CHAPTER ONE

INTRODUCTION

1.1 Background of MATRADE

Malaysian Trade Development Corporation (MATRADE) is an agency was established in

March 1993 under Ministry of International Trade and Industry (MITI). MATRADE were

there to promotion and also assisting Malaysia’s enterprise to be in the international arena

besides making Malaysia as a premier exporting nation. MATRADE has serve for the

government and they had the branch in 40 countries such Seoul, London, Frankfurt, Paris,

Chennai, Bangkok, Cairo and five local branch in Penang, Johor, Sabah, Sarawak and

Terengganu. These branches actually become the network for MATRADE Headquarters in

Kuala Lumpur to get any information about trading in the country besides assisting the

Malaysian and foreign company to look for the market and also the product. The branches

also helping Malaysia to make good relation with foreigner through business networking

with the business society in the country and having business meeting to make them know

about Malaysia and the products. In this research, we will look how the MATRADE doing

their operation to help Malaysia trade expansion in the global market and also giving the best

to all.

1.2 Objective of MATRADE

MATRADE’s objectives are to raise the profile of Malaysian exporters in foreign markets,

to disseminate timely and relevant information and market intelligence to help Malaysian

companies gain a competitive edge in foreign markets, to introduce Malaysian companies to

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foreign importers seeking Malaysian suppliers and to undertake activities to promote the

export of Malaysian goods and services in overseas markets.

1.3 Mission and vision of MATRADE

A government agency like MATRADE owes its existence to the legacy and dreams of the

leaders of the nation, giving MATRADE a strong and meaningful mission

“Promoting Malaysia's Enterprises to the World”

to develop and promote Malaysia’s export to the world and its functions are to promote,

assist and develop Malaysia’s external trade with particular emphasis on the export of

manufactured and semi-manufactured products and, on a selective basis, imports, to

formulate and implement a national export marketing strategy to promote the export of

manufactured and semi-manufactured products, to undertake commercial intelligence and

market research and create a comprehensive database of information for the improvement

and development of trade, to organise training programmes to improve the international

marketing skills of the Malaysian exporters, to enhance and protect Malaysia’s international

trade interests abroad, to represent Malaysia in any international forum in respect of any

matter relating to trade, to develop, promote, facilitate and assist in service areas related to

trade; and to advise the Government on matters affecting or in any way connected with trade

and to act as the agent of the Government or for any person, body or organisation on such

matters.

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As a Government linked Agency under the direct supervision of the Deputy Minister of

International Trade and Industries Dato’ Mukhriz Mahathir, MATRADE has a strong

vision,that is to:

“Positioning Malaysia as a Globally Competitive Trading Nation”

1.4 Practicum in Review

Job Description, Assisting the Trade Commissioner in daily duties and additional events

scheduled by the Corporation. The duties of the Trade Commissioner in linking Malaysia to

the host country is vital in making international trade, especially Malaysian exports to other

countries. This establishment allows Malaysian products and services to be provided in

various countries with minimal risk.

To accomplish this goal, the Trade Commissioner is initially the eye on the ground. For the

MATRADE Seoul office, the Trade Commissioner is a specialist in the rules and regulations

of the host country especially in sectors of international trade, the does and don’ts of local

business culture, also an essential ice breaker for the traders from both sides.

In this particularly sensitive role, the Trade Commissioner is also tasked in collecting vital

statistics on the trade between the countries, the particulars on the developments of various

sectors, the needs of the local market, the chances for Malaysian producers in various fields

of Malaysian expertise to enter the ever booming Korean market.

Interns Involvement: By just being here, as a student I’m able to observe the working

environment, the challenges of promoting trade between countries and also the difficulties

and perceptions of OECD nation like Korea towards Malaysia.

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Other than that, I have been tasked to collect statistics, mainly on current situations, namely

Situation Report (SITREP) and Market Alerts (MA), which are both an essential part of the

Trade Commissioners duty (Key Performance Index). These documents allow the

MATRADE Malaysia to analyze and arrange for a better strategy in tackling trade between

Kuala Lumpur and Seoul.

First stop of the learning process, was juggling multiple tasks at the same time, setting

priorities by due dates, not by the date of tasks issued. This multiplied with the tasks and

involvement of the trade office with the Malaysian Embassy here.

Current Tasks, The social visit of Yang Di-Pertuan Agong and Permaisuri Agong

accompanied by the International Trade and Industries Minister to Korea was a special task

to MATRADE as the accompanying minister was to be briefed and accompanied by the

Trade Commissioner. This involved serious data collection and event management.

Although supervised and assisted by various departments the heavy load of duty was resting

on the Trade Commissioner. The event planning and secretariat was placed in the

MATRADE Office. The extended work time and detailed work plan showed the intensity of

working in a foreign mission, the importance of bilateral relations – also bilateral trade in

short.

In the speech of YB Minister of International Trade and Industries of Malaysia, he stated that

“Malaysia as the seventh largest trading partner of Republic of Korea we have to intense the

safeguarding of Malaysian interest and Malaysian trade to maintain if not move up the

ladder. As to Republic of Korea as the third largest trading partner of Malaysia, we look

forward in improving all necessary needs of Koreans in Malaysia”. This remark shows the

importance of bilateral relations between Malaysia and Korea.

