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President Thabo Mbeki accompanied by First Lady, Zanele Mbeki, will pay a State Visit to Malaysia Tuesday and Wednesday, 2 and 3 September 2003.

During his visit, President Mbeki will be hosted by the King of Malaysia, His Majesty the Yang di-Pertuan Agong.

During the State Visit, President Mbeki will hold bilateral discussions with Prime Minister Mahathir Mohamad and discuss, among others:
* Developments in Africa with regard to the African Union and NEPAD;
* Strengthening and consolidating relations between the Association of South East Asian Nations (ASEAN) and the African Union.
* Conflict resolution attempts in Africa and ongoing peace-keeping efforts in Central and West Africa;
* The status of South-South and North-South relations;
* Developments regarding the redefinition of the Non-Aligned Movement in a changing global environment;
* Positions to be taken to the World Trade Organisation (WTO) meeting in Cancun next month;
* The promotion of peaceful resolution of disputes following the war against Iraq and increasingly volatile situation in the Middle East. To this end Malaysia has recently hosted the Kuala Lumpur World Peace Conference.

In addition, President Mbeki will bid farewell to Prime Minister Mahathir since he is retiring from office in October 2003 in favour of Deputy Prime Minister, Datuk Seri Abdullah Ahmad Badawi. Prime Minister Mahathir has long-standing ties with the ANC and consistently supported the fight against apartheid. President Mbeki will also officially meet the Prime Minister designate.

It is anticipated that a Joint Statement on the Establishment of a Joint Trade Committee, an Agreement on Economic, Scientific, Technical and Cultural Co-operation and a Memorandum of Understanding concerning the Establishment of a Joint Commission for Economic, Scientific, Technical and Cultural Co-operation, will be signed during the visit.

South Africa is an important strategic partner for Malaysia and Malaysian business and remains a springboard for Malaysia's economic and political efforts in the rest of Africa as well as South America.

The balance of trade is currently in Malaysia's favour and requires to be urgently addressed. The major challenge is to strengthen the bilateral trade relations between the two countries. South Africa's commercial policy toward Malaysia has focused on trade and investment promotion.

The focus-specific areas of the Department of Trade and Industry are agro-forestry; film production; petrochemical products; shipping and boat building; telecommunication equipment; and the stone and granite industry.

An important milestone of South African business enthusiasm in Malaysia was the official launching of the Malaysia South Africa Business Council (MSABC) by President Mandela and the Prime Minister. Dr Mahathir, in Kuala Lumpur, in March 1997

Malaysians, investing in mainly petrochemicals, telecommunications and the hospitality and property markets, have been among the largest new investors in South Africa. Such investments have included the Petronas-Engen, Telekom Malaysia-SBC Communications and the Samrand property development enterprises.

During the visit President Mbeki will also meet with South African students at the Multimedia University and engage with the Malaysia-South Africa Business Council and Asian Strategy and Leadership Institute.

BACKGROUND

Malaysia was one of apartheid South Africa's most vocal critics in Asia, and traditionally maintained close ties with the African National Congress (ANC).

At the end of 1991, Malaysia lifted people-to-people sanctions against South Africa (in accordance with the Harare Declaration at the Commonwealth Heads of State Meeting in Zimbabwe). Less than two years later, the then Foreign Minister, Datuk Abdullah Badawi (the future Prime Minister), announced that Malaysia would lift all remaining diplomatic, trade and economic sanctions against South Africa with effect from 25 September 1993.

Full diplomatic relations was established on 8 November 1993. The South African Embassy in Kuala Lumpur was opened on 17 January 1994 and subsequently, upon South Africa's re-admittance to the Commonwealth, became the South African High Commission.

In March 1994, Malaysia awarded the Tun Abdul Razak International Award to President Nelson Mandela. President Mandela's daughter, Ms Zinzi Mandela, accepted the award on behalf of the President at a ceremony in Kuala Lumpur on 10 August 1994. Similarly, Dr Mahathir received the Order of the Cape of Good Hope from President Mandela in Cape Town, South Africa on 7 May 1997.

In April 1994, Malaysia's Prime Minister Mahathir was one of the first foreign statesmen to pay a private one-day visit to South Africa to congratulate President Mandela. The Malaysian Minister of Foreign Affairs, Datuk Abdullah Badawi, attended the inauguration of President Mandela on 10 May 1994.

Diplomatic relations since 1994

Since 1994 a rapid improvement of relations has occurred in all spheres, but most notably at the political and economic levels. The personal friendship between former President Mandela and Prime Minister Mahathir, coupled with Malaysia's comprehensive anti-apartheid stance over four decades and a common realisation of the importance of South-South co-operation, has provided the impetus for a warm, friendly and solid relationship.

