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04 practicals report report

  1. 1. CHAPTER ONE INTRODUCTION 1.1 Background of MATRADEMalaysian Trade Development Corporation (MATRADE) is an agency was established inMarch 1993 under Ministry of International Trade and Industry (MITI). MATRADE werethere to promotion and also assisting Malaysia‟s enterprise to be in the international arenabesides making Malaysia as a premier exporting nation. MATRADE has serve for thegovernment 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 andTerengganu. These branches actually become the network for MATRADE Headquarters inKuala Lumpur to get any information about trading in the country besides assisting theMalaysian and foreign company to look for the market and also the product. The branchesalso helping Malaysia to make good relation with foreigner through business networkingwith the business society in the country and having business meeting to make them knowabout Malaysia and the products. In this research, we will look how the MATRADE doingtheir operation to help Malaysia trade expansion in the global market and also giving the bestto all. 1.2 Objective of MATRADEMATRADE‟s objectives are to raise the profile of Malaysian exporters in foreign markets,to disseminate timely and relevant information and market intelligence to help Malaysiancompanies gain a competitive edge in foreign markets, to introduce Malaysian companies to 1
  2. 2. foreign importers seeking Malaysian suppliers and to undertake activities to promote theexport of Malaysian goods and services in overseas markets. 1.3 Mission and vision of MATRADEA government agency like MATRADE owes its existence to the legacy and dreams of theleaders of the nation, giving MATRADE a strong and meaningful mission “Promoting Malaysias 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 ofmanufactured and semi-manufactured products and, on a selective basis, imports, toformulate and implement a national export marketing strategy to promote the export ofmanufactured and semi-manufactured products, to undertake commercial intelligence andmarket research and create a comprehensive database of information for the improvementand development of trade, to organise training programmes to improve the internationalmarketing skills of the Malaysian exporters, to enhance and protect Malaysia‟s internationaltrade interests abroad, to represent Malaysia in any international forum in respect of anymatter relating to trade, to develop, promote, facilitate and assist in service areas related totrade; and to advise the Government on matters affecting or in any way connected with tradeand to act as the agent of the Government or for any person, body or organisation on suchmatters. 2
  3. 3. As a Government linked Agency under the direct supervision of the Deputy Minister ofInternational Trade and Industries Dato‟ Mukhriz Mahathir, MATRADE has a strongvision,that is to: “Positioning Malaysia as a Globally Competitive Trading Nation” 1.4 Practicum in ReviewJob Description, Assisting the Trade Commissioner in daily duties and additional eventsscheduled by the Corporation. The duties of the Trade Commissioner in linking Malaysia tothe host country is vital in making international trade, especially Malaysian exports to othercountries. This establishment allows Malaysian products and services to be provided invarious countries with minimal risk.To accomplish this goal, the Trade Commissioner is initially the eye on the ground. For theMATRADE Seoul office, the Trade Commissioner is a specialist in the rules and regulationsof the host country especially in sectors of international trade, the does and don‟ts of localbusiness 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 vitalstatistics on the trade between the countries, the particulars on the developments of varioussectors, the needs of the local market, the chances for Malaysian producers in various fieldsof Malaysian expertise to enter the ever booming Korean market.Interns Involvement: By just being here, as a student I‟m able to observe the workingenvironment, the challenges of promoting trade between countries and also the difficultiesand perceptions of OECD nation like Korea towards Malaysia. 3
  4. 4. Other than that, I have been tasked to collect statistics, mainly on current situations, namelySituation Report (SITREP) and Market Alerts (MA), which are both an essential part of theTrade Commissioners duty (Key Performance Index). These documents allow theMATRADE Malaysia to analyze and arrange for a better strategy in tackling trade betweenKuala Lumpur and Seoul.First stop of the learning process, was juggling multiple tasks at the same time, settingpriorities by due dates, not by the date of tasks issued. This multiplied with the tasks andinvolvement of the trade office with the Malaysian Embassy here.Current Tasks, The social visit of Yang Di-Pertuan Agong and Permaisuri Agongaccompanied by the International Trade and Industries Minister to Korea was a special taskto MATRADE as the accompanying minister was to be briefed and accompanied by theTrade Commissioner. This involved serious data collection and event management.Although supervised and assisted by various departments the heavy load of duty was restingon the Trade Commissioner. The event planning and secretariat was placed in theMATRADE Office. The extended work time and detailed work plan showed the intensity ofworking in a foreign mission, the importance of bilateral relations – also bilateral trade inshort.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 thesafeguarding of Malaysian interest and Malaysian trade to maintain if not move up theladder. As to Republic of Korea as the third largest trading partner of Malaysia, we lookforward in improving all necessary needs of Koreans in Malaysia”. This remark shows theimportance of bilateral relations between Malaysia and Korea. 4
