Malaysia-EU FTA expected to promote ASEAN-EU ties

The EU is placing high expectations on the Free Trade Agreement (FTA) with Malaysia as a central pillar in its strategy to strengthen relations with the Association of Southeast Asian Nations (ASEAN) amid escalating global uncertainties.

The FTA will not only enhance trade and investment flows between Malaysia and the EU but also serve as a platform for building a resilient, future-oriented partnership grounded in shared values and a rules-based multilateralism, EU Ambassador to Malaysia Rafael Daerr said in his keynote address at the “Powering Resilience: EU-Malaysia Partnership in Turbulent Times” forum held recently at the Asia School of Business.

Daerr emphasized that the EU has an open trade policy with a transparent legal system, focusing on fair competition - characteristics similar to Malaysia's economic policy. If it were an EU state, Malaysia would rank sixth in population size and 11th in terms of economic scale - a testament to its strategic importance of this Southeast Asian country to Europe.

The Malaysia-EU FTA was launched in 2010 but stalled after 2015. However, following a joint statement between European Commission President Ursula von der Leyen and Malaysian Prime Minister Datuk Seri Anwar Ibrahim, the negotiation process was restarted in January 2025.

The EU hopes that the agreement will replicate the success of the EU-Vietnam FTA, which has helped bilateral trade grow strongly since it came into force in 2020.

In the context of geopolitical fragmentation and disruptions in global supply chains, the EU is shifting its strategy to establish trusted partnerships in Asia. Malaysia, as the EU’s third largest trading partner and second largest investor in the region, is playing an increasingly important role, especially in the high-tech, green technology and semiconductor sectors – strategic areas that are attracting deep interest from both sides.

Apart from trade, he said the EU-Malaysia relationship will continue to grow through cooperation in education, research, green technology and maritime security. The ambassador also highlighted Malaysia’s current ASEAN chairmanship as a timely convergence of regional leadership and bilateral momentum.