WT/TPR/M/366/Add.1 26 April 2018 (18-2631) Page: 1/154 Trade Policy Review Body 14 and 16 February 2018 Original

WT/TPR/M/366/Add.1

26 April 2018

(18-2631) Page: 1/154

Trade Policy Review Body Original: English/Spanish 14 and 16 February 2018 anglais/espagnol inglés/español

TRADE POLICY REVIEW

MALAYSIA MINUTES OF THE MEETING Addendum Chairperson: H.E. Mr. Juan Carlos González (Colombia)

This document contains the advance written questions and additional questions by WTO Members, and replies provided by Malaysia.1

Organe d'examen des politiques commerciales 14 et 16 février 2018

EXAMEN DES POLITIQUES COMMERCIALES

MALAISIE COMPTE RENDU DE LA RÉUNION Addendum Président: S.E. M. Juan Carlos González (Colombie)

Le présent document contient les questions écrites communiquées à l'avance par les Membres de l'OMC, leurs questions additionnelles, et les réponses fournies par Malaisie.1

Órgano de Examen de las Políticas Comerciales 14 y 16 de febrero de 2018

EXAMEN DE LAS POLÍTICAS COMERCIALES

MALASIA ACTA DE LA REUNIÓN Addendum Presidente: Excmo. Sr. Juan Carlos González (Colombia)

En el presente documento figuran las preguntas presentadas anticipadamente por escrito y las preguntas adicionales de los Miembros de la OMC, así como las respuestas facilitadas por Malasia.1

1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.

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CHILE ...... 3 MÉXICO ...... 6 FOLLOW-UP QUESTIONS FROM MEXICO...... 9 BRUNEI DARUSSALAM ...... 10 THE EUROPEAN UNION ...... 11 FOLLOW-UP QUESTIONS FROM THE EUROPEAN UNION ...... 30 ECUADOR ...... 40 UKRAINE ...... 44 THE UNITED STATES ...... 58 FOLLOW-UP QUESTIONS FROM THE UNITED STATES ...... 67 NEW ZEALAND ...... 68 CHINESE TAIPEI ...... 72 SINGAPORE ...... 80 AUSTRALIA ...... 85 OMAN ...... 92 HONG KONG, CHINA ...... 93 SWITZERLAND ...... 97 FOLLOW-UP QUESTIONS FROM SWITZERLAND ...... 102 NORWAY ...... 103 COSTA RICA ...... 104 COLOMBIA ...... 105 ARGENTINA ...... 108 BRAZIL ...... 110 THAILAND ...... 116 ADDITIONAL QUESTIONS FROM THAILAND (I) ...... 120 ADDITIONAL QUESTION FROM THAILAND (II) ...... 122 INDONESIA ...... 123 FOLLOW-UP QUESTIONS FROM INDONESIA ...... 127 INDIA ...... 132 JAPAN ...... 134 KINGDOM OF SAUDI ARABIA ...... 138 CANADA ...... 142 REPUBLIC OF KOREA ...... 146 CHINA ...... 147 FOLLOW-UP QUESTIONS FROM CHINA ...... 154

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CHILE

1.3 Developments in Trade and Investment 1.3.1 Trends and patterns in merchandise and services trade Paragraph 1.29, p. 18-19 “As an extremely open and diverse economy that is well integrated into regional and global value chains, Malaysia is dependent on trade. Trade in goods and services, as a proportion of GDP, was nearly 130% in 2016. After peaking at over RM 113 billion in 2014, the trade in goods surplus declined to RM 101 billion in 2016. The decline was due to weak global demand and the fall in global commodity prices. On the other hand, the services deficit doubled during the review period mainly on the back of increased usage of foreign professional services.” Question: Paragraph 1.29 indicates that the services declined during the review period mainly on the back of increased usage of foreign professional services. In relation to this, Chile kindly asks Malaysia to further explain the reasons observed for this preference in the usage of foreign professional services, and if any measure has been undertaken by the government in order to correct this problem.

Answer: Malaysia has autonomously liberalized the services sector in 2009 and 2012 in order to enhance domestic competitiveness and promote FDIs. Professional services sub-sectors that have been liberalized include architectural, engineering, quantity surveying and accounting. Malaysia welcomes foreign professionals in these sectors to complement our local talents. The involvement of foreign professionals, particularly in technical and engineering services were mainly in investment-related and major construction activities. With FDI, MNCs tend to second their managers and technical executives in Malaysia to ensure business efficiency and to increase capacity building of local professionals through technology and knowledge transfer. The use of foreign professionals in construction sector is concentrated to highly specialised operations which local expertise is currently lacking.

At the same time, the Government will also continue to build local capacity to ensure sufficient supply of quality professionals. 2.3 Trade Agreements and Arrangements 2.3.1 WTO Paragraph 2.27, p. 27: “Malaysia has submitted notifications to the WTO in a number of areas (Table 2.2). However, as at May 2017, notifications were outstanding in the areas of: agriculture (domestic support); quantitative restrictions; and customs valuation. It has not yet notified its MFN tariffs for 2016, nor has it submitted import data for 2015. It has not notified "any new, or any changes to existing laws, regulations or administrative guidelines which significantly affect trade in services", which it is obliged to notify under Article III:3 of the GATS.” Question: Paragraph 2.27 indicates that Malaysia has not made any notification pursuant to Article III:3 of the GATS. In relation to this, Chile would be thankful if Malaysia could inform of any news, or changes to existing laws, regulations or administrative guidelines, that significantly affects trade in services.

Answer: Malaysia is committed to fulfill its obligations under all WTO agreements and will continue to take measures to meet notification obligations. The Government had liberalised the services sector in 2009 by removing or reducing restrictions on foreign equity participation in 27 sub-sectors. These include health and social services, tourism services, transport services, business services and computer and related services. In 2012, Malaysia had further liberalised 18 sub-sectors comprising telecommunications, healthcare, professional services, environmental services, distribution trade services, education services and courier services.

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In 2015, the Services Sector Blueprint and the Logistics and Trade Facilitation Masterplan were launched. The Services Sector Blueprint outlines three strategic shifts to a more knowledge- intensive and innovation-led sector, an accelerated integrated sectoral governance reform and expedite internationalisation of products and services. The Logistics and Trade Facilitation Masterplan with a total of 21 action plans, focuses on improving the productivity and competitiveness of the logistics industry. Further information on Malaysia’s initiatives in the services sector is accessible at http://www.miti.gov.my/index.php/pages/view/4218?mid=566.

Regarding the section 3.3.2 “Standards and other technical requirements” (pages 62-64), Chile would be thankful if Malaysia could reply to the following points: - Does Malaysia conduct regulatory impact assessments of its technical regulations and conformity assessment procedures? In the case of an affirmative answer, those regulatory impact assessments are performed in a centralized manner, or is a responsibility of each regulatory agency?

Answer: In Malaysia, the Regulatory Impact Assessments (RIA) is conducted in a centralized manner. Each regulatory agency is required to notify Malaysia Productivity Corporation (MPC) prior to any development of new/revised regulations/conformity assessment procedures. This is based on the National Policy on the Development and Implementation of Regulations (NPDIR), which was launched on 15 July 2015 by the Chief Secretary to the Government of Malaysia. MPC will determine the necessity of RIA for each regulation. Should RIA be required, the regulatory agency needs to submit the result of RIA to MPC for verification before gazetting it. Further information is accessible at:  http://www.mpc.gov.my/good-regulatory-practice-grp/;  http://grp.mpc.gov.my.

- Does Malaysia publish – online - all its technical regulations and conformity assessment procedures? If that is not the case, is it possible to find that information online on Malaysia´s regulatory agencies websites?

Answer: All Acts and regulations are accessible online:  http://www.federalgazette.agc.gov.my/;  http://www.agc.gov.my/agcportal/index.php?r=portal2/lom&menu_id=b21XYmExVUhFO E4wempZdE1vNUVKdz09.

It is also possible to find the details of the relevant conformity assessment procedures on the relevant regulatory agency’s website. - Does Malaysia develop an internal coordination mechanism with its regulatory agencies?

Answer: MPC acts as the coordinator to integrate RIA into rule making process. For more information, visit http://grp.mpc.gov.my.

- Regarding this topic of “Standards and other technical requirements”, does Malaysia develop a coordination with the private sector?

Answer: Department of Standards Malaysia as the coordinating body for standards related issues in Malaysia undertakes coordination with the private sector through various platforms in 2 stages: i. Standards development stage; and ii. Technical regulations development stage.

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4.3.2 Financial services Paragraph 4.103, p. 110: “All banking licences are granted by the Minister of Finance, based upon recommendations made by the BNM. As already mentioned, licences granted to all banks are subject to prudential and best interest of Malaysia criteria. All banking institutions must be locally incorporated in Malaysia. The requirement also applies to Islamic banks, with the exception of international Islamic banks (which may be established either as a locally incorporated company or a branch). Locally incorporated foreign-owned commercial banks are allowed to establish up to eight branches and ten microfinance branches.” Question: Paragraph 4.103 states that licences granted to all banks are subject to prudential and best interest of Malaysia criteria. In relation to this, Chile would be thankful if Malaysia would further explain in detail the criteria of “Prudential and best interest of Malaysia”, and what specific elements are taken into account.

Answer: The criteria and prudential requirements for licensing are published. Please refer to Section 11 and Schedule 5 of the Financial Services Act (FSA) and Islamic Financial Services Act (IFSA) at: http://www.bnm.gov.my/index.php?ch=59&pg=160&ac=221&bb=file and http://www.bnm.gov.my/index.php?ch=59&pg=160&ac=222&bb=file. Based on the FSA and IFSA, prudential requirements shall take into consideration: a. the character and integrity of the applicant or, if the applicant is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good governance and integrity;

b. the business of the person to be authorised is not detrimental to the interests of its future depositors, policy owners, participants, users or the public generally;

c. the soundness and feasibility of the plans of the applicant for the future conduct and development of the business of the person to be authorised;

d. the nature and sufficiency of the financial resources of the applicant as a source of continuing financial support for the person to be authorised;

e. the business record and experience of the applicant; and

f. the person to be authorised will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of the person to be authorised.

Whether the application will be in the best interest of Malaysia (BIOM), assessments will be made having regard to: a. the effect of the investment on the level and nature of economic activity in Malaysia, including the effect on productivity, efficiency and quality of financial services;

b. the contribution towards enhancing international trade and investment linkages between Malaysia and other countries;

c. the effect of the investment on the stability of the financial system, including on conduct and behaviours that could pose a risk to the financial system; and

d. the degree and significance of participation of Malaysians in the financial sector.

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MÉXICO

PARTE I: PREGUNTAS EN RELACIÓN CON EL INFORME DE LA SECRETARÍA DE LA OMC (WT/TPR/S/366) 2 REGÍMENES DE COMERCIO E INVERSIÓN; 2.3 Acuerdos y arreglos comerciales; 2.3.1 OMC: Página 29, (con relación al párrafo 2.27) Malasia ha presentado notificaciones a la OMC en varias esferas (cuadro 2.2). Sin embargo, en mayo de 2017, tenía notificaciones pendientes en las siguientes esferas: agricultura (ayuda interna); restricciones cuantitativas; y valoración en aduana. Todavía no ha notificado sus aranceles NMF para 2016, ni tampoco ha presentado los datos de importación correspondientes a 2015. Además no ha notificado "nuevas leyes, reglamentos o directrices administrativas que afecten significativamente al comercio de servicios", como es su obligación en virtud del párrafo 3 del artículo III del AGCS. Pregunta 1: 1. El Informe de la Secretaría de la OMC menciona el estado que guardan las notificaciones de Malasia a mayo de 2017. ¿Podría Malasia proporcionar una actualización sobre el estado que guardan sus notificaciones a enero o febrero de 2018?

Answer: Malaysia has been more consistent in submitting notifications and will continue to update outstanding notifications. Updates on notifications are as follows:  submitted the notification on MFN tariffs for 2016 and 2017 in April 2017;  submitted import data for 2015 and 2016 in August 2017. However, Malaysia will resubmit the data by the first half 2018 after rectifying the error as notified by the Secretariat; and  submitted notification on customs valuation on 18 January 2018. On services, Malaysia has undertaken various reforms exercises which include autonomous liberalization of 27 and 18 sub-sectors in 2009 and 2012 respectively. In 2015, Malaysia has also launched:  Services Sector Blueprint to enhance the potential of services sector and transform it to become more knowledge intensive and innovation-led; and  Logistics and Trade Facilitation Masterplan to improve the productivity and competitiveness of the logistics industry. Malaysia will submit notifications on improvements made in the services sector progressively.

3 POLÍTICAS Y PRÁCTICAS COMERCIALES, POR MEDIDAS; 3.2 Medidas que afectan directamente a las exportaciones; 3.2.4 Apoyo y promoción de las exportaciones; 3.2.4.1 Apoyo a la exportación: Página 58 (con relación al párrafo 3.57) Malasia ha brindado apoyo a los exportadores en forma de exención del impuesto sobre la renta imponible, sobre la base del valor del incremento de las exportaciones:  Las empresas manufactureras o las que se dedican a la producción de frutas frescas y secas, flores frescas y secas, plantas ornamentales y peces ornamentales han gozado de una exención fiscal sobre la renta imponible equivalente al 10% del valor del incremento de las exportaciones.  Las empresas manufactureras tenían derecho a una exención del impuesto sobre la renta imponible equivalente al 10% o al 15% del valor del incremento de las exportaciones, siempre que las mercancías exportadas tuvieran por lo menos un 30% o un 50% de valor añadido, respectivamente.  Las empresas manufactureras de propiedad nacional, con un capital social malasio del 60% como mínimo, podían optar a una exención del impuesto sobre su renta imponible equivalente al 30% del valor del incremento de sus exportaciones, siempre que se lograra

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un aumento significativo de dichas exportaciones; esta tasa se elevaba al 50% cuando la empresa lograba penetrar en mercados nuevos, y la exención era total si lograba el mayor aumento de las exportaciones en su categoría.  Se otorgaba una exención sobre el 70% del impuesto sobre la renta imponible equivalente al 50% del valor del incremento de las exportaciones a las empresas de determinados sectores de servicios, a saber, servicios jurídicos, contabilidad, arquitectura, comercialización, asesoramiento de empresas, gestión de obras, gestión de edificios, servicios de oficina, atención de salud, enseñanza, plantación, gestión, servicios editoriales, tecnología de la información y las comunicaciones, ingeniería, imprenta y franquicias locales. Pregunta 2: 2. ¿De qué manera considera Malasia que sus medidas de exenciones fiscales en función al incremento de de sus exportaciones de mercancías son compatibles con el Acuerdo sobre Subvenciones y Medidas Compensatorias?

Answer: The measures are part of the initiatives to encourage manufacturing companies incorporated in Malaysia including SMEs to move up the value chain, adding greater value to the products and be more active in international trade. Malaysia is committed to fulfill its obligations under all WTO Agreements, including the Agreement on Subsidies and Countervailing Measures (ASCM).

PARTE II: PREGUNTAS EN RELACIÓN CON EL INFORME DEL GOBIERNO DE MALASIA (WT/TPR/G/366) 2 DESARROLLO ECONÓMICO; 2.1 Panorama general; Política de salarios mínimos. Página 7 del Informe de Malasia (con relación al párrafo 2.30) Para lograr sus objetivos, la política se complementa con medidas de mejora de la productividad, como la formación de trabajadores con competencias avanzadas, la mejora de la calidad de la enseñanza y la facilitación de la inversión en automatización y tecnologías avanzadas. Pregunta 3: 3. ¿Podría Malasia dar detalles sobre sus medidas para mejorar la calidad de la enseñanza y facilitar la inversión en la automatización y tecnologías avanzadas?

Answer: Malaysia is currently developing a comprehensive work plan to address the overall issues of technical and vocational education and training (TVET) to generate skilled workforce that meets the demand and supply of the industry. The outline of the TVET Masterplan include: i. streamlining the facilities/ equipment among existing TVET institutions; ii. reviewing and strengthening the curriculum and programs that meet the demands/ needs of the industry; iii. re-skilling / up-skilling existing TVET instructors to be competent and up to date with the current technology; and iv. incorporating current economic and technology landscape, including the Fourth Industrial Revolution.

3 EVOLUCIÓN DE LA POLÍTICA COMERCIAL; 3.2 Iniciativas para facilitar el comercio; Plan de Productividad de Malasia: Página 9 del Informe de Malasia (con relación al párrafo 3.9, inciso iii) En el marco del Plan, se han identificado seis prioridades inmediatas clave para acelerar el aumento de la productividad. Esas seis prioridades inmediatas son las siguientes: […] iii. reforzar la digitalización de las pymes mediante el comercio electrónico y la adopción de tecnologías innovadoras; Pregunta 4: 4. Cuál es la posición de Malasia en las discusiones de Comercio Electrónico que se llevan a cabo en la OMC?

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Answer: Malaysia is supportive of the discussion on Electronic Commerce that is taking place at the WTO. Electronic Commerce is one of the focus areas for Malaysia. It is imperative to advance electronic commerce work in the WTO to enhance the benefits of electronic commerce for businesses and consumers internationally. As a co-sponsor of the paper on e-commerce and development, Malaysia is of the view that the WTO should be the platform for Members to deliberate and discuss e-commerce. Areas that can be looked at include trade facilitation and e-commerce, infrastructure gaps to enable e-commerce, access to payment solutions and online security.

6 OTRAS POLÍTICAS INTERNAS; 6.5 El comercio electrónico y la economía digital en Malasia: Página 35 del Informe de Malasia (con relación al párrafo 6.13) El objetivo del programa de comercio electrónico en Malasia es doble: i) preparar a las empresas para el futuro, lo que incluye incorporar aproximadamente al 80% de las pymes al mundo del comercio electrónico y garantizar su capacidad para mantenerse al día en un mercado en línea destinado a crecer mucho más rápido que las ventas en los mercados físicos; y ii) ampliar el acceso al mercado más allá de los 16 millones de clientes digitales que existen en Malasia para competir por los más de 87 millones de clientes digitales de la región de la ASEAN y, en última instancia, los 1.000 millones de clientes digitales de todo el mundo. Teniendo esto presente, en la hoja de ruta estratégica sobre el comercio electrónico se describe la actuación del Gobierno, basada en unas infraestructuras asequibles y de calidad y un marco de gestión propicio, en seis ejes principales. Estos seis ejes son los siguientes: acelerar el uso del comercio electrónico por los vendedores; aumentar la contratación en línea por las empresas; eliminar los obstáculos no arancelarios, por ejemplo en el ámbito de la prestación de servicios integrales de venta a través del comercio electrónico, el comercio transfronterizo, los pagos electrónicos y la protección del consumidor; reestructurar los incentivos económicos existentes; hacer inversiones estratégicas en determinados agentes de comercio electrónico; y promover la marca nacional para impulsar el comercio electrónico transfronterizo. En el corto plazo, se ha otorgado prioridad a un total de 13 programas en los seis ejes descritos con objeto de generar resultados importantes en el sector. La aplicación de estos programas corre a cargo de 10 Ministerios y organismos públicos, y su supervisión es responsabilidad del Consejo Nacional de Comercio Electrónico. Pregunta 5: Malasia menciona que en la hoja de ruta estratégica sobre el comercio electrónico se describe la actuación del Gobierno en seis ejes principales. Uno de esos ejes consiste en hacer inversiones estratégicas en determinados agentes de comercio electrónico. ¿De qué manera se asegura Malasia de no discriminar a los agentes de comercio electrónico al momento de hacer inversiones estratégicas?

Answer: In order to increase national e-commerce adoption and increase the multiplier benefits to the country, strategic investments need to be made in selected eCommerce player(s), especially in those operating in key parts of the value chain for e-commerce. Nevertheless, at this juncture, the Government of Malaysia does not make any direct investment in e-commerce players. Malaysia adopts a non-discriminatory approach in implementing this objective. Investment promotion authorities in Malaysia will continue to engage and attract potential investments in e- commerce.

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FOLLOW-UP QUESTIONS FROM MEXICO

PARTE I: PREGUNTAS EN RELACIÓN CON EL INFORME DE LA SECRETARÍA 3. POLÍTICAS Y PRÁCTICAS COMERCIALES, POR MEDIDAS; 3.2 Medidas que afectan directamente a las exportaciones; 3.2.4 Apoyo y promoción de las exportaciones; 3.2.4.1 Apoyo a la exportación: Página 58 (párrafo 3.57) 3.57. Malasia ha brindado apoyo a los exportadores en forma de exención del impuesto sobre la renta imponible, sobre la base del valor del incremento de las exportaciones: a. Las empresas manufactureras o las que se dedican a la producción de frutas frescas y secas, flores frescas y secas, plantas ornamentales y peces ornamentales han gozado de una exención fiscal sobre la renta imponible equivalente al 10% del valor del incremento de las exportaciones.

b. Las empresas manufactureras tenían derecho a una exención del impuesto sobre la renta imponible equivalente al 10% o al 15% del valor del incremento de las exportaciones, siempre que las mercancías exportadas tuvieran por lo menos un 30% o un 50% de valor añadido, respectivamente.

c. Las empresas manufactureras de propiedad nacional, con un capital social malasio del 60% como mínimo, podían optar a una exención del impuesto sobre su renta imponible equivalente al 30% del valor del incremento de sus exportaciones, siempre que se lograra un aumento significativo de dichas exportaciones; esta tasa se elevaba al 50% cuando la empresa lograba penetrar en mercados nuevos, y la exención era total si lograba el mayor aumento de las exportaciones en su categoría.

d. Se otorgaba una exención sobre el 70% del impuesto sobre la renta imponible equivalente al 50% del valor del incremento de las exportaciones a las empresas de determinados sectores de servicios, a saber, servicios jurídicos, contabilidad, arquitectura, comercialización, asesoramiento de empresas, gestión de obras, gestión de edificios, servicios de oficina, atención de salud, enseñanza, plantación, gestión, servicios editoriales, tecnología de la información y las comunicaciones, ingeniería, imprenta y franquicias locales.

Preguntas 6 y 7: 6. ¿Podría Malasia indicar el periodo de vigencia de las exenciones mencionadas en los incisos a, b, c y d?

Answer: Information on the period of validity of the exemptions mentioned in subparagraphs a, b, c and d can be accessed at https://incentives.mida.gov.my/Incentives/Modules/Public/IncentiveList.aspx. The company can only claim on the year of assessment where the company fulfills all the criteria.

7. Según se indica en el párrafo 3.57, las exenciones que se indican en los incisos a, b, c y d se otorgan en porcentajes del valor del incremento de las exportaciones, ¿podría Malasia aclarar cuál es la base de referencia con la que se determina dicho incremento? (p. ej. el año anterior, semestre anterior).

Answer: The baseline for determining the increased value is the export sales of the company for the preceding year.

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BRUNEI DARUSSALAM

Referring to Secretariat Report Para 2.23. In May 2015, Malaysia became the fifth Member to ratify the Trade Facilitation Agreement; before that, in July 2014, it notified the Preparatory Committee that Malaysia had designated all provisions under Category A, except Article 7.8 (Expedited Shipments) and Article 11.9 (Advance filing and processing of transit documentation and data prior to the arrival of goods). Brunei seeks further information as to whether Malaysia would be notifying the remaining Article 7.8 and Article 11.9 in the first quarter of 2018?

Answer: WTO Secretariat has published Malaysia’s commitment for Category B on 24 November 2017.

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THE EUROPEAN UNION

Secretariat Report SUMMARY Sectoral Policy Developments Page 10, paragraph 22 The paragraph states that up to 100% foreign equity participation is now allowed for wholesale and retail trade. 1. Are there plans to revise the Distributive Trade Guidelines to allow hypermarket operators access to other markets segments?

Answer: Yes, a review would be carried out periodically to assess the needs and demands of the retail industry.

2 TRADE AND INVESTMENT REGIMES 2.3 Trade Agreements and Arrangements Page 27, paragraph 2.27 Reference is made to Malaysia's outstanding notifications. 2. Could Malaysia please indicate when it foresees to make these outstanding notifications?

Answer: Malaysia has been more consistent in submitting notifications and will continue to update outstanding notifications. To-date, notifications have been submitted on:  MFN tariffs for 2016 and 2017 in April 2017;  import data for 2015 and 2016 in August 2017. However, Malaysia will resubmit the data by the first half 2018 after rectifying the error as notified by the Secretariat; and  customs valuation on 18 January 2018. On services, Malaysia has undertaken various reforms which include autonomous liberalization of 27 and 18 sub-sectors in 2009 and 2012 respectively. In 2015, Malaysia has also launched:  Services Sector Blueprint to enhance the potential of services sector and transform it to become more knowledge intensive and innovation-led; and  Logistics and Trade Facilitation Masterplan to improve the productivity and competitiveness of the logistics industry.

Malaysia will submit notifications on improvements made in the services sector progressively. Page 30, paragraph 2.35 Following the US withdrawal from TPP, the remaining 11 TPP members reached an agreement in November 2017 to revive the TPP as the CPTPP (Comprehensive and Progressive Transpacific Partnership Agreement) which basically retains almost all TPP provisions with some exceptions. 3. Could Malaysia please provide more details on CPTPP, its contents and exceptions, and the next steps to be taken?

Answer: Following the Trans-Pacific Partnership (TPP) Ministerial Statement at Da Nang, Viet Nam on 10 November 2017, Chief Negotiators of the 11 Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) member countries met in Tokyo from 22-23 January 2018. The Tokyo meeting had achieved a breakthrough in which all member countries have come to an agreement on these four country-specific issues as follows: i. State-owned enterprises; ii. Market access for the coal industry;

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- 12 - iii. Trade sanctions related to dispute settlement; and iv. Exceptions to cultural industries. The CPTPP member countries have also agreed to suspend 22 provisions. The suspension would mean that these provisions will not be implemented for the time being, until all CPTPP member countries agreed to uplift this suspension. The CPTPP is targeted to be signed on 8 March 2018 in Chile. An outline of the CPTPP and list of suspended provisions are available on MITI’s website at: http://fta.miti.gov.my/index.php/pages/view/71?mid=40.

2.4 Investment Regime 2.4.1 Overview Page 34, paragraph 2.49 According to the World Economic Forum's Global Competitiveness Report, the most problematic factors involved in doing business in Malaysia include access to financing, corruption and inefficient government bureaucracy. 4. Which further steps does Malaysia envisage taking in order to improve the existing investment framework, in particular to strengthen the stability of the business environment and make the government bureaucracy more efficient?

Answer: In advancing global competitiveness, Malaysia maintains a progressive and predictable investment regime. Malaysia has taken proactive measures to facilitate high quality investments. Investment policy measures are continuously being reviewed in order to promote investments that will transform Malaysia into a high income economy by 2020. The Malaysian Investment Development Authority (MIDA) as a one-stop center for investments provides comprehensive assistance to investors. PEMUDAH or the Special Task Force to Facilitate Business was formed in 2007 to improve the public service delivery to the business community and further enhance Malaysia’s competitiveness. The Working Group on Efficiency, consisting of members from the public and private sectors, was initiated by PEMUDAH to look at issues related to efficiency in doing business in Malaysia.

2.4.2 Foreign Investment Regime Page 36, paragraph 2.61 According to the report, Malaysia continued to reduce foreign investment restrictions during the review period. 5. Could Malaysia please clarify if and where a complete compilation of information related to equity caps and other restrictions is available on a sector-by-sector basis?

Answer: The services sectors in Malaysia are under the purview of various ministries/agencies. The information is available at the respective ministries/agencies’ website. Further information on Malaysia’s initiatives in the services sector, can be accessed at: http://www.miti.gov.my/index.php/pages/view/4218?mid=566.

Page 36, paragraph 2.62 According to the report, "For projects of strategic and national importance, foreign ownership is required to be widespread to ensure that no single foreign party has a dominant influence on the company." 6. How is "strategic and national importance" defined?

Answer: The general criteria in determining "projects of strategic and national importance" are:  national security and sovereignty consideration; and

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 contribution towards the socio-economic and industrial development.

Page 36, paragraph 2.63 The paragraph lists three types of measures supporting the ethnic Malay community (Bumiputera) that may affect FDI. The EU notes that some Bumiputera measures are missing in this description. According to MIDA (http://www.mida.gov.my/home/41/pages/), for instance, Public Bonded Warehouse companies must have at least 30% Bumiputera equity. Some other bumiputera requirements are mentioned throughout this report although in a scattered form. 7. Could Malaysia provide a comprehensive list of bumiputera requirements affecting Foreign Direct Investment? This information should not only cover the federal government but also state and local governments to the extent that they can enact bumiputera regulations which concern foreign direct investment.

Answer: Presently, there is no comprehensive list of Bumiputera requirements affecting FDIs. The Bumiputera policy is designed to enhance the participation of Bumiputera in economic activities. Malaysia encourages joint-ventures between Malaysian and foreign investors. Since June 2003, foreign investors could hold 100% of the equity in all investments in new projects in the manufacturing sector, as well as investments in expansion/diversification projects by existing companies, irrespective of the level of exports and without excluding any product or activity.

8. What are the conditions for investors to obtain approval from the Economic Planning Unit for acquisitions of properties valued at RM 20 million or more?

Answer: Approval has to be sought if there is dilution to the ownership of property/change of control of the company owned by Bumiputera interest and/or Government agency. The acquisition must comply with 30% equity Bumiputera shareholding and RM250,000 paid-up capital.

9. What is the threshold as of which companies are qualified to have predominant Malay-based operations?

Answer: There is no “Malay-based operation” term in Malaysia. Companies with Malaysian-based operations are those that derive more than 50% of their profits after tax from operations based in Malaysia. Further information can be found in the Bumiputera Equity Requirements FAQs, accessible at https://www.sc.com.my/bumiputera-equity-requirements-for-public-listed-companies/. Reference can also be made to Rule 1.01, Part A, Chapter 1 of Bursa Main Market Listing Requirement, accessible at: http://customer.bursamalaysia.com:8080/MainLR/Pages/MainChapter1.aspx. The threshold as of which companies are qualified to have predominant Bumiputera-based operations is stated in 1PP Circular - LB 1.1 - Kriteria Pemberian Taraf "Bumiputera Controlled Public Listed Companies" which can be accessed at http://1pp.treasury.gov.my/.

10. Is there any amendment envisaged in the coming future on those measures?

Answer: No amendments on these measures are foreseen in the coming future.

3 TRADE POLICIES AND PRACTICES BY MEASURE 3.1 Measures Directly Affecting Imports 3.1.1 Customs procedures, valuation, and requirements

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Page 39, paragraph 3.7 Up until now, and despite the high tariffs and taxation to imported alcoholic beverages, the process of registering new alcoholic labels by importers has worked without notable incidents. In the last six months, however, delays and barriers to the registration of new labels in the Customs department have arisen. Smuggling of alcoholic beverages has decreased due to the mandatory registration of new labels at the Customs department before imports are allowed. At the same time, getting the new label to be registered and approved by the Customs department has not been without important delays. 11. Is the Government of Malaysia planning to review the procedure of mandatory registration for new alcoholic labels in order to facilitate new labels into the market?

Answer: The current procedure will be maintained. However, approval for importation of new labels as well as renewal of import licences is now centralized at RMCD headquarters for standardization instead of state offices, hence reducing the delays. This will also facilitate the new labels into the market.

3.1.2 Rules of Origin Page 39, paragraph 3.10 12. Does Malaysia collect data on trade origins?

Answer: Import declarations include information on country of origin.

3.1.3 Tariffs 3.1.3.1 Applied MFN tariff Page 41,Paragraph 3.16 and chart 3.3 : The total amount of duties and taxes that Malaysia imposes on imported spirits is one of the highest in the Asian region. In Malaysia, the import tariff alone, for a 75 cl bottle of brandy or whisky, costing 43.50 MYR (at a rate of €1 to 4.40 MYR) is equivalent to nearly 10 EUR, compared to zero in Singapore, Japan, Taiwan, US, and the EU. Rates are a combination of unitary and specific rates. 13. Does Malaysia plan to reduce the high tariffs on spirits and liqueurs (HS Code 22.08), ideally by applying a simple and non-discriminatory alcohol-content based rate?

Answer: There is no plan to reduce import duties and excise duties on spirits and liqueurs. However, effective 1 March 2016, the excise duties structure on alcoholic beverages has been simplified from a combination of specific and ad-valorem rates to specific rates only. The previous 15 different rates have been streamlined to 5 rates. The current structure of excise duties on alcoholic beverages is as per Excise Duties Order 2017 (Chapter 22).

3.1.5 Import prohibitions, restrictions and licensing Page 44, paragraph 3.26 The paragraph sets out how the "approved permits" (AP) system continues under the National Automotive Policy (NAP). 14. Could Malaysia please provide a more detailed explanation on the mechanics of this AP system, specifically how AP permits are allocated to operators and how the amount of AP permits are calculated each year?

Answer: Issuance of AP permits for the importation of foreign-built or assembled motor vehicles are based on company`s request and importation plan.

15. Could Malaysia please also indicate whether it considers suppressing these APs in the future?

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Answer: This AP system continues to be used for monitoring and data collection purposes.

3.1.5.2 Import licensing 3.1.5.2.2 Third schedule Page 46, paragraph 3.31 and page 47, paragraph 3.36 Under regulations 18 of the Customs Regulations 1977, importers of alcoholic beverages require to apply for an import license, which is subject to annual renewal. In the application including renewal, details such as the quantity and value to be imported, brands, name of suppliers, value and quantity of local sales, movement of duty unpaid goods and tax paid the previous year, have to be provided. In addition, monthly detailed returns are required to be submitted to Customs in the prescribed format to include information such as value & quantity of imports, CIF value of the products, value & quantity of local sales, movement of duty unpaid goods, balance of stock, and details on purchase and usage of tax stamps. During 2017, the approval process for licensing (including approvals to add new brands to the license) became more stringent. While the intention is to tackle smuggling of alcoholic beverages, this process is disruptive to businesses of legitimate and established importers, and might in fact cause an increase in smuggling. 16. Presently, all documentations required for the annual application and the monthly returns need to be submitted in hard copies. With a view to improving administrative efficiency, when will Customs streamline the documentations required and implement an online system for the submissions of applications and the required documentation?

Answer: The development of an online system is currently in progress and is expected to be implemented in 2019.

17. Will Customs consider extending the validity of the import license to at least 2 years (instead of annual renewal) for established importers who are affiliate companies of brand owners?

Answer: There is no plan to increase the validity period.

18. Could Malaysia please provide information on the effectiveness of its current tax stamp system for alcoholic drinks? Would it consider exempting reputable traders from the stamping requirement provided that the manufacturers can demonstrate they have robust traceability systems in place?

Answer: Currently, tax stamps on alcoholic beverages provide the best visual identification tool for customs officers to distinguish between duty paid and duty unpaid products. At present, there is no plan to revise the system.

3.1.5.2.3 Fourth schedule 19. If imported products conform to international standards, would the Government of Malaysia or the Construction Industry Development Board (CIDB) accept a certificate of approval or a letter of exemption to be issued to the Malaysian importer without going through testing by SIRIM?

Answer: CIDB accepts Product Certification (PC)/test reports for materials if it meets the standard prescribed under Schedule 4 of the CIDB Act.

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3.2 Measures Directly Affecting Exports 3.2.2 Taxes, charges and levies Page 52, paragraphs 3.48-3.50 Malaysia still levies export duties on a considerable number of tariff lines. 20. What are Malaysia's plans to eliminate / phase out export duties?

Answer: At present, Malaysia has no plans to eliminate/phase out its export duties. This is to ensure adequate supply of raw materials.

3.2.4 Export support and promotion 3.2.4.1 Export support Page 54, paragraph 3.57 Income tax exemptions are available to exporters based on the value of increased exports. 21. Could Malaysia please indicate the annual foregone tax income resulting from this scheme as well as the value of exports benefiting from it?

Answer: Malaysia does not compile such data. Section 138 of the Income Tax Act 1967 does not allow such information to be made public.

3.2.5 Export finance, insurance and guarantees Page 56, paragraph 3.65 This paragraph briefly explains the operation of the Export-Import Bank of Malaysia Berhad (MEXIM). 22. What is the preferential rate applied by MEXIM in comparison of conventional rates applied by commercial banks?

Answer: There is no preferential rate applied by MEXIM. The rates are equivalent to those applied by Commercial Banks.

3.3 Measures Affecting Production and Trade 3.3.1 Taxation and incentives 3.3.1.1 Tax structure 3.3.1.1.1 Indirect taxes Page 58, paragraphs 3.74-3.76 This paragraph details the amount of excise taxes applied to motor vehicles, alcoholic beverages and cigarettes. Paragraph 3.75 states that these excise taxes apply equally to foreign and domestic products. 23. As regards vehicles, could Malaysia please provide a detailed explanation of the tax scheme that gives manufacturers of cars and parts rebates on their excise and import taxes? In particular, could Malaysia please confirm the existence of such rebates and provide the name of the different schemes (e.g. industry linkage programme), together with a description of each scheme and a link to information relating to the scheme. Could Malaysia please describe the criteria and the formula used to define the level of the rebate? Could Malaysia confirm the amount of local content as one of the criteria? Could Malaysia also indicate whether special rules apply to third countries, e.g. through Free Trade Agreements?

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24. Paragraph 3.76 states that taxi owners, car rental operators and tour operators are exempt from the excise tax if they purchase locally made cars. As this exemption seems to be in contradiction with paragraph 3.75, could Malaysia please explain why foreign built cars do not benefit from it?

Answer: Malaysia is undertaking a review on this policy.

25. Concerning alcoholic beverages, we would also need detailed explanation of the excise taxes currently applied to the different alcoholic beverages and the base and rationale for setting the specific rates for the different products.

Answer: There are no standard rates or excise duties structure for all types of alcoholic beverages. The current structure of excise duties on alcoholic beverages is as per Excise Duties Order 2017.

26. Does Malaysia intend to complete the reform process commenced in 2016 and equalise the rates of excise taxes for all types of alcoholic beverage/intoxicating liquor on an RM per 100% volume per litre basis, and, if so, when?

Answer: Effective 1 March 2016, excise duties on alcoholic beverages in Malaysia have been restructured from a combination of specific and ad-valorem rates to specific rates only. The previous 15 different rates have been streamlined to only 5 rates. The current structure of excise duties on alcoholic beverages is as per Excise Duties Order 2017. The restructuring of excise duties on alcoholic beverages took into consideration the historical rates imposed, type or class of the alcohol beverage, alcohol content and consumption pattern. The excise duties currently applied on alcoholic beverages in Malaysia is an alcohol-content based rate. Currently, there is no plan to equalise the rates of excise taxes for all type of alcoholic beverages on a single rate. Malaysia reserves the right to reform the excise duty structure on alcoholic beverages in the future.

3.3.1.2 Tax incentives 3.3.1.2.1 Main incentives Page 59, paragraphs 3.82 This paragraph describes two tax incentive schemes (pioneer status and investment tax allowance). 27. Do these two schemes apply to Malaysian and foreign-owned companies equally? Could Malaysia please provide more detailed information regarding the process for applying for incentives and the process for the awarding of incentives?

Answer: Yes, the schemes apply to both Malaysian and foreign-owned companies. Details of the applications and the process can be accessed at http://www.mida.gov.my/home/forms-&-guidelines/posts/.

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3.3.1.2.2 More favourable incentives Page 60, paragraph 3.85-3.86 These paragraphs describe more favourable incentives schemes. 28. Do these schemes apply to Malaysian and foreign-owned companies equally? Could Malaysia please provide more detailed information regarding the process for applying for incentives and the process for the awarding of incentives?

Answer: Yes, the schemes apply to both Malaysian and foreign-owned companies. Details of the applications and the process can be accessed at http://www.mida.gov.my/home/forms-&-guidelines/posts/.

3.3.1.2.3 Incentives on indirect taxes Page 61, paragraph 3.88 This paragraph explains that import tariff exemptions may be considered for raw materials. 29. Could Malaysia please provide the conditions under which such exemption is granted, as well as the list of products benefitting from this exemption?

Answer: Full exemption of import duty on raw materials for the purpose of manufacture of finished products is considered based on the following factors:  Manufacturing process that involves value-added activity;  Imported raw materials are fundamental and are used directly in manufacturing process; and  Imported raw materials are not produced locally.

30. Could Malaysia please indicate whether the exemption is applied regardless of the origin of the raw material, and whether foreign-owned companies operating in Malaysia can also benefit from this exemption?

Answer: The aforementioned exemption disregards the origin of the raw materials and local/foreign ownership status of the companies operating in Malaysia.

Page 63, paragraph 3.102 It is stated that all meat products sold in Malaysia (except for pork), whether imported or local, must be halal certified. 31. How does Malaysia intend to ensure that manufacturers seeking halal certification can choose among sufficient certification bodies providing competitive services in their territory, so that cost and delay related to the required inspections and certifications do not impede trade?

Answer: Manufacturers can seek halal certifications from 67 foreign halal certification bodies from 41 countries recognized by Malaysia. The list of recognized foreign halal certification bodies and authorities can be accessed at www.halal.gov.my.

32. Is there any agreement in place which allows Malaysia to recognize the halal standards and the certificates of ASEAN countries? Are there any plans for Malaysia to recognize halal standards and certificates of other countries?