  5. 5. CHAPTER TWO THE REPUBLIC OF KOREA ECONOMY 2.1 Economic viewSouth 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 risingtoo sharp in the international foreign-exchange market, the authorities has been implementedsome policies including modest capital control. The South Korea‟s economy are gettingstabilize and the main focus are shifted to the structural issues. Four decades ago SouthKorea are nobody until it can be labeled into the most poorer country but the conditionchanged when its join the trillion dollar club of economies in 2004 and now alreadyenjoying as the world‟s 20 largest economies.Meanwhile the role of the government is importing raw materials and technology at theexpenses of consumer goods helps the economy to strengthen. The Asian financial crisisaffected South Korea until it have to suffer insufficient of foreign reserves, the extensive offoreign borrowing and high debt ratios and massive short-term borrowing from the othernations. Korean government has taken a numerous measurement to overcome its domesticproblems 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 fullyfledged foreign-exchange crisis. At this time South Korea are forced to secure an emergencyloan from the International Monetary Fund (IMF) or else they will have to face seriousproblem as the economy would collapse. 5
  6. 6. In terms of Gross Domestic Product (GDP) growth indicates South Korea are recoveringfrom the crisis which shrank by 6.7 percent in 1998, grew by 10.9 percent in 1999. InAugust 2000, the IMF release South Korea from its restructuring program. Growthmoderated to about 4-5 percent annually between 2003 and 2007. This figure is graduallydecreasing to 0.2 percent during the economic downturn in late 2008. Several reasons madethe South Korea‟s economy recovering from its disadvantage situation such growth of anexport, low interest rates and an expansionary fiscal policy and growth exceeded 6 percentin 2010.South Korea Economic PolicyDecision that taken by Bank of Korea (BOK) on its latest monthly monetary policy are verysurprising as it will implementing another widely anticipated increase in its main policyinterest rates, the official cash rate. The factor that forced BOK to react is the acceleratingpace of home-loan growth to maintain its benchmark rate at 3 percent. In April theoutstanding balance of home-backed loans reaching 24.9 percent of nominal GDP in 2010that 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 includetax cuts for the individuals and tax concessions for firms that were implemented in late 2008and 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 6
  7. 7. implementation stage. Strong cyclical recovery resulted the budget to shift from deficitequivalent 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 officialcash rate. Since the early year indicate that inflation are under the target of BOK‟s. As weknow South Korean economy relies heavily on external demands, it is complicated tostrengthening domestic demand and tighter product markets. On the other sides, BOK likelyto maintain an accommodative monetary stance because they are concerned at highlyleveraged household sector when it comes to problems as the interest rate increased.South-North economic tiesBilateral trade between these two brothers was first legalized in 1988, rose to almost $1.82billion in 2008 before declining sharply thereafter. South Korea already became secondlargest trading partner to the North Korea after its main partner. China. The trade is relatedto the out-processing or assembly works that undertaken by South Korean firms that tookplace in Kaesong Industrial Complex. South Korea actually funded much of the project inNorth Korea before it is stopped under the Six-party Talks.The cooperation between these two nations becomes trigger to the hope for reunification. In2000 North-South Summit the two Koreas reconnected their east and west coast railroadsand roads from South Korea to Mountain Geumgang in North Korea. However thisunderstanding were not able to stand long because the incident torpedo launch by the NorthKorea on the South Korean warship Cheonan in March 2010. This resulted the ties betweenthe two Korea were severely damaged. 7
  8. 8. This event shows the North Korea always have no intention to cooperate with the Southbecause they themselves are not willing to ended their wars. For them the different ofideologies that already nurtured are very strong and they are not willing to sacrifice theirown ideology for a mere reunification. To show their unwillingness a lot of things they doneto escalate the unrest and then damaging ties between them especially created by theDemocratic People Republic of Korea. 2.2 Rules and regulationExternal Trade Act is one of the laws that regulated by Foreign Trade that function as togoverning the export and import goods. While the Foreign Exchange Management Act areconcerning 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 mainpurpose 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 problemsbecause there is no license required but the importer just have to fill in the declaration ofimportation. Besides there is also a system that control the goods arrival.When dealing imports and exports with South Korea several important matter should beaware of such anti-dumping regulations under supervise of Foreign Trade Act, the KoreaTrade Commission (KTC) investigates and determines injury to the Korean industryresulting from imports. This can be seen through the plywood products from Malaysia thatthey detect it will harm the plywood product in South Korea itself. Although there is some 8
