With the UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), businesses in the UK and Malaysia will benefit from greater market access, reduced trade barriers (with over 99% of current UK goods exports eligible for tariff-free trade), new investment opportunities and stronger economic ties. As Malaysia continues its role as ASEAN's Chair in 2025, it has the potential to accelerate supply chain shifts, drive investment relocations and reshape trade patterns in the region that will further enhance the UK - ASEAN partnership.
CPTPP Boosts UK - Malaysia Trade and Investment Relations
The CPTPP, which came into force for the UK on 15 December 2024, marks the first formal free trade agreement between Malaysia and the UK. This agreement eliminates a significant portion of tariffs between Malaysian and UK products, creating valuable opportunities in industries such as automotives, electronics, and food exports. As a result, UK businesses will gain better access to Malaysia’s economy, which was valued at US$ 399 billion in GDP in 2024, and can tap into a growing consumer base by increasing exports of goods and services to Malaysia at lower overall costs.
Tariff reductions under the CPTPP are particularly beneficial for some UK exports such as whisky and cars. Over the next decade, Malaysia will eliminate 80% of tariffs on UK produced whisky and 30% on UK-manufactured cars. Reciprocally, Malaysia’s key exports, including palm oil, rubber, and timber, will gain tariff-free access to the UK market. These changes pave the way for deeper bilateral trade and investment relationships between the two countries.
Reduced Trade Barriers and Market Access Expansion
With over 99% of UK goods exported to CPTPP members now eligible for tariff-free trade, the cost of exporting to Malaysia will significantly decrease. This opens up major opportunities for UK businesses in the food, beverages, and automotives sectors. Notably, British firms including Sheffield-based Mak Tok, which produces chilli paste and has been looking to licence its brand and partner with a manufacturer, can now expand into the Malaysian market more easily.
From Malaysia’s perspective, the CPTPP enhances its access to the UK market, particularly for commodities like palm oil. Sustainability standards in the UK may encourage Malaysian producers to adopt greener practices, improving the global reputation of Malaysia’s palm oil industry. The overall reduction in trade barriers is expected to drive long-term economic growth for both countries.
Investment Opportunities Strengthened by CPTPP
During the Malaysian Prime Minister Anwar Ibrahim's (PM Anwar) visit to the UK in January 2025, Malaysian-owned YTL Group announced its investment of £4 billion in the UK over the next 5 years, with around £2 billion directed towards the Brabazon Bristol development, which comprises of 6,500 homes, three new schools, three hotels, and a 19,500-capacity arena, conferencing and exhibition space. According to YTL, the development is expected to create over 30,000 jobs, with the remaining £2 billion invested in YTL's UK businesses.
Additionally, PM Anwar launched Tenaga Nasional Berhad's (TNB) 102-megawatt (MW) Eastfield and Bunkers Hill solar farm projects, which marks TNB's expansion into the global renewable energy sector in the UK. Once commercially operational, the two greenfield solar projects will increase TNB's total generation capacity in the UK to 908 MW.
As a result, through CPTPP, Malaysian investors now have greater certainty when investing in the UK, which is expected to lead to increased profitability and employment opportunities, thereby contributing significantly to both the local and national economy.
Malaysia's ASEAN Chairmanship 2025
As the ASEAN Chair in 2025, Malaysia is fostering policies that bolster trade facilitation, investment attractiveness and digital transformation in line with its theme of "Inclusivity and Sustainability", which will benefit both ASEAN and UK businesses.
The UK, as a dialogue partner of ASEAN, stands to gain from Malaysia’s leadership by deepening its trade footprint in Southeast Asia in priority areas including legal services, education and agriculture as well as small and medium-sized enterprises. Malaysia’s chairmanship could also lead to new agreements that align ASEAN’s economic policies with CPTPP, streamlining trade and investment frameworks across the region. The UK’s digital trade ambitions, in particular, align well with Malaysia’s push for digital transformation, paving the way for stronger UK - Malaysia digital trade partnerships.
Despite the UK not previously having free trade agreements in place with Malaysia, the CPTPP serves as a gateway to extensive trade liberalisation between both countries. PM Anwar emphasised the need for proactive capacity building and technical cooperation under CPTPP, not only among large companies but especially with small and medium enterprises across Malaysia and the UK.
By leveraging Malaysia's strategic role as both a CPTPP member and as ASEAN's Chair in 2025, Malaysia and the UK will be able to optimise linkages and maximise the agreement's potential to enhance economic cooperation and create fresh avenues for business and investment growth. In light of recent U.S. tariff increases, the CPTPP has become even more significant in offering ASEAN access to alternative markets and mitigating the impact of trade disruptions.