Answer: Presently, Malaysia is a member of the ASEAN Working Group on Halal Food (AWGHF). The Working Group is involved in the process of harmonizing the standards among all ASEAN countries.

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33. Does Malaysia plan to rely on standards being developed by the Standards and Metrology Institute for the Islamic Countries (SMIIC)?

Answer: Malaysia is involved directly in the development of SMIIC standards. The SMIIC standards incorporate seven (7) Malaysian Standards as its foundation.

Page 64, paragraph 3.107 The CIDB recently introduced additional markings for steel wire rod, which are not in accordance with international marking requirements, but only apply in Malaysia. 34. Could Malaysia please confirm whether this requirement is already in place?

Answer: The marking requirement is implemented effective 1 December 2015 in accordance with Malaysian Standard MS 146:2014.

3.3.3 Sanitary and phytosanitary requirements Page 65, paragraph 3.111 In the SPS Committee, the EU raised concerns about Malaysia's restrictions on beef imports from the EU due to BSE concerns under STC N°193 in October 2016, March 2017 and July 2017 respectively. 35. Could Malaysia please explain why the import of beef from OIE controlled risk status countries is not allowed, in apparent contradiction with OIE standards?

Answer: Malaysia is a BSE-free country. Import of beef is allowed from Negligible BSE risk country. Malaysia’s surveillance and monitoring system which have been developed and executed as prevention measures of BSE, is based on OIE standards. Page 65, paragraph 3.112 The EU applies strict control measures in the affected zones when an outbreak of avian influenza is applied. These measures are in line with the relevant standards of the OIE. This allows that safe trade can continue to take place from these affected EU countries. In full transparency, trading partners are informed on the EU regionalisation measures undertaken. However, upon notification of an outbreak of avian influenza and of the zoning measures undertaken, Malaysia applies immediately a country-wide ban on imports of poultry and its products instead of recognising the regionalisation measures put in place.

36. Could Malaysia please explain its procedure (in detail – including indicative timelines per step in the procedure) that it applies to rapidly recognise regionalisation measures applied by EU Member States for outbreaks due to avian influenza with a view to ensure that Malaysian measures imposed are not more trade-restrictive than required and thus to avoid that a country-wide ban is imposed?

Answer: In a case of avian influenza outbreak notified to OIE, Department of Veterinary Services (DVS) Malaysia will temporarily suspend importation from affected countries. Importation will resume in accordance with Article 10.4.3 and 10.4.19 of the OIE Terrestrial Animal Health Code 2016. At present, Malaysia has recognized regionalization in United Kingdom, France and Germany. For recognition of regionalization measures, DVS Malaysia requires more information from the countries, including information on risk assessment.

3.3.4 Competition policy and price controls 3.3.4.1 Competition policy 3.3.4.1.1 Legal framework Page 66, paragraph 3.117

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Malaysia is the only country in ASEAN with a competition law that does not provide for merger and acquisition control. 37. What are the reasons for not broadening the Competition Act to include merger control?

Answer: Malaysia’s Competition Act focuses on anti-competitive activities and abuse of dominance. However, Malaysia will be conducting a study on the merger and acquisition control in the future.

3.3.5 State trading, government-linked enterprises and privatization 3.3.5.3 Privatization Page 69, paragraph 3.137 This paragraph explains the conditions under which the privatization programme has been carried out. These include a minimum 30% of bumiputera equity and a maximum of 25% of foreign equity (which may be increased up to 49%). 38. Could Malaysia please explain the rationale for limiting the participation of foreign companies in the privatization programme?

Answer: The rationale are as follows: i. to encourage participation of local companies; ii. sufficient players (contractors and developers) in the local market with vast experience and capabilities to construct facilities through Public-Private Partnership (PPP); and iii. sufficient support from Local Banks to finance PPP projects.

39. Could Malaysia please indicate the number of companies that have been privatised to date?

Answer: The history of privatisation in Malaysia can be traced back to 1983 when the Government first launched its Privatisation Policy during which framework for closer cooperation between the public and the private sectors were embarked. In 2006, the Government decided to streamline privatisation by adopting new approaches such as the private finance initiative (PFI) model and mechanisms to enhance the efficacy of the privatisation programme. In the Malaysian context, PPP generally include Privatisation and Private Finance Initiatives (PFI). Throughout this 30-year journey, Malaysia has successfully implemented over 800 projects across the country in various sectors ranging from infrastructure development to health, education and security sectors.

Page 72, paragraph 3.156 This paragraph deals with procurement done by Government Linked Companies (GLCs). 40. What is the volume of procurement carried out by GLCs?

Answer: The procurement activities of GLCs are not controlled by the government and it is conducted based on commercial decision in the best interest of the company.

3.3.6 Government procurement Page 69, paragraph 3.140 and page 72, paragraph 3.155 Foreign companies face discrimination and serious obstacles when trying to access Malaysia's public procurement market. They are not allowed to tender in important sectors such as civil engineering and infrastructure development. Public procurement in Malaysia is characterised by its lack of transparency, preference for local companies and the lack of international best industry practices and procedures by independent observers. Malaysia is only an observer to the Government Procurement Agreement, unlike many similar advanced and upper-middle income Asian economies that are party to the agreement.

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41. Does the Government of Malaysia intend to publicize the procedures and conditions of government procurement in Malaysia?

Answer: The Financial Procedure Act 1957 (Revised 1972) remains Malaysia's main legal instrument for financial matters including government procurement. The Treasury Instructions provide details on the financial and accounting procedures. Treasury Instructions can be accessed at http://www.treasury.gov.my/index.php/en/ministrys-profile/publication.html. The government procurement procedures and conditions are detailed out in 1Treasury Circulars (1Pekeliling Perbendaharaan - 1PP), accessible at http://1pp.treasury.gov.my/.

42. Does Malaysia consider aligning the conditions presently applied to foreign companies to those applied to Malaysian companies?

Answer: Foreign companies may participate in local tenders, provided they incorporate a local company in Malaysia. International tenders are only invited if goods and services cannot be procured locally.

43. Does the Government of Malaysia intend to become a full party to the Agreement on Government Procurement (GPA) like other similar Asian economies?

Answer: As an observer to WTO GPA, Malaysia continues to gain insights through the discussion and deliberation of the Committee meetings particularly in understanding GPA regimes aligned to the WTO Agreement. Malaysia will assess its readiness to join the WTO GPA in consultation with stakeholders including the obligations that need to be fulfilled as a party.

44. Could Malaysia please provide information about the rules and practices it has convened with third countries in the framework of cooperation initiatives, such as with China, ASEAN, ASEM, in relation to public procurement?

Answer: In terms of government procurement, Malaysia has no specific framework of cooperation currently. Currently, foreign companies may participate in local tenders, provided they incorporate a local company in Malaysia and also fulfill the registration as well as tender requirements. International tenders are only invited if goods and services cannot be procured locally.

45. Direct as opposed to open tenders appear to be favoured for government projects. Further clarification of procurement regulations would be welcome. Does Malaysia have any plans to improve the transparency of procurement in the public sector, including Government Linked Companies?

Answer: All foreign companies that are locally incorporated will be accorded equal treatment regardless of their economy of origin. Several initiatives have been put in place to improve the government procurement system and enhance transparency in the processes. For example, the new ePerolehan system for applications and procurement of supplies and services are undertaken online. Procurement policies of GLCs are approved by the Boards. Most of the procurement are commercially driven and based on best practices.

3.3.7 Intellectual Property Rights 3.3.7.1 Overview Page 74, paragraph 3.166

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This paragraph details the functions of MyIPO as the main Malaysian organisation regulating intellectual property rights. Throughout section 3.3.7 (Intellectual Property Rights), there is no mention of the recently reformed Malaysian system for collective rights management (CRM). 46. Could Malaysia please provide a thorough description of this reform, its rationale and its intended objectives?

Answer: The rationale is to provide a good establishment system of Collecting Management Organisation (CMO) in lieu of its management, operation, and protection of right holders through representation of one stop single body representing all categories of right holders in various creative sectors. Among the intended objectives are to centralize the royalty collection and distribution system, a good record management of CMO constituents’ documents, effective compliance by CMO through certain provisions, and establishing means for right holders to seek remedy from court/tribunal as result of mismanagement by CMO.

Page 74, paragraph 3.169 This paragraph lists the current laws pertaining to IP in Malaysia. 47. Does Malaysia plan to reform some of these laws in the coming years? If so, could Malaysia please provide details about the envisaged reforms?

Answer: Malaysia plans to amend the Copyright Act 1987, Geographical Indications Act 2000, Trade Marks Act 1976 and Patents Act 1983 to be in line with the current international practices and to accede to international treaties such as the Madrid Protocol, Budapest Treaty, Marrakesh Treaty and Protocol to amend the TRIPS Agreement.

Page 75, paragraph 3.173 This paragraph describes incentives granted to domestic companies to acquire industrial property rights. 48. Are these incentives available to foreign-owned companies?

Answer: The incentive is for 70% Malaysian-owned acquirer.

Page 76, paragraph 3.176 Footnote 58 states that "GIs are protected regardless of whether or not they are registered". 49. Could Malaysia clarify what non-registered GIs in that context mean (i.e. foreign GIs, etc.)?

Answer: Non-registered GIs are goods that fulfill the requirement of GIs as provided in the Geographical Indications Act 2000 but are not registered according to the procedure provided by the Act and not recorded in the Register of GIs. Non-registered GIs must have valid protection and recognized as a GI in the country of origin.

Page 76, paragraph 3.178 The report states that "For a new drug product containing a new chemical entity, the period of test data protection is calculated from the date the product is first registered or granted marketing authorization and data exclusivity/test data protection in the country of origin, or in any country recognized and deemed appropriate by the Director of Pharmaceutical Services." 50. Could Malaysia please provide further details on the requisites for the protection of regulatory test data and provide additional information as to the possibility to extend the term of protection to compensate for administrative delays in the granting of marketing authorisations in Malaysia?

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Answer: Details of the requisites for the protection of test data are available in the Directive on Data Exclusivity (DE). Malaysia provides DE protection for 5 years and 3 years for second indication for small molecules only. The Patents Act 1983 does not provide for extension of patent term protection to compensate for administrative delays in granting marketing authorizations. For DE protection application, an innovator company has to apply for registration of pharmaceuticals within 18 months to encourage pharmaceutical companies to market their new drugs early to Malaysia. The protection starts from the date the product is registered in the country of origin. There is no requirement to extend the term of protection as the process registration of products is efficient. The timeline i.e. 245 days is comparable to other countries’ timeline.

Page 74, paragraph 3.169 and page 77, paragraph 3.180 The following EU questions relate to copyright protection: 51. Could Malaysia please provide further details on the main priorities of its envisaged Copyright reform, including as regards a possible extension of the term of protection for authors?

Answer: Presently, Malaysia is not reviewing the extension of the copyright term of protection.

52. In relation with Copyright and related rights, as regards collective rights management, could Malaysia please provide information on the latest developments in Malaysia as regards the organisation, governance, transparency, as well as the collection and distribution of royalties by collecting societies?

Answer: Effective 1st January 2017, Malaysia has declared Music Rights Malaysia Berhad (MRM) to be the official body for collection of royalty in music category representing authors, producers of sound recording and performers. It is to be noted that the establishment of MRM is to centralize the collection of royalty system and provide a good management of right holders under one umbrella. In terms of Transparency, Accountability and Good Governance, the new establishment of one stop collection centre is mainly meant to facilitate user to seek clearance or permission for exploitation of music. In lieu of CMO, it provides a good representation of right holders in enforcing their rights to maximize economic rights, reducing unnecessary cost, proper distribution of royalties to right holders and participating in annual general meetings.

53. Could Malaysia please confirm that its Copyright law is in line with Article 15 of the WIPO Performances and Phonograms Treaty (WPPT) in terms of providing for remuneration rights for both performers and producers? It appears that producers of phonograms would have exclusive rights regarding the public performance right; could Malaysia explain how the exclusive right of producers is articulated with the remuneration right of performers?

Answer: According to Section 16B of Copyright Act 1987, performers have the right to claim the remuneration rights from the producer of sound recording whenever the sound recording is published for commercial purposes. Currently, in line with the establishment of Music Rights Malaysia Berhad, the remuneration rights of the performers and producer of sound recording is payable to both of them. In line with this new practice, Malaysia has proposed to make a new amendment to Section 26B Copyright Act 1987 to give remuneration rights to both performers and producers of sound recording. The following EU question relates to “decoded” alcohol products. Increasingly, there has been an increase in the number of “decoded” alcohol products being imported into Malaysia. The decoding of alcohol refers to the deliberate tampering, damage or removal of traceability information (i.e. lot or batch codes) from legitimate products.

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54. Would Malaysia consider passing legislation to prohibit the trade, distribution and sale of products whose traceability information have been altered, removed and/or destroyed?

Answer: Price Control (Labelling by Manufacturers, Importers, Producers or Wholesalers) Order 1980 is to provide essential particulars on pre-packed goods which allow traceability of the source of the goods. For example, the name and address of the manufacturer, importer, producer or wholesaler must be affixed to such goods, or its wrapper, bag or container. In the case of traceability information or description which has been altered, such as the address and name of the manufacturer, enforcement action can be taken under the Trade Descriptions Act 2011.

3.3.7.2 Enforcement Page 77, paragraph 3.181 Reference is made to the ex officio duty to detain or suspend the release of goods that are deemed to be infringing IPRs on copyrights and trademarks. Further, reference is made to the World Health Organization's (WHO) estimates that consumption of unrecorded alcohol is three times higher than recorded alcohol consumption in Malaysia. According to the WHO, the volume of the unrecorded market has trebled since 2005. Regrettably, the unrecorded market comprises 77% of Malaysia’s total alcohol consumption. 55. Could Malaysia please provide details on the ex officio protection in case of national and foreign GIs?

Answer: The Geographical Indications Act 2000 does not provide for ex officio duty to detain or suspend the release of goods that are deemed to be infringing IPRs on geographical indication.

56. Could Malaysia please provide more information about its plans to tackle the problem of unrecorded alcohol consumption? Can Malaysia provide enforcement statistics of inspections, seizures, prosecutions and convictions of counterfeit alcohol?

Answer: Measures include: 1. strengthening enforcement at the purchase point; 2. prohibition of selling alcohol to those below 21 years old (effective 1 December 2017); and 3. promoting healthy lifestyle including through campaigns and implementing Malaysia’s Alcohol Action Plan 2013-2020.

Based on the latest available data, there were 1,601 cases of seized counterfeit alcohol worth RM34.84 million in 2016. Page 77, paragraph 3.182 The paragraph states that no cases have been brought to the Copyright Tribunal since the last TPR. 57. In the opinion of Malaysia, what could be the reasons that no cases have been brought to the Copyright Tribunal in these last three years?

Answer: The Government is not involved in civil disputes between disputing parties. Most cases were not brought to the attention of Copyright Tribunal because it may have been settled amicably between the disputing parties.

Page 77, paragraph 3.183 Reference is made to the MDTCC's efforts to combat the distribution of counterfeit goods. 58. Can Malaysia please provide further details on specific measures introduced to increase IPR border enforcement?

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Answer: Malaysia continuously enhances collaborative efforts among its border enforcement agencies such as MDTCC, Malaysian Armed Forces, Malaysian Maritime Enforcement Agency, Marine Police and Malaysia Border Control Agency to monitor the smuggling activities into the country. Programs on identification of counterfeit goods and the modus operandi of counterfeit activities are conducted regularly for border agencies.

4 TRADE POLICIES BY SECTOR 4.1 Agriculture, Forestry, and Fisheries 4.1.1 Agriculture Page 89, paragraph 4.42 Malaysia has reserved the right to use the special agricultural safeguard for 71 tariff lines but the SSG has never been invoked. 59. Does Malaysia intend to eliminate some of the products on the special agriculture safeguard list in the near future?

Answer: At present, Malaysia has no plans to eliminate products which are subjected to the special agricultural safeguard (SSG).

4.1.2 Fisheries 4.1.2.3 Policy Page 95, paragraph 4.56 Reference is made to the incentives that should be given to fishers' associations to assist their members in buying deep-sea vessels. 60. What are the incentives (conditions to be fulfilled, total amount of the scheme, number of vessels having received such a grant) granted to fishers' associations to acquire deep-sea ships?

Answer: Presently, the Malaysian Government does not provide incentives to fishers’ associations to assist their members in acquiring deep-sea vessels.

4.3 Services 4.3.1 General Page 107, paragraph 4.94 This paragraph summarises Malaysia's autonomous liberalisation of services sectors since 2012. 61. Is Malaysia intending to liberalise further the telecommunications, transport and financial sector?

Answer: Malaysia is committed to develop and improve the telecommunications sector specifically on the infrastructure and regulations. This is reflected in Malaysia’s announcement in 2012 to liberalise further the telecommunications sector. For the maritime transport sector, international transportation services for passenger and cargo allows for maximum 51% foreign equity participation. This is based on bilateral agreements signed.

62. Is Malaysia aiming to allow more foreign banks and financial institutions to operate in Malaysia?

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- 26 - in banks and insurance companies. All applications for new licenses and acquisition of interest in shares in financial institutions are now assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM), based on Schedule 5 and Schedule 6 of the FSA and IFSA. The BIOM considerations are similar to foreign investment practices that we have observed in other member countries. Laws governing banks in other member countries also allow the authority to consider the best interests of the financial system in assessing an application to incorporate a new bank.

63. Are there any plans to allow a foreign company going to own 100% equity in the retail sector?

Answer: Reviews would be carried out periodically to assess the needs and demands of the retail industry.

64. How does the Malaysian government intend to safeguard foreign investment in Malaysia?

Answer: The Malaysian Government has been a preferred host for investments due to the safeguards offered under various bilateral and regional free trade agreements. Apart from FTAs, Malaysia is one of the top signatories of Investment Guarantee Agreements (IGAs) in the region, having signed 74 IGAs including 2 regional IGAs with ASEAN and OIC. In general, the IGAs aim to promote a conducive environment for investments. For Malaysia, IGA is used to attract foreign investments into the country and safeguard the interests of direct investment of Malaysians overseas, through the elements of protection, promotion and investment facilitation. This works in reciprocity, as IGA is a protection treaty which typically provides reciprocal assurances to contracting Parties as to the treatment of investments within their borders.

65. Does the GoM intend to recognise the authorized certification and standard bodies overseas?

Answer: The Government of Malaysia recognises the authorized certification and standard bodies overseas in the areas of engineering, architecture, accountancy and taxation. At the national level, we also have the accreditation boards such as the Malaysian National ASEAN Qualifications Reference Framework Committee (MyAQRF) which was established in 2016. It is a common reference framework that enables comparison of education qualifications across participating ASEAN Member States (AMS).

4.3.2 Financial services Page 114, paragraph 4.115 This paragraph deals with the Financial Sector blueprint 2011-2020. 66. What are the conditions and requirements for foreign banks to enter the Malaysian market?

Answer: Under the Financial Services Act (FSA) 2013 and Islamic Financial Services Act (IFSA) 2013, all applications for new licenses and acquisitions of interest in shares in financial institutions are assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM) based on Schedule 5 and Schedule 6 of the FSA and IFSA. Pursuant to the FSA and IFSA, a licensed foreign bank is, among others, required to: a. be a public company incorporated in Malaysia;

b. maintain a minimum amount of capital funds; and

c. pay annual license fees.

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Page 115, paragraph 4.124 This subparagraph states that an insurance company must obtain a licence from the Ministry of Finance which is granted upon recommendation from the Bank Negara. 67. What are the conditions and requirements for granting such licences?

Answer: Under the Financial Services Act (FSA) 2013 and Islamic Financial Services Act (IFSA) 2013, all applications for new licenses and acquisitions of interest in shares in financial institutions are assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM) based on Schedule 5 and Schedule 6 of the FSA and IFSA. Pursuant to the FSA and IFSA, a licensed insurer/ takaful operator is, among others, required to: a. be a public company incorporated in Malaysia; b. maintain a minimum amount of capital funds; and c. pay annual license fees.

4.3.4 Transport 4.3.4.1 Air transport Page 124, paragraph 4.161 This subparagraph lists the airlines in Malaysia with air service licences, including the flag carrier Malaysian airlines (MAS). 68. With respect to this airline, could Malaysia provide information on the restructuring MAS underwent in 2015?

Answer: Information on the 12-point MAS Recovery Plan can be accessed at: http://www.khazanah.com.my/khazanah/files/3b/3bef7c12-8eaa-41d1-88c0-ea517eb4deb4.pdf.

4.3.4.2 Maritime transport Page 128, paragraph 4.181 This subparagraph states that Joint Ventures Corporations in port activities are subject to foreign equity caps and minimum bumiputera shareholding requirements. 69. Could Malaysia give some more details about such requirements?

Answer: All the federal ports have been privatized. Accordingly, all operations and services offered are subject to the Privatization Act 1990 and the Port Concession Agreement between the Government and the port operator.

4.3.5 Tourism Page 130, paragraph 4.189 Table 4.41 details fiscal incentives for hotels and tourism projects. 70. Are these incentives available to foreign-owned companies?

Answer: Incentives are available to eligible Malaysian and foreign investors/ foreign-owned companies. Government Report

3 Trade Policy Developments 3.2 Initiatives to Facilitate Trade Page 9, paragraph 3.11 This paragraph describes the ongoing efforts to diminish licencing requirements.

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71. Which other products are expected to see their import licence requirement abolished in the future?

Answer: Malaysia will continue to review the import licensing requirements to facilitate trade and industry while taking into account the national socio-economic, safety and health interests.

4 Challenges and Opportunities of External Environment 4.5 EU's Resolution on Palm Oil and Deforestation of Rainforest Page 21-22, paragraphs 4.12-4.14 Reference is made to the non-legislative Resolution adopted by the European Parliament in April 2017 and to Malaysia's initiatives on the sustainability of palm oil production. It is noted that the Resolution referred to in the Government's report is a document by the European Parliament. Accordingly, the position it puts forward should be attributed to the European Parliament and not to the European Union. 72. Could Malaysia please provide further information on recent developments with regard to the implementation of the Malaysian Sustainable Palm Oil scheme, notably in view of the 2019 target for its mandatory use by domestic palm oil producers and processors?

Answer: As of 2017, a total of 518,793.96 hectares of oil palm planted areas and 50 palm oil mills (accounting for 2,899 metric tonnes/hr) have been certified under the MSPO Certification Scheme. Seven certification bodies (CBs) have been accredited by Department of Standards (DSM) under the ACB-MSPO Accreditation Scheme, while another six CBs have already submitted full application and are in various stages of the assessment by DSM. Malaysia is committed to sustainable management of palm oil and will undertake mandatory MSPO certification by December 2019.

5 Sectoral Policies 5.3 Services Sector Page 26, paragraph 5.23 This paragraph describes measures taken by Bank Negara. 73. Could Malaysia please confirm whether these measures are temporary? If yes, when does Bank Negara foresee reviewing them?

Answer: The measures are part of a series of market development initiatives by the FMC. The aspiration is to have a highly developed, liquid and deep foreign exchange (FX) market in Malaysia that commensurate with the growth of the economy and the increasingly sophisticated needs of investors and businesses. These are achieved by promoting a deeper, more transparent and well- functioning onshore FX market where genuine investors and market participants can effectively manage their market risks with greater flexibility to hedge on the onshore market. Certainly, a deep and liquid onshore FX market will enable investors to better manage against volatile currency movements. In addition, the FMC measures represented a balanced approach to foster the above objectives and addressing the impact from external spillovers arising from other markets that had caused instability and disorder to the Malaysian financial market. The market failure and unfettered and opaque NDF were tolerated to the detriment of financial market stability across markets. The implementation of the measures has yielded clear positive outcomes. Liquidity in the onshore FX market has improved significantly, enabling a better facilitation of FX needs of the market. Bid- ask spread has narrowed, which contributed to reduced transaction costs for market participants. These initiatives will remain as an important strategy towards meeting the objectives of further developing and enhancing the domestic financial markets.

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6 Other Domestic Policies 6.5 E-Commerce and Digital Economy in Malaysia Page 31-32, paragraph 6.12-6.17 Reference is made to Malaysia's efforts to boost e-commerce under the National eCommerce Strategic Roadmap. 74. Could Malaysia please describe any measures it intends to take to foster consumer protection as part of its overall strategy on e-commerce and digital economy?

Answer: In order to boost consumer trust and confidence in digital economy and e-commerce, Malaysia has taken various consumer protection measures. These include: a. Consumer Protection Act 1999 which provides for the protection of consumers, and applies in respect of all goods and services that are offered or supplied to one or more consumers in trade including any trade transaction conducted through electronic means.

b. Consumer Protection (Electronic Trade Transactions) Regulations 2012 which prescribes the important information that must be displayed on the website by the online sellers.

c. Tribunal for Consumer Claims which provides an alternative forum for consumers to file claims in a simple, inexpensive and speedy manner.

d. Malaysia Trustmark as a means of validating the legality of an organization that is involved in e-commerce with the objective to ensure a safer e-commerce in Malaysia, for Malaysians to enjoy the convenience of online shopping and services.

The Ministry of Domestic Trade, Co-operatives and Consumerism has also conducted nationwide eConsumer and eSeller advocacy programmes aimed at enhancing consumer awareness and encouraging ethical online behavior among sellers.

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FOLLOW-UP QUESTIONS FROM THE EUROPEAN UNION

Secretariat Report SUMMARY Sectoral Policy Developments Page 10, paragraph 22 The paragraph states that up to 100% foreign equity participation is now allowed for wholesale and retail trade. EU Question 1: Are there plans to revise the Distributive Trade Guidelines to allow hypermarket operators access to other markets segments?

Answer: Yes, a review would be carried out periodically to assess the needs and demands of the retail industry.

EU Follow-up question: When would the first review take place, and what would be the subsequent intervals?

Answer: The review will be conducted based on the development and dynamics of the retail industry.

2 TRADE AND INVESTMENT REGIMES 2.3 Trade Agreements and Arrangements Page 27, paragraph 2.27 Reference is made to Malaysia's outstanding notifications. EU Question 2: Could Malaysia please indicate when it foresees to make these outstanding notifications?

On services, Malaysia has undertaken various reforms which include autonomous liberalization of 27 and 18 sub-sectors in 2009 and 2012 respectively. In 2015, Malaysia has also launched:  Services Sector Blueprint to enhance the potential of services sector and transform it to become more knowledge intensive and innovation-led; and  Logistics and Trade Facilitation Masterplan to improve the productivity and competitiveness of the logistics industry.

Malaysia will submit notifications on improvements made in the services sector progressively.

EU Follow-up question: Could Malaysia please indicate a timeline for the submission of missing notifications?

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Answer: Malaysia will be submitting the outstanding notifications in due course after consultations with relevant stakeholders.

2.4 Investment Regime 2.4.2 Foreign Investment Regime Page 36, paragraph 2.61 According to the report, Malaysia continued to reduce foreign investment restrictions during the review period. EU Question 5: Could Malaysia please clarify if and where a complete compilation of information related to equity caps and other restrictions is available on a sector-by-sector basis?

EU Follow-up questions:  As accessing the information on the website has proven difficult, could Malaysia kindly provide a compilation?

Answer: A compilation of information related to equity caps and other foreign investment restrictions can be accessed at http://www.miti.gov.my/index.php/pages/view/4218?mid=566; and www.mida.gov.my.

 Could Malaysia please indicate how an investor can find out which ministry/agency is competent for the service sector of his interest?

Answer: MIDA is an agency under MITI that assists companies intending to invest in the manufacturing and services sectors, as well as facilitates the implementation of their projects. Further details can be accessed at www.mida.gov.my.

Page 36, paragraph 2.62 According to the report, "For projects of strategic and national importance, foreign ownership is required to be widespread to ensure that no single foreign party has a dominant influence on the company." EU Question 6: How is "strategic and national importance" defined?

Answer: The general criteria in determining "projects of strategic and national importance" are:  national security and sovereignty consideration; and  contribution towards the socio-economic and industrial development.

EU Follow-up question: At least the second definition seems very broad. Could Malaysia please provide a more precise definition or an example?

Answer: Examples of such projects are transportation infrastructure development, and special economic corridors to create and spur economic activities for the benefit of the people.

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Page 36, paragraph 2.63 The paragraph lists three types of measures supporting the ethnic Malay community (Bumiputera) that may affect FDI. The EU notes that some Bumiputera measures are missing in this description. According to MIDA (http://www.mida.gov.my/home/41/pages/), for instance, Public Bonded Warehouse companies must have at least 30% Bumiputera equity. Some other bumiputera requirements are mentioned throughout this report although in a scattered form. EU Question 9: What is the threshold as of which companies are qualified to have predominant Malay-based operations?

Answer: There is no “Malay-based operation” term in Malaysia. Companies with Malaysian-based operations are those that derive more than 50% of their profits after tax from operations based in Malaysia. Further information can be found in the Bumiputera Equity Requirements FAQs, accessible at: https://www.sc.com.my/bumiputera-equity- requirements-for-public-listed-companies/. Reference can also be made to Rule 1.01, Part A, Chapter 1 of Bursa Main Market Listing Requirement, accessible at: http://customer.bursamalaysia.com:8080/MainLR/Pages/MainChapter1.aspx. The threshold as of which companies are qualified to have predominant Bumiputera-based operations is stated in 1PP Circular - LB 1.1 - Kriteria Pemberian Taraf "Bumiputera Controlled Public Listed Companies" which can be accessed at http://1pp.treasury.gov.my/.

EU Follow-up question: What is the threshold as of which companies are qualified to have predominant Bumiputera-based operations?

Answer: The threshold as of which companies are qualified to have predominant Bumiputera-based operations is stated in 1PP Circular - LB 1.1 - Kriteria Pemberian Taraf "Bumiputera Controlled Public Listed Companies" which can be accessed at: http://1pp.treasury.gov.my/.

3 TRADE POLICIES AND PRACTICES BY MEASURE 3.1 Measures Directly Affecting Imports 3.1.2 Rules of Origin Page 39, paragraph 3.10 EU Question 12: Does Malaysia collect data on trade origins?

Answer: Import declarations include information on country of origin.

EU Follow-up question: Does Malaysia store and analyse the country of origin information of the import declarations?

Answer: For imports, country of origin is compiled and disseminated. The relevant data and publications can be accessed at https://www.dosm.gov.my/v1/.

3.1.5 Import prohibitions, restrictions and licensing Page 44, paragraph 3.26 The paragraph sets out how the "approved permits" (AP) system continues under the National Automotive Policy (NAP). EU Question 14: Could Malaysia please provide a more detailed explanation on the mechanics of this AP system, specifically how AP permits are allocated to operators and how the amount of AP permits are calculated each year?

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Answer: Issuance of AP permits for the importation of foreign-built or assembled motor vehicles are based on company`s request and importation plan.

EU Follow-up questions: Could Malaysia please elaborate about the numbers of APs requested and allocated:  What is the exact amount of APs issued to an applying company? Can a company get all APs it requests?

Answer: The amount is considered based on the company’s request and importation plan.

 Could Malaysia please provide more details about the importation plan? Is it a plan of the applying company or a government document? If it pertains to Malaysia as a whole, how are quotas calculated?

Answer: The importation plan is from the applying company.

EU Question 15: Could Malaysia please also indicate whether it considers suppressing these APs in the future?

Answer: This AP system continues to be used for monitoring and data collection purposes.

EU Follow-up questions:  Does this mean that there is no limit to the number of APs granted?

Answer: The amount is considered based on the company’s request and importation plan.

 Could Malaysia consider a system that would serve the same purpose but be less cumbersome?

Answer: At this stage, the system will continue to be used.

3.1.6 Anti-dumping, countervailing, and safeguard measures Page 50, paragraph 3.45 In April 2017, Malaysia imposed Definitive Safeguard measures for 3 years on two products, namely 1) Steel wire rods and deformed bars in coils; 2) Steel concrete reinforcing bars. In the first case, the share in total imports of imports into Malaysia from only two countries (China and South-Korea) rose from 73% in 2013 to 85% in 2015. The share of all the other imports cumulated (including the EU) declined from 27% to 15% over the same period. In the second case, the share of Malaysian imports from China in total imports rose from 67% in 2013 to 94% in 2015. The share of all other imports (cumulated; including the EU) declined from 33% to 6% over the same period. The above data is directly derived from the two petitions that underpinned the imposition of the above Safeguard measures.

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EU Question: Could Malaysia please explain why it chose the safeguard instrument, which equally affects all importers of the product concerned, including those which are not responsible for the problems identified by the petitioners, rather than the more targeted anti-dumping instrument?

Answer: The Investigating Authority (IA) satisfies that the impositions of the Safeguard Measures were in line with the requirements stipulated under the WTO Safeguards Agreement, Safeguards Act 2006, and its Regulations. The evidence shows that there are surge in imports, serious injury, and the causal link between imports and the serious injury that merit for safeguard investigations.

3.3 Measures Affecting Production and Trade 3.3.1 Taxation and incentives 3.3.1.1 Tax structure 3.3.1.1.1 Indirect taxes Page 58, paragraphs 3.74-3.76 This paragraph details the amount of excise taxes applied to motor vehicles, alcoholic beverages and cigarettes. Paragraph 3.75 states that these excise taxes apply equally to foreign and domestic products. EU Question 23: As regards vehicles, could Malaysia please provide a detailed explanation of the tax scheme that gives manufacturers of cars and parts rebates on their excise and import taxes? In particular, could Malaysia please confirm the existence of such rebates and provide the name of the different schemes (e.g. industry linkage programme), together with a description of each scheme and a link to information relating to the scheme. Could Malaysia please describe the criteria and the formula used to define the level of the rebate? Could Malaysia confirm the amount of local content as one of the criteria? Could Malaysia also indicate whether special rules apply to third countries, e.g. through Free Trade Agreements?

Answer: Both the Industrial Linkage Programme (ILP) and Multi Sourcing Parts Programme (MSP) are given to all motor vehicle and motorcycle manufacturers/ assemblers incorporated in Malaysia. ILP was created as a mechanism to adjust and maintain the competitiveness of Malaysia’s automotive industry, in light of the liberalisation exercises undertaken by Malaysia. It encourages manufacturers/ assemblers to increase their value-added activities to obtain reduction in the value of excise duty to be paid. MSP is a type of incentive given to manufacturers/assemblers which imports parts/components of Completely Knocked Down (CKD) kit from more than one source/country. It provides flexibility for OEMs/assemblers to enjoy same import duty rate as the CKD kit for the importation of components from another source/country. No special rules are applicable to third countries.

EU Follow-up questions:  Could Malaysia please indicate a website with further information on the ILP and MSP programmes and state their legal basis?

Answer: There are no publicly available details on ILP and MSP.

 Regarding the ILP, how is the reduction of excise duty calculated and what are the applicable rules? Is it correct to conclude that the excise duties on a vehicle the value of which was partially created in Malaysia would be less than the excise duties on a similar vehicle imported from a third country?

Answer: ILP encourages manufacturers/ assemblers to increase their value-added activities to obtain reduction in the value of excise duty to be paid.

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 Could Malaysia please provide further details on the operation of the MSP?

Answer: The applications are processed by MIDA and will be deliberated and endorsed by a committee in MITI. The Committee will then provide recommendation to the Ministry of Finance.

EU Question 24: Paragraph 3.76 states that taxi owners, car rental operators and tour operators are exempt from the excise tax if they purchase locally made cars. As this exemption seems to be in contradiction with paragraph 3.75, could Malaysia please explain why foreign built cars do not benefit from it?

Answer: Malaysia is undertaking a review on this policy.

EU Follow-up question: What is the envisaged timeline for this review?

Answer: At the moment, there is no definitive timeline as this policy needs to be aligned with the Taxi Transformation Programme objectives.

EU Question 25: Concerning alcoholic beverages, we would also need detailed explanation of the excise taxes currently applied to the different alcoholic beverages and the base and rationale for setting the specific rates for the different products.

Answer: There are no standard rates or excise duties structure for all types of alcoholic beverages. The current structure of excise duties on alcoholic beverages is as per Excise Duties Order 2017.

EU Follow-up question: How often does Malaysia review the Excise Duties Order?

Answer: Malaysia constantly reviews the Excise Duties Order.

3.3.1.2 Tax incentives 3.3.1.2.3 Incentives on indirect taxes Page 63, paragraph 3.102 It is stated that all meat products sold in Malaysia (except for pork), whether imported or local, must be halal certified. EU Questions 32: Is there any agreement in place which allows Malaysia to recognize the halal standards and the certificates of ASEAN countries? Are there any plans for Malaysia to recognize halal standards and certificates of other countries?

Answer: Presently, Malaysia is a member of the ASEAN Working Group on Halal Food (AWGHF). The Working Group is involved in the process of harmonizing the standards among all ASEAN countries.

EU Follow-up question: Are there any plans for Malaysia to recognize halal standards and certificates of other countries?

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Answer: As of December 2017, JAKIM recognized 67 foreign halal certification bodies including 13 certification bodies in European Union. The full list of the recognized certification bodies can be accessed at: www.halal.gov.my.

3.3.3 Sanitary and phytosanitary requirements Page 65, paragraph 3.111 In the SPS Committee, the EU raised concerns about Malaysia's restrictions on beef imports from the EU due to BSE concerns under STC N°193 in October 2016, March 2017 and July 2017 respectively. EU Question 35: Could Malaysia please explain why the import of beef from OIE controlled risk status countries is not allowed, in apparent contradiction with OIE standards?

EU Follow-up question: Could Malaysia please share the scientific justification that explains why Malaysia goes beyond the OIE Standard on BSE, specifically the recommendations for importation of meat and meat products from a country, zone or compartment posing a controlled BSE risk (Chapter 11.4, article 11.4.11. of the OIE Terrestrial Animal Health Code)?

Answer: BSE controls are based on scientific knowledge and designed to reduce the risks of BSE to an extremely low level, although the risk of BSE cannot be removed completely. Additional control measures are taken to provide a high level of public protection to safeguard human health and to ensure the risk of BSE infectivity entering the food chain continues to be extremely low.

3.3.4 Competition policy and price controls 3.3.4.1 Competition policy 3.3.4.1.1 Legal framework Page 66, paragraph 3.117 Malaysia is the only country in ASEAN with a competition law that does not provide for merger and acquisition control. EU Question 37: What are the reasons for not broadening the Competition Act to include merger control?

Answer: Malaysia’s Competition Act focuses on anti-competitive activities and abuse of dominance. However, Malaysia will be conducting a study on the merger and acquisition control in the future.

EU Follow-up question: What are the timelines for the study and subsequent initiatives?

Answer: In general, the scope of this study is to assess merger issues in Malaysia by addressing all sources of possible harm to competition and consumers, and to conduct ex post evaluation of merger control decisions. Focus will also be given to the aspect of legal and procedural merger framework between other regulators in Malaysia. This study is expected to be completed by end of 2018.

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- 37 - engineering and infrastructure development. Public procurement in Malaysia is characterised by its lack of transparency, preference for local companies and the lack of international best industry practices and procedures by independent observers. Malaysia is only an observer to the Government Procurement Agreement, unlike many similar advanced and upper-middle income Asian economies that are party to the agreement. EU Question 41: Does the Government of Malaysia intend to publicize the procedures and conditions of government procurement in Malaysia?

Answer: The Financial Procedure Act 1957 (Revised 1972) remains Malaysia's main legal instrument for financial matters including government procurement. The Treasury Instructions provide details on the financial and accounting procedures. Treasury Instructions can be accessed at: http://www.treasury.gov.my/index.php/en/ministrys-profile/publication.html. The government procurement procedures and conditions are detailed out in 1Treasury Circulars (1Pekeliling Perbendaharaan - 1PP), accessible at: http://1pp.treasury.gov.my/.

EU Follow-up question: Does Malaysia intend to reform this legislation or prepare additional legislation on government procurement?

Answer: At present, financial matters are sufficiently provided for under this legislation. Malaysia's government procurement rules and procedures are regularly being reviewed, to conform to international best practices.

EU Question 43: Does the Government of Malaysia intend to become a full party to the Agreement on Government Procurement (GPA) like other similar Asian economies?

EU Follow-up question: Could Malaysia please indicate when it intends to undertake this assessment?

Answer: The current focus is to enhance the ability of local industry players to become at par with its international counterparts.

EU Question 45: Direct as opposed to open tenders appear to be favoured for government projects. Further clarification of procurement regulations would be welcome. Does Malaysia have any plans to improve the transparency of procurement in the public sector, including Government Linked Companies?

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EU Follow-up questions: Could Malaysia please provide further information on the ePerolehan system? Is it voluntary or mandatory? Which contracting authorities can use it? Is there any obstacle for European firms not established in Malaysia to apply for the system; i.e. is it necessary to have an address or be registered in Malaysia in order to apply?

Answer: ePerolehan is an end-to-end procurement system for federal funded procurement of supplies and services. All Federal Government agencies are required to use this system. Any foreign companies interested to participate in Malaysia’s government procurement may do so, provided they are locally incorporated and fulfil the registration as well as tender requirements. Further information can be accessed at: www.eperolehan.gov.my.

