VZCZCXYZ0021
RR RUEHWEB

DE RUEHKL #0947/01 1440733
ZNY CCCCC ZZH
R 240733Z MAY 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 6718
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASH DC

C O N F I D E N T I A L KUALA LUMPUR 000947 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR FOR B. WEISEL AND J. JENSEN 
TREASURY FOR OASIA 
COMMERCE FOR 4430/MAC/EAP/MAC/BAKER 
 
E.O. 12958: DECL: 05/23/2016 
TAGS: ETRD EFIN ELAB ECPS MY
SUBJECT: MEET THE FTA NEGOTIATORS:  PART 3 
 
REF: A. KUALA LUMPUR 0678 
     ¶B. KUALA LUMPUR 0743 
     ¶C. KUALA LUMPUR 0930 
 
Classified By: Economic Counselor Colin Helmer for reasons 1.4 b & d. 
 
¶1.  (SBU) Summary and introduction:  Many of Malaysia's lead 
negotiators for the different FTA chapters took part in our 
Trade and Investment Framework (TIFA) discussions, but others 
are new faces.  Econ counselor and econoffs are calling on 
all of the new negotiators to take their measure in advance 
of the negotiation.  Refs A & B reported on previous calls. 
 
Financial Services 
------------------ 
 
¶2.   (C) Econ officers met with Nor Shamsiah Yunus (goes by 
Nor Shamsiah), Assistant Governor of Bank Negara, Malaysia's 
central bank, and Jeremy Lee, Deputy Director of the 
International Department.  When econoffs asked why Nor 
Shamsiah, who supervises regulatory matters, was selected to 
be lead negotiator for financial services, Lee chimed in, 
"Because (Bank Negara) Governor Zeti considers these 
negotiations so important!"  Nor Shamsiah noted she has past 
experience from negotiations on financial services at the WTO 
and suggested that this was why she was chosen.  However, it 
is noteworthy that the International Department had this 
responsibility in Malaysia's other bilateral FTA's and that 
Governor Zeti apparently intervened to put one of her top 
officials in charge. 
 
¶3.  (SBU) Nor Shamsiah expressed skepticism that Malaysian 
financial services firms could be competitive in the U.S. 
market.  Thus she saw all the FTA benefits in this sector 
accruing to the U.S. side.  When econ counselor observed that 
the U.S. market for Islamic financial services might be 
underserved and provide an opportunity for Malaysian firms to 
get their foot in the door, Nor Shamsiah said this would not 
be possible because of U.S. deposit insurance rules. 
Econoffs suggested that the diverse U.S. financial services 
market provided a variety of means for reaching out to 
potential customers.  They proposed savings and loan 
associations, or credit unions as alternatives, if a 
federally chartered bank was not an option.  Nor Shamsiah 
said she would like to hear from U.S. negotiators how 
Malaysian firms might be able to offer Islamic financial 
services in the U.S.  She also wanted to know how the Federal 
government would bind the states in services where they 
retain regulatory authority, such as insurance. 
 
¶4.  (C) Comment:  Nor Shamsiah is considered by many to be a 
future candidate for Governor of Bank Negara.  She has 
significant government experience but lacks familiarity with 
the private sector, having spent her whole career at Bank 
Negara.  She is personable and engaging, but staunchly 
supports the Bank's protection of Malaysia's domestic 
financial services firms and its use of its regulatory 
authority to advance the government's bumiputera policy (Ref 
C).  Opportunities to pursue Islamic finance in the U.S. may 
be the most significant incentive we can offer to Bank Negara 
in return for opening Malaysia's market to U.S. firms.  We 
encourage U.S. negotiators to come prepared to discuss this 
Islamic finance in detail at the first FTA round in Penang, 
June 12-15. 
 
Labor 
----- 
 
¶5.  (SBU) Political and economic officers called on Choy Lup 
Bong (goes by Choy) Under Secretary in the Labor Policy 
Division of the Ministry of Human Resources to discuss 
arrangements for the first round of negotiations on the labor 
chapter.  Choy, who recently accompanied Minister of Human 
Resources Fong Chan Onn on a visit to the U.S., said Minster 
Fong became aware on his trip that the FTA's labor component 
would require a significant effort from his Ministry.  Choy 
indicated that Fong probably would provide a briefing to the 
National Labor Advisory Council (NLAC), a body which brings 
together representatives from government, employer 
federations and labor unions, following the first round. 
Fong chairs the NLAC and may use this group to keep 
stakeholders informed as the negotiations go forward.  Choy 
recommended that labor negotiations be held the week of June 
26 (instead of June 12 with the other FTA chapters) to allow 
U.S. negotiators to meet with G. Rajasekaran, Secretary 
General of the Malaysian Trade Union Congress (MTUC), 
Malaysia's largest trade union umbrella organization. 
(Comment:  We concur with this recommendation.  Rajasekaran's 
comments on the FTA will be influential with the public, in 
particular union members.) 
 
¶6.  (SBU) Choy seemed very pro-U.S. for a Malaysian 
government official.  He spoke effusively about Minister 
Fong's visit to Seattle, where they toured the headquarters 
of Boeing and Microsoft. 
 
Telecommunications and E-Commerce 
--------------------------------- 
 
¶7.  (SBU) Econoffs met with K. Anbalangan (goes by Anba) 
Acting Under Secretary of the International Communications 
Division of the Ministry of Energy, Water and Communications, 
who will be the lead negotiator for the Telecommunications 
and E-Commerce chapter.  Anba said he had represented 
Malaysia in telecoms discussions at the WTO.  He clearly had 
studied the telecoms chapters of U.S. FTA's and raised a 
number technical questions about how they would apply to 
Malaysia's situation.  However, his main focus was on "what 
do U.S. firms want in this market?"   He pressed this point 
repeatedly, suggesting that as U.S. firms had shown no strong 
commercial interest in this sector up to now, U.S. 
negotiators should be moderate in their requests. 
 
¶8.  (SBU) Anba gave the impression of being a tough and 
aggressive negotiator.  He indicated he sees little scope for 
Malaysia to benefit from these two FTA chapters, and as such 
sees little incentive to be flexible in his approach to them. 
LAFLEUR