India and Malaysia have concluded a comprehensive economic cooperation agreement (CECA). Prime Minister Manmohan Singh and his Malaysian counterpart, Najib Tun Razak, announced in a joint statement that they would sign the CECA by January 31, 2011 and implement it by July 1, 2011.
The CECA will go beyond the existing Indo-ASEAN free trade agreement by incorporating services and investment.
Sources described Malaysia's economic ties to India as being similar to that of a Persian Gulf state. While bilateral trade has grown from $1 billion in 2001 to $10 billion in 2008, the real shift has been the rise of investment. Indian firms have invested nearly $2.5 billion in Malaysia.
“Trade is still small, and overly dependent on palm oil, but investment is big,” a Malaysian prime minister’s office aide said.
These include Reliance Industries Ltd, which spent $300 million on its largest polyester textile plant and L&T, which has a $200-million switching gearfactory. “In the next two or three weeks, few big investments will be announced,” sources said.
Malaysian investment and work in India has been especially focussed in infrastructure in India. Malaysia has also sought infotech capabilities: 60 Indian IT firms have set up there and many of the 150,000 Indian resident workers are IT professionals.
Prime Minister Najib has made it a point to make India, China and West Asia are the future markets for Malaysia and has made a point of making these his first three overseas destinations since he was elected in April 2009.