3.3.7 Intellectual Property Rights 3.3.7.1 Overview Page 76, paragraph 3.176 Footnote 58 states that "GIs are protected regardless of whether or not they are registered". EU Question 49: Could Malaysia clarify what non-registered GIs in that context mean (i.e. foreign GIs, etc.)?

EU Follow-up question: What are the reasons for a GI not being registered? Is it that no request has been made, or that registration has been refused? Is the same level of protection granted for non-registered GIs as for registered GIs?

Answer: The main reason for a GI not being registered is because no request has been made. Non-registered GI will not be covered under Section 20 of Geographical Indications Act 2000.

4 TRADE POLICIES BY SECTOR 4.1 Agriculture, Forestry, and Fisheries 4.1.2 Fisheries 4.1.2.3 Policy Page 95, paragraph 4.56 Reference is made to the incentives that should be given to fishers' associations to assist their members in buying deep-sea vessels. EU Question 60: What are the incentives (conditions to be fulfilled, total amount of the scheme, number of vessels having received such a grant) granted to fishers' associations to acquire deep-sea ships?

Answer: Presently, the Malaysian Government does not provide incentives to fishers’ associations to assist their members in acquiring deep-sea vessels.

EU Follow-up question: Are there any plans to grant incentives in the future?

Answer: The Malaysian Government does not have any plan to grant such incentives in the future.

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4.3 Services 4.3.1 General Page 107, paragraph 4.94 This paragraph summarises Malaysia's autonomous liberalisation of services sectors since 2012. EU Question 61: Is Malaysia intending to liberalise further the telecommunications, transport and financial sector?

EU Follow-up question: Could Malaysia please also respond to the question as regards the financial services sector?

Answer: With the enactment of the Financial Services Act (FSA) 2013 and Islamic Financial Services Act (IFSA) 2013, Malaysia no longer has specific quotas on new licenses and hard foreign equity limits in banks and insurance companies. All applications for new licenses and acquisition of interest in shares in financial institutions are now assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM), based on Schedule 5 and Schedule 6 of the FSA and IFSA. The prudential requirements and the key considerations in applying the best interest of Malaysia criteria in assessing all applications for new licenses and acquisitions of interest in shares in financial institutions are published in the Acts, which can be accessed at: www.bnm.gov.my.

4.3.4.2 Maritime transport Page 128, paragraph 4.181 This subparagraph states that Joint Ventures Corporations in port activities are subject to foreign equity caps and minimum bumiputera shareholding requirements. EU Question 69: Could Malaysia give some more details about such requirements?

EU Follow-up question: As per the original EU question, could Malaysia please give more details about the foreign equity caps and Bumiputera shareholding requirements?

Answer: As explained in our original response, all the federal ports have been privatised.

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ECUADOR

Informe de la Secretaría: 1. De conformidad con la página 42, párrafo 3.9: “El valor de la transacción, calculado en función del precio c.i.f., se utiliza para la mayoría de las importaciones. Si no se puede utilizar este método, la valoración se basa en el valor de transacción de mercancías idénticas o similares, el valor deducido o el valor reconstruido, o bien se recurre a una valoración flexible. El Ministro de Hacienda aprueba el valor mínimo de las mercancías recomendado por la Oficina de Gestión de la Valoración en Aduana”. Al respecto, ¿podría indicarnos cómo se utiliza y qué alcance tendría ese valor mínimo en el proceso de valoración de las mercancías importadas, considerando que, según el informe de la Secretaría, Malasia utiliza los métodos de valoración según el Acuerdo sobre Valoración en Aduana de la OMC?

Answer: Malaysian Customs (Rules of Valuation) Order 1999 is in line with the WTO Customs Valuation Agreement (CVA). Although the Secretariat Report mentioned about the minimum value approach, Malaysia has never used this approach under Regulation 11 of Customs (Rules of Valuation) Order 1999. Malaysia also adopts a gazette price system which is based on the transaction value, but is only applicable for passenger cars. Currently, Malaysia is reviewing this system to adopt the transaction value method.

2. De conformidad a la página 48, párrafo 3.26: “En enero de 2014, el Gobierno decidió mantener el sistema de ’permisos aprobados’ aplicable a la importación y distribución de automóviles, camiones y motocicletas fabricados o montados en el extranjero, que se inscribe en la Política Nacional para el Sector del Automóvil”. Según el informe de la Secretaría sobre el EPC de Malasia 2014, se indicó que el sistema de permisos aprobados funciona de hecho como un contingente de importación. ¿Podría informarnos Malasia bajo qué disposiciones de la OMC se justifica la medida, particularmente cómo ese contingente se ajusta a las disposiciones del artículo XI del GATT de 1994? De igual manera, ¿cómo se administra ese contingente? ¿Existen condiciones específicas para acceder al mismo?

Answer:  Issuance of AP is for monitoring and data collection purposes. It is in line with the Import Licensing Agreement.  Permits are based on the request/plan by each operator. The AP system is used for monitoring and data collection purposes.  The company needs to be a registered Malaysian company and obtained the rights to import a particular brand/model of the motor vehicle from the principal or manufacturer.

3. De conformidad con la página 50, párrafo 3.36: “En la Parte II de la tercera lista se enumeran las mercancías cuya importación a Malasia está supeditada a determinadas condiciones; ahora bien, estas prescripciones no se aplican a las zonas de libre comercio”. ¿Podría indicarnos Malasia por qué esas prescripciones, como los requisitos de embalaje del cigarrillo, no se aplican a las zonas de libre comercio, tomando en cuenta que muchas de esas prescripciones o reglamentos podrían afectar la compra y venta de los productos importados, discriminando de esta manera a productos originarios de países que no forman parte de esa zona de libre comercio?

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Answer: Free trade zones in Malaysia are essentially export processing zones in which goods are processed further before being exported. Retail trade is not allowed in free trade zones, therefore, packaging requirements meant for sale and distribution in local market is irrelevant.

4. De conformidad con la página 58, párrafo 3.57 literal b), en relación al apoyo a los exportadores de empresas manufactureras, bajo la forma de exención del impuesto sobre la renta imponible, sobre la base del valor del incremento de sus exportaciones y valor añadido: ¿Podría indicarnos Malasia cómo la medida se ajusta a sus compromisos en materia de prohibición de subvenciones a la exportación, si esa exención o reducción, como consta en el informe, se vincula a un resultado de exportación e, indirectamente, a la utilización de productos nacionales? Adicionalmente, ¿cómo se ajusta a las disposiciones del Acuerdo sobre Medidas de Inversión Relacionadas con el Comercio si, al parecer, indirectamente, ese apoyo podría considerarse como una prescripción que otorga una ventaja que podría afectar a bienes importados similares por la obligación de incorporar un determinado porcentaje de valor añadido?

Answer:  The measures are part of the initiatives to encourage manufacturing companies incorporated in Malaysia including SMEs to move up the value chain, adding greater value to the products to enable them to integrate better in the global value and supply chains. Malaysia is committed to fulfill its obligations under all WTO Agreements, including the Agreement on Subsidies and Countervailing Measures (ASCM).  These initiatives are aimed at encouraging Malaysian companies especially SMEs to venture into the international market, thereby allowing firms to produce in greater scale to meet domestic and foreign demands. The strategies include export promotions, participation in international exhibitions and export acceleration missions, business matching and engagements through FTAs.

5. De conformidad con la página 59, párrafo 3.60, respecto a los requisitos que deben cumplir las empresas que quieran establecerse en una zona franca industrial y beneficiarse de una exención del derecho de importación y de otras reducciones o exenciones fiscales: ¿Podría explicarnos Malasia cómo esos requisitos se ajustan a sus compromisos en materia de subvenciones prohibidas para la exportación, cuando se dispone que para poder establecerse en una zona franca industrial se debe cumplir con un porcentaje mínimo de exportación de producción y contenido nacional?

Answer: A Free Zone is an area in any part of Malaysia that is declared by the Minister of Finance under the provision of Section 3(1) of the Free Zones Act 1990, as a Free Commercial Zone or Free Industrial Zone. The activities and industries therein are subject to minimal customs formalities as it is deemed under Section 2 (1A) of the Customs Act 1967 to be a place outside the Principal Custom Area except in respect of Prohibition of Imports and Exports under Section 31 of the Customs Act 1967. Hence, products from companies located in the Free Industrial Zones (FIZ) destined for Malaysian domestic market are considered as imported products and subjected to import duty at MFN/applied rates. However, effective 1 January 2011, products produced in the FIZ destined for the Malaysian market are eligible to enjoy ASEAN or ATIGA duty rates if they complied with the origin criteria, i.e. local content or substantial transformation.

6. De conformidad con la página 63, párrafo 3.76: “Los propietarios de taxis particulares (desde 2012) y las empresas de alquiler de automóviles (desde 2002) estaban exentos de impuestos sobre el consumo para la compra de automóviles de fabricación nacional, mientras que los operadores turísticos se beneficiaban de una reducción del 50% en la compra de automóviles con tracción en las cuatro ruedas montados en el país. Las autoridades han indicado que esta medida está destinada, en parte, a reducir el costo del alquiler de automóviles para turistas y del transporte público, con el objetivo de estimular la actividad turística”.

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¿Podría indicarnos Malasia cómo la medida se ajusta al principio de trato nacional en relación a los vehículos importados y los de producción nacional? ¿Qué medida ha adoptado Malasia para evitar que se afecten las condiciones de competencia y cómo esta ventaja, derivada de la medida, se ajusta a las disposiciones del Acuerdo sobre las Medidas de Inversión Relacionadas con el Comercio?

Answer:  Malaysia is undertaking a review on this policy.  Malaysia is currently in the process of liberalizing this measure to include all eligible vehicle models.

7. De conformidad con el Cuadro 2.1 Planes sectoriales y herramientas de comercio e inversión (página 27): El tercer plan general para la industria 2006 – 2020, se centra en los sectores manufactureros, de servicios y agropecuario. Los objetivos estratégicos son: consolidar la posición de Malasia como gran potencial comercial; generar inversiones en sectores concretos; fortalecer el papel del sector privado; y crear un entorno empresarial más competitivo. ¿Qué tipo de estrategia utilizaron o utilizan para generar inversión en sectores concretos?

Answer: Strategies to generate investments in the specific sectors are outlined in the 11th Malaysia Plan (2016-2020), namely in three (3) catalytic subsectors i.e. chemicals, electrical and electronics (E&E) and machinery and equipment (M&E) industries; and two (2) subsectors of high potential growth namely aerospace and medical devices. The '3+2' subsectors were selected due to their strong inter-linkages to other subsectors and indirectly their capacities will be the base to support the development of the overall manufacturing sector. Among the strategies are:  promoting investments and exports of products and services with growth potential;  assisting and facilitating domestic companies with capacity to expand into promoted activities;  developing specialized high technology parks, with the requisite physical infrastructure, workforce and support industries;  encouraging multinational corporations to establish and expand their operations in Malaysia;  providing greater support to companies in promoted activities; and  ensuring conducive ecosystem for investment, particularly in terms of infrastructure, costs of doing business, availability of skilled talents, and efficient public service delivery system. For further details, please refer to 11th Malaysia Plan (http://www.epu.gov.my/en/rmk/eleventh- malaysia-plan-2016-2020) and the Third Industrial Master Plan 2006-2020 (http://www.miti.gov.my/index.php/pages/view/1690).

8. Sobre el plan para el sector de los servicios 2015 – 2020, en lo que respecta a los programas de colaboración entre empresas grandes y pequeñas para facilitar la transferencia de conocimiento a las PYMEs: ¿Qué estrategia utilizaron o utilizan para facilitar la transferencia de conocimientos a PYMEs por parte de las grandes empresas? En el mismo plan, se hace referencia al establecimiento de un consorcio para fortalecer la competitividad de los proveedores de servicios de Malasia. ¿En qué consiste específicamente este consorcio y cómo aporta para el fortalecimiento de la competitividad?

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Answer:  The Government facilitates greater cooperation between large and smaller companies through joint research projects especially in areas of high value added and complex products. The Government helps local research institutes to work on specific projects together with a large company and then, SMEs are brought in once the R&D has reached commercialization stage for the complex products. These research institutes act as a conduit to transfer the technology to the SMEs for production and scale up purposes. In addition, there is also a Large Corporations and SMEs Partnership Programme under the Services Sector Blueprint. This programme aims to increase the number of partnership between large corporations and SMEs for international projects through the corporations’ utilization of SME’s services. Under this partnership arrangement, SME service providers will benefit in terms of knowledge transfer, capacity building and international exposure. SMEs are also involved in the production of parts and components as well as participating in the supply chain process. Examples include:  big players such as Huawei are working with SME Corp. Malaysia to create a digital incubation lab in helping SMEs to create digital solutions;

 in the aerospace sector, Tier-1 and Tier-2 companies are involved in the development of SMEs by sharing their requirements for parts and components which are to be produced by these SMEs; and

 in the retail sector, frequent business matching sessions have been arranged between large retail outlets and SMEs as a platform for small businesses to understand hypermarket requirements to increase their potential to be part of the supply chain.  Through initiatives led by various agencies, Malaysia encourages partnerships between large and small enterprises for business purposes, particularly in the form of a consortium. The secretariat from each agency will go through a selection process for matchmaking between large corporation and SMEs. Through a consortium, Malaysian companies will be more competitive in offering various types of services and expertise for project bidding purposes. Small enterprises will also benefit from knowledge transfers as large enterprises have more experience, as well as financial and technical resources. The Malaysian Incorporated Services Bhd (Malaysian Inc.) was formed as a consortium in 2015 to focus on securing targeted projects and penetrating professional services markets abroad.

9. De conformidad con el Cuadro 3.15 Incentivos fiscales (Página 64): Uno de los incentivos se refiere a las condiciones de empresas innovadoras. ¿Podría indicarnos Malasia qué indicadores utilizan para determinar si la empresa es innovadora? ¿Es innovación en productos o en procesos?

Answer:  The phrase “innovative companies” is not reflected in the Secretariat Report.  Malaysia has put in place various incentives and grants towards encouraging companies in wide spectrum of industry to embark on R&D activities.

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UKRAINE

SECRETARIAT REPORT (WT/TPR/S/366) 2 TRADE AND INVESTMENT REGIMES 2.2 Trade Policy Formulation and Objectives 2.2.1 Structure of Trade Policy Formulation Page 24 (Para 2.12) The Report says that “On 16 October 2014, the Guidelines on Public Consultation Procedures were launched by the Chief Secretary to the Government of Malaysia, serving as a reference for ministries and agencies in implementing public consultations. According to the Government, public consultation is one of the key tools to improve transparency, efficiency and effectiveness of regulation and is an important element of Regulatory Impact Analysis.” Question: 1. Could Malaysia kindly provide some more information on the performance of Regulatory Impact Analysis?

Answer: From 2014–2017, 240 Regulatory Notifications had been submitted. 49 notifications had been exempted from RIA process as it was administrative in nature (i.e. only to ensure clarity on the interpretation of the regulations). 27 had been withdrawn due to change of policy. 19 notifications are in the process of resubmission. 145 notifications need to undertake RIA. 62 Regulatory Impact Statement which is the output of RIA process had been received which had completed the public consultation process. While 83 proposals are in the process of completing the RIA process.

2.3 Trade Agreements and Arrangements 2.3.1 WTO Page 26 (Para 2.23) According to the Report “In May 2015, Malaysia became the fifth Member to ratify the Trade Facilitation Agreement; before that, in July 2014, it notified the Preparatory Committee that Malaysia had designated all provisions under Category A, except Article 7.8 (Expedited Shipments) and Article 11.9 (Advance filing and processing of transit documentation and data prior to the arrival of goods).”

Question: 2. Would Malaysia please elaborate if there is any progress in implementation of provisions of Article 7.8 and Article 11.9 of the Trade Facilitation Agreement?

Answer: Malaysia will implement its Category B commitments (Article 7.8 & Article 11.9) after a five year transitional period from the entry into force of the TFA on 22 February 2017, as provided under the TFA.

2.4 Investment Regime 2.4.1 Overview Pages 33 - 34 (Para 2.48) The Report mentions that “During the review period, Malaysia made starting a business less costly by reducing the company registration fees, but made it more difficult by requiring that companies with annual revenue of more than RM 500,000 register as GST payers. Its ranking in terms of the ease of starting a business dropped significantly from 59th in 2016 to 112th in 2017.” Questions: 3. Would Malaysia kindly provide information on the actual company registration fees?

Answer: The registration fees for company limited by share under Section 14 of the Companies Act 2016 is RM1,000.

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Further details can be accessed at: http://www.ssm.com.my/en/table-of-fees-rob-roc.

4. Could Malaysia also explain what difficulties for companies the requirement concerning GST- registration created?

Answer: Malaysia has continuously strived to address the issues faced by companies for GST registration. Previously, two main issues faced by businesses were: a. companies are required to provide bank account information in detail; and

b. companies that have not reached the threshold yet, but voluntarily registered would need to prove that it will be reaching the GST registration threshold within 12 months.

However, these issues have been addressed to ease the registration process. Starting March 2017, the requirements to provide bank details have become optional. In addition, companies applying under voluntary registration are no longer required to provide proof of reaching the GST registration threshold.

3 TRADE POLICIES AND PRACTICES BY MEASURE 3.1 Measures Directly Affecting Imports 3.1.1 Customs procedures, valuation, and requirements Pages 38 (Para 3.3) The Report notes that “To import, it takes 72 hours and US$321 to conduct border compliance, and 10 hours and US$60 to conduct documentary compliance.” 3.1.4 Other charges affecting imports Page 43 (Para 3.23) It is stated in the Report that according to the authorities no fees are imposed by Customs for customs procedures. Question: 5. Could Malaysia kindly confirm that no fees are imposed by Customs for customs procedures, and explain what values of border and documentary compliance measures may be included in the calculations of the cost to import?

Answer: Royal Malaysian Customs Department does not impose any fees for Customs procedures. However, fees and charges imposed by the relevant service providers may be applicable.

Page 39 (Para 3.6) The Report mentions such trade facilitation initiative as setting up a Trade Facilitation Cluster Working Group - the national trade facilitation committee, which coordinates and monitors trade facilitation efforts so as to ensure compliance with the WTO's TFA. Question: 6. Could Malaysia please provide some more details in respect of the National Trade Facilitation Committee (including general procedure of its operation, main functions, related legal policy framework, membership) and inform what measures are planned by this Committee to ensure compliance with the WTO's TFA provisions?

Answer: Trade Facilitation Cluster Working Group (TFCWG) under the National Logistics Task Force (NLTF) is derived from the Logistics and Trade Facilitation Masterplan (2015-2020). TFCWG acts as the National Committee on Trade Facilitation for Malaysia and is jointly chaired by Ministry of International Trade and industry (MITI) and Royal Malaysian Customs Department (RMCD). TFCWG consists of representatives from several ministries/agencies and private sector. TFCWG’s initiatives and measures towards compliance to WTO TFA include to:

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 improve cargo clearance system, paperless trading and security of trade documents, so as to boost trading activities and reduce cost of doing business;  promote cross-border movement of logistic service providers by leveraging on on-going trade facilitation and liberalisation initiatives in international and sub-regional foras (WTO, ASEAN, APEC, IMT-GT, BIMP-EAGA, etc); and  identify and review unnecessary regulatory burden on industry including procedures, licence, permit and certification to enhance business processes, and improve service delivery. Upon TFA’s entry into force, Malaysia has implemented Category A and the WTO Secretariat has published Malaysia’s commitment for Category B on 24 November 2017.

3.3 Measures Affecting Production and Trade 3.3.6 Government procurement 3.3.6.1 Overview Page 70 (Para 3.141) The Report notes that “Foreign suppliers are not allowed to participate in domestic tenders; international tenders are called if there are no domestically produced supplies or services available.” Question: 7. Could Malaysia kindly elaborate what goods and services were the major subjects of international tenders in recent years?

Answer: Malaysia also allows international companies that are incorporated in Malaysia to participate in local tenders. In recent years, participation has been witnessed in sectors such as medical equipment and telecommunications.

8. Does Malaysia have any plans to liberalize its government procurement policy to allow foreign suppliers to participate in tenders at the same conditions as the local traders?

Answer: There has been no change of policy since Malaysia’s last TPR in 2014. However, Malaysia is in the midst of reviewing its government procurement rules and regulations to be in line with international practices.

Page 70 (Para 3.142) According to the Report “Government procurement is considered by the authorities as an important tool to support Malaysia's National Development Policy and Vision 2020, i.e. bringing the country towards being a high-income nation by 2020. Malaysia became an observer of the WTO Committee on Government Procurement in 2012.” Question: 9. Taking into account the observer status of Malaysia in the WTO Government Procurement Agreement (GPA) from 2012, is Malaysia considering any further steps to join the WTO GPA?

Answer: As an observer to WTO GPA, Malaysia continues to gain insights through the discussion and deliberation of the Committee meeting particularly in understanding the alignment of GPA regimes to the WTO agreement. Malaysia will assess its readiness to join the WTO GPA in consultation with stakeholders including the obligations that need to be fulfilled as a party.

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3.3.7 Intellectual property rights 3.3.7.1 Overview Pages 74 - 75 (paragraphs 3.171, 3.174) According to the Report “Malaysia ratified the Protocol Amending the TRIPS Agreement on Public Health in December 2015. … There have been no changes to provisions on compulsory licensing, and no compulsory licences have been granted since 2014.” It is also mentioned in Para 2.7 (page 23) of the Report that “Treaties or international legal instruments (including WTO agreements) are not implemented automatically; appropriate national legislation is required to give the treaty force of law domestically.” Questions: 10. In view of the entry into force of the Protocol Amending the TRIPS Agreement (on 23 January 2017), could Malaysia kindly inform on national implementing measures providing for special compulsory licences and its scope (for export or import of medicines)?

Answer: Malaysia has submitted the acceptance of the Protocol Amending the TRIPS Agreement in December 2015. Hence, Malaysia is amending the Patents Act 1983 to include the provision of the Article 31bis of TRIPS Agreement.

11. What competent authorities are responsible for initiation and making decision relating to the grant of compulsory licences to address public health problems according to Malaysian legislation?

Answer: Initiation to invoke compulsory licensing due to public health concern is under the jurisdiction of Ministry of Health (MOH). Granting of compulsory licensing comes under the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) which is the competent authority as provided under the Patents Act 1983.

12. Who may apply for the grant of the compulsory licence to use the patented invention concerning medicines and how is the process of cooperation between applicants and responsible authorities organized?

Answer: Any person can apply for compulsory licenses under Patent Acts 1983. The process of cooperation between applicants and responsible authorities is provided under Part X (Compulsory Licences) Section 49 to 54 of Patents Acts 1983. The procedures are provided under Regulation 38 to 42 of Patent Regulations.

13. Are there any pre-grant conditions and requirements on remuneration to the patent holder? 14. If so, could Malaysia, please, also describe the relevant legislative provision concerning pre- grant conditions and remuneration?

Answer: Details regarding compulsory licenses are provided under Section 49 to 54 of Patents Acts 1983. With regard to compulsory licenses under Rights of Government, it is provided under Section 84 of Patents Act 1983. 15. Considering Press Statement of Minister of Health of Malaysia of 20 September 2017 (available at: https://goo.gl/SaznZu), could Malaysia, please, clarify the state of play of the implementation of the decision to initiate the Rights of Government to exploit the patented invention of Sofosbuvir?

Answer: MDTCC and MOH are working closely on the implementation of the decision to initiate the Rights of Government. Malaysia is currently finalizing the procurement of generic Sofosbuvir tablets.

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16. Has Malaysia examined the possibility of using the system, set out by the Protocol Amending the TRIPS Agreement, while making abovementioned decision?

Answer: The decision on this issue is based on the current provision of the Patents Act 1983.

4 TRADE POLICIES BY SECTOR 4.1 Agriculture, Forestry, and Fisheries 4.1.1 Agriculture 4.1.1.3 Domestic policies Page 82 (Para 4.11) The Report states that “The NAP follows the three National Agricultural Plans that covered the period 1984 to 2010 and covers the sectors MOA is responsible for and the associated processing industry. The objectives of the NAP are (i) to ensure food safety and food security, (ii) to develop the agrofood industry into a competitive and sustainable industry, and (iii) to increase incomes of producers and entrepreneurs. Among the strategic directions to achieve these objectives are self- sufficiency targets for crops, livestock, and fish where self-sufficiency is defined as domestic production as a percentage of production + exports – imports +/- changes in stocks (Table 4.3).” Questions: 17. As Malaysia has been currently implementing the NAP 2011-2020, could Malaysia kindly present main intermediate results of the NAP implementation and describe possible challenges in achieving its goals?

Answer: Based on the Midterm Review of NAP in 2017, the inception of NAP has yielded positive results. The overall industries witnessed an average positive CAGR of 3.4% in production. Yield targets for sectors such as paddy, livestock, fruits, vegetables and floriculture are on track. Among the challenges that need to be overcome in achieving NAP goals are: a. possible disease outbreaks in aquaculture and ornamental fish sectors; b. selection and testing of suitable crops for domestic cultivation; c. the need for further research to increase crop productivity; and d. the need for training and exposure of new technologies among extension officers and systematic activities to increase adherence of agencies to the MS ISO 9001:2008.

18. What are the criteria according to which the indicators of self-sufficiency targets are defined?

Answer: The self-sufficiency level (SSL) of food commodities will be reviewed from time to time taking into consideration the security of supply in the country, global market scenario, relative cost of imports, increased demand, availability of agricultural land, average annual growth rate and changes in dietary.

4.1.1.3.1 Selected sub-sectors Palm oil Pages 84 – 85 (Para 4.22) The Report notes that “There are about 644,522 oil palm small holders (less than 40.47 ha) in Malaysia who may qualify for a number of incentive schemes including the Replanting Subsidy for Oil Palm smallholders (TSSPK), Oil Palm Smallholders New Planting Scheme (TBSPK), Smallholding Maintenance Assistance (CPC) and Cantas Discount Scheme (SKIDIC). Under the replanting and new planting schemes, small holders can receive about RM 7,500 per ha in peninsular Malaysia or RM 9,000 in Sabah and Sarawak. From 2011-2016 (the period under the 10th Malaysia Plan): 56,910 small holders with a total of 132,829 ha received planting assistance; 918 small holders with less than 2.5 ha received about RM 500 per month under the CPC; and 2,772 small holders received a discount of RM 1,000 for harvesting machines (called cantas). The 2017 budget allocation for replanting of oil palm was RM 40 million.”

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4.1.1.5 Support levels Page 91 (Para 4.47) The Report sets out that “A number of Government programmes are operated by Agrobank to provide finance to the agriculture and fishing sectors. The profit rates charged by Agrobank for the loans to farmers under mandated programmes is 3.75%, which tends to be significantly lower than the profit rates charged by commercial banks (Table 4.12).” Question: 19. Ukraine kindly ask Malaysia to elucidate how such support will be presented in Malaysia’s Table DS:1 notification for the period 2012-2016?

Answer: The support (if any) will be notified as per the requirement of the WTO Agreement on Agriculture. Rice.

Pages 88 – 89 (Para 4.40) According to the Report “In addition to the Guaranteed Minimum Price of RM 1,200 per tonne (increased from RM 750 per tonne in 2014), a range of support measures are available for rice producers including direct payments for each tonne produced, a number of input subsidies, and a rice millers subsidy (Table 4.10). In 2016, the total cost of the rice subsidy programmes was reported to be approximately RM 1 billion per year and RM 1.3 billion was allocated in 2017, which was 46% of the total allocation to agriculture (Table 4.11).” Question: 20. Could Malaysia please refer to criteria, set out in Annex 2 to the WTO Agreement on Agriculture (AoA), and other provisions of the AoA, under which the aforementioned domestic support measures for rice were provided?

Answer: The domestic support measure is used as an income support measure for resource-poor farmers, rural development and food security. The measure does not have trade-distorting effect or effects on production and is consistent with Annex 2 of the AoA.

4.3 Services 4.3.5 Tourism Page 129 (Para 4.185) The Report notes that “The Malaysian Tourism Promotion Board (MTPB), established under the Tourism Promotion Board Act No. 481 of 1992, is responsible for promoting Malaysia as a tourism destination and assisting tourism service providers.” Question: 21. Could Malaysia kindly provide more information on the functioning of the Malaysian Tourism Promotion Board (known as Tourism Malaysia) and its practical experience in terms of the public-private partnership?

Answer: The objectives of the establishment of Tourism Malaysia are to:  promote Malaysia as an outstanding tourist destination;  showcase Malaysia's unique wonders, attractions and cultures;  enhance Malaysia's market share for meetings, incentives, conventions and exhibitions (MICE);  increase Malaysia's tourism revenue by increasing tourist numbers to Malaysia and extend their length of stay;  encourage tourism and its related industries in Malaysia; and  help develop domestic tourism and promote new investments in the country, as well as provide increased employment opportunities. The growth of tourism would also contribute positively to the country's economic development and quality of life.

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Tourism Malaysia undertakes public-private partnership initiatives through:  engaging and collaborating with international private sector entities/travel agents and airline companies;  participating in international travel exhibitions to market Malaysian travel agents/product owners;  media initiatives and coverage for Malaysian tourism destinations; and  organizing themed events/programmes such as Visit Malaysia Year, Malaysia Homestay Programme, Health and Medical Tourism: Destination of the Year. Further details can be accessed at https://www.tourism.gov.my.

PART II: QUESTIONS REGARDING THE REPORT BY MALAYSIA (WT/TPR/G/366) Page 6 (Para 2.26) According to the Report “The Government implemented the GST on 1 April 2015, to replace the Sales and Services Tax regime. The GST implementation is part of the Government’s tax reform programme to streamline the country’s tax system so that it would be more efficient, transparent and business-friendly.” Question: 22. Does Malaysia have any plans to simplify the procedure for refunding GST to foreign Embassies in Malaysia?

Answer: Foreign embassies in Malaysia have been given relief from paying GST on all goods acquired except petroleum products. The relief is given under the condition that the goods are acquired for the official use of the embassy. In addition to that, relief is also given to selected services such as leasing of building, maintenance of the building, utility and professional services such as accounting and legal. With the relief, embassies are only required to issue the Certificate of GST Relief (CoGSTR) when purchases are made and no GST to be paid up front. In the circumstances where CoGSTR cannot be issued and GST to be paid up front, embassies can send in their claims which have been acknowledged by the Head of Mission to RMCD. Subsequently RMCD will make the refund of the GST amount to the embassies bank account directly with no further checking.

Pages 8 - 9 (paragraphs 3.9 – 3.10) The Report mentions six immediate priorities which have been identified as game changers to move the needle on productivity improvement, under the Blueprint. One of the priorities is removing of non-tariff measures that impede business growth. Introduction of guillotine approach to reduce regulatory burden is among the reform activities. Questions: 23. Could Malaysia provide some practical examples of non-tariff measures which are expected to be eliminated or restructured under the Blueprint?

Answer: Some practical examples are as follows:  remove burdensome NTMs processes and procedures to industries. These include delays in meeting the formalities of authorities, unnecessary administrative costs and other compliance costs in meeting regulatory requirements; and

 remove redundant measures having similar objectives which are imposed by different agencies.

24. Would Malaysia kindly share further details on this “guillotine approach” to reduce regulatory burden?

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Answer: The ‘guillotine approach’ involves elimination of selected procedures, licenses and regulations. Licenses that do not need legislative justification or/and are no longer needed will be abolished while licenses and requirements that are not business friendly will be simplified.

25. Is the implementation of such approach under way?

Answer: Yes.

26. What is the timeframe for implementation of “guillotine approach” and restructuring non-tariff measures?

Answer: This initiative has started since May 2017 and will be completed by 2020.

Page 9 (Para 3.11) Under the Report “As an on-going effort to facilitate trade, the Government continues to review the import licencing requirement. In this connection, the import licence requirement for motorhomes, motorcycle helmets, used tyres and flour was abolished effective 1 September 2016; and 181 tariff lines of iron and steel products effective 1 August 2017. The implementation measure is gazetted in the Customs (Prohibition of Imports) (Amendment) Order 2016 and 2017.” Question: 27. Could Malaysia kindly clarify what categories of goods are planned to be released from the import licensing requirement in the near future?

Answer: Malaysia will continue to review the import licensing requirements to facilitate trade and industry while taking into account the national socio-economic, safety and health interests.

Page 12 (Para 3.26) The Report mentions the establishment of the Investment Committee (IC), which monitors and ensures that the objectives and targets of the Economic Transformation Programme (ETP) on economic growth of private investments is realised fully. Questions: 28. Would Malaysia kindly clarify the instruments which the Investment Committee (IC) has to perform its functions?

Answer: The Investment Committee (IC) monitors the objectives and targets of the Economic Transformation Programme (ETP). Established in October 2010, the IC is a joint initiative of MITI and PEMANDU to ensure better coordination on investments among all the relevant Government and investment promotion agencies. The IC’s main focus is to promote and facilitate overall investment in achieving the RM115 billion annual investment targets as set out in the ETP. In addition, the IC also monitors the realization of the economic growth target of 6% and private investment of 12.8%.

29. Could Malaysia also describe measures set out in the Economic Transformation Programme for improvement of investment climate?

Answer: The Government has strengthened the business climate through initiatives driven by the Economic Transformation Programme (ETP), in close collaboration with the private sector, particularly through a Special Task Force to Facilitate Business, known as PEMUDAH. In addition, the Strategic

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Reform Initiatives (SRIs) under the ETP comprise policies to strengthen the country's commercial environment as well as investment climate, covering: i. competition, standards and liberalisation; ii. public finance reform; iii. public service delivery; iv. narrowing disparity; v. Government’s role in business; and vi. human capital development.

Page 14 (Para 3.41) It is stated in the Report that “In the move to further accelerate growth of the halal industry in Malaysia and enhance Malaysia’s role in leading global halal industry development, the Government initiated the formation of the Malaysia Halal Council (MHC). The Council was established in June 2016 under the chairmanship of the Deputy Prime Minister of Malaysia. The Council acts as an “Advisor” to the Government on both religious and economic matters in relation to the halal industry within the following areas: i. formulation of policies related to halal; ii. monitoring the implementation of policies, strategic directions and key programmes; and; iii. matters pertaining to development and management of the halal industry.”

Question: 30. Does Malaysia have an intention to introduce halal representatives to Embassies of Malaysia overseas, in particular, in Ukraine?

Answer: Malaysia welcomes collaboration with Ukraine in Halal cooperation. Ukraine’s interest can be communicated directly to JAKIM (detailed contact is accessible at www.islam.gov.my) or via the Malaysian Embassy in Kiev.

Page 23 (paragraphs 5.11 – 5.12) Malaysia has identified the agriculture sector as one of the National Key Economic Areas (NKEA) under the ETP. Under this program the Government is now focusing at the agriculture market model, capitalizing the Malaysia’s competitive advantages and integrating to the regional agricultural value chain by 2020. The Government is also implementing the 10 year National Agrofood Policy (NAP) which was launched in 2012, with the aim to further improve the competitiveness of the agro-food industry to create a more productive and knowledge intensive industry. One of the important parts of the Government’s reform is a Good and Services Tax (GST) implemented on 1 April 2015. GST is imposed on all goods and services either produced in the country or imported, at a standard rate of 6%. However, certain supplies of goods and services are not subject to GST. Question: 31. Could Malaysia please clarify the GST implementation mechanism for agriculture sector and elaborate more on GST exempted agriculture activities, provide list of commodities exempted from GST at the output and input stages and describe the legislation governing the tax credit system for agriculture businesses?

Answer: The specific GST treatments for agriculture sector are: i. Land for agriculture activities is categorised as exempt supply under Goods and Service Tax (Exempt Supply) Order 2014. Therefore, there is no GST to be paid on the purchase or leasing of agriculture land; and ii. Most of the agriculture products (output) such as paddy, vegetable and fruits have been categorised as zero rated supply under the Goods and Services Tax (Zero-rated Supply) Order 2014.

Further details can be accessed at: http://gst.customs.gov.my/en/rg/Pages/rg_ig.aspx.

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Pages 25 - 26 (Section “Financial Services Sector”) The Report describes particularities of Malaysia’s banking and insurance sector, its progress and impact on the development. Questions: 32. Would Malaysia kindly share information concerning licensing of non-banking financial institutions in Malaysia, in particular relating to types of licenses, key requirements to applicants, particularities of licensing procedures?

Answer: The licensing of non-banking financial institutions (NBFI) will depend on the specific authorities under which they are licensed. NBFIs comprise cooperatives, leasing and factoring companies, building/housing institutions/corporations and Cagamas. For example, non-banking financial institutions under the purview of Bank Negara Malaysia include Insurers/takaful operators, operators of payment system and issuers of designated payment instrument (DPI). Further information is accessible at: http://www.bnm.gov.my/index.php?ch=59&pg=160&ac=221&bb=file. And: http://www.bnm.gov.my/index.php?ch=59&pg=160&ac=222&bb=file. For capital market intermediaries license, further information can be accessed at: https://www.sc.com.my/wp-content/uploads/eng/html/cmsa/Licensinghandbook_170623.pdf. For moneylending and pawn broking license, further information is accessible at: http://www.kpkt.gov.my/index.php/pages/view/58. For co-operatives, further information can be accessed at: http://www.skm.gov.my/index.php/en/services/panduan-penubuhan-koperasi. For companies undertaking leasing, factoring, development finance and building credit businesses are required to seek written acknowledgement from BNM to undertake such businesses.

33. Could Malaysia further elaborate on procedures for approving payment system operators and issuers of payment instruments and electronic money, including key requirements to applicants?

Answer: Among the key requirements under the submission requirements guideline (http://www.bnm.gov.my/files/2013/PS_Submission%20Requirements%20_190713.pdf) are as follows: a. Details on the applicant with related company supporting documents (e.g. audited financial statements, details of shareholders and directors, company related forms and etc.);

b. Details on the governance and internal control functions;

c. Business plan of the proposed product and services; and

d. Policies, procedures and controls to be implemented by the applicant.

Under the Financial Services Act (FSA) and Islamic Financial Services Act (IFSA), all applications for payment system operators and issuers of payment instruments and electronic money are assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM) based on Schedule 5 and Schedule 6 of the FSA and IFSA. Please refer to Schedule 5 and Schedule 6 of the FSA and IFSA, which are publicly available at: http://www.bnm.gov.my/index.php?ch=59&pg=160&ac=221&bb=file; and http://www.bnm.gov.my/index.php?ch=59&pg=160&ac=222&bb=file.

34. How does the Central Bank of Malaysia assess the ownership structure, business reputation and financial conditions of applicants?

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Answer: In respect of banking institutions, insurers and takaful operators, BNM’s assessment primarily seeks to ensure that licence applicants/potential shareholders are of integrity and good reputation, and in sound financial condition, in order to minimise risks that could undermine the safety and soundness of Malaysian financial institutions. All information submitted by an applicant (such as their annual financial statements, business plans, and information from the home regulator), including information BNM gathers from the public domain (e.g. news articles), will be taken under consideration by BNM in making a determination of the suitability of the applicant. Please refer to Schedule 5 and Schedule 6 of the FSA and IFSA, and the Policy Document on Shareholder Suitability available on the Bank Negara Malaysia website.

35. What are the requirements to transfer of significant ownership/control in the regulated entities?

Answer: Banking institutions, insurers and takaful operators BNM approval is required where acquiring party’s aggregate interest in shares crosses the following thresholds: a. any multiple of 5% (5%,10%,15% etc); and b. 33% (percentage for mandatory offers).

The approval of the Minister of Finance (on BNM’s recommendation) is required: a. where acquiring party’s aggregate interest in shares exceeds 50%; b. for any acquisition of ‘control’ over a licensed institution (irrespective of shareholding level); and c. for disposals which results in disposing party holding less than 50% interest in shares, or ceases to have control.

Insurance/takaful brokers, financial advisors, money brokers BNM approval required for ownership transfers which result in a change in control over the approved institution. All other ownership transfers only need to be notified to BNM. Please refer to Section 87 of the FSA and Section 99 of the IFSA.

36. What are the indicators of non-transparency of the ownership structure?

Answer: Any impediment to BNM’s ability to assess whether the nature, scale and activities of the applicant’s corporate group will impede the regulation and supervision of the Malaysian financial institution. This includes the ability for BNM to determine the ultimate beneficial owner of the financial institution.

37. In what cases may the Central Bank of Malaysia grant the status of "Approved Business"?

Answer: “Approved Business” is defined under the Financial Services Act (FSA) and Islamic Financial Services Act (IFSA) as: a. Operation of a payment system which-

i. Enables the transfer of funds from one banking account or an Islamic banking account to another, which include any debit transfer, credit transfer or standing instructions but does not include the operation of a remittance system approved under section 40 of the Money Services Business Act 2011; or

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ii. Provides payment instrument or Islamic payment instrument network operation which enables payments to be made through the use of a payment instrument.

b. Issuance of a designated payment instrument or an Islamic designated payment instrument (DPI).

c. Insurance broking business / Takaful broking business.

d. Money broking business.

e. Financial advisory business / Islamic financial advisory business.

All applications for Approved Businesses will be assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM) based on Schedule 5 and Schedule 6 of the FSA and IFSA.

