23/01/2012 (Business Times) - The Malaysia-Chile Free Trade Agreement, which takes effect in 2012, will rekindle activities placed on the back burner due to the regional financial crisis.

It would potentially be a new phase of bilateral ties for both the two small open economies which depend largely on trade.

To ambassador Christian Rehren, who recently took up the Kuala Lumpur posting, it is the best gift for a friendship which spanned 33 years.

“Bilaterally speaking, it gives a new dimension, which implies a lot of things not only from pure trade point of view but beyond to include cultural ties for two countries which are (distantly) located from each other,” he said in a recent interview.

Rehren felt that both countries can look forward to re-kindling the South-South cooperation and more importantly, the Malaysian South-South Corp Bhd (MASSCORP), which is a consortium of 86 Malaysian corporate leaders.

Through such cooperation, both countries had built ships, developed industries and houses, and Rehren is keen to see that return to the fore.

Malaysia’s Proton cars could also re-enter the Latin American market again.“In the 1990s, Malaysia was aggressive in its foreign policy approach to the South-South cooperation and Non-alignment Movement (NAM) and there was a pause due to the Asian financial crisis, leading us to concentrate on our internal developments.”

Such cooperation would be a new tool for Malaysia to have investments in smaller countries in South America, especially the smaller states which do not have a diplomatic presence in Kuala Lumpur.

And, there is more to look forward to for both trade partners as they are also negotiating partners in the Trans Pacific Partnership (TPP).

For Chile, the current level of exports between both countries is at a “deficit”, enabling the Free Trade Agreement to provide a starting line for trade to flourish.

“In 2010, we were exporting US$72 billion (RM223 billion) worth of products across the world, hence the US$200 million (RM622 million) exports to Malaysia appear nothing compared with the potential and critical mass which we both can reach.”

According to Chilean senior trade officials, bilateral trade has the potential to grow by 25 per cent annually with the Free Trade Agreement in place.

Malaysia’s thriving tourism market and its success in eco tourism, national heritage tourism plus its infrastructure places it in the front line of global tourism and Chile is keen to pick up some of Malaysia’s experience.

Chile-based national carrier Línea Aérea Nacional de Chile (LAN Chile) is also focused on growing its reach to Asia via Auckland as Chileans increase their engagements with Asian economies.

Rehren said energy needs in Chile have become a hot topic as it moves towards its 2018 agenda of being a developed as well as a high-income country.

“One of the purposes of dealing with Malaysia for a Free Trade Agreement was for the energy sector, which Malaysia as the third largest producer of solar cells in the world can help,” he said, adding that Chile has six wind parks and is embarking on solar projects.

If Malaysia imports US$3.5 million (RM10.88 million) grapes from Chile annually, more can be expected including its exquisite range of wines with the Free Trade Agreement.

“We will also hope to offer a delectable and diverse seafood fare which range from king crabs, scallops to sea bass.” The halal industry will also receive a shot in the arm as its 50-odd companies will soon find increased opportunities through trade with Malaysia.

“Within two years of trade in goods, we hope to expand into services especially telecommunications, why not?”. For 2012, he expects exports to surge as businesses take advantage of lower or zero tariffs for products such as palm oil.

“With the Free Trade Agreement , we expect bilateral trade to bulge to US$1 billion (RM3.11 billion) in the next two years as other Malaysian products such as palm oil, cocoa, rubber gloves and wooden furniture enter the market along with the existing electronics and manufactured products.”

For the first nine months of 2011, Chilean exports to Malaysia totalled US$208 million (RM646.8 million).