The extent of the close political relations between the two countries was illustrated by the visit to South Africa in August 1995 by the Malaysian Prime Minister. President Mandela reciprocated with a State visit to Malaysia in March 1997. These good relations were further strengthened during the visit of then Deputy President Thabo Mbeki to Malaysia during the Commonwealth Games in September 1998.

Ministers, parliamentarians and other high standing dignitaries from both countries have since exchanged visits. Delegations from the Provinces of Gauteng, the Northern Province, Northwest and the Northern Cape, led by their Premiers, have visited Malaysia. Numerous delegations from all the South African provinces have also visited Malaysia. Many visits from Malaysia to South Africa, at various levels incorporating an array of interests, have taken place since the installation of South Africa's Government of National Unity. Many of Malaysia's Cabinet Ministers have also visited South Africa.

In May 1999 the South African Government appointed Honorary Consuls in the Malaysian States of Penang and Sarawak in an effort to establish a presence outside the commercial heartland of Selangor, within which the capital of Kuala Lumpur is located.

Dr Abraham Nkomo, South Africa's third High Commissioner to Malaysia, presented his credentials to the King of Malaysia on 22 March 2002.

Agreements

South Africa and Malaysia have to date signed the following Agreements:
* Agreement on the establishment of diplomatic relations;
* Air services agreement (1993);
* MoU on Defence Co-operation (1996);
* Agreement Governing the Exchange and Protection of Classified Information in the Field of Defence (1997);
* Bilateral Trade Agreement (1997);
* Agreement on Merchant Shipping and Related Maritime Matters (1997);
* The following agreements have been concluded between state/parastatal entities:
* MoU between the Department of Minerals and Energy (DME) and Petroliam Nasional Berhad (PETRONAS), the national oil company of Malaysia, on 21 June 2000. The objective of the MoU is to provide the framework of co-operation between DME and PETRONAS in the rationalisation and development of the oil and gas industry in the RSA.
* Strategic Equity Partnership between Telkom SA and Telekom Malaysia (12%) and SBC of the USA (18%).
* Cooperation Agreement on Multimedia and Broadcasting between the National Electronic Media Institute of South Africa and the Multimedia University (MMU) of Malaysia.
* MoU between South African Maritime Safety Authority (SAMSA) and Global Maritime Ventures (GMV) on areas of cooperation in the maritime sector.
* Agreement on Design, Construction, Supply, Testing and Commissioning of Twenty-Two Sets Electrical Multiple Units (EMU) between Union Carriage & Wagon and KTM signed on 12 April 1995.
* MoU to establish collaborative efforts on transfers of technologies between Kumpulan Ikram and CSIR Transportek signed on 14 March 2003 (to promote cooperation in roads and transport technology).
* MoU between Kumpulan Ikram and CSIR Transportek signed in 1999.

The following agreements/Memoranda of Understanding (MoU) are currently under negotiation:
* Agreement on the Promotion and Protection of Investments;
* Agreement on the Avoidance of Double Taxation;
* Agreement on ICT Co-operation;
* Economic, Technical, Scientific and Cultural Co-operation Agreement;
* MoU on the establishment of a Joint Ministerial Commission (JMC)
* MoU on Co-operation in the field of Sport and Recreation;
* MoU on Public Service Training (SAMDI/INTAN);
* MoU on Co-operation in the Field of Education

It is anticipated that a Joint Statement on the Establishment of a Joint Trade Committee, the Memorandum of Understanding on the Establishment of a Joint Ministerial Commission, and the Agreement on Economic, Technical, Scientific and Cultural Co-operation will be signed during the State Visit by President Mbeki on 2-3 September 2003.

Tourism

Tourism arrivals from both South Africa and Malaysia have steadily grown since 1994. As of 1 May 2002, Malaysia Airlines has operated three flights per week to South Africa. SATOUR statistics have recorded a steady increase in the number of tourists visiting South Africa since the Asian Financial Crisis. Malaysia has become a popular destination for value-seeking South African tourists. The Mission actively participates, annually, in premier tourism shows like the Malaysian Travel and Tour Association (MATTA) consumer show in Kuala Lumpur and the industry-orientated Southern African Tourism Mart.

Education and culture

Since 1994, Malaysia has trained and educated more than three hundred South Africans through providing access to opportunities ranging from short specialised training programmes to full degree programmes. These range from hotel management and catering, civil, chemical and electronic engineering, public service management and training, oil and gas industry, design studies and information technology and Islamic studies.