38. Can an individual (natural person) obtain such status and in what cases/subject to what limitations?

Answer: According to Malaysia’s laws and regulations, an approved business shall be carried out by a company.

39. Would Malaysia please describe specific features of regulation and supervision of financial technology companies?

Answer: On 18 October 2016, Bank Negara Malaysia introduced the regulatory sandbox framework (the Sandbox) to enable innovation of fintech to be deployed and tested in a live environment, within specified parameters and timeframes. The Sandbox incorporates appropriate safeguards to manage the risks associated, preserve financial stability and promote fair treatment to consumers. Beyond the Sandbox, any fintech company carrying out regulated activities will be supervised in accordance with existing laws and regulations governing such activities.

40. Ukraine would also appreciate if Malaysia could share its positive and negative experience of “Sandbox” implementation.

Answer: More than a year since the introduction of the Fintech Regulatory Sandbox, several lessons can be gleaned from Bank Negara Malaysia’s experience: a. effective cross-functional policy coordination within the central bank is an imperative, as the design and delivery of fintech solutions may have cross-cutting policy implications, including on monetary policy;

b. Sandbox is not a ‘de-regulation’ but rather ‘evidence-based’ regulation. It enables regulators to enhance existing/develop new regulations to keep the regulatory framework effective and relevant;

c. close and regular consultations between regulators and sandbox participants are important to develop and monitor effectiveness of testing parameters, safeguards and performance indicators; and

d. continuous education and awareness is imperative for fintech startups to understand the regulatory framework applicable to them.

41. Could Malaysia kindly provide information regarding approaches to risk-based supervision over financial institutions utilized by Bank Negara Malaysia?

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Answer: A risk-based approach to supervision has been adopted by Bank Negara Malaysia (BNM) since 1997. In 2004, an enhanced risk-based supervisory framework (RBSF) was implemented for insurers and takaful operators and adopted progressively for banking institutions and development financial institutions in 2007. The enhanced RBSF now applies to all financial institutions (FI) regulated by BNM. Hence, ensuring that similar risks are addressed in a consistent manner across the financial sector. The RBSF also facilitates the appropriate concentration of supervisory attention on institutions that pose higher risk. The RBSF is a dynamic supervisory methodology that identifies and assesses the emerging risks in a FI based on an in-depth understanding of the institution, the industry and environment in which it operates, and factors that could adversely alter the risk profile of the significant activities and its impact on the resiliency of the FI. A key output of the RBSF is an assessment of Composite Risk Rating (CRR). CRR is derived from: a. An assessment of the risks inherent in an institution's significant activities;

b. The overall quality of its operational management and risk management control functions to mitigate inherent risks;

c. Assessment of capital buffer and earnings performance to absorb unexpected losses. Specifically for banking institution, determination of liquidity strength is also taken into consideration to assess the ability of a banking institution’s liquidity level to remain resilient over a period of time and governed by a sound liquidity risk management practices; and

d. The CRR provides the basis on which BNM determines the appropriate level of intensity of supervision over a particular institution and supervisory actions, including the imposition of additional capital requirements.

The RBSF is centrally supported by ' relationship managers' in BNM whose primary responsibilities are to carry out supervisory assessments of institutions, conduct on going supervisory reviews, recommend appropriate interventions and maintain open lines of communication with the institutions to ensure that developments and risks are quickly identified and factored into supervisory assessments on a continuing basis. BNM has continuously strengthened the RBSF in terms of its methodology, process and core capabilities including: a. Established Quality Assurance Framework through internal peer reviews with panel to ensure that supervisory assessments are appropriate with other institutions with similar risk profile;

b. Significantly strengthened technical capabilities residing in specialised risks (credit, market, operational, technology and shariah) to support on more technical aspects associated with statistical modelling, complex risk assessments, evaluation of internal risk model and non-compliance risk to shariah;

c. Improved supervisory information systems and infrastructure with enhanced capabilities to support more efficient supervisory assessments;

d. Enhanced its supervisory documentation to ensure that supervisory assessments are well-supported, and provide a clear trail of risk issues, developments and actions taken;

e. Established greater integration between BNM's macro-surveillance and supervision functions to provide supervisors on emerging risks that could impact the risk profile of individual institutions; and

f. Enhanced supervisory methodology to promote a strong culture within a FI as it is essential and fundamental element to good governance and informed decision making. This is in line with the greater emphasis on professional business conduct and integrity in sustaining public trust and confidence in the financial system.

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42. What are the requirements concerning licensing of commercial and investment banks in Malaysia (types of activities they are entitled to perform, key requirements to applicants, particularities of licensing procedure)?

Answer: Under the Financial Services Act (FSA) 2013 and Islamic Financial Services Act (IFSA) 2013, all applications for new licenses and acquisition of interest in shares in financial institutions are assessed having regard to prudential factors and whether the application will be in the best interest of Malaysia (BIOM) based on Schedule 5 and Schedule 6 of the FSA and IFSA. Additionally, a foreign bank is required to be a public company incorporated in Malaysia, maintain a minimum amount of capital funds, and subjected to annual license fees. Applicants who are interested to operate an investment bank must also engage with the Securities Commission Malaysia.

Page 31 (Para 6.12) According to the Report “The National eCommerce Strategic Roadmap (NeSR) was developed by the Malaysia Digital Economy Corporation (MDEC) to tap into the future of e-commerce and digital economy in Malaysia, through extensive consultations with various public and private stakeholders. The initiative is also to chart the pathway forward and unlock the transformative potential of online business and transactions. The Roadmap was launched by the Prime Minister on 13 October 2016. The Government has also established the National eCommerce Council (NeCC), which is chaired by the Minister of International Trade and Industry and comprises various Ministries and Agencies, to govern, drive and foster coordination in the implementation of the Roadmap towards doubling Malaysia’s e-commerce growth rate and reaching its GDP contribution of RM 211 billion (approximately US$47.68 billion) by 2020.”

Question: 43. Could Malaysia kindly elaborate on its vision with regards to further activities under Work Programme on Electronic Commerce within the WTO and the role of the WTO in promoting regulatory environment in facilitating electronic commerce?

Answer: Malaysia is supportive of the discussion on Electronic Commerce that is taking place at the WTO. In fact Malaysia is a co-sponsor of the paper on e-commerce and development. Electronic Commerce is one of the focus areas for Malaysia. It is imperative to advance electronic commerce work in the WTO to enhance the benefits of electronic commerce for businesses and consumers internationally. Areas that can be looked at include trade facilitation and e-commerce, infrastructure gaps to enable e-commerce, access to payment solutions and online security.

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THE UNITED STATES

Secretariat Report – Malaysia (S366) 3. Trade Policies and Practices by Measures 3.1 Measures Directly Affecting Imports 3.1.1 Customs procedures, valuation and requirements Page 39, Paragraph 3.9: Malaysia bases its customs valuation on the Customs (Rules of Valuation) Regulations 1999, which is “largely” determined in accordance with the WTO Agreement on Customs Valuation. Could Malaysia clarify what is meant by “largely?” In what circumstances does Malaysia not follow the WTO CVA? How often do such circumstances arise?

Answer: Under "Flexible valuation" method, the customs value is in accordance with Article 7 WTO CVA. The customs value shall be determined based on: i. data or information available in Malaysia;

ii. interpreted in a flexible manner; and

iii. reasonably adjusted to the extent necessary to arrive at a customs value (consistent).

Page 39, Paragraph 3.9: Malaysia’s Minister of Finance has the authority to approve a minimum value of goods recommended by the Customs Valuation Management Section. Such action appears to contradict statements that the transaction value is used. When is the minimum value used compared to the transaction value? Under what circumstances is a minimum value used?

Page 39, Paragraph 3.9: Could Malaysia provide a timeline on the adoption of car and motorcycle pricing methods? Can Malaysia provide assurances those methods will be consistent with the WTO CVA?

Answer: Malaysia is undertaking a review to adopt the transaction value method for passenger cars. As for motorcycles, the valuation is consistent with the WTO CVA since it is not subjected to the gazette pricing system.

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3.3.4 Competition policy and price controls 3.3.4.1 Competition policy 3.3.4.1.1 Legal framework Page 66, paragraph 3.117: The Secretariat report states that Malaysia is the “only country in ASEAN with a competition law that does not provide for merger and acquisition control.” Please explain why this is the case and identify what plans, if any, Malaysia has to put in place such measures in the near future.

Answer: Malaysia’s Competition Act focuses on anti-competitive activities and abuse of dominance. However, Malaysia will be conducting a study on the merger and acquisition control in the future.

3.3.6 Government Procurement 3.3.6.1 Overview Page 70, Paragraph 3.141: The Secretariat reports that, due to the nature of the Malaysian procurement system, no data on annual purchases by procurement method or origin are available. Please provide figures, or estimates, on the number and value of government procurements that are made available as international tenders relative to domestic tenders.

Page 70, Paragraph 3.147: The Secretariat reports that government procurement is divided into domestic tenders and international tenders. Please identify how companies are defined as “domestic.” Is it based on the location of the supplier, the nationality of ownership, the origin of goods or services, or through other methods?

Answer: Domestic companies are defined as those incorporated in Malaysia.

Page 71, Paragraph 3.149: The Secretariat outlines the components of the Industrial Collaboration Programme (ICP), which includes offsets and counter trade applied to procurement from foreign suppliers for contracts of about RM 50 million. Please confirm whether an ICP-covered procurement from a foreign suppler would have both offset and counter trade elements, or would an authority such as the TDA choose whether to apply one or the other to a specific procurement.

Answer: ICP-covered procurement from a foreign supplier may have either offsets or counter trade or both elements. The decision on whether offsets or counter trade is implemented based upon mutual agreement between the supplier and the procuring agency with the advice from TDA.

3.3.7 Intellectual property rights 3.3.7.1 Overview Page 74, paragraph 3.166: What is the role of MyIPO related to “copyright protection?”

Answer: MyIPO is responsible in administering copyright legislation and regulations, as well as developing and managing procedures to ensure compliance of Copyright Act 1987. Page 74, paragraph 3.169: The Secretariat report states that Malaysia is reviewing the Copyright Act 1987 (last amended in 2012). Please provide a summary of the subject matter of the types of copyright issues expected to be reviewed.

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Answer: The amendment may include overall review of copyright terminologies used in copyright related international treaties, provisions relating to Collective Management Organization, and provisions relating to limitations and exceptions.

 What steps is the Government taking in connection with its review of the Copyright Act 1987, as amended 2012? What is the timeline for this process?

Answer: The Government will conduct consultations with stakeholders and relevant government agencies. The process is expected to be completed in the course of 2018.

 Please provide a summary of the subject matter of the types of copyright issues expected to be reviewed. Are amendments to the Copyright Act anticipated and, if so, in what areas?

 What amendments, if any, is the Government contemplating in connection with areas such as (a) copyright term; (b) technological protection measures; and (c) internet service provider liability?

Answer: Malaysia is not reviewing the copyright term. The technological protection measures and internet service provider liability may be reviewed in line with copyright related international treaties and other international commitments.

Page 74, paragraph 3.169: The report indicated that Malaysia protects GIs under the Geographical Indications Act 2000. In examining GIs, can Malaysia please identify the criteria it uses to determine whether a term is generic in Malaysia? In addition, does Malaysia identify generic components of GIs that consist of compound terms?

Answer:

 The term is generic if the relevant indication is identical with the term customary in common language as the common name for such goods or services in Malaysia. With regards to GI for product of vine of other country, the term is generic if the relevant indication is identical with the customary name of a grape variety existing in Malaysia as of 1 January 1995.

 Malaysia recognizes the components of a compound GI when it forms part of the whole GI and not when it is only used as a generic component.

Page 76, paragraph 3.178: The report states: “The legislation on trade secrets remains the same as described in the previous Review: there is no formal registration process for trade secrets or confidential information.” The accompanying footnote references WT/TPR/S/292/Rev.2, 8 April 2014, which explains that trade secrets are covered under a breach of confidence theory in Malaysia. Are there criminal penalties for trade secret theft/theft of confidential information in Malaysia? If so, what are the penalties for theft of confidential information? Is this a crime that is generally prosecuted in Malaysia?

Answer: Malaysian law in this area remains based on English law and there is no formal registration process for trade secrets or confidential information. A breach of confidence is generally actionable in the courts provided the following three conditions are met:  the information is confidential;

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 the information is disclosed in circumstances importing confidentiality; and  there must be actual or anticipated unauthorized use or disclosure.

Page 77, paragraph 3.180: The report indicates that copyright registration and deposit is voluntary in Malaysia. Are there any statistics regarding the number of copyright registrations issued in Malaysia? (See Table 3.21 which contains IPR data on other types of intellectual property but not copyright.)

Answer: A total of 9,064 copyright voluntary notifications were received for the period June 2012-17 January 2018.

3.3.7.2 Enforcement Page 77, paragraph 3.181: The report indicates that Malaysian customs officers have an ex officio authority to detain or suspend the release of goods deemed to be infringing on copyrights and trademarks. We understand that on December 29, 2017, the Malaysian Border Security Agency Act 2017 (Act 799) entered into force. This Act establishes a new agency, the Malaysian Border Security Agency (Agensi Kawalan Sempadan Malaysia, AKSEM), which will be “responsible for curbing smuggling and other illegal activities along the country’s land borders.” Please describe more about the launch of this new agency and how its work might intersect with IPR enforcement at the borders.

Answer: The objective of the establishment of the Malaysia Border Security Agency (AKSEM) is to secure the Malaysian land border against any smuggling or other illegal activities and for associated matters. One of the functions of AKSEM provided under paragraph 4(d) of the Malaysian Border Security Agency Act 2017 [Act 799] is to prevent and suppress the commission of an offence in relation to smuggling activities or other illegal activities at the Malaysian land border. For the purpose of carrying into effect the provisions of the Act, a number of officials will be appointed from relevant agencies such as Police, Customs, Immigration, National Anti-Drugs Agency, and National Kenaf and Tobacco Board, as provided under Section 13 of the Act. Further, by virtue of Section 14 of the Act, the officers of AKSEM have all the powers of a police officer of whatever rank as provided for under the Criminal Procedure Code [Act 593] and such powers shall be in addition to the powers provided for under this Act. Therefore, if there is any offence relating to goods including of goods deemed to be infringing on copyrights and trademarks committed at the Malaysia land border, the officers of AKSEM have powers to prevent and suppress such commission of the offence. This enforcement power shall however, be read together with other laws relating to copyright/intellectual property.

Page 77, paragraph 3.182: The Secretariat report stated that since the last TPR in 2014, no cases have been brought to the Copyright Tribunal. Are there possible explanations that might explain this situation? What efforts could be taken to encourage actions to be brought to the Tribunal? Do police/investigators have ex officio authority for copyright violations?

Answer:

 The Government is not involved in civil disputes between disputing parties. Most cases were not brought to the attention of Copyright Tribunal because there may have been amicable settlement between the disputing parties.  More awareness relating to Copyright Tribunal will be organized jointly by CMO and Copyright Office.  Section 50 of Copyright Act 1987 empowers any Assistant Controller or Police not below the rank of Inspector a power to investigate any offence under Section 41 of Copyright Act 1987.

At page 78, paragraph 3.184: The report states that “MyIPO has also been making efforts to improve IPR enforcement. For example, in 2015, the 2nd Global IP Valuation Conference was held in Malaysia as a platform to enhance understanding of IP valuation among stakeholders; in March 2016, the Government introduced an IP Filing Fund under the 11th MP, which aims at encouraging

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- 62 - and assisting youth, students and local communities to file IPs. MyIPO also provides various training programmes such as the IP summer camp, IP Funtastic Programme, and other IP awareness programmes.” Do you have any data that you can share on the results of MyIPO’s efforts to improve IPR enforcement?

Answer: The IP Filing Fund which started in 2016 has been successful in funding 274 filings in year 2016 and 265 filings in year 2017 of trademarks, patent, copyright and industrial design applications. This may enable the inventor to enforce their rights after registration has been completed.

4. Trade Policies by Sector 4.3.2 Financial services Page 108, paragraph 4.98: The Secretariat report does not mention restrictions on the ability of financial institutions to outsource systems and processes that were implemented by Bank Negara in 2013. We understand that Bank Negara may be contemplating revision of the policy such that financial institutions would be required to store data in Malaysia. Requiring that data be locally stored does not increase security or access to data. In terms of security, increasing the number of access points that must be protected and denying financial institutions the ability to utilize global hardware and software systems throughout worldwide operations can lead to security vulnerability. In terms of effective financial supervision, financial regulators can and do have access to data without data being kept locally, and requirements for local data storage can restrict the ability of supervisors from getting the data they need for effective supervision of a financial institution’s worldwide operations. Financial institutions also rely on the ability to transfer data in order to fully realize commercial opportunities, effectively manage worldwide risk, and operate in the most efficient way for the consumer. Is Malaysia considering a change to the outsourcing policy to require that data be locally stored, and will Malaysia consult with stakeholders before implementing additional restrictions on outsourcing?

Answer: Malaysia advocates policies that promote efficiency, innovation and creativity while ensuring that domestic financial stability is preserved. This key principle underpins the formulation of Malaysia’s outsourcing policy. The increasing complexity and extent of outsourcing arrangements and the related data security breaches incidents in recent years were among important considerations that Bank Negara Malaysia has taken into account in its review of the policy on outsourcing.

The exposure draft was published in September 2017 for a 2 month consultation. Page 109, paragraph 4.102: The Secretariat report notes that Malaysia evaluates investment in the financial sector based on prudential considerations and the best interest of Malaysia criteria. It is unclear how Malaysia applies the listed qualitative factors for determining the best interest of Malaysia. Is the percentage interest in a Malaysian financial institution sought by a foreign firm considered when determining whether a transaction is in the best interest of Malaysia?

Answer: The Financial Services Act (FSA) 2013 and Islamic Financial Services Act (IFSA) 2013 mandates Bank Negara Malaysia to assess applications for acquisition of shares in accordance with the prudential and best interest of Malaysia criteria based on Schedule 6 of the FSA and IFSA.

Could complete ownership by a foreign firm of a Malaysian financial institution ever be determined to be in the best interest of Malaysia?

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Could a foreign financial institution increasing its existing interest to a controlling share ever be determined to be in the best interest of Malaysia?

Is there a process for foreign firms to seek guidance as to whether a prospective transaction is likely to be approved under the stated best interest of Malaysia test, and if not, the reasons for the determination?

Answer: Interested parties can contact Bank Negara Malaysia to obtain more guidance on the licensing process.

Questions based on the Report by Malaysia (WT/TPR/G/366) 3. Trade Policy Developments 3.2 Initiatives to facilitate trade Page 8, paragraph 3.5: We appreciate the information on Malaysia’s efforts to implement good regulatory practices (GRPs) at the national and sub-national levels. Does Malaysia have a central entity to track the implementation of GRPs?

Answer: MPC is the National Oversight Body to oversee and coordinate the implementation of GRP.

What other systems or procedures are in place to determine the extent to which GRPs have been applied?

Answer: Currently the initiatives have been extended to States and Local Authorities in Malaysia and are expected to be completed by 2020.

The report mentions regulatory impact assessment (RIA). Does Malaysia apply RIA in all cases? If not, for which subset of regulations does Malaysia apply RIA?

Answer: RIA is applied to all regulations that have high impact to trade and investments. However exemption is given to regulations that have impact on sovereignty, health, security and environment.

Page 10, paragraph 3.16: The report states that Malaysia is developing efforts to reduce unnecessary regulatory procedures. How is this work undertaken, and by what government agency? Will the process be open to stakeholders outside of Malaysia?

Answer:

 MPC is the government agency in-charge of reviewing existing regulations through the Reducing Unnecessary Regulatory Burdens (RURB) project. This project is focused on addressing the cost arising from regulations and enforcement that is burdensome to business. Recommendations will be made to reduce those burdens that affect the respective industry/sector.

 The process is open to all including foreign stakeholders. Details can be accessed at: http://grp.mpc.gov.my.

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Page 10, Paragraph 3.17: The Government Report mentions 12 national key export sectors — including machinery & equipment, automotive parts and medical devices — for which Malaysia is undertaking “initiatives... aimed at moving up the products value chain through enhancing downstream activities.”

 Could Malaysia provide additional details regarding these initiatives, such as the specific measures used to enhance downstream activities, the nature and extent of any financial or other incentives provided to producers in these sectors, etc.?

Answer: Specific measures undertaken include the establishment of the National Export Council (NEC) as a high level platform to decide on policies and measures to enhance and improve export eco-system. Specifically, it addresses the need to improve the infrastructure to support trade, reduce unnecessary regulatory procedures, standards and certification, non-tariff barriers, market access, skilled talent and access to financing. Among notable initiatives through NEC: 1. Medical Device  Establishment of Medical Device Focus Group to expand the development of the medical device industry; and  Establishment of Medical Device Investment Advisory Panel (MDIAP) to draw up strategic initiatives and discuss related industry issues. 2. Machinery & Equipment (M&E)  Discussions with the industry and agencies to identify export strategies to build the supply chain ecosystem and groom the local SMEs to export their products. Focus is given on sub-sectors such as semiconductor, oil & gas, robotics & factory automation and material handling. 3. Automotive parts  For Automotive sector, strategies have been outlined in the National Automotive Policy 2014.

 Could Malaysia explain why these programs have not been reported in its subsidy notifications under Article 25 of the SCM Agreement?

Answer: The 12 national key export sectors were only identified for export promotion purposes without additional financial support from the government. The measures are part of the initiatives to encourage manufacturing companies incorporated in Malaysia including SMEs to move up the value chain, adding greater value to the products to enable them to integrate better in the global value and supply chains. Malaysia is committed to fulfil its obligations under the Agreement on Subsidies and Countervailing Measures (ASCM).

Page 10, Paragraphs 3.18 - 3.20: The Government Report mentions various investment promotion programs through the Malaysian Investment Development Authority targeting high-tech, high value-added, knowledge-intensive industries and R&D activity in new growth areas.

 Could Malaysia provide additional details regarding these programs in terms of the specific measures used to encourage these sectors, the nature and extent of any financial or other incentives provided to producers in these sectors, etc.

Answer: The measures will focus on enhancing R&D, more sustainable manufacturing practices, greater compliance to global standards and collaboration between stakeholders. Five strategies identified: i. moving towards complex and diverse products; ii. enhancing productivity through automation; iii. stimulating innovation-led growth;

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iv. strengthening growths enabler; and v. ramping up internationalization.

Information on incentives and eligibility criteria can be accessed at https://incentives.mida.gov.my.

 Could Malaysia explain why these programs have not been reported in your subsidy notifications under Article 25 of the SCM Agreement?

Answer: The measures are part of the initiatives to encourage manufacturing companies incorporated in Malaysia to move up the value chain, adding greater value to the products to enable them to integrate better in the global value and supply chains. Any investment incentives would be eligible for either the Pioneer Status or Investment Tax Allowance schemes which have been notified under the Subsidies and Countervailing Measures (ASCM).

Page 14, Paragraph 3.41: The report states that the government has established the Malaysia Halal Council. What opportunities do stakeholders outside of Malaysia have to provide input on the trade-related aspects on halal policy?

Answer: Inputs on trade-related aspects on halal policy can be forwarded to the Secretariat of the Malaysia Halal Council, i.e. Halal Industry Development Corporation and JAKIM. Under the National Policy on the Development and Implementation of Regulations, introduced by the government on 15 July 2013 (Government Circular No.1 / 2013), formulation and revision of policies have to undertake the Regulatory Impact Analysis and Public Consultation. Public Consultation is conducted through invitation-based engagements or public notification via relevant webpages. The Government has also adopted “OECD Guiding Principles for Regulatory Quality and Performance (Annex 1)” as reference in ensuring process of developing regulatory procedures conforms to principles of Good Regulatory Practice (GRP).

Questions not related to either the government or secretariat report We understand that Malaysia is in the process of developing a standard for Halal medical devices (JSM17/ISC/I-01R0).

 Can you provide information on the status of this standard?

Answer: The Halal Medical Device Standard is currently in the development stage and undergoing public consultations. A few round table discussions have been organized to obtain comments and feedback from the relevant authorities and key industrial players from both domestic and international. The second round of public comments is tentatively scheduled in March 2018. Details can be accessed at: http://www.jsm.gov.my/public-comment#.WmWE-DSYPcs.

 When do you expect to notify the measure to the WTO?

Answer: Still in the development stage. However, presently, the Halal Medical Device Standard is intended to be a voluntary measure. Representatives of the medical device industry have noted that the scope of the standard currently under consideration does not distinguish between medical devices that contain organic matter, and those that do not.

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Could you clarify whether any standard expected to be adopted differentiates between the two? If it does not, why not?

Answer: The standard is still in development stage. Any comments should be channelled during the second round of public consultation which is tentatively scheduled in March 2018. Details will be accessible at: http://www.jsm.gov.my/public-comment#.WmWE-DSYPcs.

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FOLLOW-UP QUESTIONS FROM THE UNITED STATES

RD/TPR/887 Government Procurement Page 52: The United States asked Malaysia to provide figures or estimates on the number and value of government procurements that are made available as international or domestic tenders. Malaysia replied that international companies that are incorporated in Malaysia can participate in local tenders, but provided no statistics or estimates. Follow-up question: Can you please provide the requested number and value figures or estimates, or confirm that currently there are no statistics or estimates available on the number and value of government procurements that are international tenders or domestic tenders?

Answer: Due to the decentralised government procurement system, no data on annual purchases based on procurement method and origin are available.

Trade Policy Developments Page 56: The United States asked Malaysia if they applied a regulatory impact assessment (RIA) in all cases. Malaysia replied that RIA is applied to all regulations that have a “high impact to trade and investment.” Follow-up question: Is there a monetary or other threshold for what Malaysia considers a “high impact to trade and investment?” If not, how does Malaysia determine which regulations “have a high impact to trade and investment?”

Answer: RIA is applied to regulations that are likely to have significant regulatory impact on business, trade and investment. However any proposals with minor changes that do not substantially alter the existing regulatory arrangement for businesses and involve a very small initial one-off cost to business with no subsequent recurring costs, do not require RIA.

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NEW ZEALAND

Secretariat Report – Malaysia (S366) SECTION 2: TRADE AND INVESTMENT REGIMES 2.3: Trade Agreements and Arrangements WT/TPR/S/366, section 2.3.1, page 27, paragraph 2.27 “…as at May 2017, notifications were outstanding in the areas of: agriculture (domestic support); quantitative restrictions; and customs valuation…” Question:  Can Malaysia provide an update on when it intends to provide its outstanding notifications on agriculture (domestic support); quantitative restrictions; and customs valuation?

Answer: Malaysia has submitted its notification on customs valuation on 18 January 2018. Malaysia is in the process updating other outstanding notifications.

SECTION 3: TRADE POLICIES AND PRACTICES BY MEASURE 3.2.2: Taxes, Charges, and Levies WT/TPR/S/366, section 3.2.2, page 52, paragraph 3.48 Section 3.2.2, page 52, para 3.48, notes that Malaysia levies export taxes to ensure sufficient supply of raw materials for domestic downstream industries and for food security purposes. Question:  When does Malaysia intend to review specific rates of the export duties listed in Table 3.11?

Answer: At present, Malaysia has no plans to review its export duties. This is to ensure adequate supply of raw materials.

3.3.6: Government Procurement WT/TPR/S/366, section 3.3.6.1, page 70, paragraph 3.141 “Foreign suppliers are not allowed to participate in domestic tenders; international tenders are called if there are no domestically produced supplies or services available.” Questions:  Could Malaysia explain how international suppliers are notified when international tenders are called?; and

 if there is a process for suppliers to indicate that they would be interested in international tenders should they be called?

Answer: Notice of international tenders will be advertised and published online through the MyPROCUREMENT portal at: http://myprocurement.treasury.gov.my/.

WT/TPR/S/366, section 3.3.6.2, page 71, paragraph 3.148 “For specific works, if domestic contractors do not have the expertise and capability, tenders may be called on a joint-venture basis between domestic and foreign contractors to encourage the transfer of technology.” Questions:  Could Malaysia explain how it determines whether tenders will be called on a joint-venture basis? ; and

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 if there is a process for suppliers to indicate that they would be interested in participating in joint-venture tenders?

Answer: Malaysia does not limit participation in international tenders to only joint-venture companies. Tenders on a joint-venture basis are determined when domestic contractors do not have the expertise and capability. International tenders may be invited if goods or services could not be procured locally. Foreign companies may participate directly in international tenders or through joint ventures with local companies. Any condition imposed will be stated in the tender documents.

WT/TPR/S/366, section 3.3.6.2, page 71, paragraph 3.155 “Malaysia maintains a supplier registration system. Any suppliers intending to participate in government procurement of goods and services must register with the Ministry of Finance. For construction works, they must register with the Contractors and Entrepreneurs Development Division (Bahagian Pembangunan Kontraktor dan Usahawan – BPKU) of the Ministry of Works and the Construction Industry Development Board Malaysia (CIDB).” Questions:  Could Malaysia clarify if foreign suppliers able to register on the supplier registration system?; and

 what are the requirements to register on the system?

Answer:  Foreign companies may participate in local tenders, provided they incorporate a local company in Malaysia.  All companies and corporate bodies, which are incorporated in Malaysia, as well as individuals intending to participate in Government procurement i.e. to do business with the Government, are required to undergo a registration process. Registration authorities are as below:

Category Registration Authorities

Supplies Government Procurement Division, Ministry of Finance Malaysia

Services Government Procurement Division, Ministry of Finance Malaysia

Works Construction Industry Development Board (CIDB) Malaysia

Guidelines for registration can be obtained at:

Category Website

Supplies https://www.eperolehan.gov.my/supplier-registration-guide

Services

Works http://cimsapp.cidb.gov.my/SMIS/regcontractor/index

SECTION 4: TRADE POLICIES BY SECTOR 4.1.1.4: Trade Policy WT/TPR/S/366, section 4.1.1.4, page 89, paragraph 4.43 Section 4.1.1.4 of the Secretariat's Report, page 89, para 4.43, notes that Malaysia continues to apply tariff quotas, particularly on agricultural products. Question:  Could Malaysia explain what plans it might have for improving the administration of, and ultimately phasing out, its tariff quotas?

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Answer: Malaysia endeavors to improve its TRQ administration whereby quotas are allocated on first come first serve basis and the information are presented on relevant websites (e.g. MOA and its Agencies’ websites and Malaysia National Trade Repository webpage). Other improvements are being considered and will be implemented in due time. At present, Malaysia does not have any plans to phase out the TRQs.

WT/TPR/S/366, section 4.1.1.4, page 90, paragraph 4.44 Section 4 .1.1.4 of the Secretariat's Report, page 90, para 4.44, notes that quota allocation is on a first-come-first-served basis. Question:  Are there any other conditions in play when granting quota allocation?

Answer: Other conditions include registration with Companies Commission of Malaysia and Department of Veterinary (DVS) Malaysia, obtaining approval to import from DVS and subscription to ePermit service provider.

4.1.2: Fisheries WT/TPR/S/366, section 4.2.2, page 95, paragraph 4.56 In the context of setting out key aspects of Malaysia’s fishing regime, including efforts to combat IUU fishing and fishing for overfished stocks, section 4.1.2 of the Secretariat’s report, p95, para 4.56 notes that fishers’ associations will be given “special incentives” to assist their members in buying deep sea vessels. An increase in the marine catch to 1.76 million tonnes by 2020 is predicted. Questions:  Can Malaysia outline these incentives and how it will ensure that such incentives will not undermine the objective of combatting IUU fishing, or fishing for overfished stocks, given that the support will be administered by fishers’ associations rather than a government agency?

 Could Malaysia further outline how it will ensure that such incentives will not result in an unfair competitive advantage in favour of Malaysian fishers?

Answer: At present, the Malaysian Government does not provide incentives to fishers’ associations to assist their members in acquiring deep-sea vessels.

4.2.2 Energy WT/TPR/S/366, section 4.2.2, page 100, paragraph 4.75 and page 104, paragraph 4.84 – 4.86 Section 4.2.2 of the Secretariat's Report, page 104, para 4.84, notes that at the end of 2014 Malaysia removed subsidies for liquid fuels, which applied to petrol and diesel, but the subsidy for liquefied petroleum gas was maintained. Paragraphs 4.85-4.86 of the Secretariat’s Report further detail changes to the Gas Supply (Amendment) Act 2016 and the Economic Transformation Programme that regulates gas prices to the power sector, and para 4.75 refers to plans under the Eleventh Malaysia Plan (MP11) to reduce gas subsidies, although petrol and diesel prices will continue to be regulated. Question:  Has Malaysia considered utilising the APEC Voluntary Peer Review for Reform of Inefficient Fossil Fuel Subsidies as a mechanism to further assist the design of a comprehensive fossil fuel subsidy rationalisation programme with transitional policies?

Answer: Malaysia has yet to consider utilising APEC Voluntary Peer Review for Reform of Inefficient Fossil Fuel Subsidies. However, Malaysia had volunteered to undergo the APEC Peer Review on Energy Efficiency (PREE) in 2011.

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The exercise to rationalise gas prices for the power sector is well underway and making good progress. The Malaysian Government has developed a mechanism and formula, after extensive consultations among EPU, the National Oil Company (PETRONAS), Energy Commission and KeTTHA.

REPORT BY MALAYSIA (WT/TPR/G/366) SECTION 3: TRADE POLICY DEVELOPMENTS 3.2: Initiatives to Facilitate Trade WT/TPR/G/366, section 3.2, page 13, paragraph 3.39 The Draft National SME Development Bill 2016 “aims to improve the approach to SME and entrepreneurship in Malaysia as well as simplify the regulatory and policy environment for SMEs. It covers six (6) key areas, namely, general guidelines, institutional framework, market access, special incentives such as standard payment terms and government procurement, SME funding and responsibilities of those parties involved in the proposed Act.” Question(s):  Can Malaysia give any more detail on what the planned improvements in procurement to simplify the regulatory and policy environment for SMEs will consist of?

Answer: The procurement terms in the Draft National SME Development Bill 2016 are a general statement to indicate the commitment of the Government to provide greater market access for SMEs. Detailed procurement policy will be introduced upon enactment of the Bill.

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CHINESE TAIPEI

PART I: REGARDING THE SECRETARIAT REPORT (WT/TPR/S/366) 2. TRADE AND INVESTMENT REGIMES 2.2 TRADE POLICY FORMULATION AND OBJECTIVES 2.2.1 STRUCTURE OF TRADE POLICY FORMULATION Page 24 (Para 2.12) On 16 October 2014, the Guidelines on Public Consultation Procedures were launched by the Chief Secretary to the Government of Malaysia, serving as a reference for ministries and agencies in implementing public consultations. According to the Government, public consultation is one of the key tools to improve transparency, efficiency and effectiveness of regulation and is an important element of Regulatory Impact Analysis (RIA). Regular dialogues and consultations with the business community, including chambers of commerce and industry associations, are undertaken by various ministries and agencies to obtain feedback from the private sector. For example, the Malaysia Productivity Corporation (MPC) coordinates ministries and agencies in the performance of RIAs. 1. With regard to formulating trade policies and making policy decisions, how does the Ministry of International Trade and Industry (MITI) utilize the Public Consultation Procedures to integrate opinions from the private sector? How does this mechanism affect the trade policies? On the other hand, is there a similar mechanism or channel for foreign investors and stakeholders to make policy suggestions?

Answer: Ministry of International Trade and Industry (MITI) is committed in implementing Good Regulatory Practice (GRP) as underlined in the National Policy on the Development and Implementation of Regulation. As part of the GRP, public consultation is one of the compulsory processes when formulating a new policy/regulation or reviewing existing policy/regulation to ensure transparency and accountability. MITI provides various public platforms such as meetings, dialogues, workshops and online public feedback through the MITI portal to reach out to the stakeholders. These include interested local and foreign stakeholders such as business associations, chambers, councils, industry key players, and embassies. This inclusive approach in policy/regulatory formulation enhances the quality of proposals and at the same time strengthens greater awareness and buy-in from the public.

2. While shaping its trade policy, the Malaysian government is actively seeking public support. In the current era of Internet and mobile devices, many people obtain information via new media sources and social networking websites. How does the Malaysian government collect public opinions in this way and thus seek public support?

Answer: Malaysian Government applies ‘No Wrong Door’ policy. As such any queries will be responded by the respective ministries. MITI provides an open platform and welcomes the public to channel their views in any trade/industry matters via the ministry’s website to ensure inputs from the stakeholders are taken into account. In the MITI portal, there is a specific web page that caters for enquiries, views and feedback. MITI through its agency, Malaysia Productivity Corporation had established a GRP portal which is used as a platform for engagement with key stakeholders for feedback in drafting new policies.

2.2.2 Trade policy objectives Page 25 (Para 2.16) The Economic Planning Unit (EPU) in the Prime Minister's Department developed the 11th Malaysia Plan (11th MP) for 2016-20, as the final part of Vision 2020. The main aim of the 11th MP is to rebrand Malaysia as a centre for high technology and global activities. Strategies in the next five years include strengthening investment in the manufacturing and services sectors, and promoting both domestic and foreign investment. It identified six strategic thrusts:

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a. enhancing inclusiveness towards an equitable society; b. improving well-being for all; c. accelerating human capital development for an advanced nation; d. pursuing green growth for sustainability and resilience; e. strengthening infrastructure to support economic expansion; and f. re-engineering economic growth for greater prosperity.

Page 25 (Para 2.17) The 11th MP also highlighted six "game changers" to accelerate Malaysia's development: unlocking the potential of productivity; lifting the bottom 40% of households towards a middle-class society; enabling industry-led technical and vocational education and training; embarking on green growth; translating innovation to wealth; and investing in competitive cities. 3. Please kindly provide more detailed information on the policies or strategies relevant to human capital development in the 11th MP.

Answer: In the 11th MP, efforts to accelerate human capital development will continuously focus on improving productivity growth and reducing dependency on low skilled foreign workers; enabling more industry collaboration in Technical and Vocational Education and Training (TVET) landscape; strengthening the lifelong learning initiatives; and improving the quality of education system. These can be achieved by deliberative strategies to be undertaken by the Government as follows: Labour Market:  Improving labour productivity and wages through the shift to high-skilled jobs  Enhancing labour market operations to maximise efficiency and effectiveness  Improving management of foreign workers TVET:  Strengthening the governance of TVET for better management  Enhancing quality and delivery of TVET programmes to improve graduate employability  Rebranding TVET to increase its attractiveness Lifelong Learning:  Improving effectiveness of programmes to meet learning needs  Improving regulatory and funding support to broaden access  Enhancing access and quality to improve student outcome Education:  Enhancing governance and stakeholder partnerships for better school support  Raising the quality of graduates and programmes, and strengthening research for innovation  Strengthening Institute of Higher Education governance and financial sustainability towards institutional excellence

2.2.3 Trade laws and regulations Page 26 (Para 2.21) Other legislative changes include: the Gas Supply (Amendment) Act 2016, which came into effect in January 2016; various amendments to the Food Regulations 1985 to, inter alia, harmonize with the Codex standard, and regulate the sale of alcoholic beverages; the amendment to the Malaysian Biofuel Industry Regulation 2014, to reduce dependency on fossil fuels for a greener environment and expand palm oil usage; and the implementation of the Import Legality Regulation under the Timber Legality Assurance System, to ensure all imported timber is from legal sources. 4. We would like to congratulate Malaysia on your legislation changes on the Food Regulations 1985. We would like to learn what the legislation changes are in details and how these amendments comply with the international standards such as the Codex Standard.

Answer: Amendments to the Food Regulation 1985 are made in a transparent manner and take into account the views of relevant stakeholders through public engagements including dialogue

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3. TRADE POLICIES AND PRACTICES BY MEASURE 3.3 MEASURES AFFECTING PRODUCTION AND TRADE 3.3.2 Standards and other technical requirements Page 63 (Para 3.102) The Government aims to make Malaysia a hub for halal food products. All meat, processed meat products, poultry, and egg products, domestically produced or imported, must receive halal certification from the Department of Islamic Development Malaysia (JAKIM) or any foreign halal certification body recognized by JAKIM prior to importation and distribution in Malaysia. Other than swine, the slaughtering of animals and production of animal-based products for export to Malaysia must be conducted according to halal requirements. The Department of Veterinary Services (DVS), in collaboration with JAKIM, inspects slaughterhouses and processing plants overseas periodically, to ensure compliance with Malaysia's import requirements. 5. We would appreciate if Malaysia could provide the numbers of Halal certifications approved by JAKIM and the numbers by other foreign halal certification bodies recognized by JAKIM to date. Is there any statistics available to show the domestic sales volumes of Halal-certified products by certification authorities? What are the possible reasons for differences in sales between JAKIM certified and foreign certified?

Answer: Currently, there are 6,440 JAKIM’s Halal certified companies. Malaysia recognises 67 foreign Halal certification bodies from 41 countries. At present, there is no statistics available on the sales volume based on Halal-certified products by certification authorities.

6. Regarding to the Halal certification procedures, we would like know if there is any applicant fees, and how the fees are calculated. Are the fees imposed on the domestic and foreign manufacturers all the same? What are the reasons for such differences if there is any.

