According to the Pakistan business Chronicle reported on November 7th, the federal cabinet of Pakistan recently approved the Pakistan Malaysia free trade agreement (FTA), which will take effect from January 2008.

This is followed by the signing of FTA with Sri Lanka and China since the signing of similar agreements between third countries.

The agreement stipulates that the list of goods drawn up by the two sides is divided into two tariff reductions in January 2009 and January 2012 respectively until zero.

In recent years, the economic and trade cooperation between Pakistan and Malaysia has become increasingly close. The two countries signed the early harvest plan for bilateral trade as early as 2005, and the volume of trade increased year by year.

The FTA has widened Pakistan's superior export products such as cotton yarn (cloth), bedding, household textiles, jade, mango, leather and minerals, and has made proper protection for important industries such as automobiles, electronics, footwear, leather, chemical products, paper, clothing, furniture and other important industries.

The focus of the last round of negotiations between the two sides is Malaysia's issue of tariff reduction on palm oil exports from Pakistan's bulk exports. The two sides finally agreed to reduce tariffs on products imported from Malaysia to 5% in January next year and make further adjustments in January 2010.