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CHAPTER TWO

THE REPUBLIC OF KOREA ECONOMY

2.1 Economic view

South Korea economies are on the basis of business-friendly policies towards 2011-2015.

External trade lies crucial to the South Korean economy. In order to avoid won from rising

too sharp in the international foreign-exchange market, the authorities has been implemented

some policies including modest capital control. The South Korea’s economy are getting

stabilize and the main focus are shifted to the structural issues. Four decades ago South

Korea are nobody until it can be labeled into the most poorer country but the condition

changed when its join the trillion dollar club of economies in 2004 and now already

enjoying as the world’s 20 largest economies.

Meanwhile the role of the government is importing raw materials and technology at the

expenses of consumer goods helps the economy to strengthen. The Asian financial crisis

affected South Korea until it have to suffer insufficient of foreign reserves, the extensive of

foreign borrowing and high debt ratios and massive short-term borrowing from the other

nations. Korean government has taken a numerous measurement to overcome its domestic

problems such as greater openness to foreign investment and imports.

Another problems emerged by the end of 1997 when South Korea was in the midst of a fully

fledged foreign-exchange crisis. At this time South Korea are forced to secure an emergency

loan from the International Monetary Fund (IMF) or else they will have to face serious

problem as the economy would collapse.

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In terms of Gross Domestic Product (GDP) growth indicates South Korea are recovering

from the crisis which shrank by 6.7 percent in 1998, grew by 10.9 percent in 1999. In

August 2000, the IMF release South Korea from its restructuring program. Growth

moderated to about 4-5 percent annually between 2003 and 2007. This figure is gradually

decreasing to 0.2 percent during the economic downturn in late 2008. Several reasons made

the South Korea’s economy recovering from its disadvantage situation such growth of an

export, low interest rates and an expansionary fiscal policy and growth exceeded 6 percent

in 2010.

South Korea Economic Policy

Decision that taken by Bank of Korea (BOK) on its latest monthly monetary policy are very

surprising as it will implementing another widely anticipated increase in its main policy

interest rates, the official cash rate. The factor that forced BOK to react is the accelerating

pace of home-loan growth to maintain its benchmark rate at 3 percent. In April the

outstanding balance of home-backed loans reaching 24.9 percent of nominal GDP in 2010

that is equivalent to W292.3 trillion. With the stable mortgage lending rates below 7 percent,

the possibilities of housing loan crisis will not be happen at the moments.

The fiscal policy adopted by South Korea government are still practiced, these all include

tax cuts for the individuals and tax concessions for firms that were implemented in late 2008

and 2009 plus range of incentive that hold its purpose to boost economic activity. In 2010,

public expenditure are recorded high because a lot of projects already reach its

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implementation stage. Strong cyclical recovery resulted the budget to shift from deficit

equivalent to 1.7 percent of GDP in 2009 to an estimated surplus of 1.2 percent in 2010.

Monetary policies in South Korea are still stick to its main policy interest rate, the official

cash rate. Since the early year indicate that inflation are under the target of BOK’s. As we

know South Korean economy relies heavily on external demands, it is complicated to

strengthening domestic demand and tighter product markets. On the other sides, BOK likely

to maintain an accommodative monetary stance because they are concerned at highly

leveraged household sector when it comes to problems as the interest rate increased.

South-North economic ties

Bilateral trade between these two brothers was first legalized in 1988, rose to almost $1.82

billion in 2008 before declining sharply thereafter. South Korea already became second

largest trading partner to the North Korea after its main partner. China. The trade is related

to the out-processing or assembly works that undertaken by South Korean firms that took

place in Kaesong Industrial Complex. South Korea actually funded much of the project in

North Korea before it is stopped under the Six-party Talks.

The cooperation between these two nations becomes trigger to the hope for reunification. In

2000 North-South Summit the two Koreas reconnected their east and west coast railroads

and roads from South Korea to Mountain Geumgang in North Korea. However this

understanding were not able to stand long because the incident torpedo launch by the North

Korea on the South Korean warship Cheonan in March 2010. This resulted the ties between

the two Korea were severely damaged.

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This event shows the North Korea always have no intention to cooperate with the South

because they themselves are not willing to ended their wars. For them the different of

ideologies that already nurtured are very strong and they are not willing to sacrifice their

own ideology for a mere reunification. To show their unwillingness a lot of things they done

to escalate the unrest and then damaging ties between them especially created by the

Democratic People Republic of Korea.

2.2 Rules and regulation

External Trade Act is one of the laws that regulated by Foreign Trade that function as to

governing the export and import goods. While the Foreign Exchange Management Act are

concerning foreign exchange matters such as the settlements of export or import payments.

The collections of tariffs and customs clearance were under the Customs Act. The main

purpose having trade regulations is to promote external trade and facilitate fair transactions.

Country that have intention to import their goods to South Korea will not facing problems

because there is no license required but the importer just have to fill in the declaration of

importation. Besides there is also a system that control the goods arrival.

