Business

Currency swap facility to boost Malaysia, South Korea bilateral ties

Currency swap facility to boost Malaysia, South Korea bilateral tiesThe Gyeonggi Business Centre, Kuala Lumpur (GBCKL), expects bilateral trade between Malaysia and South Korea to improve further with implementation of the Malaysia-Korea Currency Swap-Financed Trade Settlement Facility, early next year.   

Its Regional Director for the Korean Trade Centre (Asia), Patrick On said the settlement facility, expected to be commercially viable next year, would facilitate trade settlements and translate into higher trades.

"The strong support of the central banks of both countries for this trade settlement facility will accelerate use of the respective currencies for cross-border trade.

"Up to RM15.0 billion or KRW5.0 trillion will be made available by the two central banks to facilitate trade settlements between firms of both countries, using the respective currencies," he told Bernama.

On said the settlement facility would benefit importers and exporters of both countries by reducing the risk of currency mismatches and potentially lower transaction costs in international trade.

In 2013, Malaysia's trade with Korea increased 13.7% to US$18.04 billion (RM56.91 billion) from US$16.20 billion in 2012.

From January-July 2014, total trade between Malaysia and Korea rose by 11.4% to RM35 billion (US$10.76 billion) against RM31.41 billion in the corresponding period of 2013.

Korea is Malaysia's seventh largest trading partner, ninth largest export destination, and seventh largest source of imports.

According to On, the free trade agreement partnership between Malaysia and Korea is under intense consideration.

"Regular trade missions and specified trade meets, as well as offerings from Malaysia’s Economic Transformation Programme, are also factors that can further spur bilateral relations going forward," he said.

GBCKL, a business hub representing the Korean government to assist small medium enterprises to penetrate South East Asian markets, will organise the largest Korean products sourcing fair, "G-Fair KL", from December 2-3 at the Shangri-La Hotel in Kuala Lumpur.

On said the trade fair would feature 64 selected Korean companies from various sectors as water and sewerage industries, beauty and cosmetic products, consumer products, industrial and building materials, and IT, electronics and electrical products.

"Starting this year, the trade fair would be an annual event by GBCKL, as we want to take advantage of the establishment of the Asean Economic Community, under Malaysia's chairmanship of Asean next year.

"Malaysia can be called a focal point in Southeast Asia and the GBCKL is a Korean hub for this region," he added. – Bernama, November 22, 2014.

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