Answer: Malaysia is currently in the process of reviewing the fees structure on the Halal Certification procedures.

3.3.7 Intellectual property rights Page 73 (Para 3.167) In 2014, MyIPO introduced an IP Renewal One-Stop Centre – the Renewal Lounge – to provide information on procedures and fees of IP renewal. In June 2014, an initial IPR Marketplace Portal was launched to enable IP owners to conduct potential transactions such as IP sale licensing, merchandising and/or franchising of their IP rights. MyIPO also collaborates with Universiti Malaysia Sarawak to introduce IP courses for undergraduate students. 7. MyIPO has launched an initial IPR Marketplace Portal in June 2014. What is the site’s address of the IPR Marketplace Portal? How does it go so far?

Answer: The portal is accessible at: http://iprmarketplace.myipo.gov.my/. Since the launch of the IPR Marketplace in 2014, there are more than 160 listing of IP rights. MyIPO conducted a number of stakeholder engagements to determine the collaboration needed in positioning the IPR Marketplace at a national level. However, the IPR Marketplace is currently being reviewed to take into account stakeholders requirements as well as current trends.

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3.3.7 Intellectual property rights Page76 (Para 3.179) In 2017, the pendency period was 8 months for trademarks. Following the introduction of expedited examination in 2011, it takes 6 months 3 weeks (from the date of filing a request) for a trademark to be granted under the expedited procedures.

Page77 (Para 3.183) The MDTCC has been making efforts to combat the distribution of counterfeit goods, by: establishing working relationships with overseas enforcement agencies including Interpol; establishing and strengthening cooperation between MDTCC and trademark owners; strengthening and mobilizing the Special Taskforce Combating Counterfeit Goods, which involves various government agencies and trademark owners; increasing the monitoring of business-related websites and social media; strengthening cooperation with Customs to increase enforcement action at the border.

Page77 (Para 3.184) MyIPO has also been making efforts to improve IPR enforcement. For example, in 2015, the 2nd Global IP Valuation Conference was held in Malaysia as a platform to enhance understanding on IP valuation among stakeholders; in March 2016, the Government introduced an IP Filing Fund under the 11th MP, which aims at encouraging and assisting youth, students and local communities to file IPs. MyIPO also provides various training programmes such as the IP summer camp, IP Funtastic Programme, and other IP awareness programmes. 8. MyIPO has introduced expedited examination in 2011. What are the requirements for applying for expedited examination?

Answer: Requirements for applying for expedited examination: i. request can be made within four months from the date of filing of the application; and; ii. Form TM5A must be accompanied with a statutory declaration stating the reasons for the request and prescribed fee.

 On what grounds would MyIPO refuse an application for expedited examination?

Answer: Under the Regulation 18A of Trade Marks Regulation, the Registrar may refuse an application for expedited examination if: i. the request is not in the national or public interest; ii. there is no infringement proceeding taking place or no evidence showing potential infringement in respect of the trade mark; iii. registration of the trademark is not a condition to obtain monetary benefits from the Government or institutions recognized by the Registrar; or iv. there are no other reasonable grounds which support the request.

 How many applications for expedited examination for trademarks are made every year? Among them, how many are eligible for expedited examination?

Answer: Statistics for Trademark Expedited Examination Applications 2011–2016

YEAR APPLICATION TOTAL Malaysia Foreign 2011 83 33 116 2012 169 129 298 2013 288 30 318 2014 291 37 328 2015 113 22 135 2016 52 38 90

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Registered Trademark under Expedited Examination 2011–2016

YEAR TOTAL 2011 92 2012 67 2013 163 2014 138 2015 41 2016 38 9. The MDTCC has worked to strengthen cooperation with trademark owners and mobilize the Special Taskforce Combating Counterfeit Goods, which involves various government agencies and trademark owners. Is there any mechanism or program in place to facilitate such cooperation? What are the contents of them?

Answer: The Special Taskforce Combating Counterfeit Goods is held annually where it serves as a forum for stakeholders to exchange information and best practices, and to discuss enforcement activities carried out throughout the year.

 In addition, what measures has the MDTCC adopted to monitor business-related websites and social media?

Answer: MDTCC is also working together with Malaysia Communications and Multimedia Commissions (MCMC) to block access and remove content for fraudulent websites.

4.TRADE POLICY BY SECTOR 4.2 MINING AND ENERGY 4.2.2 Energy Page 99 (Para 4.75) The Eleventh Malaysia Plan (MP11) emphasizes energy efficiency, the development of renewable energy sources, more efficient recovery of gas and oil, and improvement in infrastructure. It also states that piped gas and compressed natural gas subsidies are to be reduced while petrol and diesel prices will continue to be regulated. The National Energy Efficiency Action Plan (NEEAP) 2016-2025 was approved by the Government in January 2016 with several initiatives, including:  promotion of 5-star rated appliances;  Minimum Energy Performance Standards (MEPS);  energy audits and energy management in buildings and industries;  Promotion of cogeneration facilities; and  energy efficiency building design.

10. Could Malaysia please elaborate the implementation, as well as the policy goals of the “National Energy Efficiency Action Plan (NEEAP) 2016-2025”?

Answer: NEEAP 2016-2025 target is to save electricity and reduce the electricity consumption by 8% in year 2025. The focus of the NEEAP strategies and programs are on electricity use in government, industrial, commercial and residential sectors.

 Could Malaysia please further specify relevant policy measures and concrete actions of the “NEEAP”?

Answer: There are 4 main strategic thrusts in NEEAP which are:

1. implementation of Energy Efficiency Plan;

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2. strengthen Institutional Framework, Capacity Development and Training for Implementation of EE Initiatives; 3. establishment of Sustainable Funding Mechanisms to Implement Energy Efficiency Initiatives; and 4. promotion of Private Sector Investment in Energy Efficiency Initiatives. The 3 identified key initiatives are: 1) Equipment Programme Initiative. a. Promotion of 5-Star Rated Appliances b. Minimum Energy Performance Standards (MEPS) 2) Industrial Programme Initiative. a. Energy Audits and Energy Management in Industries b. Promotion of Co-generation 3) Buildings Programme Initiative. a. Energy Audits and Energy Management in Buildings b. Energy Efficient Building Design

 Which measure is more effective for Malaysia to achieve the policy goals of the NEEAP?

Answer: All the key initiatives and its programs listed above have been identified as the most effective measures in achieving the policy goals.

11. We have noted Malaysia’s efforts to promote 5-star rated appliances under The National Energy Efficiency Action Plan 2016-2025. Does this measure target specific brands, types or other classifications of appliances? Moreover, does the government have any concrete measures for promoting 5-star rated appliances?

Answer: The promotion of 5-Star appliances applies to all domestic electrical appliances regulated by Energy Commission Malaysia. The criteria for the selection of the appliances to be regulated under MEPS Standards and Labeling are based upon the standards appliances commonly purchased and used by consumers. By enforcing MEPS, Malaysia targets to ensure that only energy efficient appliances are available in the market. As currently there are about 6.7 million domestic consumers, this has been identified as the easiest and straightforward way to reduce consumption in a household by using energy efficient appliances, in addition to implementing energy management.

4.2.2 Energy Page 103 (Para.4.84) At end-2014, subsidies for liquid fuels, which applied to petrol and diesel were removed, but the subsidy for liquefied petroleum gas was maintained. As noted in the last Review, in 2012 the subsidy was the equivalent of 51% of actual price for LPG, 28% for RON95 petrol, and 32% for diesel. Regulated prices are still used based on the Automatic Pricing System (APM) described in the last Review but without the subsidy element. However, the Government still sets prices based on the components of the APM, which are product cost, operation cost as well as profit margins for oil companies and petrol stations. Since 30 March 2017, retail prices for petrol and diesel have been set on a weekly rather than monthly basis. 12. With respect to the current competitive conditions, are there any differences between domestic and foreign enterprises in the liquid fuel market? Additionally, are there any sunset clauses regarding the aforementioned subsidy? If so, could Malaysia please provide further explanation in this regard?

Answer: There are no differences between treatment for domestic and foreign enterprises in the liquid fuel market. The regulated weekly adjusted prices for petrol and diesel products are applicable throughout the country.

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 Furthermore, given the reserved subsidy for LPG, could Malaysia further elaborate the purpose, criteria, relevant measures, current status, and future plans concerning the subsidy policy for LPG?

Answer: The current policy on subsidy for LPG is aimed at ensuring affordable retail price for consumers/household sector. Recognizing there are abuses where LPG meant for domestic use is consumed by non-domestic sectors, the Government through Ministry of Domestic Trade, Cooperative and Consumerism will enhance its enforcement. Further review on the mechanism will also be undertaken. In the future, subsidy for the LPG will be gradually removed to reflect market price.

 Additionally, are there any sunset clauses regarding the aforementioned subsidy? If so, could Malaysia please provide further explanation in this regard?

Answer: In line with the fiscal reform initiative, Malaysia has successfully undertaken subsidy rationalization programme. The programme will be gradually expanded to ensure effectiveness of Government spending and maintaining long-term economic resilience.

4.2.2.2 Electricity Page 105 (Para 4.92) For electricity from renewable sources, SEDA sets the feed-in tariffs for electricity from solar photovoltaic (PV), biogas, biomass, small-scale hydro plants, and geothermal sources. The feed-in tariff varies depending on the source of electricity and the installed capacity, from RM 0.7424 per kWh for small solar PV installations to RM 0.24 per kWh for hydro plants with installed capacity of 10-30 MW. For solar PV, biogas, and biomass plants, the basic feed-in tariff may be adjusted to take account of various factors. These factors include the use of locally produced equipment when the adjustment is an additional RM 0.05 per kWh. 13. Could Malaysia please provide further information concerning the standard, ratio, and categories of feed-in tariffs (FIT) for power generated from renewable sources? Furthermore, as “the use of locally produced equipment” may also be a factor that may affect FIT for the aforementioned generated power, could Malaysia please specify the concrete measures or policies in this regard?

Answer: FiT categories in Malaysia are differentiated according to its resources namely, Solar, Biogas, Biomass, Small Hydro and Geothermal. The FiT rate provided under the Renewable Energy Act 2011 (Act 725) can be accessed at: http://seda.gov.my/.

14. With respect to developers within the renewable power sector, what is the ratio of foreign to local enterprises? Would these foreign enterprises be obliged to comply with the requirements on “the use of locally produced equipment” so as to set up business in Malaysia?

Answer: RE developers (Local or Foreign) under FIT are not obliged to use locally produced product.

PART II: REGARDING THE GOVERNMENT REPORT (WT/TPR/G/366) 3. TRADE POLICY DEVELOPMENTS 3.2 INITIATIVES TO FACILITATE TRADE Further Liberalisation on Import Licence Requirement Page 9 (Para 3.11) As an on-going effort to facilitate trade, the Government continues to review the import licencing requirement. In this connection, the import licence requirement for motorhomes, motorcycle

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helmets, used tyres and flour was abolished effective 1 September 2016; and 181 tariff lines of iron and steel products effective 1 August 2017. The implementation measure is gazetted in the Customs (Prohibition of Imports) (Amendment) Order 2016 and 2017. 15. In its efforts to liberalize trade and diminish items requiring import licences, would Malaysia please further explain how the mechanism works when considering the abolishment of import licences for specific items? What factors are taken into consideration during this process?

Answer: Malaysia will continue to review the import licensing requirements to facilitate trade and industry while taking into account the national socio-economic, safety and health interests.

16. What are the plans or time tables for further abolishment of import licenses for existing items? Will Malaysia make preliminary announcements beforehand for those items which are going to be exempted from the list that requires import licences?

Answer: Malaysia will continue to review the import licensing requirements to facilitate trade and industry while taking into account the national socio-economic, safety and health interests.

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SINGAPORE

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT 2.4.1 Investment Regime Page 35 (Para 2.56) 1. The Secretariat Report highlights Malaysia’s Business Licensing Electronic Support System (BLESS), a virtual one-stop services centre that helps companies apply for business licenses and permits. Could Malaysia provide more information on the following: (i) Are all companies intending to operate in Malaysia (i.e., both Malaysian and foreign companies from any sector) eligible to apply for business licenses and permits via BLESS? Are there any conditions or restrictions applied to foreign companies from utilising BLESS to apply for business licenses and permits?

Answer: All companies intending to operate in Malaysia either Malaysian or foreign are eligible to apply for business licenses and permits via BLESS. Authentication for registration will be done through MyIdentity (National Registration Department) for Malaysian citizen whereas passport information should be made available for foreign users or companies. As of 2017, there are 214 licenses available with participation from 75 federal agencies and the list is expanding following the development expansion of BLESS. Each license published will have their own set of conditions and requirements based on current policies by Licensing Agencies. Companies can browse and go through Check List and Guidelines provided along with the intended business license.

(ii) What is the average time taken to receive approval and the business license / permit itself for applications done via BLESS?

Answer: Duration for approval varies by License in BLESS. Licensing Agency can set their client charter based on SOPs agreed by their management. Some licenses require less time to process. For example, approval for license under the Disease Control Division, Ministry of Health (MOH) can be received within hours. Other licenses may take longer time based on other requirements such as on-site or premise inspection.

(iii) Are there alternative approaches or systems to apply for a business license / permit for companies, especially SMEs, which may not be ready to apply for business licenses or permits through an online system?

Answer: There are pocket areas where online system might not be available. Thus, the manual applications process is still being offered by Licensing Agencies. Client based system are also made available by some agencies where business applications are processed independently.

(iv) With the increased number of business license / permit applications through BLESS, has there been a corresponding increase in business license / permit approvals as well? An indication of the share of approved applications would be useful.

Answer: With the average of 75,000 applications yearly for the past three years (2015-2017), positive responses both on application and approval process are made possible through online system. In 2017, the approval rate via BLESS is 75% which is an increment of 7% compared with 2016.

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3.1.1 Customs procedures, valuation, and requirements Page 38 (Para 3.2) 2. The Secretariat Report notes that Malaysia’s customs procedures are automated and several documents, namely import declarations, duty assessment, payment of duties, customs release, and import licenses, can be submitted electronically. Does Malaysia plan to expand the scope of documents which can be submitted electronically – e.g., to include other documents such as invoices, bill of lading, and other supporting documents? If there are plans to do so, could Malaysia give an indicative timeframe for this. If there are no plans to do so, could Malaysia elaborate on the rationale for selecting which documents can be submitted electronically; and the reasons, for not selecting the other documents?

Answer: The development of an online system is currently in progress and is expected to be implemented in 2019.

3.2.4.3 Free trade zones and other measures Page 55 (Para 3.59): 3. The Secretariat Report highlights free trade zones in Malaysia, which include the Free Industrial Zone (“FIZ”) and the Free Commercial Zone (“FCZ”). We would appreciate (i) details of the FCZ; and (ii) the rationale for separating free trade zones into FIZ and FCZ.

Answer: FCZ focuses on value-added activities such as break-bulking, repackaging, grading as well as transit before the final product is taken out of the free zones whilst the FIZ focuses on manufacturing activities.

4.2.2 Energy Page 100 (Para 4.75) 4. Energy efficiency will be an area of focus for Malaysia’s Eleventh Malaysia Plan (MP11). Malaysia also has the Green Government Procurement Initiative and its green technology efforts. Could Malaysia provide more information on these initiatives – in particular, on (i) the role of renewable energy in these initiatives; and whether there are opportunities for domestic and foreign renewable energy companies to take part in these initiatives?

Answer: In the Eleventh Malaysia Plan, the application of renewable energy is promoted through the Net Energy Metering (NEM) program which encourages users to install renewable energy system such as solar photovoltaic for own consumption to reduce the energy demand from the grid. Under the NEM system, users are able to sell any energy excess to the grid and buy it back when needed. Foreign companies may participate in local tenders, provided they incorporate a local company in Malaysia and also fulfill the registration as well as tender requirements. International tenders are only invited if goods and services cannot be procured locally.

4.3.3 Telecommunications Page 119 (Paras 4.140 – 4.141) 5. One of the six thrusts of MP11 pertains to the strengthening of infrastructure to support economic expansion. Digital infrastructure is one of the focus areas mentioned. Could Malaysia elaborate on the following: iii. The success of the Tenth Malaysia Plan (MP10) in the area of digital infrastructure and how the work on digital infrastructure from MP10 will feed into MP11.

Answer: Under the MP10, the Government expanded digital infrastructure to improve broadband penetration through the High Speed Broadband (HSBB) and the Broadband for General Population (BBGP). This contributed to an increase of broadband coverage in populated areas of 83.7%,

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- 82 - household broadband penetration of 70.2%; upgrades of submarine cables and systems to increase international capacity and rolling out of BBGP with fibre optic backhaul links in rural areas. Under the MP11, the Government intends to improve the required digital infrastructure to support the digital nation that it envisages, with focus on coverage, availability and affordability. Further details can be accessed at http://www.pmo.gov.my/dokumenattached/RMK/RMK11_E.pdf.

iv. Whether Malaysia intends to partner and collaborate with foreign companies specialising in digital infrastructure with a view to strengthening Malaysia’s digital infrastructure.

Answer: Malaysia has been and will continue to partner and collaborate with foreign investors in this area.

v. Challenges Malaysia foresees in strengthening its digital infrastructure.

Answer: Improving digital infrastructure coverage nationwide is still a challenge, especially in rural areas, primarily due to the high cost of broadband deployment and low returns on investment.

PART II: QUESTIONS REGARDING THE GOVERNMENT REPORT Sectoral Performance Page 4 (Para 2.8) 6. Services account for the largest share of Malaysia’s GDP. Malaysia has liberalised several services sectors since its previous Trade Policy Review. Does Malaysia have plans to further liberalise its services sectors? If so, what are some examples of such services sectors; and will these liberalisation efforts be part of Malaysia’s Services Sector Blueprint?

Answer: The services sector remains a key driver of growth to the economy. Malaysia will continue to look into the possibility of liberalising our services sector to promote trade while at the same time balancing national developmental needs of the services sector. Under the Services Sector Blueprint, focus is given on regulatory review and reform pertaining to the openness of trade in services in Malaysia. Through the review, Malaysia will be able to identify possible reform to existing regulations as well as improving the transparency of regulationns to provide an environment that is conducive to trade.

Transport Connectivity Pages 5-6 (Paras 2.22 - 2.24) 7. The Government Report mentions several transport projects to be implemented under MP11. Has work begun on these projects? In particular, could Malaysia provide more information on the status of the East Coast Rail Link (ECRL) project that will connect Klang Valley to the East Coast? The rail is to be built in phases with completion targeted for 2024. Have any of the phases started yet? What would be entailed in the various phases?

Answer: The projects listed under the MP11 have been implemented such as Electrified Double-Track Railway from Ipoh to Padang Besar, Kuala Lumpur International Airport 2 (KLIA2), Klang Valley Mass Rapid Transit (KVMRT) Line 1 and Light Rail Transit (LRT) extension. On-going projects include Klang Valley Mass Rapid Transit (KVMRT) Line 2, East Coast Rail Link (ECRL), Pan-Borneo Highway and Electrified Double-Track Railway from Gemas to Johor Bahru. The East Coast Rail Link (ECRL) project is divided into two phases. Phase 1 starts from the Integrated Transport Terminal (ITT) Gombak in Selangor to Kota Bharu, Kelantan. Construction has started in January 2018 for Phase 1 with site clearing, access road and tunnel portal construction on Government lands such as the Jabor tunnel portal in Kuantan, Pahang.

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For Phase 2, it is divided into the Northern section (from Kota Bharu to Pengkalan Kubor in Kelantan) and Southern section (from Gombak to Port Klang in Selangor). Phase 2 is currently in the process for Environmental Impact Assessment (EIA). Malaysia Productivity Blueprint

Page 8 (Para 3.7) 8. The Malaysia Productivity Blueprint was launched in May 2017. Could Malaysia share if there have been any challenges in implementing the Blueprint and in working towards labour productivity growth targets?

Answer: Among the challenges in implementing the Blueprint are lack of comprehensive participation from the enterprises and difficulty in transforming entrepreneurs’ mindset towards productivity culture. Promotion of Investments for Manufacturing and Services Sectors.

Page 10 (Para 3.22) 9. Malaysia has successfully established five economic growth corridors to further develop Malaysia’s strategic investments regions. Could Malaysia share some views on this strategy, in particular, its approach, as well as whether and how Malaysia plans to continue developing the strategy?

Answer: Five Regional Economic Corridors (RECs) were identified and created to address development imbalances and accelerate the country’s economic growth using the Public-Private Partnership (PPP) approach. RECs will leverage on the strengths, location and uniqueness of each economic region to ensure its economic stability.

E-Commerce and Digital Economy in Malaysia Page 31 (Paras 6.12 – 6.13) 10. Could Malaysia provide more details on the plans laid out in Malaysia’s National e-Commerce Strategic Roadmap and Digital Free Trade Zone?

Answer: National e-Commerce Strategic Roadmap (NeSR) The Roadmap was launched in October 2016 by the Prime Minister. The National eCommerce Council (NeCC), comprising various Ministries and Agencies, was established to drive the implementation of the Roadmap including the six thrust areas: i. Accelerate seller adoption of eCommerce; ii. Increase adoption of eProcurement by businesses; iii. Lift non-tariff barriers (e-Fulfillment, cross-border, e-Payment, consumer protection); iv. Realign existing economic incentives; v. Make strategic investments in select eCommerce player(s); and vi. Promote national brand to boost cross-border eCommerce. For more information about the NeSR, kindly refer to: https://www.mdec.my/digital-innovation- ecosystem/ecommerce/nesr. Digital Free Trade Zone DFTZ has 2 key objectives i.e. to drive exports by Malaysian SMEs and to establish Malaysia as Regional eFulfilment Hub. Malaysia will be engaging with stakeholders and industry towards achieving the said objectives including eCommerce players such as marketplaces, logistics industry and other supporting industry such as payment solutions provider. Malaysia will also be engaging with other countries to explore collaborations.

 What approaches and tools has Malaysia used to enable SMEs to be part of the e-commerce sector?

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Answer: Malaysia has taken a holistic approach to encourage eCommerce adoption by SMEs through collaboration among Government agencies, eCommerce players and trade associations. The DFTZ Pilot Project launched in November 2017 provides a platform for SMEs to sell their products and services to third country markets. DFTZ includes physical and virtual zones that support SMEs to trade goods, provide services, innovate and co-create solutions. Key initiatives taken by Government to facilitate SMEs’s participation in eCommerce include: i. promote and market eCommerce to SMEs to ensure that businesses are aware of the benefits of eCommerce; ii. improve eCommerce training and talent development for SME by establishing multi- platform, multi-tool training opportunities to cover the life cycles of SMEs, from entry to maturity; iii. create a one-stop eBusiness portal for SMEs to obtain information about eCommerce, such as eCommerce readiness surveys, e-business apps, training opportunities, community FAQs, and financial incentives. For example, Malaysia has an initiative called Go eCommerce. It is an avenue for SMEs to start their eCommerce journey with resources right at their fingertips. Please refer to https://www.go-ecommerce.my/ for more information; and iv. SME Onboarding Initiative: Promote SMEs on international marketplaces by developing go-to-market strategies for various countries, platforms, and products in order to boost Malaysian exports.

 Will Malaysia’s changes to the SME Act be geared towards enabling SMEs to better participate in the e-commerce sector?

Answer: The Draft National SME Development Bill 2016 does not have a specific provision on eCommerce as gearing SMEs towards eCommerce has been extensively elaborated under the National eCommerce Strategic Roadmap (NeSR).

 Will there be opportunities for foreign companies to collaborate with Malaysia in contribution to Malaysia’s e-commerce sector?

Answer: Foreign companies are already key partners in Malaysia’s eCommerce sector through: (i) collaboration with leading companies such as Google, Lazada and Alibaba to provide training programmes for SMEs on eCommerce adoption; and (ii) collaboration with leading eMarketplaces such as Alibaba.com, Trade India, Dagang Halal, Aladdin Street, Amazon, eBay, Qoo11, Tarad.com, Matahari Mall, JD.com and TMall Global to assist SMEs to access export markets through eCommerce. Going forward, Malaysia welcomes participation from foreign companies to collaborate and invest in Malaysia’s eCommerce sector.

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AUSTRALIA

Report by the Secretariat (WT/TPR/S/366) 2 TRADE AND INVESTMENT REGIMES 2.2 Trade Policy Formulation and Objectives 2.2.3 Trade laws and regulations Page 27, Paragraph 2.27 Malaysia has submitted notifications to the WTO in a number of areas (Table 2.2). However, as at May 2017, notifications were outstanding in the areas of: agriculture (domestic support); quantitative restrictions; and customs valuation. Question 1: Could Malaysia provide an update on the progress towards completing and submitting outstanding notifications?

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.1 Measures Directly Affecting Imports 3.1.1 Customs procedures, valuation, and requirements Page 38, Paragraph 3.1 Customs procedures remain managed by the Royal Malaysian Customs Department (RMCD) under the Customs Act 1967, and no significant changes have been made to its legislative or institutional framework since the previous trade policy review of Malaysia in 2014. Question 2: Is there a service charter for the timely granting of import licences and clearance by customs?

Answer: Generally the service charters range from 30 minutes to 3 weeks depending on the imported products. Please refer to the respective agencies that grant the import licences for information on their service charter.

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.1 Measures Directly Affecting Imports 3.1.3 Tariffs 3.1.3.1 Applied MFN tariff Page 43, Paragraph 3.18 Malaysia’s tariff quotas apply to tariff lines, including those for live swine and poultry, poultry and pork meat, liquid milk and round cabbage. Under Malaysia’s Tariff Rate Quotas commitment, import licences for TRQs will be provided on a first-come, first-served basis. Details of quota administration will be promptly published, including information on procedures for the submission of applications for licences. Quota administration will be in accordance with the WTO Agreement on Import Licensing Procedures and Article 11 of the Trade in Goods Chapter.

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Question 3: Could Malaysia provide details of quota administration for agri-food including allocation and timing of allocation of quotas, quota entitlement holders and current quota usage?

Answer: TRQs are determined on a yearly basis and the application will be processed within 1 to 3 months.

Question 4: Are there any restrictions on who can apply for quotas?

Answer: Applications for TRQs are opened to producers and traders.

Question 5: Where can importers and exporters access information on quota administration? Is this information publicly available?

Answer: Relevant information concerning allocation of TRQs is published on the website of Department of Veterinary Services Malaysia as below: http://www.dvs.gov.my/index.php/pages/view/381.

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.1 Measures Directly Affecting Imports 3.1.5 Import prohibitions, restrictions, and licensing 3.1.5.2 Import licensing (second, third, and fourth schedules) Page 46, paragraph 3.31 Part I of the third schedule lists products conditionally prohibited from import mainly on SPS grounds. The products are animals and animal products, plant and plant products, as well as processed agriculture products such as pasta, flour, and other food products. For importation of these products an import permit is required. Question 6: On what basis does Malaysia require an import permit for highly processed agri-foods, such as pasta?

Answer: Importation of pasta into Peninsular Malaysia and Labuan does not require import permit. However, processed pasta stuffed (with meat or other substances) whether or not cooked or otherwise prepared, requires import permit from State Veterinary Departments of Sabah and Sarawak.

Question 7: What is the difference between an import permit and an import licence?

Answer: Import permit is one of the import licensing procedures in Malaysia.

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.2 Measures Directly Affecting Exports 3.2.3 Export prohibitions, restrictions, and licensing 3.2.4.3 Free trade zones and other measures Page 55, paragraph 3.59 In 2017, there were 21 free industrial zones (FIZs) and 18 free commercial zones (FCZs) in Malaysia. They were set up to facilitate operations of export-oriented companies.

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Question 8: Are the Sanitary and Phytosanitary regulations applied to goods imported into these zones the same as regulations applied to good imported into other parts of Malaysia?

Answer: The SPS Regulations are also applied to goods imported into FIZs and FCZs.

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.3 Measures Directly Affecting Production and Trade 3.3.4 Competition policy and price controls 3.3.4.1 Competition policy Page 66, paragraph 3.115 Page 88, paragraph 4.38 Malaysia’s Competition Act introduced in 2010 addresses 2 competition issues: anti-competitive agreements and the abuse of dominant market positions. The Act prohibits any anti-competitive agreements, either horizontal or vertical, in particular hard- core cartels, such as agreements for price fixing, sharing markets, controlling production and bid rigging. Under the rice section 4.38 (page 88), the report notes that through a privatization agreement in 1996, the formerly state-owned company BERNAS (Padiberas Basional Berhad) agreed with the Government to a set of duties which gives BERNAS the sole right to import and distribute rice for the Malaysian market. Question 9: As the sole importer and distributer of rice for the Malaysian market, how does the formerly state- owned company of BERNAS comply with Malaysia’s Competition Act?

Answer: Padiberas Nasional Berhad (BERNAS) acts as a State Trading Enterprise for rice importation. It performs non-commercial activities on behalf of the Government of Malaysia, hence it does not infringe Malaysia’s Competition Act.

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.3 Measures Directly Affecting Production and Trade 3.3.4 Competition policy and price controls 3.3.4.1 Competition policy Page 65, paragraph 3.118 The Secretariat report notes that Malaysia’s Competition Act 2010 exempts some sectors, including communications and multimedia, aviation and electricity and piped gas, that are covered by sector-specific regulations. Furthermore, the report identified a lack of consistency on key concepts of competition between the Competition Act and relevant sectoral acts, and the lack of any evidence of enforcement of competition policy by sectoral regulators have constrained the effectiveness of the competition policy regime in the country. Question 10: Does Malaysia have any future plans to improve consistency and transparency in the application of competition policies across sectors?

Answer: All enforcement actions and the grant of exemptions under the Competition Act 2010 are published in MyCC’s website. Under the Competition Act 2010, four (4) legislations are excluded: i. Communications and Multimedia Act 1998; ii. Energy Commission Act 2001; iii. Petroleum Development Act 1974 and Petroleum Regulations 1974; and

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iv. Malaysian Aviation Commission Act 2015 However, since 2012, the MyCC has established the Special Committee on Competition which gathers 8 sector regulators to discuss and deliberate on competition issues across these sectors. It also discusses mechanisms to streamline competition policy and law efforts and to address issues and complaints related to competition.

Report by the Secretariat (WT/TPR/S/366) 3 Trade Policies and Practices by Measure 3.3 Measures Directly Affecting Production and Trade 3.3.7 Intellectual Property Rights 3.3.7.1 Overview Page 74, Paragraph 3.170 Malaysia is a member of a number of WIPO-administered treaties. The Government is considering acceding to the Madrid Protocol concerning the international registration of marks, and the Budapest Treaty regarding the international recognition of the deposit of microorganisms for patent procedures. The authorities stated that, as acceding to international treaties requires amendment to the relevant acts and regulations, Malaysia is in the midst of amending the Trade Mark Act 1976 and the Patent Act 1983, to include provisions relating to the Madrid Protocol and the Budapest Treaty respectively. Question 11: When does Malaysia expect to accede to the International Convention for the Protection of New Varieties of Plants, as revised at Geneva, March 19, 1991 (UPOV 91)? Australia notes that Malaysia has already initiated the procedure for accession to this agreement.

Answer: Malaysia is in the midst of amending its Protection of New Plant Varieties Act 2004 [Act 634] to be in line with UPOV 1991. The amendments are expected to be presented to the Parliament in 2021. The process of acceding to UPOV 1991 can only commence after the amendments are endorsed by the Parliament.

Question 12: Does Malaysia intend to accede to the Patent Law Treaty and to the Singapore Treaty on the Law of Trademarks?

Answer: Malaysia does not have any plans to accede to the Patent Law Treaty and to the Singapore Treaty on the Law of Trademarks. Malaysia is of the view that as a member of the Patent Cooperation Treaty (PCT) and with the plan to accede to Madrid Protocol, both treaties are sufficient to streamline patent and trademark application procedures.

Report by the Secretariat (WT/TPR/S/366) 4 Trade Policies by Sector 4.3 Services 4.3.2 Financial services Page 112, Paragraph 4.112; and Page 115, Paragraph 4.124 The report states that insurance companies (insurers) are governed by the Financial Services Act 2013 (FSA) and, currently, 20 of 32 direct insurers in Malaysia are foreign-owned and 5 of 7 reinsurers are foreign-owned. Question 13: Can Malaysia explain the process by which it intends to reduce foreign stakes in local insurers to 70 per cent, as outlined in the FSA?

Answer: Application to be submitted to the Insurance Development Department at Bank Negara Malaysia.

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Question 14: Can Malaysia explain the process by which a foreign insurer can increase its existing stake in a local insurer to 70 per cent, as permitted under the FSA and Malaysia’s services commitments through free trade agreements?

Answer: Application to be submitted to the Insurance Development Department at Bank Negara Malaysia.

Report by the Secretariat (WT/TPR/S/366) 4 Trade Policies by Sector 4.3 Services 4.3.3. Telecommunications Page 118, paragraph 3.118 The Secretariat report notes that the fixed line and broadband service markets are dominated by Telekom Malaysia, which is majority state-owned and has about 95% market share. Question 15: Does Malaysia have any future plans to reduce the market dominance or reduce state-ownership of Telekom Malaysia? Are there barriers to entry preventing other service suppliers, including foreign suppliers, from supplying fixed line and broadband services?

Answer: The MCMC through the Communication and Multimedia Act 1998 regulates and oversees communication and multimedia industry. Currently, efforts are undertaken by the Ministry of Communications and Multimedia (KKMM) and MCMC to increase competition and efficiency of the telecommunication industry. For example, MCMC is reviewing the Mandatory Standards on Access Pricing to facilitate competition and infrastructure sharing among service providers. Malaysia welcomes investments into fixed line and broadband services, in line with the licensing requirements set by the Malaysian Communications and Multimedia Commission. For more information, kindly refer to: https://www.skmm.gov.my/skmmgovmy/media/General/pdf/SKMM_Guidelines_V2_2017.pdf.

Report by Malaysia (WT/TPR/G/366) 2 ECONOMIC DEVELOPMENT 2.1 Overview Page 5, paragraph 2.21 The Government report notes that Malaysia’s Eleventh Master Plan, which was launched in May 2015, has identified investment in transport infrastructure and development of transportation services as fundamental enables to spur economic and social growth. Question 16: While some large-scale projects have been implemented, to what extent has Malaysia reformed its transportation services sector to enable participation from foreign service suppliers?

Answer: For the aviation sector, Malaysia has liberalised Maintenance, Repair and Overhaul (MRO), Computer Reservation System (CRS) and Selling and Marketing Services. For the logistics sector, Malaysia envisions to have the multiple rail operators to boost the rail freight segment and further enhance the quality of service provided. In shipping, Malaysia is among the countries that enforce a liberal Cabotage Policy that encourages foreign vessels to embark on commercial activities in Malaysia. From June 2017, an exemption to cabotage policy has been given to the states of Sabah and Sarawak which excludes the Domestic Shipping Licencing (DSL) requirement for any ship plying from any port in Peninsular Malaysia to any port in the states of Sabah or Sarawak and vice versa for cargo transportation services. In port development, all the federal ports have been privatized. Accordingly, all operations and services offered are subject to the Privatization Act 1990 and the Port Concession Agreement between the Government and the port operators.

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Report by Malaysia (WT/TPR/G/366) 3 TRADE POLICY DEVELOPMENTS 3.2 Initiatives to facilitate trade Page 8, paragraph 3.9 The Government report states that the Malaysian Productivity Blueprint identifies six immediate priorities to ‘move the needle’ on productivity improvement, including ‘re-structure and improve the management of foreign workers’. Question 17: Can Malaysia please outline what policies have or will be implemented to address this priority and what is the expected outcome of those policies?

Answer: The strategies include: 1. formulating a single point of authority relating to foreign workers; 2. determining a workforce policy to phase out the reliance on foreign workers across sectors; and 3. levies to be borne by employers starting January 2018.

Report by Malaysia (WT/TPR/G/366) 3 TRADE POLICY DEVELOPMENTS 3.2 Initiatives to facilitate trade Page 9, paragraph 3.11 As an on-going effort to facilitate trade, the Government continues to review the import licencing requirement. In this connection, the import licence requirement for motorhomes, motorcycle helmets, used tyres and flour was abolished effective 1 September 2016; and 181 tariff lines of iron and steel products effective 1 August 2017. The implementation measure is gazetted in the Customs (Prohibition of Imports) (Amendment) Order 2016 and 2017. Question 18: As part of the on-going effort to facilitate trade, does Malaysia propose to review the import licensing requirements for raw and processed sugar?

Answer: At present, Malaysia does not intend to abolish licensing requirements. A review would be carried out periodically to assess the needs and demands of the industry.

Report by Malaysia (WT/TPR/G/366) 5 SECTORAL POLICIES 5.3 Services sector Page 24, paragraph 5.14, 5.16 and 5.17 The Government report notes that Malaysia liberalised 18 services sub-sectors in 2012 and subsequently Malaysia has developed a Services Sector Blueprint (SSB) that includes horizontal strategies and action plans. Question 19: Does Malaysia intend to undertake structural reforms in key services sub-sectors (including telecommunications and transport services) to further open markets to foreign competition to improve productivity and boost domestic economic growth as part of the SSB?

Answer: In line with the targets set in the SSB, the Government will continue to undertake measures to enhance competitiveness and improve productivity.

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Report by Malaysia (WT/TPR/G/366) 5 Sectoral Policies 5.3 Services Sector Page 24, Paragraph 5.15 The report states that allowing foreigners to own businesses in Malaysia, or in partnership with locals in these services sub-sectors, have provided opportunities for Malaysians to form strategic alliances and other arrangements with leading international firms to upgrade and facilitate knowledge sharing and cultivate best practices and establish a viable presence into larger markets overseas through the creation of new areas of practice, products and broadened clientele base. Question 20: Does Malaysia intend to review its current limitations on how foreign architects and practices can operate in Malaysia, with a view to meeting the needs of current commercial demand for greater international collaboration in the provision of architectural consultancy services in Malaysia, which would help achieve the benefits as outlined in the report?

Answer: Under the Amendment 2015, of The Architects Act 1967, there is no limitation on foreign registration as citizenship requirement has been relaxed. Nevertheless for independent practice, foreign registration must adhere to regulation and requirement including the qualification and examination requirement as determined under the Act. However for Body Corporate Architectural Practice, collaboration can be done through 30% share equity and one third of directorship composition can be held by Foreign Architects.

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OMAN

Malaysia’s economy is one of the fastest developing in the world and is predicted to grow furthermore in the coming years. That makes it an attractive place for investment in the eyes of investors from the whole world. What are the incentives offered by the Government of Malaysia to promote Oman’s investments especially non-oil exporting businesses.

Answer: Malaysia is an open economy and welcomes investments from all countries. Investors from Oman can enjoy the incentives offered based on projects or activities undertaken in the promoted areas. Information on incentives can be accessed at: https://incentives.mida.gov.my.

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HONG KONG, CHINA

Questions on the Secretariat Report A. Trade Policies and Practices by Measure Government-linked Companies (GLCs) (WT/TPR/S/366: Pages 68-69, paras 3.135-3.136) 1. A 10-year GLC Transformation Programme (2005-15) was launched in 2004/05, to turn GLCs into stronger and more resilient and competitive companies. GLCs and Government-linked investment companies (GLICs) "graduated" from their transformative process when the Programme was completed in July 2015. The Putrajaya Committee on GLC High Performance (PCG) stated that GLCs show a strong 10-year track record in delivering financial performance, catalysing nation-building, and benefiting all stakeholders. Question: Noting that GLCs show a strong 10-year track record in, among others, delivering financial performance, we would like to have further elaborations on the key elements and achievements of the GLC Transformation Programme.

Answer: The GLC Transformation Programme is for the 20 GLCs (G20), defined by the Putrajaya Committee for GLCs (PCG) and these are all public listed companies. After a decade of transformative progress, G20 showed a strong 10-year track record in delivering financial performance, catalyzing nation-building, and benefitting all stakeholders. These include:  growth of market capitalization by almost three times from 2004 to 2015;  increase of net profit at a compounded annual growth rate (“CAGR”) of 10.2% from FY2004 to FY2014; and  domestic investments worth RM153.9 billion from FY2004 to FY2014, employing 225,050 Malaysians in 2014.

Privatisation (WT/TPR/S/366 : Page 69, para 3.137) 2. The privatization programme stipulates that bumiputeras (ethnic Malay community) should hold at least 30% equity of a privatized entity. Foreign participation is limited to 25% of total equity, although up to 49% may be permitted on a case-by-case basis. All privatized projects are subject to Malaysia's development policies and the Privatization Master Plan with regards to foreign participation. Question: Under what circumstances and conditions would the programme allow a higher percentage of foreign participation? In which sectors have foreign participation exceeding 25% of the total equity been permitted?

Answer: Malaysia extends its invitation to foreign participants when the Government is of the view that certain expertise needed may not be readily available or sufficient in Malaysia. Sectors that have foreign participation exceeding 25% of the total equity are in the areas of ports and waste-to- energy.

Intellectual Property Rights (WT/TPR/S/366 : Page 73, para 3.167) 3. An initial IPR Marketplace Portal was launched in June 2014 to enable IP owners to conduct potential transactions such as IP sale licensing, merchandising and/or franchising of their IP rights. Question: Please provide more information on the general features and functions (including fees) and the utilization rate and feedback from users so far. Is there any plan for launching the Portal on a formal basis?