When dealing imports and exports with South Korea several important matter should be

aware of such anti-dumping regulations under supervise of Foreign Trade Act, the Korea

Trade Commission (KTC) investigates and determines injury to the Korean industry

resulting from imports. This can be seen through the plywood products from Malaysia that

they detect it will harm the plywood product in South Korea itself. Although there is some

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situation where the importer can be caught in a non conformity situation his products will

have greater chances to be systematically controlled.

Procedures of control involve checking correspondence of products based on the Korean

rules this is includes standards, phytosanitary rules, and fumigations. This means the

procedure of control not only involve presenting documents regarding the equivalence of the

goods imported. Furthermore, each of the procedure should be detail or else another problem

will surely emerge.

But there is some product that listed under “Negative List” whereby it will be regulated or

forbidden. That’s why these products should have a license that acquired on the basis of a

case delivered when it is already studied by the competent Ministry and the consultation of

the corresponding professional associations.

Another important thing is the import quotas and licenses. Regarding the import license it

should be acquire directly from the Ministry of Trade and Industry. The president of a

foreign bank is delegated to issue an import license in all cases of trade except counter-trade

that have different procedure. These import licenses are valid in one year-period time.

Customs duties

Harmonized Customs System were applied by South Korea, this condition means the duties

are calculated Ad valorem on the CIF value. By this Korean Customs also have the authority

of the implementing the legislation. 8 percent is the most average customs duties (0 percent

to 2 percent for raw materials, 5 percent for semi-manufactured products, 8 percent for

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manufactured goods). Difference for the agricultural products the taxation will get stronger.

Special case goes to this product as it could have certain number of tariff quotas, for which

the duties are either reduced.

Government are completely controlled the import of rice. The government only accepts the

entry of rice for the purpose of industrial and importing food rice for the buy and sold

purpose to the consumers will be automatically rejected. The “rights of the adaptation” were

applied by the South Korea to protect its commodity. Starting from 2000, 27 products are

considered as the “rights of adaptation” notably seafood, agricultural products and textiles.

Import taxes

South Korea also imposes some other taxes which include special excise from 10 percent to

20 percent which is applied to not only luxury goods but also to automobile vehicles and

certain consumer goods. Some of the things that are considered as luxury goods such as

sunscreen or washing machine. All of these products are classified under special excise

because South Korean government intended to make sure the sustainability of their home-

products in the international market. These taxes are applied to the good’s customs cleared

value.

Whereas for the liquor tax it differs from one product to another according to its type. Beer

are imposed higher than its group make up into 115 percent, for fruit-based liquors are only

30 percent as the lowest taxation imposed and spirits make up to 72 percent. Other taxes

included transportation; make up to 20 percent on vehicles and educational taxes reach about

30 percent which applies on the amount of the other special taxes.

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2.3 Market opportunities for Malaysia’s export

Korea is one of the nation that still search for their own identity, new culture that different

from their regular practice and they are able to adapt will be their own lifestyle. For instance

food, there are many international foods that already have their influence throughout South

Korea from the western style to the Asian cuisine. All of these foods are accepted as their

own new tradition. Malaysia as a country that particular about choosing food especially for

the Muslims seeking halal food. Halal food can became one of the potential eating style to

compete in South Korea.

One of the reasons that make Halal food became necessity in South Korea because of the

increasing Muslim population and Muslim tourist in this country, although they are minority

but still it has the significant. Malaysia that is already known as the major producer of halal

food and a well established trade mark in Halal Certification should have the ability to

penetrate South Korea market.

This interest of South Korea in halal industry can be proven through the commitment shown

by one of the Korean company, PentaGlobal. This company established few months ago that

does Halal industry consultation related matters in Seoul. They were also responsible for

importing halal raw material and some of their ready-made product were distributed and

exported to Malaysia.

Having a Malaysian halal food restaurant in South Korea will bring a long term good

prospect because this will function as focal points of gathering among Malaysians. To make

this things succeed this kind of restaurant will be required to attract more visitors from

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Malaysia. Furthermore by setting this restaurant will also add new advantage to the

Malaysian food in abroad as it varieties can be promoted to the not only South Korean

society but also foreigners who reside in the country and foreign tourists who is visiting

South Korea.

Indirectly this effort also helps to promote Malaysia’s tourism industry and further to

promote Malaysian food products to the global. The setting up of a Malaysian halal food

restaurant will also pave away for exports of Malaysian food products to South Korea such

as spices, curry powder, coconut milk/powder, sauces, and other agricultural produce.

Another material that is potential is wood. Malaysia already craves its name as a land that

has abundant resource. Veneer, plywood and sawn timber are the main form of timber that is

mainly imported to South Korea. RM 1 billion is recorded last year only for Malaysia export

activities involving timber and timber-related products to South Korea.

Malaysia always improving its promotional efforts through specific activities with the South

Korean importers. Branding also help to boost the potential timber for imports. Through

branding the timber industry can leverage on the reputation and sell their products and not so

much generating revenue through a low-price strategy.

Wood company from South Korea are more prefer Malaysian wood compared to wood

imported from United States and several area in Europe. They claim that these woods are

very durable, have its own standard of quality and suitable for any type of furniture and

wood-based product. One of the company, Ladder Korea claims that wood from Malaysia

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are not easily infected by termites and other insects. This make the products can be used for

longer period.

