with China was unhealthy but Chinese Premier Wen Jiabao during his visit to New Delhi in November promised to improve market access for Indian companies especially in pharmaceutical and information technology sectors.
There were also talks to allow exports of some Indian agricultural products but he didn't elaborate.
"We have been given assurances ... we have no reasons to doubt," he told reporters.
"It is projected that in the next 15 to 20 years, of the five major economies of the world, three will be from Asia. Those three will be China, India and Japan so we will have to work together."
He brushed off talks of ongoing competition with China for regional influence, saying "the world is big enough to accommodate the rising aspirations of both China and India."
(This version CORRECTS that India is Asia's third-largest economy.)