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Answer: The portal could be accessed at: http://iprmarketplace.myipo.gov.my/. Since the launch of the IPR Marketplace in 2014, there are more than 160 listing of IP rights. MyIPO conducted a number of stakeholder engagements to determine the collaboration needed in positioning the IPR Marketplace at a national level. However, the IPR Marketplace is currently being reviewed to take into account stakeholders requirements as well as current trends.

(WT/TPR/S/366 : Page 74, para 3.168) 4. The IP Monetization Roadmap 2015-2020 was launched in September 2015. The Malaysian Government allocated RM 200 million in 2013 to an IP financing scheme under the Malaysian Debt Ventures. Question: Please provide more information about the IP financing scheme under Malaysia’s Debt Ventures. How many funding has been approved so far? What is the application success rate?

Answer: The utilization rate is 40%. However, the IP Funding Scheme is currently being reviewed. Information on IPFS under Malaysia Debt Ventures Berhad (MDV) can be found at: http://www.mdv.com.my/en/product-services/government-schemes/intellectual-property- financing/.

(WT/TPR/S/366 : Page 76, para 3.179) 5. In 2017, the pendency period was 26 months for patents and 8 months for trademarks. Following the introduction of expedited examination in 2011, it takes 20 months (from the date of filing a request) for a patent to be granted under the expedited procedures, and 6 months 3 weeks for a trademark to be granted under the expedited procedures. Question: Please provide more information on the expedited examination and the relevant procedures adopted by Malaysia IPO.

Answer: Requirements for applying trademark expedited examination:  request can be made within four months from the date of filing of the application; and  Form TM5A must be accompanied with a statutory declaration stating the reasons for the request and prescribed fee. Under the Regulation 18A of Trade Marks Regulation, the Registrar may refuse an application for expedited examination if:  the request is not in the national or public interest;  there are no infringement proceeding taking place or no evidence showing potential infringement in respect of the trade mark;  registration of the trademark is not a condition to obtain monetary benefits from the Government or institutions recognized by the Registrar; or  there are no other reasonable grounds which support the request.

B. Trade Policies by Sector Financial Services (WT/TPR/S/366: Page 113, paras 4.115-4.117) 6. Under the Financial Sector Blueprint 2011-20 (“the Blueprint”), the Malaysian government foresees a more competitive, dynamic, inclusive, and integrated financial system, offering a more diverse range of products and services to cater for the requirements of businesses operating in more integrated regional and global markets as well as to meet the needs of a more knowledge- and innovation-intensive domestic economy. The Blueprint sets out 69 recommendations and over 200 initiatives on nine focus areas to be implemented progressively by 2020.

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Question: We note that one of the focus areas of the Blueprint is “strengthening regional and international financial integration”. Please share with us how the recommendations and initiatives could achieve this goal, including whether considerations have been given to the promotion of foreign investment.

Answer: The key initiatives to achieve goals of the Blueprint: (a) promote deeper regional banking integration, through the development of the ASEAN Banking Integration Framework (ABIF); (b) deepen cross-border coordination and cooperation among regulators to promote the orderly provision of financial services in the region; and (c) establish well-developed financial infrastructure to facilitate increased cross-border financial intermediation, particularly in the area of payments and settlements for cross- border capital flows, trade and retail payments.

Telecommunications (WT/TPR/S/366: Page 120, para 4.148) 7. Network service and facilities service providers in Malaysia seeking access to network facilities are required to make a written request to the access provider. The Secretariat Report notes that the Malaysian Communications and Multimedia Commission has prepared a Mandatory Standard on Access (“the Standard”) which sets out the non-pricing terms and conditions, and the Standard was reviewed in 2016. Question: We would like to know more details on the non-pricing terms and conditions, as well as the findings from the review on the Standard. Are there any recommendations from the review to improve access?

Answer: The Mandatory Standard on Access was reviewed to improve non-pricing terms and conditions. Some of the significant changes are as follows:  developed detailed terms and conditions as opposed basic terms and conditions previously;  introduced the concept of equivalence of input as opposed to equivalence of output previously;  introduced reference access offers as opposed to access reference document previously. Reference access offer imposes obligations on service providers to enhance transparency;  introduced reporting obligations twice every year; and  in the service specific obligation, different timelines were introduced for different processes. For example, billing cycles are different for different facilities and services.

Maritime Transport (WT/TPR/S/366: Page 124, para 4.167) 8. The Secretariat Report notes some areas of focus in the Malaysian Shipping Master Plan 2017- 2022 (“the Plan”) such as promoting employment of Malaysian ships and seafarers, facilitating access to capital and financing, and improving Malaysia’s attractiveness to shipping businesses etc. Question: We would like to know more about the incentives/measures for achieving the objectives as set out in the Plan. Are these incentives/measures provided to local and foreign enterprises on a non-discriminatory basis?

Answer: The Master Plan was introduced in September 2017. The Ministry of Transport is in consultation with the relevant stakeholders to develop the appropriate measures to promote the shipping industry.

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To enhance Malaysia’s attractiveness to shipping businesses, local and foreign companies incorporated in Malaysia are eligible for tax and fiscal package such as Pioneer Status and Tax Allowance. Information on incentives and the eligibility criteria can be accessed at: https://incentives.mida.gov.my.

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SWITZERLAND

Report by the Secretariat (WT/TPR/S/366) 2 TRADE AND INVESTMENT REGIMES 2.3.1 WTO According to para.2.27 Malaysia has not yet complied with a number of its notifications’ obligations. For instance, the notification of its MFN tariffs for 2016 and its import data for 2015. Some of these notifications are routine notifications such as the MFN tariffs. Could Malaysia indicate when it will submit the requested notifications?

2.3.4 Other agreements and arrangements Para 2.47, letter c of the report states that Malaysia, as an APEC member, has participated in the Strategic Study on the Free Trade Area of the Asia-Pacific (FTAAP). Could Malaysia share with us to what extent follow-up activities with respect to the work of the Core Drafting Group are envisaged?

Answer: Malaysia led the drafting of Chapter 8 (Ongoing Regional Undertakings) of the Collective Strategic Study of the Free Trade Area of the Asia Pacific on Regional Comprehensive Economic Partnership (RCEP). Malaysia also contributed actively in the overall drafting of the Recommendations of the Collective Strategic Study Towards the Realisation of the FTAAP which was completed in 2016. Based on the recommendations from the Collective Strategic Study, APEC needs to address certain issues such as areas of divergence and convergence in RTA/FTA practices, a stock take on how next generation trade and investment issues are dealt with in existing FTAs/RTAs, advancing work programmes on measures affecting trade and investment and developing and implementing dedicated initiatives, including through capacity building, to bridge the gaps among economies on the areas identified. Work on this is on-going.

3 TRADE POLICIES AND PRACTICES BY MEASURE 3.1.1 Customs procedures, valuation, and requirements According to para. 3.9 «the Minister of Finance approves the minimum value of goods recommended by the Customs Valuation Management Section”. As article 7 of the WTO agreement on Customs valuation prohibits the use of minimum customs values for valuation purposes, could Malaysia explain the reason why the Minister of Finance approves a minimum value of certain goods? What is the aim of such minimum values and how are they used? Further, could Malaysia please elaborate on which basis are they calculated? And finally, how does Malaysia guarantee that those minimum customs values are not used for valuation purposes as foreseen in article 7 of the customs valuation agreement?

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3.1.2 Rules of origin In para 12 of the summary, it is mentioned that: « …the number of antidumping investigation initiations reached its peak in 2015, and the number of definitive anti-dumping measures reached its peak in 2016. » In turn, in para 3.10, it is stated that: “Malaysia has no national law governing rules of origin for imports, and it does not maintain any non-preferential rules of origin.” On what basis does Malaysia determine the non-preferential origin of the goods at import prior to imposing antidumping duties? Further, does Malaysia recognize the non-preferential origin certificates of the exporter country?

Answer:  During the anti-dumping investigation, analysis on import volume is based on import data published by the Department of Statistics, Malaysia. The imposition of anti-dumping duties is based on the declaration of origin by the importers.  Malaysia recognizes non-preferential origin certificates.

3.1.3.1 Applied MFN tariff According to 3.14 the simple average applied MFN rate went up from 5.6% in 2013 to 7.5% in 2017; in certain HS section these changes resulted in a significant increase of the average MFN rate (e.g. 04 Prepared food, beverages and tobacco from 2.6% to 4.1% and 17 Transport equipment from 17.3% to 21.5%) and a decrease of the percentage of duty free lines.  Could Malaysia explain why it chose to retain the tariff of the dutiable lines instead of the one of the duty free lines in the HS2017 transposition?

Answer: Where tariffs were merged, the general agreed approach was to keep the higher duty. This is to ensure that the dutiable tariff lines are not compromised, when merged with NIL duties, and are below the bound rate.

However, there were also instances when the lower duties were accorded upon agreement of the respective ministries/agencies.  How does the increase of the applied MFN rates reflect in import duties collected (weighted average according to actual imports in 2017)?

Answer: The effective increase in average applied MFN rates is due to the increase in variant of duties i.e. the nomenclature change, and changes in the tariff structure. The changes in the tariff structure involved large number of duty-free lines that were merged into other tariff lines during the tariff transposition process e.g. the products of wood and articles of wood under Chapter 44 of HS 2017 has been merged from 1,477 tariff lines in 2013 to 405 lines in 2017. There has been no significant increase of import duties collected in 2017.

 According to para. 3.15 the number of different tariff rates changed from 19 in 2013 to 25 in 2017. Could Malaysia explain the reasons why it increased the number of different tariff rates? Does Malaysia consider to decrease it again in the future as it will make the Malaysian tariff more simple and easy to administer?

Answer:  The number of tariff rates increased due to the commitment to reduce duties gradually for Information Technology Agreement (ITA) products.  Malaysia will explore the possibility to simplify the rates structure in order to ease the administration.

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3.1.6 Anti-dumping, countervailing, and safeguard measures Para. 3.40. and 3.43 of the report indicate that Malaysia has enacted legislation and implementing regulations on countervailing duties, but that to date, it has not taken any countervailing measures. Could Malaysia elaborate on the reasons why it does not apply countervailing duties?

Answer: No application has been received from the domestic industry for the Investigation Authority to initiate countervailing investigation.

3.3.1.1.1 Indirect taxes According to 3.76 individual taxi owners and car-rental operators are exempt from excise duties on the purchase of locally produced "national cars" while tour operators benefit from a 50% reduction for purchases of locally assembled four-wheel-drive cars. In the view of Malaysia is this tax exemption scheme consistent with the principle of National Treatment on Internal Taxation and Regulation (Article III, GATT)?

Answer: Malaysia is undertaking a review on this policy.

3.3.4.1.1 Legal Framework Para. 3.117 states that despite being the only ASEAN country without merger and acquisition control and suggestions by the OECD to introduce such rules, Malaysia does not intend to amend its Competition Act. Switzerland kindly asks Malaysia to elaborate on the political and economic reasons for not introducing merger and acquisition control in its competition legislation.

Answer: Malaysia’s Competition Act focuses on anti-competitive activities and abuse of dominance. However, Malaysia will be conducting a study on the merger and acquisition control in the future. According to para. 3.118 the lack of consistency on key concepts of competition between the Competition Act and relevant sectoral acts, and the lack of any evidence of enforcement of competition policy by sectoral regulators had constrained the effectiveness of the competition policy regime in Malaysia and that there were efforts under way to improve collaboration and consistency. Could Malaysia please provide more details on its plans to improve the current situation?

Answer: Under the Competition Act 2010, 4 legislations are excluded:  Communications and Multimedia Act 1998;  Energy Commission Act 2001;  Petroleum Development Act 1974 and Petroleum Regulations 1974; and  Malaysian Aviation Commission Act 2015 However, since 2012, MyCC has established the Special Committee on Competition which gathers 8 sector regulators to discuss and deliberate on competition issues across these sectors. It also discusses mechanisms to streamline competition policy and law efforts and to address issues and complaints related to competition.

3.3.4.1.2 Institutional Framework and Enforcement According to para. 3.126 the autonomy and independence of the Malaysian Competition Commission (MyCC) and the role and involvement of Ministry of Domestic Trade, Cooperatives and Consumerism, which determines the MyCC's budget, are a concern for the OECD, which has pointed out that the MyCC has less than desirable expertise and employs too few experienced economists. Switzerland would like to know if Malaysia plans to follow the OECD’s recommendations and intensify its enforcement activities to achieve effective deterrence, increase awareness and build stakeholder confidence.

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Answer: To date, MyCC has increased its talent pool in laws and economics. Further to that, MyCC has entered into Memorandum of Understandings (MoUs) with several universities to develop learning modules and subjects on competition law. In order to raise awareness and inculcate a culture of compliance to the Competition Act 2010, 54 advocacy programs have been conducted for various sectors and government agencies since 2016. With regard to enforcement, MyCC has intensified its enforcement of the Competition Act 2010 where focus has been on advocacy and infringement of the Act.

4 TRADE POLICIES BY SECTOR 4.1.1.3.1 Selected sub-sectors With reference to paragraph 4.19 many palm oil plantation companies are nowadays certifying their product according to the criteria set out under the Roundtable on Sustainable Palm Oil (RSPO). Can Malaysia please explain in what way the Malaysian Sustainable Palm Oil Certificates (MSPO) differ from the standards established by the Round Table on Sustainable Palm Oil (RSPO), particularly the level of RSPO identity preserved ID? Is the MSPO scheme aiming at replacing RSPO certification in the long run, or is MSPO to be seen as an intermediary step to help producers, especially small holders, to eventually comply with the sustainability requirements set out under RSPO?

Answer: MSPO is a national standard based on domestic laws and regulation as well as international requirement for sustainability. The Principles and Criteria are reviewed every 5 years taking on board current developments in ensuring the robustness of the scheme. In the longer term, MSPO will be a benchmark for Certified Sustainable Palm Oil (CSPO) from Malaysia. On the other hand, RSPO Certification is a business to business (B2B) scheme. RSPO is a global voluntary scheme and has the buy-in from larger companies. However, RSPO has not been able to penetrate the small and medium companies (mini-estates), and has not been very successful in supporting smallholders in achieving RSPO certification. In order to reduce the burden on the industry and to increase the uptake of MSPO certification, there are now efforts to carry out combined MSPO-RSPO audits for RSPO certified entities. With regard to paragraphs 4.20-4.21 could Malaysia please explain the reasoning behind the export duties which increase with higher prices for palm oil? And could Malaysia elaborate on the impact of these export duties on the export of sustainable palm oil and high quality (high-priced) palm oil?

Answer:  The objective of export duty is aimed to encourage the development of the downstream sector by ensuring the availability of raw material supply such as crude palm oil.  Pricing of palm oil is also influenced by other factors such as the prices of other vegetable oils, crude oil as well as the currency exchange rates.

4.2.2 Energy and 3.3.1 Taxation and incentives Among others, para. 4.74 and 4.81 describe different fossil fuel production subsidies. Such subsidies for fossil fuel production may have considerable effects on trade by affecting the rate and timing of development of new fields, which is likely leading to an extra production and thus depressing fossil fuel prices. There are also trade distorting effects with fossil fuel consumption subsidies that exist in Malaysia (e.g. para 3.90, 4.60 or 4.84). At the same time, the report by the secretariat describes the reforms that Malaysia has undertaken with a view to reduce fossil fuel subsidies (e.g. para 3.90, 4.75 or 4.84). Such reforms liberate financial resources that could be redirected to the production of renewable energy. Was this aspect included in the National Energy Efficiency Action Plan (NEEAP) 2016-2015 (para 4.75)?

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Answer: The NEEAP does not include aspects of renewable energy in its implementation as the policy on renewable energy is encompassed in the National Renewable Energy Policy and Action Plan (2009). What is the policy of Malaysia to further reduce fossil fuel subsidies, also with regard to the APEC commitment to phase out inefficient fossil fuel subsidies and more generally with regard to environmental protection?

Answer: The exercise to rationalise gas prices for the power sector is well underway and making good progress. The Malaysian Government has developed a mechanism and formula, after extensive consultations among EPU, the National Oil Company (PETRONAS), Energy Commission and KeTTHA. Malaysia has yet to consider utilising APEC Voluntary Peer Review for Reform of Inefficient Fossil Fuel Subsidies. However, Malaysia had volunteered to undergo the APEC Peer Review on Energy Efficiency (PREE) in 2011. To what extend are fossil fuel subsidy reforms compatible with the objective of making Malaysia the principal oil hub for the Asia-Pacific region (para. 7.72 and 7.74)?

Answer: There is no link between fossil fuel subsidy reforms and the aspiration of making Malaysia a principal oil hub.

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FOLLOW-UP QUESTIONS FROM SWITZERLAND

Secretariat Report 3.3.4.1.1 Legal Framework Para. 3.117 states that despite being the only ASEAN country without merger and acquisition control and suggestions by the OECD to introduce such rules, Malaysia does not intend to amend its Competition Act. Switzerland kindly asks Malaysia to elaborate on the political and economic reasons for not introducing merger and acquisition control in its competition legislation.

Answer: Malaysia’s Competition Act focuses on anti-competitive activities and abuse of dominance. However, Malaysia will be conducting a study on the merger and acquisition control in the future.

Follow-up question: We thank Malaysia for the answer provided with regard to a study on merger and acquisition control. Could Malaysia please provide details about the scope and content of the planned study? E.g. which political and economic questions will the study address?

Answer: In general, the scope of this study is to assess merger issues in Malaysia by addressing all sources of possible harm to competition and consumers and to conduct ex post evaluation of merger control decisions. Focus will also be given to the aspect of legal and procedural merger framework between other regulators in Malaysia. This study is expected to be completed by end of 2018.

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NORWAY

1. Section 2.4.2 of the WTO-secretariat's report describes changes in Malaysia's investment regime. Paragraph 2.62 details that restrictions on foreign investment in fisheries, energy, telecommunications, finance and transport, however, remain. Is a review and easing of Malaysia's investment regime in these sectors foreseen?

Answer: The Malaysian Government values foreign investment as a powerful force for the continued economic development of the country. The Government is committed to take continuous balanced measures in reducing restrictions and facilitating foreign participations in order to continue attracting high quality FDIs in fisheries, energy, telecommunications, finance and transport sectors.

2. We understand Malaysia played an instrumental role in the renegotiations of the TPP agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP / "TPP11"). Malaysia was among the first countries to ratify the original TPP agreement. What is the current status of Malaysia's participation in the process, and does Malaysia expect to be among the first to ratify the CPTPP?

Answer: The CPTPP is scheduled to be signed in March 2018. Malaysia will ratify the agreement once we have amended the 19 related laws covering mainly labour, IPR and customs related issues.

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COSTA RICA

Report by the Secretariat Page 100 (paragraph 4.74) 4.74 Under the Economic Transformation Plan, a number of Entry Point Projects (EPPs) have been identified which aim to increase the value of the oil, gas, and energy sector against a forecast decline of 2% per year in oil and gas production as resources are exhausted. The EPPs are:  sustaining oil and gas production through rejuvenation of existing fields, development of small fields, and by intensifying exploration;  enhancing downstream growth by building a regional storage and trading hub and increasing demand in Peninsular Malaysia for gas, and increasing petrochemical output;  making Malaysia a hub for oil field services by attracting multinational oil companies to set up in Malaysia and make it their regional base for operations, promoting export by domestic companies, and developing technological capabilities and capacity through strategic partnerships and joint ventures; and  building a sustainable energy platform for growth through improved energy efficiency and the development of alternative energy sources by increasing solar, nuclear, and hydroelectric power capacity. Question: Has Malaysia considered any measures under the Economic Transformation Plan to ensure the elimination of inefficient fossil fuel subsidies?

Answer: The eliminations of inefficient fossil fuel subsidies are already embedded in existing national policies. This includes the fuel subsidy rationalisation premised on the principles of market based pricing.

Report by the Secretariat Page 100 (paragraph 4.75) 4.75 The Eleventh Malaysia Plan (MP11) emphasizes energy efficiency, the development of renewable energy sources, more efficient recovery of gas and oil, and improvement in infrastructure. It also states that piped gas and compressed natural gas subsidies are to be reduced while petrol and diesel prices will continue to be regulated. The National Energy Efficiency Action Plan (NEEAP) 2016-2025 was approved by the Government in January 2016 with several initiatives, including:  promotion of 5-star rated appliances;  Minimum Energy Performance Standards (MEPS);  energy audits and energy management in buildings and industries;  Promotion of cogeneration facilities; and  energy efficiency building design. Question: Can Malaysia give further details on the measures it plans to implement to develop renewable energy sources?

Answer: Malaysia has made efforts towards renewable energy (RE) development since 2001. In 2010, the National Renewable Energy Policy and Action Plan was introduced to enhance the utilisation of indigenous RE resources. In 2011, the Renewable Energy Act which provides for the establishment and implementation of a Feed in Tariff (FiT) mechanism to catalyse the development of renewable energy resources in the electricity mix was enacted. Under MP11, Malaysia has set a target for RE (FiT) capacity of 2080MW. Malaysia has also implemented the Large-Scale Solar Programme and Net Energy Metering (NEM) scheme.

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COLOMBIA

INFORME DE GOBIERNO (WT/TPR/G/366) 2. DESARROLLO ECONÓMICO 2.1 Panorama General Resultados sectoriales Párrafo 2.6 “En 2014, la inflación aumentó hasta el 3,1%, una de las tasas más altas registradas desde 2008, debido a la racionalización de la subvención para combustibles introducida y aplicada en diciembre de 2014. En 2015, y a pesar de la introducción del impuesto sobre los bienes y servicios, la inflación disminuyó hasta el 2,1% a causa de la caída de los precios mundiales del petróleo. En 2016, la inflación se mantuvo estable en el 2,1% debido al bajo efecto de base, la reestructuración del sistema de estabilización de los precios del aceite para cocina desde noviembre de 2016 y el repunte de los precios minoristas de la gasolina y el diésel”. 1. ¿Podría el Gobierno de Malasia explicar en qué consistía la subvención para los combustibles antes de diciembre de 2014?, y ¿Cómo fue su racionalización posterior a esa fecha? 2. ¿Cómo funciona el sistema de estabilización de los precios del aceite para cocina? ¿Se aplica el sistema a los aceites importados y a los aceites para la exportación?

Answer: 1. Prior to December 2014, the subsidy for fuel was based on the difference between the selling price set by the Government and the actual monthly average price of the fuel products. Effective December 2014, the Government introduced a managed float system where the monthly retail price was fixed based on the previous month’s average market price.

In April 2017, this mechanism was further enhanced through a weekly managed float system.

2. The scheme applies to 1kg polybag and 1 litre bottle where the Government subsidizes the differences between market and control prices. The scheme does not apply to cooking oils which are imported or exported.

3.2 Iniciativas para facilitar el comercio Liberalización de las prescripciones relativas a las licencias de importación Párrafo. 3.11 “En el marco de los esfuerzos para facilitar el comercio, el Gobierno sigue revisando las prescripciones en materia de licencias de importación. En este sentido, el 1º de septiembre de 2016 dejaron de exigirse licencias para la importación de autocaravanas, cascos para motoristas, neumáticos usados y harina, y el 1º de agosto de 2017 se suprimió la licencia de importación para 181 líneas arancelarias de productos de hierro y acero. Las medidas se publicaron en las Órdenes de Aduanas (Prohibición de Importaciones) (Modificación) de 2016 y 2017”. 3. ¿De conformidad con este párrafo y el numeral 3.1.5 del Informe de la Secretaría (párrafos 3.24 a 3.45), se solicita al Gobierno de Malasia indicar a qué porcentaje de las líneas arancelarias de Malasia se les exige aún licencia de importación? ¿Dónde puede un exportador consultar las líneas arancelarias que requieren licencia de importación en Malasia, en inglés?

Answers: It is estimated that 13.5% of Malaysia’s tariff lines requires import license. Information regarding import licenses can be accessed at: www.customs.gov.my.

4.5 Resolución del Parlamento Europeo sobre el aceite de palma y la deforestación de las selvas tropicales Párrafo 4.13 “La UE es el tercer mayor mercado para el aceite de palma y Malasia es uno de los principales productores y exportadores de productos de aceite de palma del mundo. Malasia considera que la Resolución de la UE es discriminatoria para este producto y daría lugar a

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- 106 - obstáculos no arancelarios que perjudicarían a las exportaciones de aceite de palma de Malasia a la UE. En consonancia con el compromiso de Malasia con el cultivo sostenible de la palma oleaginosa, desde enero de 2015 se viene aplicando voluntariamente el Plan sobre el Aceite de Palma Sostenible de Malasia. Este Plan se basa en las leyes y reglamentos nacionales y en las mejores prácticas en materia de sostenibilidad. Para respaldar su aplicación, en 2014 se creó el Consejo de Certificación del Aceite de Palma de Malasia. Además, en 2017, para promover el aceite de palma sostenible y certificado y reforzar la imagen del sector, el Gobierno anunció que a partir del 31 de diciembre de 2019 se exigiría a todos los productores y elaboradores de aceite de palma del país el certificado de Aceite de Palma Sostenible de Malasia”. 4. ¿Podría el gobierno de malasia informar qué entidades conforman el Consejo de Certificación del Aceite de Palma de Malasia? ¿A cuál entidad está adscrito dicho Consejo de Certificación? ¿Los recursos económicos que percibe de la función de certificación son recursos públicos o privados?

Answers: The Malaysian Palm Oil Certification Council (MPOCC):  was incorporated in December 2014 under Companies Act 1965. MPOCC’s task was to develop and operate the Malaysian Sustainable Palm Oil (MSPO) Certification Scheme;  started operations in October 2015; and  is governed by 13-Member Board of Trustees. Representatives are from oil palm industry associations, academic and R&D institutes, smallholders organization, Government, NGOs and civil society.

MPOCC is given allocation from the palm oil promotion fund.

5. ¿Colombia desea conocer con más detalle lo relativo al Plan sobre el Aceite de Palma Sostenible de Malasia. Por lo tanto, desea conocer si se puede consultar por internet en ingles la información sobre dicho plan. En caso negativo, ¿A qué entidad se podría trasladar la solicitud y posibles inquietudes sobre el mismo?

Answers: Detailed information is accessible at: www.mpocc.org.my.

INFORME DE LA SECRETARIA (WT/TPR/S/366) 2.3.2 Acuerdos regionales y preferenciales Párrafo 2.34 “Como parte de la ASEAN, Malasia es signataria de acuerdos comerciales regionales con Australia y Nueva Zelandia, China, la India, el Japón y la República de Corea. Durante el período objeto de examen, se amplió el Acuerdo entre la ASEAN y la India para que abarcara el comercio de servicios (cuadro 2.3). También se concluyó el ALC entre la ASEAN y Hong Kong, China, y su firma está prevista en breve. Malasia también tiene ACR bilaterales con Australia, Chile, la India, el Japón, Nueva Zelandia, el Pakistán y Turquía. El ALC entre Malasia y Turquía entró en vigor en 2015 (cuadro 2.3). Malasia se encuentra en proceso de negociación con la Unión Europea y la AELC”. 6. ¿Podría el Gobierno de Malasia explicar si ha considerado profundizar sus relaciones económicas con los países de América Latina y el Caribe, a través de la negociación de futuros acuerdos bilaterales de comercio? ¿En general, cual es la política comercial de Malasia con respecto a dicha región (América Latina y el Caribe)? Answer: As an open and global trading country, Malaysia will capitalise on every opportunity available to ensure that the momentum we have created thus far in our engagements with Latin America and the Caribbean as a strategic and business-friendly partner is maintained. This does not exclude free trade agreements.

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Considering the Latin American region’s growing openness underlined through a series of economic reforms, as well as its immense potential, Malaysia views Latin America as one of the key regions that Malaysia will be engaging further in the coming years. Over the years, Malaysia has established good trade relations with Mexico, Brazil, Peru and Chile particularly in the mining sector, healthcare, medical devices, palm oil, aerospace and aviation, automotive and agribusiness. This has served us well in advancing our bilateral relations. In fact, in 2017, the inaugural Latin American Business Day was held at the Ministry of International Trade and Industry (MITI). The event was co-organised by MITI and ten Embassies representing the Group of Latin America and Caribbean Countries. While promoting Malaysia as the gateway to ASEAN and Asia, Malaysia will intensify promotional efforts to gain better access into Latin America and the Caribbean through our traditional partners such as Mexico, Brazil, Peru and Chile and also through the major trade blocs present in the region.

7. Desde la perspectiva de Malasia, ¿cuáles han sido los beneficios del TLC con Chile que va a cumplir 6 años de entrada en vigor?

Answer: Chile is Malaysia’s first FTA with a Latin American country. From Malaysia’s perspective, over the past six years, there has been benefit from this FTA. For the period Jan-Sept 2017, total trade with Chile increased by 44.0% to reach RM1,092.1 million (US$251.1 million). Exports grew by 2.3% to RM530.1 million (US$126.2 million), and imports rose to 133.8% to RM561.9 million (US$129.0 million).

3.1.1 Procedimientos y requisitos aduaneros y valoración en aduana Párrafo 3.7 “Hasta la fecha, el contrabando sigue siendo motivo de preocupación, a pesar de que el valor de los artículos confiscados se redujo en un 38% entre 2014 y 2016, lo que refleja el fortalecimiento de las medidas impuestas para mitigar este problema. En 2016, el valor de las mercancías confiscadas alcanzó los 446,9 millones de ringgit, lo que equivale al 0,26% del total de las mercancías importadas. Los principales artículos confiscados fueron medicamentos, cigarrillos, vehículos, bebidas alcohólicas y petardos”.

8. ¿Podría el Gobierno de Malasia realizar un resumen de las medidas impuestas adoptadas para mitigar el problema del contrabando de medicamentos, cigarrillos y bebidas alcohólicas?

Answer: Some of the measures imposed by Malaysia to mitigate smuggling of contrabands include imposition of import permits for cigarettes and alcoholic beverages, tax stamps requirements as well as continuous inter-agency enforcement initiatives.

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ARGENTINA

REGÍMENES DE COMERCIO E INVERSIÓN En el párrafo 2.11 se hace mención a la facilitación de la actividad empresarial que lleva adelante el gobierno malasio. 1. ¿A qué organismos estatales deben contactarse las empresas que desean realizar consultas para operar en Malasia?

Answer: 1. MIDA assists companies which intend to invest in the manufacturing and services sectors, as well as facilitates the implementation of their projects. The wide range of services provided by MIDA includes providing information on the opportunities for investments and facilitating companies which are looking for joint venture partners.

MIDA has established 12 regional offices in Malaysia to assist investors in implementing their manufacturing projects and services. Further details can be accessed at www.mida.gov.my

En el párrafo 2.21 se hace referencia a la modificación del Reglamento de la Industria Malasia de Biocombustibles del año 2014, para reducir la dependencia de los combustibles fósiles y fomentar un entorno más ecológico. 2. ¿Podrían brindar mayor información acerca de las medidas que se aplicarán para lograr este objetivo?

Answer: 2. The Ministry of Plantation Industries and Commodities has amended the Malaysian Biofuel Industry (Blending Percentage and Mandatory Use) Regulation in November 2014 by increasing blending percentage of biofuel from 5% to 7% to support national effort in reducing dependency on fossil fuel.

El párrafo 2.29 se menciona el proyecto de Arancel Externo Común de la ASEAN para el año 2025. 3. ¿Podrían brindar mayor información al respecto?

Answer: 3. Under the ASEAN Economic Community Blueprint 2025, there is no target for ASEAN to move towards Common External Tariff. Each ASEAN Member State is allowed to have its own tariff schedule which allows maintaining national MFN tariff. Thus far, ASEAN has never envisioned adopting the approach of becoming a customs union.

En el párrafo 2.60 se expone el régimen de inversión extranjera. 4. ¿Podrían explicar cuáles son los incentivos otorgados a las empresas para invertir en Malasia y qué actividades son objeto de promoción en Malasia?

Answer: 4. The major tax incentives for companies investing in the manufacturing sector are the Pioneer Status (PS) and the Investment Tax Allowance (ITA). Further information can be accessed at: https://incentives.mida.gov.my.

POLÍTICAS Y PRÁCTICAS COMERCIALES, POR MEDIDAS En el párrafo 3.57 se dan datos respecto del incentivo a las exportaciones que reciben ciertos sectores de diversas industrias. 5. ¿Podrían indicar las condiciones y requisitos que deben cumplir las empresas para acceder a tales beneficios?

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Answer: 5. The conditions and requirements that companies must meet to obtain such benefits can be accessed at: https://incentives.mida.gov.my.

En los párrafos 3.81 y 3.85 se indica acerca de los incentivos fiscales en el marco de diversas leyes allí explicitadas. 6. ¿Podrían indicar las condiciones y requisitos para acceder a tales incentivos?

Answer: 6. The conditions and requirements that companies must meet to obtain such benefits can be accessed at: https://incentives.mida.gov.my.

7. ¿Son aplicables estos incentivos tanto a empresas de capital nacional como extranjero?

Answer: 7. Incentives are available for both companies with national capital and companies with foreign capital investing in Malaysia that fulfill the necessary criteria.

En el párrafo 3.128 se menciona que existen subvenciones al gas licuado de petróleo. 8. ¿Podría la Secretaria ampliar la información respecto de dichas subvenciones?

Answer: 8. The current policy on subsidy for LPG is aimed at ensuring affordable retail price for consumers/ household sector. In the future, subsidy for the LPG will be gradually removed to reflect the market price.

9. ¿Qué relación tienen estas subvenciones respecto de la política de crecimiento verde detallada en el punto 2.16-F de la sección 2.2.2 “Objetivos de la política comercial”, y del párrafo 4.23 sobre la Política Nacional en materia de Biocombustibles?

Answer: 9. There is no relationship between subsidies and the National Biofuel Policy.

En el párrafo 4.46 se indica que las últimas notificaciones de Agricultura corresponden a los años civiles 2008-2011. 10. ¿Puede indicar cuándo se podrán conocer las nuevas notificaciones para el sector?

Answer: 10. Malaysia has been more consistent in submitting notifications and in the process of updating other outstanding notifications.

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BRAZIL

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT III TRADE POLICIES AND PRACTICES BY MEASURE 3.3 Measures Affecting Production and Trade 3.3.2. Sanitary and phytosanitary requirements Page 65 (Para 3.108 and 3.109) Paragraphs 3.108 and 3.109 list the relevant legislation related to sanitary and phytosanitary requirements of products into Malaysia, as well as the relevant Governmental bodies responsible for that issue. In that regard, please answer: Questions: 1. What is, if any, the deadline for the Department of Veterinary Services (DVS) and the Department of Islamic Development (JAKIM) to complete approval procedures for foreign exporting bovine meat and poultry establishments? In particular, how long does it take for the Malaysian Government to conclude the required adequacy audit of the applications for the subsequent schedule of a compliance audit in the exporting plants?

Answer: The conclusion of adequacy audit for the applications of compliance audit in the exporting plant may take up to 2 years. Further details can be accessed at: www.dvs.gov.my.

2. What is the deadline for the DVS and the JAKIM to approve requests for inspection visits of foreign meat and poultry establishments that intend to export to Malaysia?

Answer: The approval for requests of inspection is subjected to obtaining necessary audit documents required by DVS and JAKIM. Further details can be accessed at: www.dvs.gov.my.

3. Could you describe the licensing process for the export of processed and fresh bovine meat into Malaysia, referred to in Paragraph 3.33 of the Secretariat Report?

Answer: Importation of animal product into Malaysia is subjected to import permit by Malaysian Quarantine and Inspection Services (MAQIS). The application of import permit can be done through online “ePermit” system and the issuance of import permit will be within 24 hours.

4. Regarding Sabah and Sarawak regions, what are the relevant regulations and legislation applicable to import permits, also referred to in Paragraph 3.33 of the Secretariat Report? Please indicate the Government agencies responsible for the granting of import permits into Sabah and Sarawak.

Answer: For importation into Sabah, import license will be issued by or on behalf of the Director of the Department of Veterinary Services and Animal Industry, Sabah under the Animal Welfare Enactment 2015 [Sabah No. 9 of 2015]. For importation into Sarawak, import permit will be issued by or on behalf of the State Veterinary Authority, Sarawak under the Veterinary Public Health Ordinance 1999 [Sarawak Chapter 32].

5. What is, if any, the unit of the DVS specifically responsible for Sabah and Sarawak?

Answer: The units responsible are:  Department of Veterinary Services and Animal Industry, Sabah; and

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 Department of Veterinary Services Sarawak.

3.3.3. Sanitary and phytosanitary requirements Page 65 (Para 3.108) Paragraph 3.108 lists the relevant legislation related to sanitary and phytosanitary requirements applicable to food products, including fruits. In that regard, please answer: Questions: 6. Does the Government of Malaysia allow the importation of fruits (such as melons, oranges and apples) and vegetables from countries where South American Leaf Blight (SALB) disease occur, after the appropriate treatment has been applied in accordance with international standards? If not, what is the scientific basis for such prohibition?

Answer: Pest Risk Analysis (PRA) must be completed before any new plant or planting material is allowed to be imported into Malaysia. This is in accordance to the Malaysian Plant Quarantine Regulations 1981 and the International Standards for Phytosanitary Measures (ISPM).

7. In case the importation of such fruits and vegetables mentioned above is allowed by the Government of Malaysia, what is the procedure for the approval of establishments that intend to export to Malaysia?

Answer: Approval is subjected to the PRA report. Malaysia welcomes countries to submit the technical documents for PRA evaluation, should they intend to export to Malaysia.

3.3.8 Intellectual Property Rights Page 75 (Para 3.174) According to paragraph 3.174, no compulsory licences have been granted in Malaysia since 2014. However, there reports in the media stating that in September, 2017, the Malaysian government approved the use of Rights of Government under Patent Act 1983 (Act 291) for the patented invention of Sofosbuvir, a hepatitis C medicine. In that regard, please answer: Questions: 8. Can you confirm this information? If confirmed, was the decision based on the Doha Declaration on the TRIPS Agreement and Public Health (…“the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all” and it is reaffirmed “the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose”)?.

Answer: The implementation of the compulsory licence under the Rights of Government is based on the existing provision of Patents Act 1983 and in accordance with the Doha Declaration on the TRIPS Agreement.

9. How many additional hepatitis C patients are expected to receive treatment after the approval of the use of Rights of Government?

Answer: Based on a report in 2010, it is estimated that 453,700 Malaysians were infected with viral Hepatitis C with 2,000 newly diagnosed patients per year. The treatment plan is being finalized since the Sofosbuvir tablets are yet to be available. It is expected that 1,500 Hepatitis C patients will receive treatment in 2018, as compared to only 500 patients who were treated with other Hepatitis C drugs before the approval of the use of Rights of Government.

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10. Were there any challenges encountered by the Government of Malaysia in implementing the use of Rights of Government for Sofosbuvir?

Answer: The implementation is still at an initial stage.

11. Does the Government of Malaysia intend to use the system provided for by Article 31bis of the TRIPS Agreement, which entered into force on 23 January, 2017?

Answer: The decision on this issue is based on the current provision of the Patents Act 1983 and the TRIPS Agreement.

4 Trade policies by sector 4.3.3 Telecommunications Page 120 (Para 4.143) 4.143. In general, a network facility or network service provider licensee is allowed to hold up to 49% foreign equity and must have 30% bumiputera equity. However, equity restrictions do not apply if the licence holder is a public listed company, although they do apply when the licensee is a private limited company (Sendirian Berhad) held by a public limited company (Berhad). Questions: 12. Does Malaysia have any plans to liberalise the telecommunications sector and to allow foreigners to have majority stake on network facilities or network service providers? Were there any changes over the last 20 years in the regulations that set the rules of maximum of 49% foreigner and minimum 30% bumiputera? Which were those changes, if any? 13. If there are plans to liberalise the sector, could Malaysia please elaborate on these plans?

4.3.4 Transport Page 122 (Para 4.151) Table 4.34 lists the functions of the Department of Civil Aviation and the Malaysian Aviation Commission

DEPARTMENT OF CIVIL AVIATION MALAYSIAN AVIATION COMMISSION  Exercise regulatory functions in respect of  Regulate economic matters relating to the civil aviation and airport and aviation civil aviation industry services including the establishment of  Provide a mechanism for the protection of standards and their enforcement consumers  Represent the government of Malaysia in  Provide a mechanism for dispute resolution respect of civil aviation matters and to do between the providers of aviation services all things necessary for this purpose  Administer, allocate and manage air traffic  Ensure the safe and orderly growth of civil rights aviation throughout Malaysia  Monitor slot allocation for airlines or other  Encourage the development of airways and aircraft operators airport and air navigation facilities for civil aviation  Administer and manage public service obligations  Promote the provision of efficient airport and aviation services by licensees  Facilitate and coordinate matters of interest to the Malaysian civil aviation services and  Promote the interests of users of airport government agencies, locally and and aviation services in Malaysia in respect internationally  Issuing and renewing air

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DEPARTMENT OF CIVIL AVIATION MALAYSIAN AVIATION COMMISSION of the prices charged for, and the quality service licences and permits, ground handling and variety of, services provided by licences and aerodrome operator licences licensees  Perform any other functions that are incidental or consequential to any of its functions under the MACA

Question: 14. In light of the fact that the Malaysian Aviation Comission is responsible for: i) administering, allocating and managing air traffic rights; ii) monitoring slot allocation for airlines; iii) administering and managing public service obligations; iv) facilitating and coordinating matters of interest to the Malaysian civil aviation services and government agencies, locally and internationally; v) issuing and renewing air service licences and permits, does the Malaysian Aviation Commission takes part in air service agreements negotiations or is this matter exclusively dealt with by the Department of Civil Aviation, given that the Department is responsible for “representing the government of Malaysia in respect of civil aviation matters”?