Rubber also one of the great opportunity for Malaysia to export specifically the Technically

Specified Natural Rubber (TSNR). TSNR is a dry natural rubber graded or the basis of

technical parameters. South Korea mainly imports technically Specified Natural Rubber as

raw material. The exports for this rubber product to South Korea are increasing in terms of

both volume and value since 2001. About total of US$240 million South Korea’s imports

are worth of Technically Specified Natural Rubber in 2003. These figures were increase

sharply to 66.1 percent compared with US$144.8 million in 2002.

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CHAPTER THREE

THE COOPERATION BETWEEN MALAYSIA AND REPUBLIC OF KOREA

3.1 Bilateral Trade between Malaysia and Republic of Korea

For 2010, bilateral trade between Korea and Malaysia totaled US$15.6billion, up 31.5 per

cent as compared with the corresponding period of 2009.

Bilateral trade between the two countries was in favor of Malaysia, recording trade surplus

of US$3.4 billion for 2010.

Table 1: ROK’s Bilateral Trade with Malaysia

(Unit: US$ million, %)2009 2010 2010/2009

Value Value Growth

Total 11,899 15,646(14th): 1.8% share 31.5

Export 4,325 6,115 (16th): 1.3% share 41.4

Import 7,574 9,531(13th): 2.2% share 25.8

Balance of

Trade-3,249 -3,416 -

Note: % indicates change from the corresponding period of previous year. Source: Korea International Trade Association (KITA)

ROK’s Export to Malaysia

Korea’s export to Malaysia registered US$6.1 billion, up 41.4 per cent as compared with

2009. Malaysia placed the 16th major export destination for Korea, accounting for 1.3 per

cent share in Korea’s global exports.

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For top five export products to Malaysia by 2-digit in HS Code classification, electrical

machinery & equipment, optical instruments & apparatus, iron & steel, boilers &

machinery/mechanical appliances, and ships.

Based on HS 6-digit, major export products to Malaysia were optical devices (for electronic

calculators, opto-electronic watches, TVs, and monitors), tankers, memories, other apparatus

of radar/navigational aid, TV cameras), printed circuits, processors & controllers, passenger

cars (with engine capacity of 1,500 – 3,000 cc), other fuel (jet fuel, kerosene, engine oil),

acrylonitrile-butadiene rubber, and flat-rolled steel products.

Table 2: ROK’s Export to Malaysia by Major Product

(Unit: US$ million, %)

Rank Hs code Commodity

2009 2010

Value Inc. Rate Value Inc. RateMarket

Share

Total 4,325 -25.4 6,115 41.4 100.0

1 85 Electrical machinery and equipment and parts thereof

1,280 -38.6 1,422 11.1 23.3

2 90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, parts and accessories thereof

627 7.4 955 52.3 15.6

3 72 Iron and steel 479 -18.7 610 27.5 10.0

4 84 Nuclear reactors, boilers, machinery ,and mechanical appliances

409 -45.6 495 21.0 8.1

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parts thereof

5 89 Ships, boats and floating structures

141 223.4 391 177.0 6.4

6 39 Plastics and articles thereof

217 -18.2 341 57.1 5.6

7 87 Vehicles other than railway or tramway rolling-stock, and parts thereof

127 -42.8 304 140.4 5.0

8 74 Copper and articles thereof

126 -32.3 204 62.0 3.3

9 27 Mineral fuels.mineral oils, bituminous substances, mineral waxes

63 -1.7 166 162.1 2.7

10 40 Rubber and articles thereof

70 12.4 164 133.7 2.7

Note:Ranking and market share were based on value in 2010. % indicates change from the corresponding period of previous year.

Table 3: ROK’s Export to Malaysia (6-digit) (Unit: US$ mil. %)

Rank

Hs

code

Commodity

2009 2010

ValueInc.

RateValue

Inc.

Rate

Market

Share

Total 4,325 -25.4 6,115 41.4 100.0

1 901380 Other devices, appliances and

instruments (for electronic

591 9.4 897 51.8 14.7

16

calculators, opto-electronic

watches, tvs, and monitors)

2 890120 Tankers 140 460.

6

388 178.0 6.3

3 854232 Memories 236 19.0 331 40.2 5.4

4 852990 Other (of radar apparatus,

navigational aid, tv cameras,

radio broadcast receivers )

182 -7.3 289 58.7 4.7

5 853400 Printed circuits. 182 -25.9 204 12.2 3.3

6 854231 Processors and controllers,

whether or not combined

with memories, converters,

logic circuits, amplifiers,

clock and timing circuits, or

other circuits

236 -64.4 187 -20.7 3.1

7 870323 Of a cylinder capacity

exceeding 1,500 cc but not

exceeding 3,000 cc

30 -66.8 185 510.7 3.0

8 271019 Other (such as jet fuel, 56 22.5 144 156.5 2.4

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kerosene, engine oil)

9 400251 Acrylonitrile-butadiene

rubber latex(cr)

26 1,57

0.0

91 253.5 1.5

10 720917 (flat-rolled products in coils,

cold-rolled) of a thickness of

0.5 ㎜ or more but not

exceeding 1

76 -11.0 86 12.8 1.4

Note:Ranking and market share were based on value in 2010.% indicates change from the corresponding period of previous year.

