Effective January 2013, exports of Australian products into Malaysia will get to enjoy 97.6 per cent tariff-free entry and will increase to 99 per cent by 2017.

On Tuesday, Australia and Malaysia formalised its free trade agreement (FTA) that covered trade in economic and technical cooperation, goods and services, e-commerce, intellectual property rights, investment, competition policy as well as legal and institutional provisions.

As expected, both business communities of both countries lauded the Malaysia-Australia Free Trade Agreement (Mafta), which happened to be the first Asian FTA completed under the Rudd-Gillard Labor governments.

"The economic relationship between Australia and Malaysia has tremendous potential," Jennifer Westacott, chief executive of the Business Council of Australia (BCA), said in a statement.

"Removing impediments to businesses investing and doing business across borders is a fundamental way of making the most of Australia's current and future opportunities in the Asian Century," Ms Westacott added.

During Tuesday's signing in Malaysia, Datuk Seri Mustapa Mohamed, Malaysian Minister of International Trade and Industry, pointed out the Mafta even offered faster rate of tariff elimination for Malaysian exports compared with the Asean-Australia-New Zealand FTA (AANZFTA) where it will be by 2020 when duties are entirely eliminated.

The agreement, he said, will be a great catalyst for exporters from both countries to improve their products and services, more so that "most of our goods do not directly compete but rather complement each other."

Among the items that will get to enjoy almost zero duties are glass and glassware, iron and steel, automotive parts and components, fruit, milk and tariff-rate quota products which have not been given to other FTA partners.

The addition of dairy and rice in the deal was likewise well received by Australia's National Farmers Federation.

"Protectionist sentiment around agricultural goods is rife and growing across the globe, so in this context, it is pleasing that Australia has managed to forge an agreement with Malaysia that has dealt with some sensitive agricultural issues that were not effectively covered by AANZFTA," Duncan Fraser, vice president of the National Farmers Federation, was quoted as saying by The Australian.

Besides goods, the Mafta will enable Malaysia to enjoy up to 100 per cent in investment advisory companies, up to 70 per cent foreign equity holding in insurance companies and investment banks, and up to 70 per cent in corporate finance advisory and financial planning companies.

In the education sector, the agreement gives Malaysia also up to 70 per cent foreign equity holding depending on the subsector and for private higher education, and that this could be increased up to 100 per cent by 2015.

In the telecommunications industry, Australia may have up to 100 per cent ownership depending on the type of licence. For network service provider and network facilities provider licences, Australians can control up to 70 per cent stake while there would be no limit for application service provider licence.

Mafta also allows Malaysia to participate in private hospital services as well as provide traditional and complementary medicine services.

Current trade figures between Australia and Malaysia are placed at $16 billion annually, and could more than double in the next 15 years, according to projections by HSBC.

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