Answer: Air traffic negotiation is under the purview of the Ministry of Transport. However, depending on the need to verify economic and technical matters, participation of the Malaysian Aviation Commission and Department of Civil Aviation will be considered on a case to case basis.

Page 123 (Para 4.156) According to the Secretariat report, all airports in Malaysia are owned by the State, except for Tanjung Manis Airport and Kerteh Airport. The government-linked company, Malaysia Airports Holdings Berhad (MAHB), manages five of the six international airports, plus the 16 domestic airports and 18 of the short take-off and landing airports (STOLPorts). In addition to operations in Malaysia, MAHB also has investments abroad: Istanbul Sabiha Gokcen International Airport in Turkey; and Rajiv Gandhi International Airport serving Hyderabad in India. Question: 15. Does Malaysia have any plans to liberalise airport management allowing foreign companies to operate airports in Malaysian territory or to have a significant stake in Malaysian companies that do so? It is noted that companies like Malaysia Airports Holdings Berhad (MAHB) have investments and operations abroad.

Answer: Malaysia is undertaking domestic consultation on the need to liberalise and allow foreign companies to operate airports in Malaysia and have a significant stake in Malaysian companies.

Page 122 (Para 4.168) Paragraph 4.168 states that vessels registered with the Malaysian Ship Registry (Table 4.36) must be owned by a Malaysian citizen or an enterprise with at least 51% Malaysian shareholding; the vessel owner must be incorporated and have an office in Malaysia; and the ship manager must be a Malaysian citizen or corporation. Question: 16. Does Malaysia have any plans to liberalise the registration of vessels allowing them, regardless of the origin of the capital, to be regarded as Malaysian, in case of foreigners that have a commercial presence in Malaysian territory?

Answer: With regard to the Merchant Shipping Ordinance 1952, all ships must be registered (notwithstanding as a Malaysian ship or registered in any other country) to ply within Malaysian waters. There is no restriction to ply as long as they are registered unless they are plying for domestic shipping. Capital and equity are key determinants of the ship ownership. Therefore, the origin of the capital must clearly be stated to allow it to be determined as Malaysian or otherwise.

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Currently, Malaysia implements a dual registry system, namely the Malaysia Ship Registry (MSR) and the Malaysia International Ship Registry (MISR). The MISR, which was introduced in 2006, excludes the requirement for Malaysian majority shareholders to encourage individuals and foreign shipping companies to register their ships in Malaysia. Details on MISR are in paragraph 4.169 of the Secretariat Report.

PART II: QUESTIONS REGARDING THE GOVERNMENT REPORT 6 Other Domestic Policies 6.5 E-Commerce and Digital Economy in Malaysia Page 31 (Para 6.13) Paragraph 6.13 states that Malaysia’s e-commerce imperative is two-fold, the first one being to future-proof existing businesses, including by bringing roughly 80% of SMEs into the e-commerce world and ensuring their capabilities to keep pace with an online market poised to grow much faster than offline sales. Question: 17. Could Malaysia list and explain which concrete government actions help bring SMEs into the e- commerce world?

Answer: Key initiatives taken by Government to facilitate participation of SMEs in eCommerce include:  promote and market eCommerce to SMEs to ensure that businesses are aware of the benefits of eCommerce and to assist SMEs to access export markets including through collaboration with leading eMarketplaces such as Alibaba.com, Trade India, Dagang Halal, Aladdin Street, Amazon, eBay, Qoo11, Tarad.com, Matahari Mall, JD.com and TMall Global;  improve eCommerce training and talent development for SME by establishing multi- platform, multi-tool training opportunities to cover the life cycles of SMEs, from entry to maturity, as well as education and training programmes through collaboration with industry players such as Alibaba, Lazada, 11 Street and Google;  create a one-stop eBusiness portal for SMEs to obtain information about eCommerce, such as eCommerce readiness surveys, e-business apps, training opportunities, community FAQs, and financial incentives. For example, Malaysia has an initiative called Go eCommerce. It is an avenue for SMEs to start their eCommerce journey with resources right at their fingertips. Please refer to: https://www.go-ecommerce.my/ for more information; and  SME Onboarding Initiative: Promote SMEs on international marketplaces by developing go-to-market strategies for various countries, platforms, and products in order to boost Malaysian exports.

Page 32 (6.15) According to the Government report, DFTZ is a testament to Malaysia`s unwavering commitment to propel SMEs’ growth through e-commerce. It will provide physical and virtual zones to facilitate SMEs to capitalise on the convergence of exponential growth of the internet economy and cross- border e-commerce activities; and to establish Malaysia as a regional e-fulfillment hub. DFTZ will also act as a microcosm to support internet companies to trade goods, provide services, innovate and co-create solutions. Questions: 18. Could Malaysia further explain the benefits for SME's operating within a DTFZ?

Answer: The DFTZ is a strategic national initiative and one of its key objectives is to drive export by Malaysian SMEs. Various Government agencies are collaborating with industry players to on-board Malaysian SMEs onto international and regional e-marketplaces and to promote Malaysian SMEs and Malaysian products in order to boost Malaysian exports. SMEs operating in the DFTZ will benefit from the following:

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i. efficient eFulfilment warehouse facilities; ii. integrated and structured platform that facilitates cross-border eCommerce transactions; and iii. improved customs and cargo clearance processes. As at end 2017, more than 1,900 SMEs have registered with DFTZ.

19. Would foreign companies/providers/SMEs be given national treatment to join physical zones?

Answer: The DFTZ leverages on the existing legal framework under the Free Zone Act 1990. The DFTZ is open to participation by all interested eMarketplace players, whether local or foreign. All players, irrespective of their geographical locations can avail themselves of the benefits of joining the DFTZ.

20. Considering virtual zones, what kind of benefits a MERCOSUR company/provider/SME, for instance, could have? Would national treatment also apply?

Answer: The DFTZ leverages on the existing legal framework under the Free Zone Act 1990. Malaysia welcomes participation from both local and foreign companies to collaborate and invest in Malaysia’s eCommerce sector, including for MERCOSUR companies. Further details on investment into Malaysia can be accessed at: http://www.mida.gov.my.

Page 32 (Para 6.17) Paragraph 6.17 states that the Government of Malaysia will increase the de minimis or minimum value for imports from RM 500 to RM 800 to establish Malaysia as the regional e-commerce hub. Question: 21. What is the tax rate to be paid to the Malaysian Government at all levels to import into Malaysia goods bought online that exceed the de minimis? Please inform the rate with all taxes and fees that are included.

Answer: Goods purchased online exceeding the de minimis will be subjected to duty at prevailing tariff rates and GST.

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THAILAND

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT 3.1.5 Import Prohibitions, Restrictions, and Licensing 3.1.5.2 Import Licensing (Second, Third, and Fourth Schedules) 3.1.5.2.1 Second Schedule 3.28. According to the Customs (Prohibition of Imports) Order 2017, part I of the second schedule lists products that are prohibited from importation except under an import licence. All goods originating from (and exporting to) Israel are subject to import (and export) licensing requirements. Imports of 16 product categories from all countries require an import licence (Table 3.5).

Question: 17. According to table 3.5 Import licensing, the Ministry of Domestic Trade, Co-operatives and Consumerism of Malaysia decided to freeze all Refined Sugar Import Permits. As a consequence of this measure, only local manufacturer can supply refined sugar in Malaysia market. Please clarify the measure as mentioned.

Answer: Due to the increase in the world price of refined sugar in 2016, Malaysia opted to impose control on the import permit of refined sugar. This temporary measure has been lifted and beginning 2018, all industry players may apply for import permits.

4.143. In general, a network facility or network service provider licensee is allowed to hold up to 49% foreign equity and must have 30% bumiputera equity. However, equity restrictions do not apply if the licence holder is a public listed company, although they do apply when the licensee is a private limited company (Sendirian Berhad) held by a public limited company (Berhad).

Question: 18. Could Malaysia clarify more about “a public listed company” and what are the equity restrictions for this kind of company?

Answer: A “public listed company’ is a public company (as per the Companies Act 2016) listed on Bursa Malaysia’s Main or ACE Market. The criteria for listing on these markets can be accessed at: http://www.bursamalaysia.com/market/listed-companies/listing-on-bursa-malaysia/listing- criteria/. All companies seeking listing on the main market must meet the 25% public spread requirement, of which 50% or an effective 12.5% has to be allocated to Bumiputera investors. This requirement only applies to companies with Malaysian-based operations. Companies with MSC status, BioNexus status and companies with predominantly foreign-based operations (where more than 50% of profits after tax are derived outside Malaysia) are exempted from this requirement. There is no equity restrictions applied to a public listed company which is a licensee under the Communications and Multimedia Act.

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3 TRADE POLICIES AND PRACTICES BY MEASURE 3.1 Measures Directly Affecting Imports 3.1.3 Tariffs 3.12. Malaysia's implementation of its Uruguay Round tariff binding was achieved in 2005. As during the previous review period, about 20% of its tariff lines are unbound, and the simple average bound rate is 11.0% for agricultural products (WTO definition) and 16.5% for non- agricultural products. Malaysia's bound tariffs are in HS 02 nomenclature.” Question: 19. Could Malaysia please indicate the products which their tariff lines remain unbound?

Answer: Please refer to Malaysia’s schedule of concession on the WTO website. The link is: https://www.wto.org/english/thewto_e/countries_e/malaysia_e.htm.

20. Does Malaysia have any plan for these unbound tariff products in the near future?

Answer: Malaysia will further review the unbound lines and increase the level of binding in the Doha Round negotiations.

4 TRADE POLICIES BY SECTOR 4.1 Agriculture, Forestry, and Fisheries 4.1.1 Agriculture 4.1.1.4 Trade Policy 4.43. Malaysia has commitments relating to 19 tariff quotas for a range of meat and animal products as well as cabbages, unroasted coffee beans, wheat flour, sugar, and tobacco. The most recent notification for imports under tariff quotas was for calendar years 2014 and 2015, and the previous one for 1999-2013. For 1999-2007, an applied tariff regime operated where the quotas were not opened and the applied tariff on all imports did not exceed the in-quota tariff. From 2008 to 2015, nine quotas were applied (10 in 2011) one of which was a combination of three scheduled quotas for poultry meat and offal. In some cases, a quota was opened for more than the scheduled quantity. Actual imports within tariff quotas varied from one product to another and from one year to another, for example:  For live poultry chickens (HS 010594190);

 the scheduled quota is 1,943,125 animals;

 the actual quota opened varied from 1,943,128 in 2008 to 2,195,275 in 2015 ; and

 in-quota imports varied from zero in 2008, 2009, and 2012 to 53,645 in 2015; and

 For milk and cream (HS 040110110, 040120100, and 040140100);

 the scheduled quota is 1,000,000 litres;

 the actual quotas opened varied from 6,620,000 litres in 2008 to 8,922,473 in 2015; and;

 in-quota imports varied from 341,983.15 in 2014 to 8,110,007 litres in 2009.

Question: 21. Could Malaysia please clarify which TRQ products were overfilled and which were underfilled?

Answer: Information on the utilization of TRQs can be obtained from Malaysia’s notification for imports under tariff rate quotas.

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22. Are there any plans to lift these underfilled TRQs in the near future?

Answer: Presently, Malaysia does not have any plans to phase out the TRQs.

PART II: QUESTIONS REGARDING THE GOVERNMENT REPORT Draft National SME Development Bill 2016 (Page 13) 3.38. Given the importance of SMEs in the economy, SME Corp. Malaysia is currently finalizing a specific Act to guide the SME industry. From the various researches conducted, the countries with their own SME Act experienced tremendous development and growth of their SMEs. A framework for the Act was developed based on the situation and business environment in Malaysia.” Question: 23. According to the development of the draft National SME Development Bill 2016 as described in paragraph 3.38., Thailand would like to know when the aforesaid act is intended to enter into effect.

Answer: The National SME Development Bill 2016 is planned to be tabled in Parliament in the first quarter of 2018. If the necessary approvals at legislative level are obtained by 2018, then the Act is anticipated to come into effect in 2019.

Performance Management and Delivery Unit (PEMANDU) (Page 14) 3.40. In March 2017, the role of PEMANDU has been transitioned to the newly established Civil Service Delivery Unit (CSDU) under the Economic Planning Unit. CSDU will continue to focus on the implementation of the initiatives under the National Transformation Programme. Question: 24. According to paragraph 3.40., after the role of Performance Management and Delivery (PEMANDU) has been transitioned to Civil Service Delivery Unit (CSDU), Thailand would like to know what the role of PEMANDU will be afterward?

Answer: PEMANDU has been disestablished effective 1 March 2017.

National Policy on Biological Diversity 2016-2025 (Page 30) 6.7. To mitigate the impacts of such changes, the Government introduced the National Policy on Biological Diversity 2016-2025 (NPBD) to serve as a national guide for biodiversity management over the next 10 years. It also reflects the Government’s effort and initiative to strongly and continuously emphasize on continued conservation, sustainable utilization and shared benefits from biodiversity in a fair and equitable manner, as well as to strengthen the involvement and participation of all relevant stakeholders. More recently, the NPBD is also becoming a template for economic drive for sectors related to conservation, preservation and protection of biodiversity such as ecotourism.

Question: 25. According to the National Policy Biological Diversity 2016-2025 as described in paragraph 6.7, Thailand would like to understand further details on how can Malaysia bring this policy into action?

Answer: The policy has 5 overarching goals encompassing stakeholders’ empowerment, reducing pressures on biodiversity, safeguarding ecosystems, species and genetic diversity, ensuring fair and equitable sharing of benefits from the utilization of biodiversity and building the capacity of all stakeholders. The 5 goals are supported by 17 national biodiversity targets which we hope to achieve by 2025.

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Further information can be accessed at: http://www.nre.gov.my/ms- my/PustakaMedia/Penerbitan/National%20Policy%20on%20Biological%20Diversity%202016- 2025.pdf.

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ADDITIONAL QUESTIONS FROM THAILAND (I)

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT Question: According to article 4.28 on the Trade Policy Review reported by the Secretariat, the Economic Transformation Programme aims to increase productivity and global market share. 26. Could you please elucidate policies to achieve these objectives?

Answer: As outlined in the Secretariat Report, the policies include to: 27. increase productivity by new planting of 30,000 hectares per year and replanting of 40,000 hectares per year; 28. increase global market share for latex gloves to 65% by 2020; 29. ensure the commercialization of Ekoprena and Pureprena (Green Rubber) as raw materials for the production of high-end rubber products, such as eco-friendly green tyres; and 30. undertake promotion and network marketing through Malaysian Rubber Board (MRB) and Malaysia Rubber Exports Promotion Council (MREPC). Further details can be accessed at: www.mrepc.com.

31. In addition, Malaysia had a plan to be the South East Asia’s First Rubber Industrial hub while the area under rubber trees has decreased. Could you please elaborate pragmatic policies or measures regarding supply chain management and rubber imports?

Answer: Malaysia will focus on R&D for both downstream and upstream sectors to maintain the industry’s competitiveness. Malaysia has the comparative advantage in terms of technology and marketing network.

With regard to the policy of importation of raw rubber, Malaysia is committed to liberalize and does not intent to impose any restriction in the near future.

PART II: QUESTION REGARDING THE GOVERNMENT REPORT Question: According to article 3.9 on the Trade Policy Review reported by Malaysia, the report indicates one of the six immediate priorities under the Malaysia Productivity Blueprint as (i) Restructure and improve the management of foreign workers. 32. Could you please elaborate how does the structure change and how do the changes impact on foreign workers in terms of rules and regulations?

Answer: As highlighted under the Malaysia Productivity Blueprint and 11th Malaysia Plan, the Government will consult and engage the industry when formulating a comprehensive foreign workers policy to reduce reliance on foreign workers. Among the key initiatives identified under the Blueprint include:

33. the establishment of a single point of authority to streamline the development, administration and enforcement of foreign workers policies; and 34. the introduction of the foreign workers levy as a policy tool to maintain the inflow of foreign workers. Beginning January 2018, the Government has mandated all employers to be fully responsible for their foreign workers’ welfare through the introduction of Employers Undertaking (EU), which include the employers’ responsibility to bear the burden of their levy charges. Malaysia has also implemented the use of online foreign workers application system to enable the relevant

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ADDITIONAL QUESTION FROM THAILAND (II)

PART I: QUESTION REGARDING THE SECRETARIAT REPORT Question: 3.1.1 Customs procedures, valuation, and requirements As mentioned that the Minister of Finance approves the minimum value of good recommended by the Customs Valuation Management Section in paragraph 3.9. 35. Does Malaysia use minimum value as the Customs Value? It is inconsistent with the Agreement on Implementation of Article VII of the GATT 1994.

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INDONESIA

SECRETARIAT REPORT Summary Page 9 Para 10 “The number of different tariff rates increased from 19 in 2013 to 25 in 2017. Ad valorem tariff rates range from zero to 60% for industrial products and zero to 90% for agricultural products.” Question: 1. Would the Government of Malaysia give more elaboration on this matter?

Answer: The number of tariff rates increased due to the commitment to reduce duties gradually for Information Technology Agreement (ITA) products. With regard to ad valorem tariff rates, Malaysia imposes applied tariff in accordance to Malaysia’s Uruguay Round schedule. Malaysia will explore the possibility to simplify the rates structure in order to ease the administration.

Page 9 Para 16 “Malaysia continues to align its standards with international ones: in 2017, 60% of Malaysian standards were aligned with international standards, up slightly from 59.8% in 2014, and 54% were identical, down from 57.5% in 2014. In 2017, 510 or 9.7% (6.5% at end-2012) of all Malaysian standards were compulsory.”

Questions: 2. Would the Government of Malaysia clarify about the remaining 40% standards that weren’t aligned with international standards?

Answer: The remaining standards that are not aligned with international standards are indigenous standards. Indigenous standards are developed to fulfil Malaysia’s legitimate objectives (e.g. geographical, climatic or technological issues).

3. Regarding the compulsory standards, would the Government of Malaysia give clarification on the compulsory standards which are in line with international standards?

Answer: 181 out of the 510 Malaysian standards which were made compulsory by regulators are aligned with international standards.

Page 10 Para 19 “There has been no significant change to the IPR regime in Malaysia during the review period. Enforcement, despite having improved, remains an area of concern.”

Question: 4. Would the Government of Malaysia give more elaboration on its IPR enforcement progress?

Answer: The MDTCC has strengthened cooperation with trademark owners and mobilized the Special Taskforce Combating Counterfeit Goods, which involves various government agencies and trademark owners. The Special Taskforce convenes annually and serves as a forum for stakeholders to exchange information and best practices, and to discuss enforcement activities carried out throughout the year. MDTCC is also working together with Malaysia Communications and Multimedia Commissions (MCMC) to block access and remove content for fraudulent websites.

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Malaysia continuously enhances collaborative efforts among its border enforcement agencies such as MDTCC, Malaysian Armed Forces, Malaysian Maritime Enforcement Agency, Marine Police and Malaysia Border Control Agency to monitor the smuggling activities into the country. Programs on identification of counterfeit goods and the modus operandi of counterfeit activities are conducted regularly for border agencies.

Page 10 Para 20 “Although rice production represents a relatively small part of the total value of agricultural production, the Government has continued to prioritize the sector, which is dominated by small- scale producers, through self-sufficiency targets (which also apply to fruits, vegetables, and livestock), minimum prices, input subsidies, and direct payments to producers.”

Question: 5. Would the Government of Malaysia give more elaboration on the input subsidies and direct payments to producers?

Answer: Input subsidies and direct programs are targeted to poor farmers and undertaken for rural development and food security. As such, they do not significantly distort international trade.

2 Trade and Investment Regimes 2.4 Investment Regime 2.4.2 Foreign investment regime Page 36 Para 2.61 “The Government continued to reduce foreign investment restrictions during the review period. Restrictions on quantity surveying services were lifted in January 2016, bringing to 45 the total number of services sub-sectors (such as medical services, education, and legal services, among others) that have had their foreign investment restrictions lifted since 2009. Malaysia liberalized foreign equity restrictions on credit rating agencies in 2017, and unit trust management companies in 2014. Currently there is no foreign equity restriction in the capital market except for a 70% cap on investment banks.” Question: 6. Would the Government of Malaysia give further elaboration whether this policy succeed to promote foreign investment in Malaysia?

Answer: The policy to further liberalise the services sector is to enable the country to continue attracting high value investments as well as to inject competitiveness and enhance productivity. Measures undertaken to liberalise and improve market access have succeeded in increasing FDI in the services sector by 128% to RM28.3 billion in 2016 compared to RM12.4 billion in 2015.

3 Trade Policies and Practices by Measure 3.1 Measures Directly Affecting Imports 3.1.1 Customs procedures, valuation, and requirements 3.1.3.1 Applied MFN tariff Page 42 Para 3.16 “According to WTO Secretariat calculations, in 2017 the calculable ad valorem equivalents (AVEs) of the non-ad valorem duties in general fall in the range from 0.2% (clove cigarettes) to 465% (certain manufactured tobacco)” Question: 7. Would the Government of Malaysia give more elaboration on this certain manufactured tobacco? Answer: Certain manufactured tobacco refers to tariff code 2403.99.9000 for other non-smoking tobacco products such as cut rag used for the purpose of making products other than cigarette.

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3.1.5 Import prohibitions, restrictions, and licensing 3.1.5.1 Prohibitions (first schedule) Page 45 Para 3.27 “Malaysia prohibits imports of a number of products, on religious, security, health, and environmental protection and safety grounds. It prohibits the importation of logs, wood in the rough, wood roughly squared or half squared but not further manufactured, and baulks, from Indonesia. Another 14 major product categories are absolutely prohibited from importation from all countries. These include: ... poisonous chemicals and minerals; certain animal feed; sodium arsenite; and substances covered under the Montreal Protocol.” Questions: 8. Indonesia would like to seek clarification from the Government of Malaysia on the import prohibition of logs, wood in the rough, wood roughly squared or half squared but not further manufactured, and baulks, from Indonesia.

Answer: This measure was mutually agreed by Malaysia and Indonesia in order to prevent illegal logging.

9. Having said that, Indonesia would like to clarify whether the similar measure also apply to other countries as well?

Answer: This measure is not imposed on any other countries.

10. Regarding the poisonous chemicals and minerals, would the Government of Malaysia give clarification on chemicals and mineral which fall under this category?

Answer: The list of ‘poisonous chemicals and minerals’ is stated in paragraph 12 of the Customs (Prohibition of Imports) Order 2017 of the Customs Act 1967 [Act 235].

11. In relation to that, would the Government of Malaysia give further explanation regarding the mechanism to identify whether the imported goods contained poisonous chemicals and minerals? Moreover, which government body responsible for conducting that mechanism?

Answer: The Royal Malaysian Customs Department is responsible for the classifications of imported goods and advises the importers on the relevant ministries or agencies for licencing requirements.

3.2 Measures Directly Affecting Exports 3.2.4 Export support and promotion 3.2.4.1 Export Support Page 54 – 55 Para 3.57 “Locally owned manufacturing companies with Malaysian equity of at least 60% were eligible for tax exemption on statutory income equivalent to 30% of the value of increased exports, provided that the company achieved a significant increase in exports; this rate was raised to 50% in case the company succeeded in penetrating new markets, and to full tax exemption if it achieved the highest increase in export in its category.” Questions: 12. Indonesia would like to seek clarification from the Government of Malaysia whether this measure is effective to increase export.

Answer: Any increase in exports would be contributed by the various strategies undertaken by Malaysia, which include export promotions, participation in international exhibitions and export acceleration missions, business matching and engagements through FTAs.

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3.2.4.3 Free trade zones and other measures Page 55 Para 3.59 “In 2017, there were 21 free industrial zones (FIZs) and 18 free commercial zones (FCZs) in Malaysia.”

Questions: 13. Indonesia would like to seek clarification from the Government of Malaysia whether in the next five years Malaysia would like to open new FIZs?

Answer: Malaysia anticipates that more FIZs may be established in the future to boost economic growth. Other

14. Regarding the second, third and fourth of Malaysia’s import licensing schedules, Indonesia would like to clarify about the time needed in order to obtain the import licenses regulated in those schedules?

Answer: Generally the time needed in order to obtain the import licenses range from 30 minutes to 3 weeks, depending on the imported products. Please refer to the respective agencies that grant the import licences for information on their service charter.

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FOLLOW-UP QUESTIONS FROM INDONESIA

Secretariat Report III. TRADE POLICIES AND PRACTICES BY MEASURE 3.1.5.1 Prohibitions (first schedule) Page 45 (Para 3.27) 1. Malaysia prohibits import of a number products, on religious, security, health, and environmental protection and safety grounds. It prohibits the importation of logs, wood in the rough, wood roughly squared or half squared but not further manufactured, and baulks, from Indonesia. These include: some broadcast receivers; comb or comb chunk (the authorities stated that the pest risk analysis conducted on this product revealed high risks of infestation pests with adverse effects); lightening arresters containing radioactive material; liquid-filled type electric heating bags, cushions, pillows, pouches or pads using alternating current (AC) or AC and direct current (AC/DC); new pneumatic snow tyres and new retreaded snow tyres for all types of vehicles; poisonous chemicals and minerals; certain animal feed; sodium arsenite; and substances covered under the Montreal Protocol. Questions: - Could Malaysia please explain the technical regulation of the import ban for those products, especially from Indonesia?

Answer: Import prohibition for logs and baulks from Indonesia was imposed in 2002 and 2003 respectively as an effort by Malaysia to support and assist Indonesia towards combatting illegal logging activities and the associated trade. This is a mutual agreement between Malaysia and Indonesia. Indonesia may refer to the letter from Department of Forestry, Jakarta (Departemen Kehutanan Sekretariat Jenderal) dated 1 November 2005 to the Minister of Environment and Natural Resources, Malaysia.

- What are the reasons that make Malaysia governing prohibit import logs and wood from Indonesia?

Answer: Following the letter and subsequent decision made during the bilateral meeting between Malaysia and Indonesia, Malaysia has taken the effort to impose the import prohibition, to enhance cooperation in the forestry sector between both countries.

II. TRADE AND INVESTMENT REGIMES 2.3 Trade Agreements and Arrangements 2.3.1 WTO Page 27 (Para 2.27) 2. Malaysia has submitted notifications to the WTO in a number of areas (Table 2.2). However, as at May 2017, notifications were outstanding in the areas of: agriculture (domestic support); quantitative restrictions; and customs valuation. It has not yet notified its MFN tariffs for 2016, nor has it submitted import data for 2015. It has not notified "any new, or any changes to existing laws, regulations or administrative guidelines which significantly affect trade in services", which it is obliged to notify under Article III:3 of the GATS. Questions: - Could Malaysia update the information related domestic support policies for agriculture sector, quantitative restrictions and customs policies issues and any other laws which are significantly affect trade in services?

Answer: Malaysia will continue to update information through our notification as required under the various WTO Agreements.

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- How are the mechanism for quantitative restrictions policy?

Answer: Malaysia maintains the quantitative restriction through the issuance of import licenses by taking into account the national socio-economic, security, safety and health interests.

II. TRADE AND INVESTMENT REGIMES Page 36 (Para 2.62) 3. Restrictions on foreign investment in fisheries, energy, telecommunications, finance, and transport, remain. For example, as the time of the previous review, foreign equity in power generation is allowed up to 49%, while for electricity distribution, only up to a 30% stake in a designated franchise is generally allowed. The Ministry of Transport set foreign equity ceilings for domestic airline companies at 49%, with the same ceiling permitted for convention and exhibition centre’s with a seating capacity below 5,000. Foreign participation in public-private- partnership projects is in general limited to a maximum of 25% of its share capital. For projects of strategic and national importance, foreign ownership is required to be widespread to ensure that no single foreign party has a dominant influence on the company. Questions: - What are the specific qualification requirements and how are the examination and approval procedures for foreign investors to invest in Malaysia?

Answer: The requirements and procedures for foreign investors to invest in Malaysia can be accessed at: http://www.mida.gov.my/home/invest-in-malaysia/posts/.

- Is there any approach to increase FDI rather than reduce the restriction?

Answer: Malaysia’s approach are as follows: 1. Repatriation of profits and investment guarantee  Profits are freely remittable. Investment Guarantee Agreements (IGAs) have been concluded with a number of countries. IGAs serve to:  Protect against nationalisation and expropriation  Ensure prompt and adequate compensation in the event of nationalisation or expropriation  Provide free transfer of profits, capital and other fees  Ensure settlement of investment disputes under the Convention on the Settlement of Investment Disputes of which Malaysia has been a member since 1966. 2. Convention on the Settlement of Investment Disputes  In the interest of promoting and protecting foreign investment, the Malaysian government ratified the provisions of the Convention on the Settlement of Investment Disputes in 1966. The Convention, established under the auspices of the International Bank for Reconstruction and Development (IBRD), provides international conciliation or arbitration through the International Centre for Settlement of Investment Disputes located at IBRD's principal office in Washington. 3. Intellectual Property Rights  Malaysia is a member of the World Intellectual Property Organisation (WIPO), a signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) signed under the auspices of the World Trade Organisation (WTO), and a signatory to the Paris Convention and Berne Convention which govern intellectual property rights. Malaysia has also acceded to the Patents Cooperation Treaty (PCT) in the year 2006 and effective from 16 August 2006, the PCT International Application can be made at Intellectual Property Corporation of Malaysia (MyIPO).

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 Malaysia’s intellectual property laws are in conformity with international standards and provide protection to local and foreign investors. The various legislations include:  Patents Act 1983  Patents Regulations 1986  Trade Mark Act 1976  Trade Mark Regulations 1997  Trade Descriptions Act 2011  Industrial Designs Act 1996  Industrial Designs Regulations 1999  Copyright (Amended) Act 2012 4. Employment of Expatriates  Companies are allowed to bring in expatriate personnel i.e. ‘key post’ or ‘time post’. Key posts are posts that are permanently filled by foreigners whereby time post are position filled on specified time.

5. Attractive Tax Incentives  The corporate tax rate is 24%. Malaysia also offers a wide range of tax incentives under the Promotion of Investments Act 1986 and the Income Tax Act 1967.  For more information of tax incentives, please visit ICCO portal at https://incentives.mida.gov.my/Incentives/Modules/Public/IncentiveList.aspx.

III. TRADE POLICIES AND PRACTICES BY MEASURE Page 55 (Para 3.60) 4. For companies to be located in FIZs, and for them to benefit from import duty and other tax reductions or exemptions, they must fulfil the following requirements: a. To be located in a FIZ, a company must export at least 80% of its output; a company may obtain approval from the National Investment Committee in MITI and Customs to reduce its export performance requirement to 60%.

b. FIZ companies benefit from import duty exemptions if they achieve 40% of local content value; when the local content value does not reach 40%, the company may still benefit from import duty exemptions if it can prove that the non-originating raw material had undergone substantive transformation in producing the end products.

Question: - How is the mechanism to calculate the local content values? Are there any technical regulation that can be informed to us?

Answer: The calculation of the local content is in accordance with the ASEAN Trade in Goods Agreement (ATIGA).

- How could Malaysia convinced that the local content policy does not violate the TRIMs- WTO provisions?

Answer: The policy is in line with Malaysia’s commitment under ASEAN.

III. TRADE POLICIES AND PRACTICES BY MEASURE Page 46 (Para 3.30) 5. According to Part III of the second schedule, some iron and steel products are prohibited from importation except under an import licence; these do not apply to Labuan, Langkawi, Tioman, and specified free zones. Import licences for these products are issued by MITI. Malaysia

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notified that, effective from 1 August 2017, import licence requirements for 181 tariff lines of iron and steel products had been abolished Question: - What are the consideration of Malaysia to abolished import license for 282 tariff lines of iron and steel products? Answer: Effective 1 August 2017, the import licence requirement for 181 tariff lines (based on HS 2017) of iron and steel products was abolished. The abolishment of import licensing for iron and steel products has been undertaken progressively since 2009. It is part of the Government’s initiative to liberalise the industry in order to enhance the competitiveness of local industry as well as to support growth of manufacturing and construction sectors.

- What is the different between specified free zones and Free Industrial Zones (FIZ) related to those places?

Answer: There is no difference between specified free zones and FIZ in this context. A Free Zone is an area in any part of Malaysia that is declared by the Minister of Finance under the provision of Section 3(1) of the Free Zones Act 1990, as a Free Commercial Zone or Free Industrial Zone. The activities and industries therein are subject to minimal customs formalities as it is deemed under Section 2 (1A) of the Customs Act 1967 to be a place outside the Principal Custom Area except in respect of Prohibition of Imports and Exports under Section 31 of the Customs Act 1967. Hence, products from companies located in the Free Industrial Zones (FIZ) destined for Malaysian domestic market are considered as imported products and subjected to import duty at MFN/applied rates.

III. TRADE POLICIES AND PRACTICES BY MEASURE Page 47 (Para 3.39) 6. Part II of the fourth schedule lists goods for which importation is subject to TBT requirements; these requirements do not apply to free commercial zones (Table 3.6). Question: - Could Malaysia explain more detail the latest TBT / standard related to coconut (copra) and palm kernel product?

Answer: Malaysia does not have TBT related standard on coconut (copra) and palm kernel product except for SPS. The Certificate of Conformity of Agricultural Produce requirement in Part II of the Fourth Schedule is applicable for coconuts, young and matured coconut (in excess of 3 kilograms per consignments) of subheading 0801.19. The coconut (copra) of subheading 1203.00 is subjected to licensing requirements on SPS grounds, as specified in Part I, Third Schedule. For the products of ‘animal or vegetables fats and oils and their cleavage; prepared edible fats’ under heading HS1511 and HS1513, the importation is subject to approval of the Food Safety and Quality Division, Ministry of Health, as specified Part I, Third Schedule. The importation of ‘oil palm fruit bunch (including in loose form) and oil palm kernel seeds’ under subheading HS1207.10 is subject to licensing requirement, as specified in Part I, Third Schedule.

- Why there are differences in TBT Requirements between free commercial zones and other zones?

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deemed under Section 2 (1A) of the Customs Act 1967 to be a place outside the Principal Custom Area except in respect of Prohibition of Imports and Exports under Section 31 of the Customs Act 1967.

7. Imposition of import licensing requirements on certain nicotine-based product, chemicals and smoking replacement aids. In June 2016, The Malaysian authorities imposed import licensing requirement on certain nicotin-based products, mixture and preparation of a kind used for vaporizer smoking, phosphorus, hypophosporic and Alpha-Phenilacetoaceonitro. Question: - How are the procedures of import licensing for those products?

Answer: The details of the procedures can be accessed at https://www.pharmacy.gov.my/v2/ms/dokumen/garis-panduan-umum-permohonan-epermit- import-eksport-dikeluarkan-bpf-kkm.html.

- How is the impact of the policy enactment?

Answer: The implementation of import licensing requirements for the products has enabled the Government to monitor the importation of those products into the country

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INDIA

QUESTIONS ON SECRETARIAT REPORT (WT/TPR/S/366) Page 64 para 3.3.3 Question 1: According to the authorities, SPS measure applied by the Malaysia are based on relevant international standards. Malaysia is requested to provide the relevant scientific risk assessment, in accordance with the WTO SPS agreements.

Answer: Malaysia takes into account the guidelines by World Animal Organization for Animal Health (OIE) and Joint FAO/WHO Food Standard Programme of Codex Alimentarius Commission (CAC) in conducting risk assessment, in accordance with the WTO SPS Agreement.

Question 2: The authorities state that regarding food safety issues, Malaysia Food Safety Commission publishes the result of the risk assessment. India would request Malaysia to share the web link for such risk assessment carried out which are compatible with the provision of SPS Agreement.

Answer: We would like to clarify that there is no Food Safety Commission in Malaysia.

Question 3: Malaysia is also requested to provide the relevant scientific risk assessment, in accordance with the WTO SPS Agreement on agricultural chemicals.

Question 4: Malaysia is requested to provide justification for maintain such high MRL levels in the eleven illustrative lists of agricultural chemicals.

Answer: The MRLs are set based on Good Agricultural Practices (GAPs)/registered uses in Malaysia, dietary intake and risk assessment. MRL values vary between countries due to different agricultural practices and climatic conditions. Risk assessments/scientific evidences for MRL limit set for the agricultural products are in accordance with the Codex Alimentarius Commission (CAC) guidelines. The risk assessment process is based on the established Acceptable Daily Intakes (ADIs) and Acute Reference Doses (ARFDs) by Joint FAO/WHO Meetings on Pesticide Residue (JMPR) or where appropriate (e.g.; OECD, EFSA, Japan, Australia). The MRLs are notified to the WTO and consistent with the WTO obligations.

Question 5: Malaysia is also requested to provide justification of using agricultural chemicals not harmonised by the Codex as international standard in its domestic MRL standards- agricultural chemicals.

Answer: The use of agricultural chemicals domestically is in accordance with the Pesticide Act 1974 of Malaysia, and this is based on the Codex Alimentarius Commission (CAC) guidelines.

Question 6: In respect to the MRL on agricultural chemicals for each of agricultural product, could Malaysia indicate whether the requisite risk assessments were undertaken or the relevant scientific evidence was available?

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Answer: MRL on agricultural chemicals for each agricultural product is set according to the guidelines by Joint FAO/WHO Food Standard Programme of Codex Alimentarius Commission (CAC).

Question 7: Could Malaysia point out the specific documents containing the risk assessments/scientific evidences for each MRL limits set for the agricultural products?

Answer: The MRL limits are set based on Good Agricultural Practices (GAPs) and registered uses in Malaysia. Risk assessments/scientific evidences for MRL limit set for the agricultural products are in accordance with Codex Alimentarius Commission (CAC) guidelines. The risk assessment process is based on the established Acceptable Daily Intakes (ADIs) and Acute Reference Doses (ARFDs) by Joint FAO/WHO Meetings on Pesticide Residue (JMPR) or where appropriate (e.g.; OECD, EFSA, Japan, Australia).

Question 8: Malaysia is requested to indicate how the use of default MRLs standards of (0.01 ppm) are justified under the appropriate level of protection (ALOP) of the SPS agreement of WTO?

Answer: The default MRLs of 0.01mg/kg is set when there is no established MRL locally or internationally, in accordance with Food Regulation 1985 and Food Act 1983 of Malaysia. The value is also based on the Limit of Quantification (LOQ) of the instrument/method applied, and in accordance with the procedures of JMPR.

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JAPAN

REPORT BY THE GOVERNMENT (WT/TPR/G/366) 3 TRADE POLICY DEVELOPMENT 3.4 Development in FTAs Regional Trade Agreements (Questions 1 Paragraphs 3.76 and 3.77, Page 18) 1. With respect to the protection of undisclosed data related to pharmaceutical products (Article 39.3 of TRIPS and Articles 18.50 and 18.51 of TPP), for how long does Malaysia provide data protection for Biologics (new biological products)?

Answer: Currently, Malaysia does not provide protection of undisclosed data for Biologics. Under Article 18.51 of the TPP, Malaysia is compelled to grant a 5-year data exclusivity for Biologics, but has been accorded a 5-year transition period to comply with this obligation. However, this provision has now been suspended in the CPTPP.

2. For how long does Malaysia provide data protection for a previously approved pharmaceutical product covering a new formulation or a new method of administration?

Answer: In Malaysia’s existing Data Exclusivity (DE) Directive 2011, data exclusivity is granted in either one of these two conditions only, i.e.:  a new drug containing new chemical entity (NCE); or  for second indication of the NCE. Protection is provided for 5 years for new drugs and 3 years for second indication for small molecules only. The protection period is calculated from the date of approval in the first country that the product has been granted marketing approval / approval for second indication.

3. Will Malaysia make available patent term adjustment or sui generis protection (Article 18.48 of TPP) to compensate for unreasonable curtailment of the effective patent term as a result of marketing approval process?

Answer: Malaysia does not provide patent term adjustment or sui generis protection to compensate for unreasonable curtailment of the effective patent term as a result of marketing approval process. Under Article 18.48 of the TPP, Malaysia is compelled to make available patent term adjustment to compensate for unreasonable curtailment of effective patent term as a result of marketing approval process. However, this provision has now been suspended in the CPTPP.

REPORT BY THE SECRETARIAT (WT/TPR/S/366) 3 TRADE POLICIES AND PRACTICES BY MEASURE 3.1 Measures Directly Affecting Imports 3.1.5.1 Prohibitions (first schedule) (Question 2 Paragraph 3.27, Page 45) Regarding the importing prohibition on plant products, Japan recognizes that some important rules have been revised in an amended agreement of "the Plant Protection Agreement for the Asia and Pacific Region"(the amended APPPC agreement). Japan would like to ask why Malaysia has not yet ratified the amended APPPC agreement.