ROK’s Import from Malaysia

Korea’s import from Malaysia reached US$9.5 billion, up 25.8 per cent from a year earlier.

Malaysia ranked the 13th largest supplying country for local market, taking 2.2 per cent share

in Korea’s total shipments for 2010.

Based on HS 2-digit, top five products of Korea’s import from Malaysia comprised of

mineral fuels, electrical machinery and equipment, boilers/machinery, wood, and organic

chemicals.

Based on HS 6-digit, liquefied natural gas (LNG) ranked the top in Korea’s total import

from Malaysia, occupying 21.8 per cent share followed by crude petroleum oils, processors

& controllers, other fuel oils, light oils, other processors & controllers (of monolithic IC,

hybrid IC, multi-chip IC), plywood, other palm oil, and tin not alloyed.

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Table 4: ROK’s Import from Malaysia by Major Product

(Unit: US$ million, %)

RankHs

codeCommodity

2009 2010

Value

Inc. Rate

ValueInc. Rate

Market

Share

Total 7,574 -23.6 9,531 25.8 100.0

1 27 Mineral fuels.mineral oils, bituminous substances, mineral waxes

3,513 -33.8 4,292 22.2 45.0

2 85 Electrical machinery and equipment and parts thereof

1,936 -8.0 2,138 10.4 22.4

3 84 Nuclear reactors, boilers, machinery and mechanical appliances parts thereof

311 35.8 580 86.4 6.1

4 44 Wood and articles of wood, wood sharcoal

336 -10.5 362 7.7 3.8

5 29 Organic chemicals 167 -23.0 259 55.4 2.7

6 15 Animal or vegetable fats, oils and waxes, prepared edible fats

205 -17.2 248 21.0 2.6

7 40 Rubber and articles thereof 126 -34.2 211 68.0 2.2

8 80 Tin and articles thereof 111 -27.8 190 71.0 2.0

9 90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, parts and accessories thereof

91 -43.2 183 101.4 1.9

10 38 Miscellaneous chemical products 130 -33.4 172 32.8 1.8

Note: Ranking and market share were based on value in 2010.% indicates change from the corresponding period of previous year.

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Table 5: ROK’s Import from Malaysia 6-digit

(Unit: US$ million, %)

RankHs

codeCommodity

2009 2010

ValueInc.

RateValue

Inc.

Rate

Market

Share

Total 7,574 -23.6 9,531 25.8 100.0

1 271111 Natural gas (liquefied) 2,408 -18.1 2,080 -13.6 21.8

2 270900 Petroleum oils and oils

obtained from bituminous

minerals, crude.

366 -70.5 764 108.5 8.0

3 854231 Processors and

controllers, whether or not

combined with memories,

converters, logic circuits,

amplifiers, clock and

timing circuits, or other

circuits

662 -26.8 650 -1.8 6.8

4 271019 Other fuel oils (jet fuel,

kerosene, engine oil)

366 26.1 605 65.2 6.3

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5 271011 Light oils and

preparations

150 -52.2 440 193.4 4.6

6 854239 Other processors &

controllers (of monolithic

ic, hybrid ic, multi-chip

ic)

363 25.7 429 18.2 4.5

7 847330 Parts and accessories of

the machines of heading

84.71

130 412.7 335 157.3 3.5

8 441231 (plywood) with at least

one outer ply of tropical

wood specified in

subheading note 1 to this

chapter

208 -1.2 238 14.3 2.5

9 151190 Other (palm oil and its

fractions)

172 -17.7 214 24.4 2.2

10 800110 Tin not alloyed. 111 -27.8 190 71.1 2.0

Note: Ranking and market share were based on value in 2010.% indicates change from the corresponding period of previous year.

3.2 Korea Trade Development Agency (KOTRA)

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KOTRA, Korea Trade Promotion Corporation initially, Korea Trade-Investment Promotion

Agency since 1995 was established in 1962 as a national trade promotion organization.

The Korean Trade Development Agency is the counterpart of MATRADE in Korea.

However KOTRA maintains a higher function by not only promoting external trade of

Korea but also the Investment wing of the External Trade Ministry of Korea, Invest Korea.

In the 1960s and 70s, KOTRA developed overseas markets and in doing so served as a

driving force in increasing Korea’s exports. In the 1980s, near the end of the Cold War,

KOTRA led efforts to achieve economic diplomacy in Eastern Europe and the former Soviet

Union. During the Asian financial crisis in the late 1990s, as a national investment

promotion agency, KOTRA attracted foreign investment to Korea and helped steer the

nation out of the economic downturn.

Today, with 111 Korea Business Centres in 76 countries worldwide, KOTRA serves as a

vessel through which foreign companies can conveniently cooperate with Korean

companies.

Last year, Korea rarnked seventh for total exports. Trade rose ten-thousand-fold from $100

million in 1951 to $1 trillion in just 60 years.

As Korea strives to lead the $1 trillion trade era, KOTRA is supporting the globalization of

Korean SMEs so they can become reliable partners for businesses overseas. Through its

investment promotion agency Invest Korea, KOTRA supports foreign companies as they

establish and successfully run businesses here.