  9. 9. situation where the importer can be caught in a non conformity situation his products willhave greater chances to be systematically controlled.Procedures of control involve checking correspondence of products based on the Koreanrules this is includes standards, phytosanitary rules, and fumigations. This means theprocedure of control not only involve presenting documents regarding the equivalence of thegoods imported. Furthermore, each of the procedure should be detail or else another problemwill surely emerge.But there is some product that listed under “Negative List” whereby it will be regulated orforbidden. That‟s why these products should have a license that acquired on the basis of acase delivered when it is already studied by the competent Ministry and the consultation ofthe corresponding professional associations.Another important thing is the import quotas and licenses. Regarding the import license itshould be acquire directly from the Ministry of Trade and Industry. The president of aforeign bank is delegated to issue an import license in all cases of trade except counter-tradethat have different procedure. These import licenses are valid in one year-period time.Customs dutiesHarmonized Customs System were applied by South Korea, this condition means the dutiesare calculated Ad valorem on the CIF value. By this Korean Customs also have the authorityof the implementing the legislation. 8 percent is the most average customs duties (0 percentto 2 percent for raw materials, 5 percent for semi-manufactured products, 8 percent for 9
  10. 10. 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 whichthe duties are either reduced.Government are completely controlled the import of rice. The government only accepts theentry of rice for the purpose of industrial and importing food rice for the buy and soldpurpose to the consumers will be automatically rejected. The “rights of the adaptation” wereapplied by the South Korea to protect its commodity. Starting from 2000, 27 products areconsidered as the “rights of adaptation” notably seafood, agricultural products and textiles.Import taxesSouth Korea also imposes some other taxes which include special excise from 10 percent to20 percent which is applied to not only luxury goods but also to automobile vehicles andcertain consumer goods. Some of the things that are considered as luxury goods such assunscreen or washing machine. All of these products are classified under special excisebecause 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 clearedvalue.Whereas for the liquor tax it differs from one product to another according to its type. Beerare imposed higher than its group make up into 115 percent, for fruit-based liquors are only30 percent as the lowest taxation imposed and spirits make up to 72 percent. Other taxesincluded transportation; make up to 20 percent on vehicles and educational taxes reach about30 percent which applies on the amount of the other special taxes. 10
  11. 11. 2.3 Market opportunities for Malaysia’s exportKorea is one of the nation that still search for their own identity, new culture that differentfrom their regular practice and they are able to adapt will be their own lifestyle. For instancefood, there are many international foods that already have their influence throughout SouthKorea from the western style to the Asian cuisine. All of these foods are accepted as theirown new tradition. Malaysia as a country that particular about choosing food especially forthe Muslims seeking halal food. Halal food can became one of the potential eating style tocompete in South Korea.One of the reasons that make Halal food became necessity in South Korea because of theincreasing Muslim population and Muslim tourist in this country, although they are minoritybut still it has the significant. Malaysia that is already known as the major producer of halalfood and a well established trade mark in Halal Certification should have the ability topenetrate South Korea market.This interest of South Korea in halal industry can be proven through the commitment shownby one of the Korean company, PentaGlobal. This company established few months ago thatdoes Halal industry consultation related matters in Seoul. They were also responsible forimporting halal raw material and some of their ready-made product were distributed andexported to Malaysia.Having a Malaysian halal food restaurant in South Korea will bring a long term goodprospect because this will function as focal points of gathering among Malaysians. To makethis things succeed this kind of restaurant will be required to attract more visitors from 11
