Fran O'Sullivan: Malaysia the key to unlock other doors

Prime Minister Najib Razak (left) introduces John Key to Malaysian officials in Putrajaya. Photo / AP

Trade Minister Tim Groser's theatrical groan as he lifted the 1100 word document which details New Zealand's free trade agreement with Malaysia went down a treat with a 60-strong Kiwi business delegation in Kuala Lumpur to witness the official signing of the deal.

Most free trade agreements are extremely complex and permeated with arcane terminology which quickly defeats the enthusiasm of other than the most persistent trade policy wonks.

The Malaysian FTA is no exception.

But it's not until you dig deep into the detailed schedules to the FTA that you realise just how good a trade template New Zealand's negotiators have secured.

A template which if leveraged well could unlock greater gains in other countries with which New Zealand is seeking to cement trade deals like South Korea.

Take education which is New Zealand's second largest export services sector after tourism.

Malaysia is currently New Zealand's 10th largest source of international students, the third largest source of university students and second largest source of PhD students.

In 2008, 2147 international students came from Malaysia to study in New Zealand which was a 70 per cent increase since 2003 - a period in which overall international student numbers actually declined by 27 per cent.

Malaysia has placed a huge priority on education which it sees as vital to underpinning its drive to be a knowledge economy (pity this same drive has dropped out of favour in NZ).

The Kiwi negotiators deliberately targeted this sector because of the growth potential and the value-added component it entails.

The upshot is they have secured a deal which will enable New Zealand education providers to hold up to 70 per cent of shares in Malaysian-domiciled joint ventures targeting primary, secondary and tertiary students by 2015.

A similar ownership threshold applies to distance learning for language training and other tuition. Previously, they were limited to a 49 per cent stake which meant control rested on the Malaysian side.

Leveraged well this will open the door to New Zealand institutions and private education providers to unlock the Malaysian growth market.

It is a big deal within Malaysia where the Government will have to amend legislation to allow New Zealand's educationalists to take up much higher equity stakes than it has granted under previous FTAs with other nations.