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3.3 Korean Chamber of Commerce (KOCHAM)

KOCHAM (Malaysia) was founded in 2009; the Korean Chamber of Commerce Malaysia is

a vision to lead Korean business growth in Malaysia. KOCHAM are mainly fostering

friendship, promote close and harmonious educational, economic, trade and industrial

relations between Malaysia and Korea and promote greater understanding between the

private sectors of Malaysia and Korea regarding the economic and trade policies and

situations of the respective country.

The objective of KOCHAM Malaysia is to serve and facilitate economic cooperation and

trade between Malaysia and South Korea by implementing method such sharing information

and building goodwill amongst South Korean companies and members of the business

community in Malaysia. As this will also provide great support for the Malaysian business

community to expand their market to the South Korea.

Apart from that, KOCHAM also stand as promoting opinions and benefits of its members

and consolidate friendship between both countries as the private level by suggesting to and

negotiating with companies from both nations on matters related to trade and finance.

KOCHAM already have their numerous programs to give the exposure to both sides

including seminars, talks and several business related activities.

KOCHAM is active in the development of "corporate diplomacy" initiatives to build

economic cooperation and to advance closer relations between the people and the business

communities. This is one of the efforts to enhance human capital through the business field.

In order to fulfill these aims, KOCHAM promotes and hosts several different kinds of

23

events, including monthly seminars, luncheon talks, and business-oriented workshops

headed by distinguished outside speakers. To make sure all of its members are updated with

the current economic climate KOCHAM send a daily news mails.

One of the measures taken by KOCHAM to help its members to cope with and resolve the

inevitable difficulties in undertaking business, they annually send delegates to the respective

country to represent the company that in need of help. Additionally, KOCHAM hosts

several annual events, such as the Golf Tournament and the Dinner Party, to encourage and

facilitate socializing and connecting between its members, governmental agencies, and

media representatives.

KOCHAM also linked to the wide range of business interested in connecting with South

Korea. This includes the Korea International Trade Association (KITA), Korea Trade-

Investment Promotion Agency (KOTRA). In addition, KOCHAM maintains close

interaction with local, state, national, and international business and economic development

agencies, private corporations, academics, think tanks, non-profit and cultural organizations,

and the media.

KOCHAM always open their hands to make relationship with corporations, partnerships,

associations, and individuals who are interested in promoting business and trade links. As

this surely will leave the significant to both side, South Korea and country that joined it.

Malaysia had already seen this opportunity to improve its business field with one of the big

economic power. In the future Malaysia also will gain benefit through the sharing of

knowledge with KOCHAM.

3.4 ASEAN Korea Centre (AKC)

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ASEAN-Korea Center is an in intergovernmental organization inaugurated in March 2009

and its member consists of South Korea and ten of the ASEAN member country. The

concept establishing this body is much similar to the AJC (ASEAN-Japan Centre) as to

reaffirms the increasingly interdependent relationship between ASEAN and Korea which is

expected to grow in importance in the coming years. The Centre’s formation also represents

strong commitment to closer cooperation for increasing trade volume, accelerating

investment flow, enriching cultural exchange, and invigorating tourism.

ASEAN and Korea initiated dialogue relations in 1989 and the Republic of Korea became a

full Dialogue Partner of ASEAN in 1991. The ever-expanding relationship between the two

led to the Joint Declaration on Comprehensive Cooperation Partnership announced in 2004

at Vientiane, Laos that going in 8th ASEAN-ROK summit. Subsequently in 2005 at Kuala

Lumpur, Malaysia (9th ASEAN-ROK Summit), the Joint Declaration was followed by the

ASEAN-ROK Plan of Action, which, among other issues, called for a feasibility study on

the establishment of an ASEAN-Korea Centre.

The commitment to the formation of the Centre was reaffirmed in 2007 at Cebu, Philippines

(10th ASEAN-ROK Summit) and the Memorandum of Understanding (MOU) on

establishing the Centre was signed later that year at Shangri-La, Singapore (11th ASEAN-

ROK Summit). The MOU was ratified or accepted by all Member Countries in November

2008 and with the official opening of the Centre in 2009, which coincided with the 20th

anniversary of the ASEAN-ROK dialogue partnership, will usher in a promising new era of

institutionalized cooperation between the two partners. The 13th ASEAN-ROK Summit on

29 October 2010 in Ha Noi agreed to elevate ASEAN-ROK dialogue relations from

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comprehensive cooperation to strategic partnership. In order to concretize the elevation, the

Leaders adopted the Joint Declaration on ASEAN-ROK Strategic Partnership for Peace and

Prosperity and its Action Plan, which covers the period of 2011-2015.

These all events show the strategic step taken by South Korea to establish a centre that will

bring mutual benefit in the future between them and the ASEAN members. Apart from those

ASEAN members especially Malaysia can acquire benefits through transfer of technology

advancement and this will surely helps to develop on Malaysia market and trade matters. For

the South Korea, they will also get the benefit when enjoy the major material imports from

Malaysia as this will prolong mutual relations especially in trade between these two nations.

In August and September AKC had already organized two major fair in respective month

that took place in South Korea. The first is the furniture fair that set in Ilsan. Several

ASEAN members including Malaysia are taking part to promote the furniture-related

product. The event that took 5 days attracts people all around the South Korea that includes

buyers, traders and also manufacturers.