Currently, there are more than 100 South African students studying on full scholarships provided by Malaysian companies. A number of South African universities have signed Memoranda of Understanding (MoUs) with their Malaysian counterparts and such co-operation is encouraged. The perception of South Africa as an affordable education destination for international Malaysian students is being promoted.

The existence of South Africa's Malay community, numbering some 250 000, provides a useful and credible vehicle upon which to build in terms of historical, cultural and trade links between South Africa and Malaysia. People-to-people relations in all fields, particularly in education, culture, art and sport, have steadily strengthened during the course of the diplomatic relationship between the two countries.

Economic relations with South Africa

Bilateral Trade Statistics (ZA Rand'000) (Source: DTI)

YEAR / SA Exports / SA Imports / Total Trade
1994 / 348,954 / 748,003 / 1,096,957
1995 / 661,682 / 892,332 / 1,554,014
1996 / 742,534 / 1,076,632 / 1,819,166
1997 / 1,150,030 / 1,305,092 / 2,455,122
1998 / 396,181 / 1,780,970 / 2,177,151
1999 / 749,993 / 1,781,826 / 2,531,819
2000 / 1,109,222 / 2,062,585 / 3,171,807
2001 / 1,524,001 / 2,448,658 / 3,972,659
2002 / 2,010,334 / 3,643,829 / 5,654,163

Main Malaysian products exported to South Africa:Palm Oil; Vegetable fats and oils; wood and wood articles; precision instruments; machinery and mechanical equipment and parts

Main products imported from South Africa: minerals; base metals; wood pulp; cane sugar; locomotive components

Bilateral Trade

The Asian financial crisis had a dramatic effect on South African exports to Malaysia, with a drastic decline registered during 1998 (the first full year to reflect the effect of the financial crisis). In the same period South African imports from Malaysia registered a healthy increase. Before this dramatic reversal, the trade balance between the two countries had only slightly been in Malaysia's favour.

The balance of trade is currently in Malaysia's favour and requires to be urgently addressed. The major challenge is to strengthen the bilateral trade relations between the two countries.

For the year 2002, bilateral trade returned and exceeded pre-regional crisis levels by registering R5 973 million. South Africa's contribution to this annual figure was R2 010 million with Malaysia selling R3 643 million worth of goods to South Africa. Malaysia with some R1 633 million in its favour has the trade advantage. This advantage is however diminishing as more South African products find shelf space in most of Malaysia's retail and wholesale businesses.

South Africa's commercial policy toward Malaysia has focused on trade and investment promotion. The focus-specific areas of the Department of Trade and Industry are agro-forestry; film production; petrochemical products; shipping and boat building; telecommunication equipment; and the stone and granite industry.

An important milestone of South African business enthusiasm in Malaysia was the official launching of the Malaysia South Africa Business Council (MSABC) by President Mandela and Prime Minister Dr Mahathir in Kuala Lumpur, in March 1997.

Malaysian Investment in South Africa

Malaysians, investing in mainly petrochemicals, telecommunications, and the hospitality and property markets, have been among the largest new investors in South Africa. Such investments have included the Petronas-Engen, Telekom Malaysia-SBC Communications and the Samrand property development enterprises.

The Asian financial crisis initially caused a number of Malaysian companies to withdraw from their overseas commitments and consolidate at home in Malaysia. Consequently, new investment into South Africa by Malaysian companies in recent years has been slow to materialise. The newest Malaysian investment has been in the form of a R30 million condom factory that recently relocated from Zimbabwe to South Africa's Mpumalanga province.

South Africa is an important potential ally for the Malaysian Government and Malaysian business and remains a springboard for Malaysia's economic and political efforts in the rest of Africa as well as South America. The challenge that has been identified is to maintain Malaysia's support and commitment to NEPAD in an investor milieu that is increasingly diversified.

Defence Co-operation

Since December 1993, Armscor, Denel and other key contributors to South Africa's defence industry have been regular participants in Malaysia's Langkawi International Maritime and Aerospace Exhibition (LIMA) and Defence Show Asia (DSA). Representatives from DENEL and South Africa's Minister of Public Enterprises attended LIMA 2001. South Africa's intention to extend co-operation in the military field to Malaysia, with regard to product supply and development, still remains an important objective that encompasses the concluded sale of 22 units of the 155mm G-5 artillery gun, estimated at US$49 million, and continuing efforts to successfully negotiate the sale of the Rooivalk attack helicopter

For further information contact:
* Ronnie Mamoepa on 082 990 4853
* Bheki Khumalo on 083 256 9133
* Nomfanelo Kota on 082 377 7208
* David Hlabane on 082 561 9428

Issued by the Department of Foreign Affairs, 28 August 2003

Source: Department of Foreign Affairs (http://www.dfa.gov.za)