  12. 12. Malaysia. Furthermore by setting this restaurant will also add new advantage to theMalaysian food in abroad as it varieties can be promoted to the not only South Koreansociety but also foreigners who reside in the country and foreign tourists who is visitingSouth Korea.Indirectly this effort also helps to promote Malaysia‟s tourism industry and further topromote Malaysian food products to the global. The setting up of a Malaysian halal foodrestaurant will also pave away for exports of Malaysian food products to South Korea suchas 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 thathas abundant resource. Veneer, plywood and sawn timber are the main form of timber that ismainly imported to South Korea. RM 1 billion is recorded last year only for Malaysia exportactivities involving timber and timber-related products to South Korea.Malaysia always improving its promotional efforts through specific activities with the SouthKorean importers. Branding also help to boost the potential timber for imports. Throughbranding the timber industry can leverage on the reputation and sell their products and not somuch generating revenue through a low-price strategy.Wood company from South Korea are more prefer Malaysian wood compared to woodimported from United States and several area in Europe. They claim that these woods arevery durable, have its own standard of quality and suitable for any type of furniture andwood-based product. One of the company, Ladder Korea claims that wood from Malaysia 12
  13. 13. are not easily infected by termites and other insects. This make the products can be used forlonger period.Rubber also one of the great opportunity for Malaysia to export specifically the TechnicallySpecified Natural Rubber (TSNR). TSNR is a dry natural rubber graded or the basis oftechnical parameters. South Korea mainly imports technically Specified Natural Rubber asraw material. The exports for this rubber product to South Korea are increasing in terms ofboth volume and value since 2001. About total of US$240 million South Korea‟s importsare worth of Technically Specified Natural Rubber in 2003. These figures were increasesharply to 66.1 percent compared with US$144.8 million in 2002. 13
  14. 14. CHAPTER THREE THE COOPERATION BETWEEN MALAYSIA AND REPUBLIC OF KOREA 3.1 Bilateral Trade between Malaysia and Republic of KoreaFor 2010, bilateral trade between Korea and Malaysia totaled US$15.6billion, up 31.5 percent as compared with the corresponding period of 2009.Bilateral trade between the two countries was in favor of Malaysia, recording trade surplusof US$3.4 billion for 2010.Table 1: ROK’s Bilateral Trade with Malaysia(Unit: US$ million, %) 2009 2010 2010/2009 Value Value GrowthTotal 11,899 15,646(14th): 1.8% share 31.5Export 4,325 6,115 (16th): 1.3% share 41.4Import 7,574 9,531(13th): 2.2% share 25.8Balance of -3,249 -3,416 -TradeNote: % indicates change from the corresponding period of previous year.Source: Korea International Trade Association (KITA) ROK’s Export to MalaysiaKorea‟s export to Malaysia registered US$6.1 billion, up 41.4 per cent as compared with2009. Malaysia placed the 16th major export destination for Korea, accounting for 1.3 percent share in Korea‟s global exports. 14
  15. 15. For top five export products to Malaysia by 2-digit in HS Code classification, electricalmachinery & equipment, optical instruments & apparatus, iron & steel, boilers &machinery/mechanical appliances, and ships.Based on HS 6-digit, major export products to Malaysia were optical devices (for electroniccalculators, opto-electronic watches, TVs, and monitors), tankers, memories, other apparatusof radar/navigational aid, TV cameras), printed circuits, processors & controllers, passengercars (with engine capacity of 1,500 – 3,000 cc), other fuel (jet fuel, kerosene, engine oil),acrylonitrile-butadiene rubber, and flat-rolled steel products.Table 2: ROK’s Export to Malaysia by Major Product(Unit: US$ million, %) 2009 2010 Rank Hs code Commodity Market Value Inc. Rate Value Inc. Rate Share Total 4,325 -25.4 6,115 41.4 100.01 85 Electrical machinery and 1,280 -38.6 1,422 11.1 23.3 equipment and parts thereof2 90 Optical, photographic, 627 7.4 955 52.3 15.6 cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, parts and accessories thereof3 72 Iron and steel 479 -18.7 610 27.5 10.04 84 Nuclear reactors, boilers, 409 -45.6 495 21.0 8.1 machinery ,and mechanical appliances 15
  16. 16. parts thereof 5 89 Ships, boats and floating 141 223.4 391 177.0 6.4 structures 6 39 Plastics and articles 217 -18.2 341 57.1 5.6 thereof 7 87 Vehicles other than 127 -42.8 304 140.4 5.0 railway or tramway rolling-stock, and parts thereof 8 74 Copper and articles 126 -32.3 204 62.0 3.3 thereof 9 27 Mineral fuels.mineral oils, 63 -1.7 166 162.1 2.7 bituminous substances, mineral waxes 10 40 Rubber and articles 70 12.4 164 133.7 2.7 thereof 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. %) 2009 2010 HsRank Commodity Market Inc. Inc. code Value Value Rate Rate Share Total 4,325 -25.4 6,115 41.4 100.01 901380 Other devices, appliances and 591 9.4 897 51.8 14.7 instruments (for electronic 16
  17. 17. calculators, opto-electronic watches, tvs, and monitors)2 890120 Tankers 140 460. 388 178.0 6.3 63 854232 Memories 236 19.0 331 40.2 5.44 852990 Other (of radar apparatus, 182 -7.3 289 58.7 4.7 navigational aid, tv cameras, radio broadcast receivers )5 853400 Printed circuits. 182 -25.9 204 12.2 3.36 854231 Processors and controllers, 236 -64.4 187 -20.7 3.1 whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits7 870323 Of a cylinder capacity 30 -66.8 185 510.7 3.0 exceeding 1,500 cc but not exceeding 3,000 cc 17
