VZCZCXRO5980
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0401/01 1370915
ZNR UUUUU ZZH
R 160915Z MAY 08
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 1012
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/USDA FAS WASHDC
RUEHGV/USMISSION GENEVA 1578
RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 02 KUALA LUMPUR 000401 
 
DEPT FOR EEB/TPP/BTA AND EAP/MTS 
STATE PASS USTR - WEISEL AND BELL 
USDA FAS FOR OA/BIG, ITP/AAD 
COMMERCE FOR 4430/MAC/MICHAEL HOGGE 
STATE PASS FEDERAL RESERVE AND EXIMBANK 
STATE PASS FEDERAL RESERVE SAN FRANCISCO TCURRAN 
USDOC FOR 4430/MAC/EAP/J.BAKER 
TREASURY FOR OASIA AND IRS 
GENEVA FOR USTR 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV EAGR KIPR MY
SUBJECT:  MALAYSIAN TRADE MINISTER SUPPORTS FTA NOGOTIATIONS 
 
 
Sensitive but Unclassified - Not for Internet Distribution 
 
¶1. (SBU) Summary:  In a meeting with the Ambassador on the eve of 
his visit to the U.S., Minister for Trade Muhyiddin Yassin 
reaffirmed Malaysia's desire continue FTA negotiations with the U.S. 
and noted it was understood that Malaysia needed to create 
additional negotiating flexibility.  Malaysian negotiators were 
working on options for services.  For politically sensitive areas 
like government procurement competition policy where a cabinet 
mandate to negotiate was still lacking, Muhyiddin said he would 
encourage other ministries to at least initiate informal scoping 
discussions with U.S. counterparts.  The Minister told the 
Ambassador the US remained one of Malyasia's most important trade 
and investment partners and he would continue to work to build the 
relationship.  End Summary. 
 
¶2. (SBU) Minister Muhyiddin told the Ambassador during a May 12 
courtesy call that he had exchanged views on the WTO and our 
bilateral FTA with USTR Ambassador Schwab during the ASEAN trade 
ministers meeting in Bali and he reiterated that he would like to 
see faster progress in the FTA negotiations.  At the same time, he 
said, there were many technical difficulties that had to be 
addressed and the cabinet had yet to approve mandates to discuss 
sensitive topics like financial services and government procurement 
or competition policy.  While Malaysia thought it would be difficult 
to meet the level of ambition that the U.S. had in mind for 
services, the GOM was looking for additional flexibility.  Muhyiddin 
also said he hoped that an informal discussion (not a negotiation 
but a preliminary exchange) on government procurement could be 
initiated where both sides could set out potential parameters during 
the next round in July.  In the case of the Government of Malaysia, 
he said, this would include setting out what it absolutely could not 
do in the government procurement area. 
 
¶3. (SBU) The Ambassador said he welcomed the Minister's forward 
leaning approach and was pleased both sides had agreed to hold 
another round of negotiations in July.  Ambassador Schwab, he added, 
believed this FTA was doable.  While not wishing to rush the 
process, the Ambassador encouraged the Minister to ensure his 
negotiators made as much progress as possible in the July round as 
election driven political calendars in both countries would make 
scheduling follow-on rounds more difficult in the near term.  The 
Ambassador also welcomed Muhyiddin's support for seeking increased 
flexibilities in services and encouraging negotiators to exploring 
initial ideas for government procurement.  These and other sensitive 
chapters were essential elements in the U.S. view of a comprehensive 
agreement, the Ambassador said.  Contrary to recent Malaysian press 
reports, the Ambassador said, government procurement was always a 
requirement of US FTAs and there was in fact a significant coverage 
of government procurement in the US-Chilean FTA.  By taking 
important steps such as concluding a comprehensive FTA with the U.S. 
and by completing legislation for an export control regime, the 
Ambassador said, Malaysia would be putting itself in a strong 
strategic position for continued economic development in the 21st 
century.  Muhyiddin reiterated that he would like to see the FTA 
negotiations move more quickly but noted getting other ministries to 
speed up on chapters where they had an important say was difficult 
process. 
 
Recrafting Investment Missions 
------------------------------ 
 
¶4. (SBU) Minister Muhyiddin noted he looked forward to his upcoming 
trip to Detroit and New York to promote US direct investment in 
Malaysia.  Muhyiddin said this trip, which had been in the works 
before he assumed the role of Trade minister following the March 
elections, had a less targeted approach than he desired. 
Nevertheless, he still hoped to wrap up a few major investment deals 
while he was in the U.S.   Muhyiddin told the Ambassador he had met 
with the Deputy Prime Minister to work out a set of special 
incentives to offer to the U.S. firm National Instruments during 
this trip and he planned to pursue more targeted opportunities in 
sectors important to Malaysia economic development in subsequent 
trips to the U.S.   Rather than speaking at large gatherings, 
Muhyiddin said, in the future he would visit large U.S. 
corporations, meet CEOs and do small roundtable discussions.  The 
Ambassador offered the Embassy's assistance in facilitating the 
 
KUALA LUMP 00000401  002 OF 002 
 
 
Minister's visit to the U.S. and encouraged Muhyiddin to include 
Washington, D.C. on his next trip.  The Minister said he looked 
forward to doing so. 
 
¶5. (SBU) The Ambassador also encouraged the Minister to consider 
additional steps Malaysia could take to improve its investment 
environment.  Muhyiddin agreed that Malaysia could do more to become 
a truly attractive location for FDI and he welcomed comments from US 
businesses on how to do it.  He also emphasized that post election 
Malaysia was in business-as-usual mode.  Previewing a message he 
would deliver to investors in the U.S., Muhyiddin said the federal 
government would not treat state governments that were now under the 
control of opposition parties in a discriminatory manor.  Investors 
could go to any state and be assured they would receive every 
benefit that Malaysia had to offer investors.  He said all the 
states had made it clear that they continue to welcome foreign 
investment.  If the states made any changes, it would only be to 
improve the investment environment. 
 
 
KEITH