Answer: Malaysia is still consulting relevant Agencies on the amended APPPC Agreement and the decision on ratification will depend on the outcome of these consultations.

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3 TRADE POLICIES AND PRACTICES BY MEASURE 3.3 Measures Affecting Production and Trade 3.3.5 State trading, government-linked enterprises and privatization (Question 3 Paragraph 3.133, Page 68) 1. With respect to the exclusive right to import rice, could Malaysia provide an explanation on the decision making process of BERNAS regarding from where (which country) and how much rice to import?

Answer: BERNAS’s decision to import rice depends on the price competitiveness and quality. Annually, Malaysia imports approximately 700,000 to 800,000 metric tons to meet the domestic needs.

2. What requirements do domestic private enterprises have to meet in order to get permission from BERNAS to import rice? Are there any limits on the quantity or the variety of rice to import subject to permission?

Answer: BERNAS is the only company allowed by the Government to import rice into Malaysia. The two main criteria used for determining the annual quantity to be imported are the annual rice deficit in the country and the rice stockpile requirement/food security.

3. Does BERNAS collect any mark-up, or difference between its purchasing price and its selling price, when it sells imported rice to domestic private enterprises? In such case, what factors determine the level of a mark-up? Could Malaysia provide data on the results of mark-up for the last four years?

Answer: Rice imported into Malaysia is in line with market preferences and needs. The quality of the imported rice (super grade) is mostly of a higher quality compared to the local super grade. The pricing strategy adopted by BERNAS is determined by the quality and target markets. As such, it is priced higher than the local super grades.

3 TRADE POLICIES AND PRACTICES BY MEASURE 3.3 Measures Affecting Production and Trade 3.3.7 Intellectual Property rights (Question 4 Paragraph 3.174, Page 75) 1. Article 84(1) of the Malaysian Patents Act allows the Minister to issue a compulsory license even without the agreement of the owner of the patent. Has Malaysia issued a compulsory license provided in Article 84(1) before the sofosbuvir case? Could Malaysia provide information of such case, if any?

Answer: The compulsory license under Section 84(1) of the Patents Act 1983 was issued for HIV/AIDs medicine on 1 November 2003 for a period of two years.

2. In compliance with the purpose of TRIPS Article 31, could Malaysia clarify what condition could meet the requirement, i.e., "where the public interest, in particular, national security, nutrition, health" stipulated in Article 84(1)?

Answer: The condition/requirement for ‘the public interest in particular national security, nutrition, health’ stipulated in Section 84(1) is based on a case by case basis, taking into account the seriousness of the issue and the crucial need to protect public interest. For example, Malaysia declared Hepatitis C as a public health interest in 2016 in line with the World Health Assembly Resolution (WHA Resolution 63.18) which is “to recognize viral hepatitis as

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- 136 - a global public health problem and the need for governments and populations to take action to prevent, diagnose and treat viral hepatitis”. Besides that, WHA Resolution 67.6, urged all WHO member states “to consider, as necessary, national legislative mechanisms for the use of the flexibilities contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights in order to promote access to specific pharmaceutical products”.

3. On 20 September, 2017, the Director-General of Health announced the implementation of the Rights of Government to issue a compulsory license for sofosbuvir tablet. https://kpkesihatan.com/2017/09/20/press-statement-minister-of-health-20th-september- 2017-implementation-of-the-rights-of-government-for-sofosbuvir-tablet-to-increase-access- for-hepatitis-c-treatment-in-malaysia/. When Malaysia made the decision to implement the Rights of Government, was Gilead’s announcement to include Malaysia in their sofosbuvir voluntary license taken into account? https://www.ip-watch.org/2017/08/24/malaysia-inclusion-gilead-voluntary-licence-product- compulsory-licence-pressure/ http://www.gilead.com/- /media/files/pdfs/other/form%20ar%20hcv%20license%20agmt%20gild%2011202017.pdf?la =en.

Answer: The decision on the use of Government Rights under Section 84 of the Patents Act 1983 was made on 4 August 2017 before Gilead announced their intention to include Malaysia in their Sofosbuvir voluntary license.

If so, is voluntary license not enough for patent owner to avoid the implementation of the Rights of Government?

Answer: The option of using the voluntary license as a complementary mechanism for (drug) access is open in parallel to the use of the Rights of Government.

(Question 5 Paragraph 3.178, Page 76) 1. With respect to the protection of undisclosed data related to pharmaceutical products (Article 39.3 of TRIPS and Articles 18.50 and 18.51 of TPP), for how long does Malaysia provide data protection for Biologics (new biological products)?

2. For how long does Malaysia provide data protection for a previously approved pharmaceutical product covering a new formulation or a new method of administration?

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(Question 6 Paragraph 3.181, Page 77) 1. MDTCC has the authority for criminal prosecution of infringers. Are there any standards (the amount of seizures, repeat offense etc.) to proceed a criminal prosecution? Also could Malaysia provide examples of criminal punishments of infringers?

Answer: Any individual person who commits an offence of trademark counterfeiting shall be fined up to RM10,000 for each counterfeit goods or to a term of imprisonment for up to 3 years, or to both for the first offence. For a second or subsequent offences, to a fine of up to RM20,000 for each counterfeit goods or to a term of imprisonment for up to 5 years or to both.

If the offender is a body corporate, to a fine up to RM15,000 for each counterfeit goods and for a second or subsequent offence, to a fine up to RM30,000 for each counterfeit goods.

2. According to the report by the Secretariat, main categories of goods that are detained or suspended as infringing IPRs by the Customs are clothes and leather goods. Could Malaysia breakdown the number of cases by item and IPR categories?

Answer: Clothes (Trademark): 2015 - 201 2016 - 194 2017 - 151 Leather goods (Trademark): 2015 - 173 2016 - 117 2017 - 156

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KINGDOM OF SAUDI ARABIA

QUESTIONS REGARDING THE GOVERNMENT REPORT In section 2.2. We know that a monitoring mechanism has been established to ensure all the outcomes of the eleventh Malaysian Plan (11MP) are met. Question 1 Can you please explain what nature of such monitoring mechanism is; its policies and performance evaluation methods?

Answer: In order to achieve the strategic thrusts outlined in the 11MP, a results-based management approach has been implemented in the monitoring and evaluation process. This is in line with the Government’s agenda to emphasise the accountability and transparency in managing public funds. During the project application period, implementing ministries and agencies must submit a solid proposal which entails a Logical Framework Matrix (LFM), Creativity Index (CI), and a feasibility study. Once the proposal is approved and granted, the appointed officers will monitor and evaluate the project through an online system i.e. Project Monitoring System II (SPP II). In section 2.5. The agriculture sector in Malaysia posted a negative growth of 5.1% as crude palm oil output was affected by the El Nino weather phenomenon.

Question 2 Does the government have any plan to overcome the weather challenge to keep the flow of palm oil exports?

Answer: The weather challenge is a natural climatic condition. On the part of the Government, there are no measures instituted to overcome weather impact like El-Nino to sustain palm oil supply.

In section 3.9 Question 3 We understand that the Malaysia Productivity Blueprint (MPB) has six immediate priorities have been identified as game changers to move the needle on productivity improvement. One of the priorities is to restructure and improve the management of foreign workers. Can you please provide details about the specific steps needed or made towards meeting this target? And how it would enhance productivity as per the blueprint?

Answer: Malaysia has undertaken the following initiatives to restructure and improve the management of foreign workers, namely:  formulating and implementing a comprehensive foreign workers policy;  using sector-specific, structured, phased-out plan complemented by availability of local workers and automation;  applying market mechanism based on levies;  ensuring robust engagement and communication; and  streamlining management of foreign workers through a single point of authority. These initiatives aim to reduce overreliance on unskilled and low-wage foreign workers, as well as enhance labour productivity and wages by shifting to high skilled jobs.

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In section 3.9. Malaysia mentioned that one of the six priorities for productivity management is to strengthen digitalization among SMEs through e-commerce and adoption of innovative technology.

Question 4 How could this priority help facilitating foreign trade?

Answer: Efforts to strengthen digitalisation among SMEs include provision of platforms and infrastructure for online banking, payment, e-Marketplace and mobile connections. Going online reduces cost of doing business and at the same time provides abundance of opportunities for SMEs to expand their market globally. Implementation of DFTZ by Malaysia is also another mode of digitalisation to facilitate foreign trade. Initiatives such as DFTZ assist SMEs to move towards a more efficient cross-border trade through eServices platform, an integrated system that connects online services by global eCommerce companies to the relevant Malaysian public sector systems. eServices platform provides a seamless journey for exporters and importers to conduct their business online.

In section 3.13 We understand that the new customs system will enhance the facilitation of trade by allowing traders to submit all import, export and transit information required by regulatory agencies via a single electronic gateway. Question 5 When will this gateway start its work? What additional privileges it will have than the traditional existing customs system?

Answer: The development of an online system is currently in progress and is expected to be implemented in 2019. In addition to being a single window for cross border trade, the system can be accessed anywhere and will provide enhanced risk management system for the benefit of both Customs officials and traders.

In section 3.14 As of October 2017, Malaysia has entered into a Mutual Recognition Arrangement (MRA) with customs administration of Japan: Hong Kong, China: and Korea. Accredited companies will enjoy customs facilitation in those countries.

Question 6 Can you please inform us what criteria needed for companies to get involved in MRA? Are there any plan to expand the arrangement to include other countries?

Answer: MRA is signed between two Customs administrations, not between the companies. All Authorized Economic Operators (AEO) status companies can enjoy the benefit of AEO offered by partner countries except the deferred payment of tax. Currently, the Royal Malaysian Customs Department is negotiating MRA with Thailand and China. Malaysia is planning to expand the MRA with other countries which have high volume of trade with Malaysia. Further information and guidelines on AEO is accessible at: www.customsgc.gov.my.

In section 3.27. To accelerate the growth of a new wave of exports. the services sector, and small and medium enterprises (SMEs) have been identified as the targeted areas to be promoted under the Eleventh Malaysia Plan 2016-2020.

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Question 7 How does Malaysia plan to promote its SMEs development model to other countries, which are trying to develop this vital sector, like Saudi Arabia?

Answer: Malaysia is open to promote SME as well as share its experience and expertise in SME development with any partner countries. This is evident through our engagements in bilateral meetings, working visits and business forums and Memorandum of Understandings (MOUs) where Malaysia always emphasise its readiness to assist other countries in developing their small and medium enterprises. The cooperation can be in forms of exchange of information and experience, expertise, capacity building, exchange of visits between experts and professionals, and convening of conferences, seminars, meetings or sessions. Malaysia has also been promoting its SME development model to other countries through various platforms such as WTO, ASEAN, APEC and OECD. For example, Malaysia through SME Corp has shared its expertise with Small and Medium Enterprises Authority, Saudi Arabia in the following areas: i) Policy and coordination function: including coordination mechanism and formulation of the SME Masterplan; ii) SME diagnostic tool and monitoring at firm level: SCORE, M-CORE and 1-innoCERT; iii) Acculturation of entrepreneurship among youth; and iv) Bilateral matching of Malaysian SMEs with Saudi SMEs in existing sectors and industries (e.g.: oil and gas).

QUESTIONS REGARDING THE SECRETARIAT REPORT In section 2.62. Malaysia mentioned that restrictions on foreign investment in Fisheries, energy. telecommunications, finance, and transport, remain. Question 1 How does these restriction measures affect your position on the trade agreements with other countries? Is there any plan to liberalize these sectors in your coming plan?

Answer: Where Malaysia is unable to bind the liberalisation under a free trade agreement, these sectors are excluded from the scope of the trade agreement either through a reservation list of an investment chapter or not offered under the schedule of commitments of the trade in services chapter. Liberalisation of sectors, under a free trade agreement, is subject to the overall net benefit to the country as a result of negotiations. The Malaysian Government values foreign investment contribution towards the continued economic development of the country. The Government is committed to take continuous balanced measures in reducing restrictions and facilitating foreign participation in order to continue attracting high quality FDIs. Malaysia has autonomously liberalised 27 services sub-sectors in 2009 and another 18 sub-sectors in 2012.

In section 3.68. Malaysia discussed the significant change to Malaysia's tax structure and implementation of a goods and services tax (GST) of 6% from 1 April 2015, to streamline the previous consumption taxes. Question 2 What is expected impact of changing the tax structure in the coming years comparing to the previous tax mechanism?

Answer: Since the implementation of GST in Malaysia from 1 April 2015, it has benefited all segments of the society. The impact includes:

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 Consumers  Fair and more transparent as the consumer sees the tax paid in the transaction;  Distributes tax burden among a larger section of the population;  Leads to reduction in cost of goods and services as businesses can claim input tax credits from the Government; and  Encourages prudent spending since it is a consumption tax.  Private sector  Transparent and a neutral tax system as competing forms of economic activity are taxed in the same way;  Export of goods and services will be zero-rated, making local products and services more competitive in global markets;  Encourages tourism as tourists would be entitled to a tax refund on goods and services purchased from participating retailers through the Tourist Refund Scheme;  Self-enforcing tax system, making avoidance difficult due to input tax crediting mechanism; and  Compliance cost to administer GST is lower due to a streamlined tax system.  Government  Affords a more stable, predictable and efficient source of revenue as it is based on consumption;  Promotes overall tax compliance as well as brings in the informal sector into the tax net; and  Increases tax collection as the revenue grows in tandem with economic growth.  Economy  Capital formation is not affected as businesses can claim input tax;  Enhances competitiveness as it reduces cost of doing business; and  Attracts more foreign direct investment (FDI).

In section 3.85. Malaysia reported that more favorable tax reliefs may be granted to companies engaged in the following manufacturing activities: strategic projects of national importance. e.g. heavy capital investment. and high-tech projects; specialized machinery and equipment: automotive industry; and utilization of oil palm biomass Question 3 Is there any plan for Malaysia to open these industries for foreign investors? How do you evaluate the incentives programs for these industries and on what time basis?

Answer: Since June 2003, Malaysia has fully liberalised the manufacturing industries to allow participation from foreign investors. Incentive programs are being evaluated using the Matrix of Quality Investment Indicators to assess the quality of projects. Indicators include high income jobs, knowledge intensive, R&D intensity and creation of intellectual property (IP). Evaluation will be carried out after 5 years in tandem with the incentive period.

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CANADA

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT II TRADE AND INVESTMENT REGIMES: TRADE AGREEMENTS AND ARRANGEMENTS Page 27 (Para 2.27) Paragraph 2.27 states that: “Malaysia has submitted notifications to the WTO in a number of areas (Table 2.2). However, as at May 2017, notifications were outstanding in the areas of: agriculture (domestic support); quantitative restrictions; and customs valuation. It has not yet notified its MFN tariffs for 2016, nor has it submitted import data for 2015. It has not notified "any new, or any changes to existing laws, regulations or administrative guidelines which significantly affect trade in services", which it is obliged to notify under Article III:3 of the GATS.” Questions: 1. When does Malaysia intend to submit its customs valuation notification to the WTO?

Answer: Malaysia has submitted its notification on customs valuation on 18 January 2018.

2. When does Malaysia intend to notify its MFN tariffs for 2016 and its import data for 2015 to the WTO?

Answer: Malaysia has notified:  MFN tariffs for 2016 and 2017 in April 2017; and  import data for 2015 and 2016 in August 2017. However, Malaysia will resubmit the data by the first half 2018 after rectifying the error as notified by the Secretariat.

III TRADE POLICIES AND PRACTICES BY MEASURE: MEASURES DIRECTLY AFFECTING IMPORTS Page 39 (Para 3.9) Paragraph 3.9 states that “Customs valuation is based on the Customs (Rules of Valuation) Regulations 1999, amended in 2000, and is largely determined in accordance with the WTO Agreement on Customs Valuation. Transaction value based on the c.i.f. price is used for most imports. If this method cannot be used, valuation is based on the transaction value of identical or similar goods, the deductive value, the computed value or flexible valuation. The Minister of Finance approves the minimum value of goods recommended by the Customs Valuation Management Section. Regarding the valuation of passenger cars and motorcycles, Customs is reviewing its practices to adopt the transaction value method.” Questions: 3. Could Malaysia please provide an update on how it will adopt the transaction value method regarding the valuation of passenger cars and motorcycles?

III TRADE POLICIES AND PRACTICES BY MEASURE: IMPORT PROHIBITIONS, RESTRICTIONS, AND LICENSING Page 45 (Para 3.27) Paragraph 3.27 states that “Malaysia prohibits imports of a number of products, on religious, security, health, and environmental protection and safety grounds. It prohibits the importation of logs, wood in the rough, wood roughly squared or half squared but not further manufactured, and baulks, from Indonesia. Another 14 major product categories are absolutely prohibited from importation from all countries. These include: some broadcast receivers; comb or comb chunk (the

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- 143 - authorities stated that the pest risk analysis conducted on this product revealed high risks of infestation pests with adverse effects); lightening arresters containing radioactive material; liquid- filled type electric heating bags, cushions, pillows, pouches or pads using alternating current (AC) or AC and direct current (AC/DC); new pneumatic snow tyres and new retreaded snow tyres for all types of vehicles; poisonous chemicals and minerals; certain animal feed; sodium arsenite; and substances covered under the Montreal Protocol.”

Questions: 4. Could Malaysia elaborate on why it prohibits the import of snow tyres from all countries and explain how it is in line with religious, security, health, environmental protection, or safety grounds?

Answer: Currently, Malaysia prohibits the importation of any new pneumatic snow tyres and new re-treaded snow tyres which have the markings or identification S/ SNOW/ ICE/ WINTER/ STUDLESS because these tyres do not comply with the specific mandatory standards gazetted under the Road Transport Rules. However, the importation of snow tyres which have the markings or identification M+S/ M.S/ M&S and 3PMSF are allowed as they comply with the mandatory standards, i.e. the United Nations Regulations No. R30 / R54 and R117. It is aimed at ensuring the safety of road users in the country.

III TRADE POLICIES AND PRACTICES BY MEASURE: COMPETITION POLICY AND PRICE CONTROLS Page 66 (Para 3.117) Paragraph 3.117 states that: “Malaysia is the only country in ASEAN with a competition law that does not provide for merger and acquisition control. An economic survey conducted by the OECD in 2016 therefore suggests that the coverage of the Act should broaden to include merger control. Currently, Malaysia has no plans to introduce any amendments to the Act.” Questions: 5. Given the absence of generic merger control provisions, are mergers that either occur within Malaysia or have an effect on competition in Malaysia governed by other legislation (than the Malaysian Competition Act 2010) or government agencies (other than the Malaysia Competition Commission) e.g. sectoral regulators? 6. If so, could Malaysia please elaborate on what legislation or government regulators might be responsible for merger review, as well as any merger review guidelines that are employed (e.g. voluntary/mandatory notifications)?

Answer: The Malaysia Competition Commission is currently conducting a study on mergers regime. Nevertheless, matters relating to Mergers and Acquisitions concerning foreign investors and financial institutions respectively fall under the purview of the Central Bank of Malaysia (BNM) and Securities Commission Malaysia (SC). These are regulated under:  Capital Markets and Services Act 2007;  Malaysian Code of Takeovers and Mergers 2016 and Rules on Takeovers, Mergers and Acquisitions (both with effect from 15 August 2016); and  Central Bank regulations. Merger controls are also provided under Section 54(1) of the Aviation Commission Act 2015. It states that mergers which have resulted or may be expected to result in a substantial lessening of competition in any aviation service market are prohibited.

7. What is the reasoning for not broadening the coverage of the Malaysian Competition Act 2010 to include merger control?

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Answer: The Malaysia Competition Commission is currently conducting a study on mergers regime.

Page 66 (Para 3.118) Paragraph 3.118 states that: “Efforts are under way to improve collaboration and consistency. For example, the MyCC holds a Special Committee Meeting on Competition with sector regulators twice a year to discuss and review competition issues with a view to ensuring that their policies are consistent with the Act.” Questions: 8. What are the sectoral regulators who participate in the Special Committee Meeting on Competition?

Answer: The Sector Regulators of the “Special Committee Meeting on Competition” comprise: i. Malaysia Competition Commission (MyCC);

ii. Central Bank of Malaysia (BNM);

iii. Energy Commission (EC);

iv. Malaysian Aviation Commission (MAVCOM);

v. Malaysian Communications and Multimedia Commission (MCMC);

vi. Securities Commission (SC);

vii. Land Public Transport Commission (SPAD);

viii. National Water Services Commission (SPAN); and

ix. Intellectual Property Corporation of Malaysia (MyIPO).

9. Are there any agreements on cooperation on competition enforcement between the Malaysia Competition Commission and other government regulators within Malaysia?

Answer: The Malaysia Competition Commission signed a Memorandum of Understanding (MoU) with the Central Bank of Malaysia (BNM) in 2014.

PART II: QUESTIONS REGARDING THE GOVERNMENT REPORT SECTION 6.5 – E-COMMERCE AND DIGITAL ECONOMY IN MALAYSIA Page 31 (Para 6.13) Paragraph 6.13 states that: “Malaysia’s e-commerce imperative is two-fold, (i) to future-proof existing businesses, including by bringing roughly 80% of SMEs into the e-commerce world and ensuring their capabilities to keep pace with an online market poised to grow much faster than offline sales;…” Question: 10. Can Malaysia provide information on its intentions to “future-proof” existing businesses in the area of e-commerce?

Answer: Malaysia has developed the National eCommerce Strategic Roadmap (NeSR), as part of the Government’s efforts towards driving the national eCommerce agenda. The Roadmap was officially launched in 2016 with planned interventions in six (6) thrust areas namely: i. Accelerate seller (SMEs) adoption of eCommerce;

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ii. Increase adoption of eProcurement by businesses;

iii. Lift non-tariff barriers (i.e. domestic eFulfillment, cross-border eCommerce, ePayment and consumer protection);

iv. Realign existing economic incentives;

v. Make strategic investments in selected eCommerce players; and

vi. Promote national brand to boost cross-border eCommerce.

Three main strategic approach which are the key factors in engaging the SMEs to use eCommerce as a platform for business include:  increased promotion / marketing of eCommerce to SMEs – to conduct awareness programmes on adoption of eCommerce for SMEs;

 eCommerce training & talent development – to conduct series of training with specific modules to ensure SMEs understand the eCommerce ecosystem and embarked on the eMarketplace for their business operations; and

 establish one-stop eBusiness resource for SMEs – to establish eCommerce portal for SMEs to get information and also act as a wizard to guide them to choose a suitable eMarketplace for their businesses.

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REPUBLIC OF KOREA

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT Page 43 (Para 3.19) Duty Concessions/exemptions Import duty exemptions continue to be applied to manufacturing companies on raw materials and components used in the manufacture of goods for export, and for machinery and equipment not available in Malaysia but used directly in the manufacturing process. Question 1 According to the Para 3.19, import duty exemptions continue to be applied to raw materials and components used in the manufacture of goods for Re-export, and not for sale in the domestic market. In regards to Malaysia’s practice of conducting anti-dumping investigation above mentioned, please explain the questions below. Are these types of goods described in the Para 3.19 clearly excluded from the anti-dumping investigation?

Answer: The types of goods described in Para 3.19 are only applicable for import duty exemptions and not for anti-dumping duties.

If it was verified that the goods manufactured are intended for export (e.g. export record), will the import duty removed and refunded immediately?

Answer: According to Malaysia’s Countervailing and Anti-dumping Duties Act 1993, no exemptions can be granted for imports that are imposed with anti-dumping duties.

Page 49 (Para 3.42) From 2014 to 30 June 2017, imports from nine Members were affected (Table 3.8). AD duties were applied mostly on biaxially oriented polypropylene film and steel wire rod, among others Question 2 According to the Anti-dumping Duties Act 1993, AD Duty should be exempted on raw materials which is not available from local producers, and only can be imported from foreign countries. Because those do not affect any injury to the petitioners. In regards to Malaysia’s practice of conducting anti-dumping investigation above mentioned, please explain the question below. If it was finally proven that the material with the same quality cannot be produced in Malaysia after reviewing the facts and claims made by both parties, will the authority accept the facts and exclude the AD duty for the material immediately?

Answer: If the Investigating Authority (IA) finds that the certain grades or specifications of Product Under Investigation (PUI) cannot be produced by the domestic producer(s), the IA may exclude the products from the scope of investigation, provided that the interested parties substantiate their claims with available facts and evidences.

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CHINA

Secretariat Report SUMMARY Page 8, Para 7 “Restrictions on foreign investment remain in fisheries, energy, telecommunications, finance, and transport services, and foreign participation in public-private-partnership projects is limited to a ceiling of 25% of share capital. Some policies supporting the ethnic Malay community (bumiputera), including minimum equity participation in some sectors, may affect FDI. However, the Government has continued to relax foreign investment restrictions. Currently there is no foreign equity restriction in the capital market except for a 70% cap on investment banks.” Question: 1. Is there any plan to further relax restrictions on foreign investment?

Answer: The services sector remains a key driver of growth to the economy. Malaysia will continue to look into the possibility of liberalising the services sector to promote trade while at the same time balancing national developmental needs. Under the Services Sector Blueprint, focus is given on regulatory review and reform pertaining to the openness of trade in services in Malaysia. Through the review, Malaysia will be able to identify possible reform to existing regulations as well as improving the transparency of regulations to provide a condusive environment for trade. Page 10, Para 20 “In general, small-scale producers tend to be supported by the Government, while large plantations tend to be taxed.”

Question: 2. Does “supported by the Government” include tax incentive measures? If yes, please specify.

Answer: Eligible small-scale producers can benefit from certain incentives. For example, planting assistance is provided to the palm oil smallholders, i.e. those cultivating oil palm less than 40.47 hectares or 100 acres. Other examples of incentives can be accessed at: http://www.moa.gov.my/insentif- fiskal1. Page 10, Para 22 “In line with the Eleventh Malaysia Plan, 18 services subsectors were liberalized in 2012 and up to 100% foreign equity participation is now allowed for wholesale and retail trade, healthcare, professional services, environmental services, courier, and education subsectors. “

Question: 3. Does the healthcare subsector liberalized in 2012 include Traditional Chinese Medicine service? Answer: The liberalization of the healthcare subsector in 2012 does not include Traditional Chinese Medicine service or any other Traditional & Complimentary Medicine (T&CM) services. Foreign companies interested to establish T&CM services in Malaysia can liaise directly with the Ministry of Health, Malaysia. Details can be accessed at: http://tcm.moh.gov.my/en/.

Page 26, Paragraph 2.21. Other legislative changes include: the Gas Supply (Amendment) Act 2016, which came into effect in January 2016; various amendments to the Food Regulations 1985 to, inter alia, harmonize with the Codex standard, and regulate the sale of alcoholic beverages; the amendment to the Malaysian Biofuel Industry Regulation 2014, to reduce dependency on fossil fuels for a greener

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- 148 - environment and expand palm oil usage; and the implementation of the Import Legality Regulation under the Timber Legality Assurance System, to ensure all imported timber is from legal sources. Question: 4. Please clarify the details of Timber Legality Assurance System.

Answer: The details of Timber Legality Assurance System (TLAS) can be accessed at http://www.mtib.gov.my/index.php?option=com_content&view=article&id=2418%3Aimport- legality-regulation-under-timber-legality-assurance-system-tlas-&catid=1%3Ahighlights&lang=en.

Page 36, Para 2.62 …“Restrictions on foreign investment in fisheries, energy, telecommunications, finance, and transport, remain. For example, as the time of the previous review, foreign equity in power generation is allowed up to 49%, while for electricity distribution, only up to a 30% stake in a designated franchise is generally allowed.” Question: 5. Currently, Malaysia still sets industry access restrictions on foreign investment in such areas as energy, transportation and telecommunication to name a few. To some extent, the restrictions impede Chinese investors to access Malaysian market. Does Malaysia have any plan to further relax access restrictions of the related industries? If so, please specify.

Page 38, Paragraph 3.2 Customs procedures are automated: import declarations, duty assessment, payment of duties, and customs release are submitted electronically. The issue of most import licences is paperless, and they can be submitted electronically with customs declarations. However, to date, Customs has no facility to enable electronic submission of other supporting documents (e.g. invoice, bill of lading) with the import/export declaration. In 2017, there were 59 authorized economic operators (AEOs) in Malaysia, up from 48 in 2014. Registered AEOs are encouraged to conduct electronic transactions for better security management in the supply chain.1 For importers registered as AEOs, automatic release at Customs takes one minute. Question: 6. What are the conditions or limitation for the importers to register as AEOs?

Answer: Details regarding AEOs are accessible at http://customsgc.gov.my/.

Page 56, Para 3.65 “MEXIM is a wholly owned subsidiary of the Minister of Finance Incorporated. Current facilities offered by MEXIM include: conventional and Islamic banking facilities (cross-border financing, trade finance, and guarantees); insurance and takaful (short-/medium-/long-term insurance)” Questions: 7. Please further explain the penetration rate of MEXIM’s export credit insurance in foreign trade in Malaysia.

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Answer: MEXIM targets a 15% annual growth rate for the penetration of its export credit insurance in foreign trade in Malaysia.

8. Is the business scope of MEXIM’s short-term insurance different from that of commercial credit insurance institutions? If yes, please specify.

Answer: MEXIM’s terms and conditions are similar to other commercial credit insurance institutions. The difference is the percentage of indemnity which varies from one Export Credit Agency (ECA) to another, depending on the country and sector appetite.

Page 66, Para 3.117 3.117. Malaysia is the only country in ASEAN with a competition law that does not provide for merger and acquisition control. An economic survey conducted by the OECD in 2016 therefore suggests that the coverage of the Act should broaden to include merger control.38 Currently, Malaysia has no plans to introduce any amendments to the Act. Question: 9. What measures has Malaysia taken to regulate concentration of undertakings that may exclude or limit competition?

Answer: Although Competition Act 2010 does not have provisions relating to mergers and acquisitions and only covers prohibition of anti-competitive behaviors and abuse of dominant position, Section 10 of the Act is also extended to post merger anti-competitive conducts. With regard to mergers and acquisitions, Malaysia is currently conducting a study on the merger regimes which is expected to be completed this year. Page 82, Para 4.10. The Programme sets out 14 Entry Point Programmes for agriculture which focus on transforming a traditionally small-scale production-based sector into a large-scale agribusiness industry. Questions: 10. What specific measures are taken in the programme to transform a traditionally small-scale production-based sector into a large-scale agribusiness industry?

Answer: The transformation from a traditionally small-scale production-based sector into a large-scale agribusiness industry is driven by private sector investment. Under the Agriculture NKEA, five key enablers to support the implementation of the Entry Point Programs are:  Promote participation from anchor companies;  Strengthen the adoption of Good Agricultural Practices and Good Manufacturing Practices to enhance market access;  Review of regulations and policies;  Strengthen logistics infrastructure; and  Ensure sufficient human capital supply.

11. What specific measures are taken in the process to realize large-scale and centralized use of agricultural land?

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Answer: This transformation is based on an integrated and market-centric model that comprises four key themes: capitalising on competitive advantages, tapping premium markets, aligning food security objectives with increasing GNI, and participating in the regional agricultural value chain. Page 97, Para 4.63. Among minerals, bauxite was biggest in 2015 but declined sharply in 2016, reportedly as a result of a government moratorium which was first imposed in January 2016 for three months and extended several times, most recently in June 2017 for a further six months. The moratorium was not a total ban on bauxite-related activities as transport to ports and export from bauxite stockpiles was permitted Question: 12. Have the impacts of bauxite moratorium on domestic and international markets been evaluated? What are the impacts?

Answer: The moratorium was introduced to ensure sustainability of the bauxite mining activities, avoid over-exploitation of the mineral and minimize its impact on the environment. The measure has been effective in addressing related environmental issues such as air and river pollutions. Page 98, Para 4.65. In 2009, the National Mineral Council and the National Forestry Council were disbanded and the National Land Council took over their responsibilities to oversee development of the sector and coordinate policy among central and state authorities. Policy is set out in the National Mineral Policy of January 2009 which aims for the expansion of the sector through a conducive business climate for exploration and extraction while emphasizing sustainable development and environmental protection. The Eleventh Malaysia Plan also emphasizes the sustainable development of minerals. Questions: 13. In 2009, the National Mineral Council and the National Forestry Council were disbanded and the National Land Council took over their responsibilities. What is the main consideration regarding this institutional reform?

Answer: The National Land Council was established in 2009 under the Federal Constitution as a centralized platform for more effective discussions on matters related to land and mining since both are inter- related.

14. What main management tools have Malaysia taken to coordinate mineral resources development and environmental protection?

Answer: Mineral resources are under the jurisdiction of state governments which is coordinated through State Mineral Resources Committee. Environmental protection issues are also discussed at the Committee which is also attended by representatives from the Federal Agencies. Apart from that, there is also a platform to coordinate environmental related issues between the State Governments and the Federal Government through the meeting between the Minister of Natural Resources and Environment with all the State Executive Council Members in charge of environment.

15. Please specify the management tools taken in the Eleventh Malaysia Plan to promote sustainable development of mineral resources.

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Answer: Under the Eleventh Malaysia Plan, the Ministry of Natural Resources and Environment is tasked to review the existing mineral legislation, and the Sustainable Development Indicators (SDI) on mines and quarries in Malaysia. In addition, monitoring mechanisms have been established including under the Economic Planning Unit to ensure sustainable mineral resources development. This includes the Working Committee on Sustainable Development Goals (SDG) for Environment and Natural Resources Cluster.

Page 98, Para 4.68. There are no restrictions on foreign companies participating either in their own right, through equity in a local company, or through joint ventures with a local company or companies. Question: 16. Can foreign investors participate in exploration and development of all the mineral types? Which types are restricted?

Answer: Investors may participate in mineral exploration and development subject to fulfilling the requirements of the State governments.

Page 100, Para 4.72. The Malaysia Petroleum Resources Corporation, created in 2011 under the Prime Minister's Office, was set up to assist investment by domestic and international oil and gas companies with the objective of making Malaysia the principal oil hub for the Asia-Pacific region. Questions: 17. What is the main content in the objective of Malaysia becoming the principal oil hub for the Asia-Pacific region?

Answer: The main objective is to diversify and reduce our dependence on hydrocarbon commodity-based economy.

18. Besides establishing Malaysia Petroleum Resources Corporation, what actions has Malaysia taken or will be taken to realize the aforesaid objective?

Answer: As part of the initiative, the oil and gas development project in Johor has been declared as a National Project of Strategic Importance to transform the southern part of peninsular Malaysia into sustainable, world class downstream oil and gas hub. Johor state government allocated 20,000 acres of land in Pengerang District for Pengerang Integrated Petroleum Complex (PIPC). To ensure that various oil and gas projects within PIPC and storage hubs are managed and administered efficiently, a new dedicated Federal Government agency i.e. Johor Petroleum Development Corporation (JPDC) was created. JPDC's main role is to coordinate the development of PIPC as well as a one-stop information centre to assist investors, oil and gas players and local community.

Page 104, Para 4.84. At end-2014, subsidies for liquid fuels, which applied to petrol and diesel were removed, but the subsidy for liquefied petroleum gas was maintained. As noted in the last Review, in 2012 the subsidy was the equivalent of 51% of actual price for LPG, 28% for RON95 petrol, and 32% for diesel.54 Questions: 19. Why maintaining subsidy for LPG? When will it be removed?

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Answer: The current policy on subsidy for LPG is aimed at ensuring affordable retail price for consumers/ household sector. 20. When will the government lift restrictions on price?

Answer: Malaysia has taken the initiative to review the current mechanism to gradually remove the subsidy and ultimately to reflect the market price. Government Report Page 12, Para 3.25 “The Government will continue to introduce various measures to facilitate and sustain investments in the country. These measures will include fine-tuning its investment policies, enablers, fiscal and non-fiscal incentives, as well as continuously collaborating and engaging with industry players and stakeholders to attract investors in all economic sectors. ” Question: 21. Please specify measures to attract investment.

Answer: The strategies include reinforcing the regulatory environment for domestic and foreign investments in strengthening trade facilitation initiatives. Some of the measures are:  Launching of Logistic And Trade Facilitation Masterplan;  Fine-tuning investment policies, as well as continuous collaboration and engagement with industry players and stakeholders to attract investments in the manufacturing and selected services sectors;  Direct Cooperation between MIDA and Agencies at Federal and State levels;  Simplifying Approval Process for Import Duty/Sales Tax Approval; and  Establishment of the Incentive Coordination and Collaboration Office (ICCO) in MIDA.

Page 23, Para 5.8. The agriculture sector remains as an important sector to Malaysia’s economic development, particularly in providing employment to the rural community and towards achieving the national food security objectives. Agriculture also assumes an important role in the Government’s effort to uplift rural incomes and eradicate poverty. Question: 22. Considering the agriculture sector remains as an important sector to Malaysia’s economic development, how does Malaysia address the problem of shrinking agricultural land due to urbanization?

Answer: The National Agrofood Policy Malaysia emphasized increasing productivity through efficient use of resources, to address the problem of shrinking agricultural land due to urbanization. These include use of underutilized land, idle land and marginal land. For palm oil and rubber, the Agriculture National Key Economic Area (NKEA) under the Economic Transformation Programme aims to replace low-yield and old trees with new, high-yielding seedlings. Page 28, Para 5.38. The SRI Sukuk Framework launched on 28 August 2014 is an extension of the existing sukuk framework, and aims to facilitate the financing of sustainable and responsible investment initiatives. The Framework identifies four broad areas for determining project eligibility namely natural resources, energy-related, social impact and waqf.

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Question: 23. What specific measures are included in the framework to facilitate the financing of sustainable and responsible investment initiatives in the natural resources sector?

Answer: The SRI Sukuk Framework (the Framework) is an extension of the existing sukuk framework which sets out additional requirements for the issuance of SRI sukuk. The additional areas addressed in the Framework include the utilisation of proceeds, eligible SRI projects, disclosure requirements, appointment of independent party and reporting requirements. The Framework identifies four broad areas for determining project eligibility namely natural resources, energy-related, social impact and waqf. For the natural resources sector, the eligible projects are relating to the following activities: i. sustainable land use; ii. sustainable forestry and agriculture; iii. biodiversity conservation; iv. remediation and redevelopment of polluted or contaminated sites; v. water infrastructure, treatment and recycling; or vi. sustainable waste management projects.

To complement the Framework and promote greater utilisation of green sukuk as a fundraising channel, several incentives are in place to attract green issuers including:  Tax deduction until year of assessment (YA) 2020 on issuance costs of SRI sukuk approved or authorised by or lodged with the SC;  Tax incentives for green technology activities in energy, transportation, building, waste management and supporting services activities. The details can be accessed at www.mida.gov.my and www.greendirectory.my; and  Financing incentives under the Green Technology Financing Scheme (GTFS) with total funds allocation of RM5 billion until 2022. The details can be accessed at www.gtfs.my.

In addition, SC in collaboration with Bank Negara Malaysia and World Bank have also embarked on several initiatives include engaging the relevant stakeholders’, organising awareness programmes and providing technical assistance in efforts to continuously develop the ecosystem to facilitate the growth of green sukuk.

WT/TPR/M/366/Add.1

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FOLLOW-UP QUESTIONS FROM CHINA

Part I. Questions based on Report by the Secretariat (WT/TPR/S/366) Page 10 (Para 23) “Under the Malaysian Aviation Commission Act of 2015, the Malaysian Aviation Commission was established, taking over some of the responsibilities of the Ministry of Transport, including economic regulation, allocation and management of air traffic rights, monitoring of slot allocations, and licensing of air services, ground handling, and aerodrome operators. All except two of Malaysia's airports are owned by the State, and the government-linked company, Malaysia Airports Bhd, manages five of the six international airports. ” Questions: 1. Please describe the administrative system of Malaysia’s airports, including the approval system of airport construction and the operation and management mode, etc.

Answer: The Ministry of Transport provides the overall policy for airports development in Malaysia. The Government has granted concessions to Malaysia Airports Holdings Berhad and Senai Airport Terminal Services Sdn. Bhd. to operate, manage and maintain 39 airports (including short take-off and landing ports) and Sultan Ismail International Airport in Johor Bahru respectively. The concessions are granted for a period until 2069 and 2053 respectively. Any airports construction is subject to Government`s approvals. 2. Please give a brief introduction to the allowance, subsidies which the government provides to the airports, and the related tax and charge policies.

Answer: Based on the concession agreements, no allowance or subsidies are given to airport operators. However, the airport operators are allowed to levy and collect aeronautical and non-aeronautical charges. The aeronautical charges and related tax are determined by the Government.

OTHER QUESTIONS 1. Is there access restriction on foreign investment in civil aviation transport services, such as transport aviation, general aviation, airport, air traffic control, aircraft maintenance, ground service, aviation fuel and computer reservation system? If there is, what are the measures? Is there any plan or timetable for further opening up? Answer: Currently, Malaysia allows 100% foreign investment in aircraft maintenance and computer reservation system services; and 49% foreign investment in ground handling services. Malaysia will continue liberalizing the civil aviation transport services on a case-by-case basis.

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