  18. 18. 8 271019 Other (such as jet fuel, 56 22.5 144 156.5 2.4 kerosene, engine oil)9 400251 Acrylonitrile-butadiene 26 1,57 91 253.5 1.5 rubber latex(cr) 0.010 720917 (flat-rolled products in coils, 76 -11.0 86 12.8 1.4 cold-rolled) of a thickness of 0.5 ㎜ or more but not exceeding 1Note: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$9.5 billion, up 25.8 per cent from a year earlier. Malaysia ranked the 13th largest supplying country for local market, taking 2.2 per cent share in Korea‟s total shipments for 2010. Based on HS 2-digit, top five products of Korea‟s import from Malaysia comprised of mineral fuels, electrical machinery and equipment, boilers/machinery, wood, and organic chemicals. Based on HS 6-digit, liquefied natural gas (LNG) ranked the top in Korea‟s total import from Malaysia, occupying 21.8 per cent share followed by crude petroleum oils, processors 18
  19. 19. & controllers, other fuel oils, light oils, other processors & controllers (of monolithic IC, hybrid IC, multi-chip IC), plywood, other palm oil, and tin not alloyed.Table 4: ROK’s Import from Malaysia by Major Product(Unit: US$ million, %) 2009 2010 HsRank Commodity Market code Inc. Inc. Value Value Rate Rate Share Total 7,574 -23.6 9,531 25.8 100.01 27 Mineral fuels.mineral oils, bituminous 3,513 -33.8 4,292 22.2 45.0 substances, mineral waxes2 85 Electrical machinery and equipment and 1,936 -8.0 2,138 10.4 22.4 parts thereof3 84 Nuclear reactors, boilers, machinery and 311 35.8 580 86.4 6.1 mechanical appliances parts thereof4 44 Wood and articles of wood, wood 336 -10.5 362 7.7 3.8 sharcoal5 29 Organic chemicals 167 -23.0 259 55.4 2.76 15 Animal or vegetable fats, oils and waxes, 205 -17.2 248 21.0 2.6 prepared edible fats7 40 Rubber and articles thereof 126 -34.2 211 68.0 2.28 80 Tin and articles thereof 111 -27.8 190 71.0 2.09 90 Optical, photographic, cinematographic, 91 -43.2 183 101.4 1.9 measuring, checking, precision, medical or surgical instruments and apparatus, parts and accessories thereof10 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. 19
  20. 20. Table 5: ROK’s Import from Malaysia 6-digit(Unit: US$ million, %) 2009 2010Rank Hs code Commodity Market Inc. Value Value Inc. Rate Rate 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 366 -70.5 764 108.5 8.0 obtained from bituminous minerals, crude. 3 854231 Processors and controllers, 662 -26.8 650 -1.8 6.8 whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits 4 271019 Other fuel oils (jet fuel, 366 26.1 605 65.2 6.3 20
  21. 21. kerosene, engine oil) 5 271011 Light oils and preparations 150 -52.2 440 193.4 4.6 6 854239 Other processors & 363 25.7 429 18.2 4.5 controllers (of monolithic ic, hybrid ic, multi-chip ic) 7 847330 Parts and accessories of the 130 412.7 335 157.3 3.5 machines of heading 84.71 8 441231 (plywood) with at least one 208 -1.2 238 14.3 2.5 outer ply of tropical wood specified in subheading note 1 to this chapter 9 151190 Other (palm oil and its 172 -17.7 214 24.4 2.2 fractions) 10 800110 Tin not alloyed. 111 -27.8 190 71.1 2.0Note: 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) KOTRA, Korea Trade Promotion Corporation initially, Korea Trade-Investment Promotion Agency since 1995 was established in 1962 as a national trade promotion organization. 21
  22. 22. The Korean Trade Development Agency is the counterpart of MATRADE in Korea.However KOTRA maintains a higher function by not only promoting external trade ofKorea 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 adriving 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 SovietUnion. During the Asian financial crisis in the late 1990s, as a national investmentpromotion agency, KOTRA attracted foreign investment to Korea and helped steer thenation out of the economic downturn.Today, with 111 Korea Business Centres in 76 countries worldwide, KOTRA serves as avessel through which foreign companies can conveniently cooperate with Koreancompanies.Last year, Korea rarnked seventh for total exports. Trade rose ten-thousand-fold from $100million in 1951 to $1 trillion in just 60 years.As Korea strives to lead the $1 trillion trade era, KOTRA is supporting the globalization ofKorean SMEs so they can become reliable partners for businesses overseas. Through itsinvestment promotion agency Invest Korea, KOTRA supports foreign companies as theyestablish and successfully run businesses here. 22
  23. 23. 3.3 Korean Chamber of Commerce (KOCHAM)KOCHAM (Malaysia) was founded in 2009; the Korean Chamber of Commerce Malaysia isa vision to lead Korean business growth in Malaysia. KOCHAM are mainly fosteringfriendship, promote close and harmonious educational, economic, trade and industrialrelations between Malaysia and Korea and promote greater understanding between theprivate sectors of Malaysia and Korea regarding the economic and trade policies andsituations of the respective country.The objective of KOCHAM Malaysia is to serve and facilitate economic cooperation andtrade between Malaysia and South Korea by implementing method such sharing informationand building goodwill amongst South Korean companies and members of the businesscommunity in Malaysia. As this will also provide great support for the Malaysian businesscommunity to expand their market to the South Korea.Apart from that, KOCHAM also stand as promoting opinions and benefits of its membersand consolidate friendship between both countries as the private level by suggesting to andnegotiating with companies from both nations on matters related to trade and finance.KOCHAM already have their numerous programs to give the exposure to both sidesincluding seminars, talks and several business related activities.KOCHAM is active in the development of "corporate diplomacy" initiatives to buildeconomic cooperation and to advance closer relations between the people and the businesscommunities. 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 ofevents, including monthly seminars, luncheon talks, and business-oriented workshopsheaded by distinguished outside speakers. To make sure all of its members are updated withthe current economic climate KOCHAM send a daily news mails. 23