On the September, a 3 days event of textile was happening at COEX World Trade Center in

Seoul. 2 company of textile from selected ASEAN country are participating this. The event

attract people more compared to its previous fair, this is because almost all the company

joining that event were given their full commitment until the very last day.

3.5 Malaysia Industrial Development Agency (MIDA)

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Basically MIDA has served as the investment body to connect investor form across the

globe to the access with Malaysia. MIDA also have their offices around the world to make

the foreign investment deal to the Malaysia much easier. Among the functions of MIDA are,

to promote foreign and local investments in the manufacturing and services sectors, to

facilitate cross border investments and assist Malaysian companies to identify markets and

investment abroad, to undertake planning for industrial development in Malaysia, to

recommend policies and strategies on industrial promotion and development to the Minister

of International Trade and Industry, to evaluate applications for manufacturing licenses and

expatriate posts; tax incentives for manufacturing activities, tourism, R&D, training

institutions and software development; and duty exemption on raw materials, components

and machinery, to assist companies in the implementation and operation of their projects,

and offer assistance through direct consultation and co-operation with the relevant

authorities at both the federal and state levels, to facilitate the exchange of information and

co-ordination among institutions engaged in or connected with industrial development;

Senior representatives from key agencies are stationed at MIDA's headquarters in Kuala

Lumpur to advise investors on government policies and procedures to in order to enhance

MIDA's role of assisting investors. These representatives include officials from the Ministry

of Human Resources, Immigration Department, Royal Customs Malaysia, Department of

Environment, Tenaga Nasional Berhad and Telekom Malaysia Berhad.

Through MIDA Malaysia have enjoyed as the most available place to get into investment

section, because of the several factors such as a dynamic business environment in Malaysia,

strategically located in the heart of South East Asia, offers a cost-competitive location for

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investors intending to set up offshore operations for the manufacture of advanced

technological products for regional and international markets. Supported by a market-

oriented economy and pro-business Government policies, Malaysia offers investors a

dynamic and vibrant business environment with the ideal prerequisites for growth and

profits. Malaysia's key strengths include well-developed infrastructure and productive

workforce. A politically stable country with a well-developed legal system, Malaysia also

provides attractive incentives for investors.

Advancing with technology, Technological advancement has become an integral part of

Malaysia's growth as an industrialized nation. Malaysia is steadfast in providing for the

modern day requirements of investor companies based in the country thanks to the

technology advancement in Malaysia. Malaysia is one of the most technologically developed

countries amongst industrializing nations in the ASEAN region. The expansion in modern

technologies proves to be a great advantage to manufacturers in Malaysia to be well

equipped with enough information on international market and the requirement to enter it.

Well develop infrastructure, Infrastructure in Malaysia is designed to serve the business

community; it is one of the best in Asia. Telecommunications network served by digital and

fiber optic technology, five international airports (all with air-cargo facilities), well-

maintained highways and seven international seaports make Malaysia an ideal springboard

to the Asia-Pacific market. Industries in Malaysia are predominantly located in over 200

industrial estates and Free Zones developed throughout the country. These zones are

categorized as export processing zones, which cater to the requirements of export-oriented

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industries. There are also specialized parks that have been developed to cater to the needs of

specific industries.

CHAPTER FOUR

TASK AND DUTIES OF MATRADE

4.1 Marketing Malaysia Product in Republic of Korea

Every MATRADE Branch in overseas had their own style of working and depends to the

demographic and the style in the country. The experience and strategy is the most important

thing in marketing, it becomes the guidance for all to manage with surrounding and also

organize the best strategy. There is a lot of marketing that been arrange by this organization

such as exhibition-showcase, museum, exhibition centre, specialise exhibition, trade

seminar, business matching, one to one business meeting, mailing campaign, market visit,

market survey and others. The planning been organized by MATRADE and the arrangement

had been done very well to make the investment and the trade success.

Malaysian International Halal Showcase (MIHAS), is an exhibition that been done once a

year. These yearly events were mostly participated by manufacturers and distributors of

Halal food from all over the world. MIHAS involve hundreds of company who had the best

quality of the product and also had potential to export the product to the international level.

The exhibition gives opportunity to the traders to search for new products which have

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potential to be in their markets. Other than that, the exhibition also giving the chances to

traders to exchange the ideas among each other beside giving them something new to be

learnt.

Besides the MIHAS exhibition, there is also business meeting one to one that been arranged

by MATRADE between Malaysia company and foreign company. The meeting is called

Incoming Buying Mission (IBM) and Specialise Marketing Mission (SMM). The business

meeting been arranged from the trade inquiry which had been requested by the foreign

company to MATRADE. Then MATRADE will try to match the company with the

manufacturers, and when they get all the information about the manufacturers the

information will be sent to the foreign company and if they agreed so then MATRADE will

arrange their meeting one to one. In this one to one meeting, the foreign company will meet

another company that MATRADE think they also have potential to be working with the

foreign company. All the information such as company profile, the schedule for the meeting,

the place to have the meeting and also the guideline will be arrange by MATRADE without

any charge.

