MTAA Agreement: An Overview

The MTAA Agreement, also known as the Malaysia-Thailand Automotive Industry Cooperation (MTAIC) Agreement, is a bilateral trade agreement between the governments of Malaysia and Thailand. The agreement, signed in 2005, aims to promote mutual trade and investment in the automotive industry between the two countries.

The MTAA Agreement provides for the elimination of tariffs on automotive parts and components traded between Malaysia and Thailand. This has led to an increase in bilateral trade in the automotive sector, with Thailand being the largest exporter of automotive parts to Malaysia.

Under the agreement, both countries have also committed to promoting the development of their respective automotive industries. This includes cooperation on research and development, human resource development, and the establishment of a common automotive market.

The MTAA Agreement has been beneficial for both countries. For Malaysia, the agreement has provided access to cost-effective automotive components, while Thailand has gained access to Malaysia`s growing automotive market.

The agreement has also led to the establishment of joint ventures between Malaysian and Thai automotive companies. For example, Proton Holdings, Malaysia`s leading automotive company, has established a joint venture with the Thai government to produce and sell cars in Thailand.

In addition, the MTAA Agreement has stimulated investment in the automotive industry in both countries. This has led to the establishment of new manufacturing facilities and the creation of thousands of jobs in the automotive sector.

It is worth noting that the MTAA Agreement has faced some criticisms. Some critics argue that the agreement has led to a concentration of market power in the hands of a few dominant players in the automotive industry. Others have argued that the agreement has benefited Thai companies more than Malaysian companies.

However, despite these criticisms, the MTAA Agreement has been successful in promoting mutual trade and investment in the automotive industry between Malaysia and Thailand. It has also served as a model for other bilateral trade agreements in the region.

In conclusion, the MTAA Agreement is a bilateral trade agreement that has been beneficial for both Malaysia and Thailand. It has promoted trade and investment in the automotive industry, led to the establishment of joint ventures between Malaysian and Thai companies, and stimulated investment in the sector. While the agreement has faced some criticisms, it has been successful in achieving its main objectives.