Free Trade Agreement (FTA) is part of globalization that facilitates and
strengthens trade between FTA partners. Malaysia needs to maintain the economic
momentum and compete with Singapore, Indonesia, Thailand and Vietnam in the
foreign markets. By having same trading partners and produce similar products,
Malaysia needs to find ways in minimizing the gap by signing FTAs with its
trading partners. The effectiveness of FTAs on Malaysia’s International Trade
Competitiveness was analysed by identifying the purposes and benefits of each
Malaysia’s bilateral and regional FTAs, export competitiveness as well as the
challenges in competitiveness against other ASEAN Countries. This study adopted
a qualitative research method with in-depth interview as the sources of the
primary data, besides the agreement of each FTAs. Source of the trade data was
from UN COMTRADE Statistics which accessed via Trade Map – International Trade
Statistics in order to study the export competitiveness. This study found that
FTA provided benefits to Malaysia’s trade as trade increase and raises the
competition between FTA countries. Tariff concessions in the bilateral FTA is
better than regionals, however regional FTA provides flexible Rules of Origin
(ROO) that provides bigger market. Trade diversion occurred in the FTA when the
FTA partners shifted their imports from other countries to Malaysia. The
exports competitiveness is contributed by various factors such as population of
a country, gross domestic product (GDP), geographical proximity and
competitiveness of products. ASEAN countries produced similar products and
export to the same foreign market, thus, Malaysia faced with challenges in
maintaining and enhance its trade competitiveness against other ASEAN
countries. Malaysia needs clear policy direction and increase investment in
human capital. Nevertheless, Malaysia made efforts through the utilization of
the FTAs, alignment between policy and practice, engagement with stakeholders,
active implementation with on-going evaluation and support as well as being
more transparent on the information of the FTAs to the traders and public.