  24. 24. One of the measures taken by KOCHAM to help its members to cope with and resolve theinevitable difficulties in undertaking business, they annually send delegates to the respectivecountry to represent the company that in need of help. Additionally, KOCHAM hostsseveral annual events, such as the Golf Tournament and the Dinner Party, to encourage andfacilitate socializing and connecting between its members, governmental agencies, andmedia representatives.KOCHAM also linked to the wide range of business interested in connecting with SouthKorea. This includes the Korea International Trade Association (KITA), Korea Trade-Investment Promotion Agency (KOTRA). In addition, KOCHAM maintains closeinteraction with local, state, national, and international business and economic developmentagencies, 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. Asthis 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 bigeconomic power. In the future Malaysia also will gain benefit through the sharing ofknowledge with KOCHAM. 3.4 ASEAN Korea Centre (AKC)ASEAN-Korea Center is an in intergovernmental organization inaugurated in March 2009and its member consists of South Korea and ten of the ASEAN member country. Theconcept establishing this body is much similar to the AJC (ASEAN-Japan Centre) as toreaffirms the increasingly interdependent relationship between ASEAN and Korea which isexpected to grow in importance in the coming years. The Centre‟s formation also represents 24
  25. 25. strong commitment to closer cooperation for increasing trade volume, acceleratinginvestment flow, enriching cultural exchange, and invigorating tourism.ASEAN and Korea initiated dialogue relations in 1989 and the Republic of Korea became afull Dialogue Partner of ASEAN in 1991. The ever-expanding relationship between the twoled to the Joint Declaration on Comprehensive Cooperation Partnership announced in 2004at Vientiane, Laos that going in 8th ASEAN-ROK summit. Subsequently in 2005 at KualaLumpur, Malaysia (9th ASEAN-ROK Summit), the Joint Declaration was followed by theASEAN-ROK Plan of Action, which, among other issues, called for a feasibility study onthe 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) onestablishing 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 November2008 and with the official opening of the Centre in 2009, which coincided with the 20thanniversary of the ASEAN-ROK dialogue partnership, will usher in a promising new era ofinstitutionalized cooperation between the two partners. The 13th ASEAN-ROK Summit on29 October 2010 in Ha Noi agreed to elevate ASEAN-ROK dialogue relations fromcomprehensive cooperation to strategic partnership. In order to concretize the elevation, theLeaders adopted the Joint Declaration on ASEAN-ROK Strategic Partnership for Peace andProsperity and its Action Plan, which covers the period of 2011-2015. 25
  26. 26. These all events show the strategic step taken by South Korea to establish a centre that willbring mutual benefit in the future between them and the ASEAN members. Apart from thoseASEAN members especially Malaysia can acquire benefits through transfer of technologyadvancement and this will surely helps to develop on Malaysia market and trade matters. Forthe South Korea, they will also get the benefit when enjoy the major material imports fromMalaysia 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 monththat took place in South Korea. The first is the furniture fair that set in Ilsan. SeveralASEAN members including Malaysia are taking part to promote the furniture-relatedproduct. The event that took 5 days attracts people all around the South Korea that includesbuyers, traders and also manufacturers.On the September, a 3 days event of textile was happening at COEX World Trade Center inSeoul. 2 company of textile from selected ASEAN country are participating this. The eventattract people more compared to its previous fair, this is because almost all the companyjoining that event were given their full commitment until the very last day. 3.5 Malaysia Industrial Development Agency (MIDA)Basically MIDA has served as the investment body to connect investor form across theglobe to the access with Malaysia. MIDA also have their offices around the world to makethe 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, tofacilitate cross border investments and assist Malaysian companies to identify markets and 26
