Improving the Border Agency Cooperation
Among the OIC Member States for Facilitating Trade
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World Bank’s Doing Business Ranking, Malaysia is the best OIC country and 18th in the overall
ranking (189 countries). Even so, Malaysia performs poorly on “trading across borders” sub-
indicator (49th) that measures mainly the range and scope of international trade facilitation
efforts. On the Trade Facilitation Indicator of the Organisation for Economic Co-operation and
Development (OECD), Malaysia generally outperforms its regional and income level peer
groups, except for a sub-index measuring the external border cooperation.
Participation in regional initiatives
Malaysia is one of the founding members of the Association of Southeast Asian Nations
(ASEAN), a regional inter-governmental organisation of economic and political cooperation.
Today, the ASEAN charter provides a legal and institutional basis for the regional collaboration
among all ten ASEAN member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand, and Vietnam. The charter seeks to create a single
free-trade region among the ASEAN group and its 600 million inhabitants: the vision is to
move economic integration towards an EU-style single market. The ASEAN Agreement on
Customs set the fundamental principles for the regional customs cooperation 157.
The ASEAN Free Trade Area (AFTA) does not impose a common external tariff (CET) on
imported goods, unlike the European Union, the countries of the Gulf Cooperation Council
(GCC), and many other customs unions. Instead, every ASEAN member levy tariffs on imported
goods from outside ASEAN based on national tariff schedules. On the other hand, the ASEAN
Trade in Goods Agreement (ATIGA) sets common tariff schemes for the intra-ASEAN trade. A
large majority of goods originating from ASEAN benefit from a Common Effective Preferential
Tariff (CEPT) (0-5%) inside the ASEAN Free Trade Area.
Trade facilitation has been one of the focal areas of the ASEAN collaboration since its inception
in 1967, and especially since the entry of the ASEAN charter into force in 2008. The ASEAN
countries have concluded three agreements for facilitating regional cross-border trade and
transport. ASEAN Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT)
sets basic requirements – procedures and documentation – for intra-ASEAN land
transportation. The ASEAN Framework Agreement on Facilitation of Inter‐State Transport
(AFAFIST), an advanced version of the previous agreement, seeks to simplify and harmonise
transport and customs procedures for intra-ASEAN transit cargo. The framework involves
three pilot studies that will demonstrate a new electronic customs transit system, and single
electronic transit declaration, in Malaysia, Singapore, Thailand in late 2016 and early 2017.
The new e-customs system aims to facilitate regional transit traffic by road through reduction
of checks at the border. When operational, the system will enable free movement for trucks
and drivers and this way get rid of burdensome transshipments arrangements for transit
goods (i.e. a change of trucks and drivers at a border crossing). The third agreement, the
ASEAN Framework Agreement on Multimodal Transport (AFAMT), sets common
requirements, for example, for registration of intermodal carriers.
Malaysian foreign and trade policies are closely linked with activities and decision-making at
the ASEAN level. The economic integration is progressing towards a regional single market
that would enable a free flow of goods and services and facilitate movement of labour and
15 (accessed 20 June 2016)