South Korea, Malaysia Strike FTA Deal, Expect Boost in Auto and Steel Exports
South Korea-Malaysia FTA Deal: Key Takeaways - Summary Points
On October 27, 2025, South Korea and Malaysia finalized negotiations for a Free Trade Agreement (FTA). This FTA is expected to significantly strengthen economic cooperation between the two countries, particularly by expanding market access in Malaysia for key South Korean exports such as automobiles and steel. The FTA aims to lower trade barriers between the two countries, promote the free movement of goods and services through tariff reductions and eliminations, encourage investment expansion, and drive economic growth.
Lee Jae-myung officially announced the conclusion of the FTA negotiations with Malaysian Prime Minister Anwar Ibrahim during a bilateral meeting at the Kuala Lumpur Convention Centre. Both leaders agreed that the FTA would open a new chapter in their economic relationship and agreed to further expand trade and investment cooperation through the agreement. To commemorate the FTA deal, the two countries signed a joint declaration between government departments, pledging to promptly pursue follow-up procedures for the FTA to take effect.
In these FTA negotiations, South Korea agreed to further open its market to Malaysia, primarily for agricultural and food products such as lemon juice, durian, flounder, crab, and salmon. This is meaningful in that it lays the foundation for expanding South Korean agricultural and food exports to Malaysia, while also providing Malaysian consumers with a wider variety of South Korean products. Furthermore, Malaysia agreed to support Korean companies' participation in the second phase of FA-50 imports and to continuously expand defense industry cooperation projects. This is expected to expand the entry of the South Korean defense industry into the Malaysian market and contribute to strengthening security cooperation between the two countries.
Meanwhile, Malaysia and South Korea signed a Memorandum of Understanding (MOU) to expand defense industry cooperation, further solidifying their collaboration in the defense sector. This MOU is expected to support the entry of South Korean defense companies into the Malaysian market and play an important role in promoting technology exchange and joint research and development between the two countries. In addition, Lee Jae-myung also held a summit with Cambodian Prime Minister Hun Manet to discuss cooperation measures between the two countries. Cambodia and South Korea agreed to launch a joint task force, the 'Korea Dedicated Team,' in November to prevent kidnapping and detention crimes against South Koreans in Cambodia. This is expected to ensure the safety of South Korean citizens in Cambodia and strengthen security cooperation between the two countries.
The South Korea-Malaysia FTA is expected to have a positive impact on the South Korean economy. In particular, it is anticipated that the market share of major export items such as automobiles and steel will increase in Malaysia, which is expected to contribute to the growth of related industries and job creation. Furthermore, it is expected that the expansion of South Korean agricultural and food exports to Malaysia will also have a positive impact on increasing farm household income. The government plans to further strengthen economic cooperation with Malaysia as a result of this FTA and actively support the creation of synergistic effects between the two countries in various fields.