  27. 27. investment abroad, to undertake planning for industrial development in Malaysia, torecommend policies and strategies on industrial promotion and development to the Ministerof International Trade and Industry, to evaluate applications for manufacturing licenses andexpatriate posts; tax incentives for manufacturing activities, tourism, R&D, traininginstitutions and software development; and duty exemption on raw materials, componentsand machinery, to assist companies in the implementation and operation of their projects,and offer assistance through direct consultation and co-operation with the relevantauthorities at both the federal and state levels, to facilitate the exchange of information andco-ordination among institutions engaged in or connected with industrial development;Senior representatives from key agencies are stationed at MIDAs headquarters in KualaLumpur to advise investors on government policies and procedures to in order to enhanceMIDAs role of assisting investors. These representatives include officials from the Ministryof Human Resources, Immigration Department, Royal Customs Malaysia, Department ofEnvironment, Tenaga Nasional Berhad and Telekom Malaysia Berhad.Through MIDA Malaysia have enjoyed as the most available place to get into investmentsection, 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 forinvestors intending to set up offshore operations for the manufacture of advancedtechnological products for regional and international markets. Supported by a market-oriented economy and pro-business Government policies, Malaysia offers investors adynamic and vibrant business environment with the ideal prerequisites for growth andprofits. Malaysias key strengths include well-developed infrastructure and productive 27
  28. 28. workforce. A politically stable country with a well-developed legal system, Malaysia alsoprovides attractive incentives for investors.Advancing with technology, Technological advancement has become an integral part ofMalaysias growth as an industrialized nation. Malaysia is steadfast in providing for themodern day requirements of investor companies based in the country thanks to thetechnology advancement in Malaysia. Malaysia is one of the most technologically developedcountries amongst industrializing nations in the ASEAN region. The expansion in moderntechnologies proves to be a great advantage to manufacturers in Malaysia to be wellequipped with enough information on international market and the requirement to enter it.Well develop infrastructure, Infrastructure in Malaysia is designed to serve the businesscommunity; it is one of the best in Asia. Telecommunications network served by digital andfiber optic technology, five international airports (all with air-cargo facilities), well-maintained highways and seven international seaports make Malaysia an ideal springboardto the Asia-Pacific market. Industries in Malaysia are predominantly located in over 200industrial estates and Free Zones developed throughout the country. These zones arecategorized as export processing zones, which cater to the requirements of export-orientedindustries. There are also specialized parks that have been developed to cater to the needs ofspecific industries. 28
  29. 29. CHAPTER FOUR TASK AND DUTIES OF MATRADE 4.1 Marketing Malaysia Product in Republic of KoreaEvery MATRADE Branch in overseas had their own style of working and depends to thedemographic and the style in the country. The experience and strategy is the most importantthing in marketing, it becomes the guidance for all to manage with surrounding and alsoorganize the best strategy. There is a lot of marketing that been arrange by this organizationsuch as exhibition-showcase, museum, exhibition centre, specialise exhibition, tradeseminar, business matching, one to one business meeting, mailing campaign, market visit,market survey and others. The planning been organized by MATRADE and the arrangementhad been done very well to make the investment and the trade success.Malaysian International Halal Showcase (MIHAS), is an exhibition that been done once ayear. These yearly events were mostly participated by manufacturers and distributors ofHalal food from all over the world. MIHAS involve hundreds of company who had the bestquality 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 havepotential to be in their markets. Other than that, the exhibition also giving the chances totraders to exchange the ideas among each other beside giving them something new to belearnt.Besides the MIHAS exhibition, there is also business meeting one to one that been arrangedby MATRADE between Malaysia company and foreign company. The meeting is called 29
  30. 30. Incoming Buying Mission (IBM) and Specialise Marketing Mission (SMM). The businessmeeting been arranged from the trade inquiry which had been requested by the foreigncompany to MATRADE. Then MATRADE will try to match the company with themanufacturers, and when they get all the information about the manufacturers theinformation will be sent to the foreign company and if they agreed so then MATRADE willarrange their meeting one to one. In this one to one meeting, the foreign company will meetanother company that MATRADE think they also have potential to be working with theforeign 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 withoutany charge.The mailing campaign are one of the marketing plan that been organized by MATRADE todo the promotion. This plan been starts with the compiling the list of companies, then theywill start spreading the email and also sent the letter to the companies. Specialise MarketingMission in Seoul and Busan for example, been doing by MATRADE by sending the letter tolocal companies in Republic of Korea. All the companies address and details are retrievedfrom the resources such as Ali Baba website, Kompass website, The KOTRA books and alsothe files that been compile by MATRADE before this. This will help the process of mailingbecome 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 fortheir feedback form and finally register their name in the MATRADE Specialise MarketingMission website. 30
