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2011 was a record year for trade despite the turbulence
IN these times of global economic turbulence, it is vital to continue to improve the promising European Union-Malaysia relationship. Through mutual engagement and openness, we can shift the focus from crisis mitigation to economic growth generation.
This year, the EU's first priority is to get our economic house in order. A key part of this effort entails resolving the situation in Greece.
On Feb 20, we reached an agreement of a new E130 billion (RM517 billion) loan. This will ease market pressure on Greece and allow the country to continue its tough reform programme.
However, the problem is larger than that. We must now work hard to return to higher sustainable growth in the EU as a whole. To achieve that, we have taken action along three lines.
First of all, the EU countries have agreed on a number of far reaching measures for strengthening the way we manage the European economy. These include a new set of fiscal rules and the new Treaty on Stability, Coordination and Governance.
Secondly, we have built the “firewalls” to contain future crises. This June, the European Stability Mechanism, a permanent rescue fund for Europe, will be operational.
In addition, the European Central Bank (ECB) continues to ensure that all financial institutions have access to affordable financing.
Finally, the EU is working on structural reform within the Europe 2020 Strategy. The key is job creation.
Currently, in Europe there are more than 23 million unemployed. Youth unemployment in the worst affected member states is nearing 50 per cent.
EU member states are now drawing up national job plans to address this problem and support small and medium-sized enterprises, the main creators of jobs in Europe. E82 billion has been allocated to this.
All these measures will boost our competitiveness and lift the EU out of the recession we experienced at the end of last year. This year, we will see no economic growth or have a mild 0.3 per cent recession in the Eurozone. But, provided that financial conditions remain stable, the ECB predicts that we will return to positive 1.3 per cent growth next year.
Even though the EU will have a heavy domestic agenda this year, we believe that the solution to our problems lies not in closing up but in staying engaged with the world. We are a union of 27 member states (soon to be 28 with Croatia’s accession) founded on an idea to bring peace and prosperity through openness and trade.
This idea extends far beyond the borders of the EU member states. That is why we want to emphasise our commitment to continue engaging with our long-standing partners, like Malaysia.
This year, EU-Malaysia relations are set to enter a new level of cooperation. We enjoy a well-rounded relationship and are on a serious path of engagement on topics of mutual interest, including areas of trade, human rights and environment.
In this context it is natural that the EU and Malaysia have set the bar high and launched both Free Trade Agreement (FTA) and Partnership Cooperation Agreement negotiations in 2010. Together, we are working towards a target, set by prime minister Datuk Seri Najib Razak, of completing negotiations by the end of this year.
Despite all the turbulence last year, 2011 was another record year for EU-Malaysia trade. Figures from the Ministry of International Trade and Industry show that last year, the total value of Malaysian exports to the EU grew by 4.7 per cent and total trade stands at roughly RM134 billion (E33.6 billion). This year may see a slightly lower trade growth, but growth there will be.
For Malaysia, the benefits of the FTA go far beyond tariff reductions on goods, like palm oil. Malaysian companies are also growing increasingly strong in the service sector.
Take for example oil and gas process equipment maker KNM that recently secured a RM2.05 billion procurement contract for a biomass and waste recycling centre project in the UK. The point is that Malaysian companies from various sectors are succeeding in Europe, and more will do so with the predictability provided by a comprehensive FTA.
The EU economy is going through a difficult time, but the EU has been acting decisively. I am convinced that by this time next year, we will be on a firm track to economic recovery, and that the acute debt problem has been contained.
I also envisage that by then we will have brought the Malaysia–EU relationship to a wholly new level, with tangible benefits for our citizens and companies.