Malaysia-United Arab Emirates Comprehensive Economic Partnership Agreement
Date of publication: August 29, 2025
On July 31, 2025, Malaysia’s Ministry of Finance issued the Customs Duties (Goods Under the Malaysia–United Arab Emirates Comprehensive Economic Partnership Agreement) Order 2025, stating that the agreement would take effect for Malaysia on September 1, 2025. An amendment order on August 29 deferred the effective date to October 1, 2025. As Malaysia’s first bilateral free trade agreement with a Gulf Cooperation Council (GCC) member, the MY–UAE CEPA phases in tariff eliminations and reductions over an eight-year period. Policymakers expect it to increase total bilateral trade by at least 60% within five years, supporting more sustainable and diversified growth in both economies.
The UAE is Malaysia’s second-largest trading partner among Arab countries. In 2024, bilateral trade in goods reached US$9.22 billion, with Malaysia exporting US$3.18 billion to the UAE and importing US$6.04 billion.
Top 5 imports from the UAE (2024) and CEPA duty outlook
HS Chapter | Description | Value (2024) | Duty Reduction |
|---|---|---|---|
27 | Mineral fuels, oils, and distillation products | $4.10B | Duty eliminated immediately |
71 | Pearls, precious stones, metals, and coins | $1.16B | Duty eliminated immediately or over 6 years (line-specific) |
76 | Aluminium | $222.65M | Duty unchanged for some lines; eliminated immediately or over 6 years for others |
39 | Plastics | $174.02M | Duty unchanged for some lines; eliminated immediately or over 6/8 years for others |
26 | Ores, slag, and ash | $83.59M | All MFN at 0% |
Tariff Reduction Schedule on Malaysia side | Number of HS |
|---|---|
MFN Rate | 986 |
MFN Rate at 0% | 6531 |
MFN Rate reduced to 0% immediately | 2333 |
MFN Rate reduced to 0% over 4 years | 66 |
MFN Rate reduced to 0% over 6 years | 1414 |
MFN Rate reduced to 5% over 8 years | 90 |
MFN Rate reduced to 25% immediately | 12 |
Conclusion
Beyond tariff relief, MY–UAE CEPA is expected to:
- Reinforce the UAE’s role as a regional gateway for Malaysian exports into the wider Middle East and North Africa (MENA) market, leveraging major logistics platforms and free zones.
- Encourage supply-chain integration: UAE-origin industrial inputs and energy products can feed Malaysian manufacturing at lower cost, while Malaysia-based production can flow through UAE hubs for re-export to GCC, Africa, and Europe.
- Pave the way for deeper engagement with other GCC members, as this first Malaysia–GCC bilateral FTA sets a precedent and potential template for future negotiations.
Recognizing the importance of these changes, we have updated OneSource Global Trade Content to reflect MY–UAE CEPA provisions and will continue to monitor official notices, schedules, and implementation guidance to provide timely updates.
For more information on how ONESOURCE Global Trade solutions can assist you in managing trade agreements, contact your Account Manager or Customer Success Manager.