Saturday, May 18, 2024

Central Asia, Expanding Trade With Malaysia

“A serious disadvantage of the Central Asian region is the lack of direct access to the world ocean, through which, in principle, the main part of world logistics is carried out. However, with the right approach, this disadvantage can be transformed into an advantage by creating logistic hubs in the region and taking into account the population of the region and sales markets, as well as natural resources that the region is rich in. And the one who is among the first to take part in the transformation of this disadvantage into an advantage will have a certain benefit in the future.”

– H.E Ardasher S. Qodiri,

The Ambassador of Tajikistan to Malaysiathe Malaysia

 Oftentimes, the mainstream media paints a story about a country that might not capture the full picture. International Business Review goes above and beyond to present you with a new perspective on the politics, the business, the people, the culture and the very essence of a country through the eyes of its diplomats, in The Diplomat.

In this issue, the Ambassador of Tajikistan to Malaysia – H.E. Ardasher S. Qodiri, writes on the mutual benefits of a Tajikistan-Malaysia relations in an exclusive for International Business Review.

Rich in history and culture, the Central Asia region is a blend of many nationalities from five different countries; Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Over the years since gaining its independence from the Soviet Union, the people have begun to share the wonders of their region and many have come to love Central Asia for the hidden gem that it is. Within this hidden gem lies a treasure trove of natural resources. By strengthening the bonds between the Central Asian countries and Malaysia, a mutually beneficial trade relationship can blossom. In the heart of Central Asia lies Tajikistan, surrounded by its neighbouring states – Afghanistan, China, Kyrgyzstan and Uzbekistan. This gives Tajikistan an opportune position to be the bridge for Malaysia and the rest of the region’s countries. The following contribution to the International Business Review by the Tajikistan Ambassador to Malaysia Ardasher Qodiri shows how the trade foundation of Tajikistan-Malaysia relations can be laid.

Importance of Strengthening and Expanding Political Relations

Malaysia and the Central Asian countries need to build an extensive system of active political contacts and dialogue both at other levels (heads of authorities), which would create a solid base for political cooperation. Over the past thirty years of cooperation, since the period when Malaysia established diplomatic relations with the Central Asian countries (1992), certain measures have been taken and efforts have been made to strengthen cooperation. However, these measures and efforts were uneven even abrupt in nature. Visits of a high political level brought a surge of activity for a certain period of time, followed by temporary busyness with subsequent fading. It is the activation of political contacts at the highest and high levels that will give the necessary impetus to cooperation, which will need to be maintained by the efforts of all parties in a dynamic, smooth development. Also, taking into consideration the form of government in Malaysia, which is essentially parliamentary (constitutional parliamentary), and the five Central Asian countries that, being presidential (unitary presidential), have relatively active parliaments, it is necessary to activate parliamentary diplomacy (inter-parliamentary friendship committees), which in turn can give an additional impetus to cooperation.

Malaysia and the Central Asian countries have good prospects for cooperation within the framework of regional and international organisations. However, it seems that Malaysia and the Central Asian countries are mainly focused on their cooperation within their regional organisations, and their cooperation within other organisations is purely symbolic.

Economic Mutual Benefits

A quick look at the trade and economic cooperation between Malaysia and the Central Asian countries gives a very clear picture that the countries have something to work on. The total trade turnover in 2021 reached only USD 170 million, and almost 90% of this volume was Malaysia’s exports to Central Asian countries. For a clearer vision, let’s look at two items: cotton and ores, (slag & ash) which could be imported from Central Asian countries and re-exported to the markets of neighbouring countries. Thus, Malaysia and its closest neighbour Indonesia imported US$2.236 billion worth of cotton in 2021, and USD$5 billion worth of slag was imported in the same period. The Central Asian countries exported US$2.5 billion worth of cotton and US$3.46 billion worth of slag in 2020 accordingly. It can be assumed that some of these goods were delivered to the markets of Southeast Asian countries, but through third parties, not directly.

Additionally, it is also possible to note other goods that can be mined and exported from Central Asian countries, such as: iron & steel, precious stones & metals, copper and aluminium; the total import of only named goods in 2021 in Malaysia exceeded the amount of US$22 billion, and in Indonesia US$18 billion.

The parties should pay maximum attention to the expansion of trade cooperation. We have already noted some primary goods for import to Malaysia from Central Asian countries; conversely it is possible to increase the volume of palm oil exports back, as well as consider the possibilities of exporting furniture and electronics at the first stage, and further expand the range of interchange in the course of studying the state of supply and demand in the markets.

The creation of logistics centres in Central Asian countries can serve as a strong enough help, taking into account that this region is land-locked. By creating trade and logistics centres on the terms of free trade zones, it can be confidently noted that the disadvantage of the region’s lack of access to the seas will be transformed into an advantage. Such a move will significantly increase trade.

Naturally, under the present conditions, the countries of Central Asia and Malaysia are only able to partially meet each other’s needs for these and other goods, and in order to increase the volume and expand the names of goods, the parties need to work more closely to create a legal framework and sign relevant agreements on the promotion and mutual protection of investments (the Tajik proposal is addressed to the Malaysian side in December 2020), and avoidance of double taxation.

Separately, it is worth noting the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, better known as the New York Convention of 1958, which has been ratified by almost all Central Asian countries and is a strong enough argument for attracting direct investment to the region.

It should be noted that both the Central Asian and Southeast Asian regions’ trade could be mutually beneficial not only with these exemplary products, which, could be assumed, to reach this market through third countries, but also with many other goods in which both sides have the necessary potential.

The GDP PPP of Malaysia reaches almost US$1 trillion, while the GDP PPP of all Central Asian countries slightly exceeds the bar by the same amount. Considering that the average population of Central Asian countries (76.6 million) is almost two and a half times more than the population of Malaysia (32.6 million), the GDP per capita in Malaysia (almost US$30 thousand) is much higher than this indicator in Central Asia (just over USD$13 thousand).

A superficial analysis of trade and economic cooperation between

Malaysia and the Central Asian countries in comparison with economic indicators shows that the opportunities for expanding cooperation are really good and the initiative, in this case, should come from Malaysia, as a country with a stronger economy and which needs new markets. In principle, the Central Asian region should be of interest to Malaysia for several reasons, namely:

Many other arguments can be given, but it is worth adding that Malaysia, by exploring the possibilities of cooperation with Central Asian countries, will find new markets that are essentially undiscovered for the countries of Southeast Asia, and being a pioneer in cooperation with this region, Malaysia will have that advantage.

Tajikistan can play the role of a trade gateway for Malaysia to Central Asia, Afghanistan and other neighbouring countries. At the same time, Malaysia can be a connecting link for Tajikistan and other Central Asia countries with ASEAN.

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