The mailing campaign are one of the marketing plan that been organized by MATRADE to

do the promotion. This plan been starts with the compiling the list of companies, then they

will start spreading the email and also sent the letter to the companies. Specialise Marketing

Mission in Seoul and Busan for example, been doing by MATRADE by sending the letter to

local companies in Republic of Korea. All the companies address and details are retrieved

from the resources such as Ali Baba website, Kompass website, The KOTRA books and also

the files that been compile by MATRADE before this. This will help the process of mailing

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become fast and all the details about the event can be easily been sent to the companies.

After sending the details, MATRADE will follow up with the companies and waiting for

their feedback form and finally register their name in the MATRADE Specialise Marketing

Mission website.

Market visit is where the officer or delegation visits the place to do some research about the

market, example in the hypermarket, supermarket, this is very important because to

penetrate the product in ROK we have to look their demographic. Based from previous

MATRADE trade visit, it was very successful and the delegation can survey the market

clearly because they can look by themselves how the markets go. Other than that, the

market visit also can help the company to do some comparison on packaging, price, and

others competitors. The research that they had done will help the companies to get new ideas

and also add value besides doing some innovation on it. The market visit had giving a lot of

benefit to the companies and also giving the chances to the companies to see where the best

place to market their products.

MATRADE also manage the trade inquire that been made by the local companies in Korea

who looks for the products in Malaysia. By giving the resources such as the Malaysia

exporters book, CD of manufactures and also some advices and guideline will be given to

local companies. The information about the companies had been refers to Companies

Commission of Malaysia (SMM), the information that be given to companies must be

correct because it will give impact to Malaysia trade and built the trust between the

countries. The information also been given to Korean companies through e-mail, fax, and

mail.

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4.2 MATRADE promote Malaysian product

MATRADE Seoul through its various approaches towards the local market is having

continues meetings and discussions. Among those events priority was given to MATRADE

events such as the MIHAS & INTRADE.

MIHAS, The Malaysian Halal Showcase is an ideal event to be hosted by Malaysia because

of its central position in Asia makes it an ideal trading platform to draw the world’s halal

players in facilitating the sourcing and selling of global quality halal products.

Inaugurated in 2004 with the sole aim of facilitating the sourcing and selling of quality halal

consumables, products and services globally, this annual trade fair is in effect the largest

congregation of halal industry players.

As an international trade fair focusing on halal, MIHAS attracts a following of loyal visitors

and exhibitors. MIHAS 2010 saw the active participation of 527 exhibitors from 32

countries and attracted a total of 35,386 visitors from 59 countries. Over 44% of these

visitors are trade buyers and the who’s who in the food and beverage industry from the

ASEAN countries.

It embraces the halal concept in all its dimensions from pharmaceuticals and herbal

products, cosmetics and health care to Islamic investment, banking and takaful. Every year

since its inception, MIHAS hosts over 500 buyers and matches them with participants of

MIHAS from Malaysia. During MIHAS 2010, this programme resulted in sales of over

RM200.3 million with over RM1.86 billion under negotiation.

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Today, MIHAS is the premier event that is not limited to the ASEAN region alone but is

also supported internationally by the enthusiastic participation of International Pavilions

from countries across the globe.

This has equipped MIHAS with the extra edge to break through barriers to enter young

developing markets committed to serving the needs of the halal consumer and to reach a

quality-conscious generation seeking quality halal food products.

MIHAS serves as the best entry point for the world market to penetrate into and flourish in

the global Muslim the ASEAN markets. MIHAS is hosted by the Ministry of International

Trade and Industry (MITI), and organised by the Malaysia External Trade Development

Corporation (MATRADE).

One of the most important doing of this event will be the Incoming Buying Mission (IBM).

In conjunction with MIHAS 2011, MATRADE will be organising a 2-day one-to-one

business meetings for MIHAS Incoming Buying Mission (IBM). This “Buyers-Sellers

Meet” acts as a ‘window to the world’ for Malaysian companies, particularly Small and

Medium enterprises (SMEs) to meet international buyers. In view of the current global

economic environment, this event is one of the best approaches to enhance overseas

presence in a cost-effective way.

Every year since its inception, MIHAS hosts over 500 buyers and matches them with

participants of MIHAS from Malaysia. More than RM 5 billion sales were generated in the

last 7 years with more than RM 200 million immediate sales generated annually.

Approximately 7,000 meetings held yearly.

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During MIHAS 2010, this programme resulted in immediate sales of over RM66 million

with over RM1.1 billion under negotiation. For this purpose all overseas offices have been

given a target of Companies to be invited to participate in the event. The Trade

Commissioner in the case as the representative of MATRADE is for running the efforts of

promoting the event in the Seoul Office. Regarding that the trade commissioner has

presented on a few occasions on the MIHAS 2012 and has promoted the event through

media engagements.

CONCLUSION

As conclusion of my study on the bilateral trade between Malaysia and Republic of Korea, I

can see that the ever growing and competitive world, the two countries has a very special tie.

Especially in terms of trade, we rely on each other for resources and technology. Both on the

opposite sides of the spectrum are essential to balance the development of the economy of

the country. As the world is at a realist state of being, Self interest of both states concludes

all actions involved. At this point i would say that MATRADE is at an edge to promote and

sell Malaysia & its product to the dense market for various products and industries in Korea.

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