KUALA LUMPUR: International Trade and Industry Minister Datuk Seri Mustapa Mohamed (pic) gave assurance on Friday that Britain’s decision to leave the European Union (EU) will have little impact on the country in the medium to long term.

At the same time, he said Malaysia planned to build on its close relationship with the UK, which was the country’s third largest trading partner in the EU and its 4th largest source of investment last year.

In a statement, Mustapa said while there might be some impact in the very near term, the medium to long-term impact of Brexit on Malaysia’s trade and investment would be “minimal.” 

“With our strong fundamentals and economic diversification, we are in better position to face any uncertainty,” he said.

Mustapa said the UK was no longer a part of the currently negotiated Malaysia-EU free trade agreement (FTA), but Malaysia would explore the possibility of having a separate bilateral FTA with the UK as part of efforts to open up further business opportunities with the latter.

“The decades of close cooperation between Malaysia and the UK transcend beyond economic partnership,” he said. “They form a strong foundation for our future growth and Brexit will not affect our close ties. We will continue to build upon this momentum and forge ahead,”

As far as trade was concerned, he said, Brexit was unlikely to have significant disruption effect on Malaysia’s external sector. Last year, Malaysia’s trade with the UK stood at RM16.5bil or 1.1% of the country’s total trade. 

Malaysia’s total trade with the UK registered a 9.4% growth in ringgit terms to RM16.45bil in 2015 from RM15.02bil in 2014. 

Total exports amounted to RM9.32bil, an increase of 17.6%, compared to RM7.92bil in 2014. Total imports increased slightly by 0.3% to RM7.13bil in 2015 compared to RM7.10bil in 2014.

He also noted that the UK economy had been growing faster than most EU economies, with the gross domestic product growing 2.3% last year compared with 1.9% for the EU.

“We believe with the appropriate policies in place, the UK economy will adjust to the new reality,” he said.

Although the UK was Malaysia’s 4th largest source of investment last year, Mustapa said Brexit would have minimal impact on foreign direct investment (FDI) as the investments were normally long-term in nature and exchange rate volatility was usually priced into the FDI-related contracts.

“We believe that the UK will continue to be key player through its investments in Malaysia’s services sector, especially in banking and education, among others,” he said.

As at 2015, a total of 433 manufacturing projects with UK participation have been implemented and valued at RM6.8bil in terms of investment.