  31. 31. Market visit is where the officer or delegation visits the place to do some research about themarket, example in the hypermarket, supermarket, this is very important because topenetrate the product in ROK we have to look their demographic. Based from previousMATRADE trade visit, it was very successful and the delegation can survey the marketclearly because they can look by themselves how the markets go. Other than that, themarket visit also can help the company to do some comparison on packaging, price, andothers competitors. The research that they had done will help the companies to get new ideasand also add value besides doing some innovation on it. The market visit had giving a lot ofbenefit to the companies and also giving the chances to the companies to see where the bestplace to market their products.MATRADE also manage the trade inquire that been made by the local companies in Koreawho looks for the products in Malaysia. By giving the resources such as the Malaysiaexporters book, CD of manufactures and also some advices and guideline will be given tolocal companies. The information about the companies had been refers to CompaniesCommission of Malaysia (SMM), the information that be given to companies must becorrect because it will give impact to Malaysia trade and built the trust between thecountries. The information also been given to Korean companies through e-mail, fax, andmail. 4.2 MATRADE promote Malaysian productMATRADE Seoul through its various approaches towards the local market is havingcontinues meetings and discussions. Among those events priority was given to MATRADEevents such as the MIHAS & INTRADE. 31
  32. 32. MIHAS, The Malaysian Halal Showcase is an ideal event to be hosted by Malaysia becauseof its central position in Asia makes it an ideal trading platform to draw the world‟s halalplayers 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 halalconsumables, products and services globally, this annual trade fair is in effect the largestcongregation of halal industry players.As an international trade fair focusing on halal, MIHAS attracts a following of loyal visitorsand exhibitors. MIHAS 2010 saw the active participation of 527 exhibitors from 32countries and attracted a total of 35,386 visitors from 59 countries. Over 44% of thesevisitors are trade buyers and the who‟s who in the food and beverage industry from theASEAN countries.It embraces the halal concept in all its dimensions from pharmaceuticals and herbalproducts, cosmetics and health care to Islamic investment, banking and takaful. Every yearsince its inception, MIHAS hosts over 500 buyers and matches them with participants ofMIHAS from Malaysia. During MIHAS 2010, this programme resulted in sales of overRM200.3 million with over RM1.86 billion under negotiation.Today, MIHAS is the premier event that is not limited to the ASEAN region alone but isalso supported internationally by the enthusiastic participation of International Pavilionsfrom countries across the globe. 32
  33. 33. This has equipped MIHAS with the extra edge to break through barriers to enter youngdeveloping markets committed to serving the needs of the halal consumer and to reach aquality-conscious generation seeking quality halal food products.MIHAS serves as the best entry point for the world market to penetrate into and flourish inthe global Muslim the ASEAN markets. MIHAS is hosted by the Ministry of InternationalTrade and Industry (MITI), and organised by the Malaysia External Trade DevelopmentCorporation (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-onebusiness meetings for MIHAS Incoming Buying Mission (IBM). This “Buyers-SellersMeet” acts as a „window to the world‟ for Malaysian companies, particularly Small andMedium enterprises (SMEs) to meet international buyers. In view of the current globaleconomic environment, this event is one of the best approaches to enhance overseaspresence in a cost-effective way.Every year since its inception, MIHAS hosts over 500 buyers and matches them withparticipants of MIHAS from Malaysia. More than RM 5 billion sales were generated in thelast 7 years with more than RM 200 million immediate sales generated annually.Approximately 7,000 meetings held yearly.During MIHAS 2010, this programme resulted in immediate sales of over RM66 millionwith over RM1.1 billion under negotiation. For this purpose all overseas offices have beengiven a target of Companies to be invited to participate in the event. The Trade 33
  34. 34. Commissioner in the case as the representative of MATRADE is for running the efforts ofpromoting the event in the Seoul Office. Regarding that the trade commissioner haspresented on a few occasions on the MIHAS 2012 and has promoted the event throughmedia engagements.CONCLUSIONAs conclusion of my study on the bilateral trade between Malaysia and Republic of Korea, Ican 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 theopposite sides of the spectrum are essential to balance the development of the economy ofthe country. As the world is at a realist state of being, Self interest of both states concludesall actions involved. At this point i would say that MATRADE is at an edge to promote andsell Malaysia & its product to the dense market for various products and industries in Korea. 34