During a recent six-day visit to South Korea, Malaysia's Deputy Prime Minister Najib Tun Razak urged Korean businessmen to use Malaysia as a gateway to regional Asean markets and explore potential investment projects.
"We looked at several fields ... including the building of ships, marine engineering and the motor vehicle industry," Najib told the press at the end of his trip.
Technology has been flagged as a likely sector for Korean investment, particularly Malaysia's Multimedia Super Corridor (MSC), which already hosts more than 900 multinationals. Najib said it could be the location for their regional information communication technology (ICT) operations, including research and development, technical support as well as contact and data centres.
South Korea is a leading supplier of motor vehicles to Malaysia while Malaysia has the largest sales volume for passenger vehicles (366,738 in 2006) in the Asean region. Najib said the Malaysian automotive industry could benefit from Korean influence and expertise and referred to Kia and Hyundai automotive component plants in Malaysia. He added that Malaysian manufacturers could enter into joint ventures or technical partnerships with South Korean manufacturers to produce engines, transmission parts and electronic components.
With South Korea playing an important role in distributing ships and boats to Asean,
Najib also requested Korean support in transferring defence technology. Most recently, the government placed an order for the production of a state-of-the-art multipurpose warship. The purchase falls in line with new defence budgets outlined in the 9th Malaysian Plan to meet the needs of future military capabilities.
South Korea being a major buyer of Malaysian crude petroleum and liquefied natural gas (LNG), Malaysia has recently exported its expertise and know-how by building bio-diesel plants in South Korea. Since Malaysia is ranked as the world's top palm oil producer, South Korea has recognised the need to import Malaysian bio-diesel to help boost production at home. South Korean company Enertech is cooperating with the Malaysian Palm Oil Board (MPOB) to build a 60,000 tonne-capacity plant which will be the first in the country to make and sell palm bio-diesel.
Malaysia has spotted the potential to boost bio-diesel sales in South Korea, particularly since the Korean government introduced legislation in the middle of 2006 to ensure that a small percentage of each diesel tank contains renewable sources.
Bilateral trade is currently flowing at $10bn a year, a six-fold increase from 1990. South Korea is positioned as Malaysia's sixth largest trading partner and Malaysia's eighth largest export market.
Trade and investment between Malaysia and South Korea have grown stronger, in large part as a result of recent bilateral agreements, namely the Framework Agreement on Comprehensive Economic Cooperation signed by the 10 Asean member states and Korean leaders in 2005 and the Asean-Republic of Korea free trade agreement (FTA), which came together last year.
With the goal of creating a $1.4trn market comprising of 550m people, the FTA paves the way for the liberalised flow of goods and services, deeper integration and the sharing of technological expertise.
