21/05/2012 (Borneo Post) - The total trade in 2011 was by far the highest total trade ever recorded by Malaysia reaching RM1.27 trillion, an increase of 8.7 per cent compared with 2010 which recorded RM1.17 trillion.

In fact, in 2011 the nation also recorded the highest export value ever recorded for the month of December at RM60.74 billion, an increase of 6.1 per cent from the previous corresponding period.

For 2012, exports are expected to register a pick up in momentum from May onwards and grow by five per cent.

BizHive Weekly takes a look at what is in store this year in terms of bilateral trade with the nation.

Stepping across the horizon
Malaysia has experi­enced rapid economic growth during the past three decades, accompanied by low inflation, reduced unem­ployment, falling poverty, re­duction in income inequalities, and rising per capita income.

The export sector has played a decisive role in Malaysia’s economic success, contributing significantly to output, employ­ment and exports.

The nation’s export sector has been at the forefront in transforming the Malaysian economy and is highly depend­ent on the macro-economic external sector which is a vital engine of growth.

A cursory look at the coun­try’s export structure indicated that it has metamorphosed to become an exporter of a wide range of manufactured goods.

Over the past decades the com­position of the nation’s exports had shifted from resourse-based commodities such as tin, rub­ber, palm oil and petroleum to manufactured products.

Over the past three decades Malaysia has been consistent in its endeavours to develop its own manufacturing base and as a result now exports a wide range of high technology products including electrical and electronic (E&E), machinery and scientific equipment.

Highlighting the nation’s total trade performance in 2011, the Ministry of International Trade and Industry Malaysia (Miti) an­nounced that the nation’s total trade reached RM1.27 trillion, an increase of 8.7 per cent compared with 2010 which recorded RM1.17 trillion.

The total trade in 2011 was by far the highest total trade ever recorded by Malaysia.

Furthermore, exports showed a positive growth with an increase of 8.7 per cent to RM694.55 billion for the year 2011 and imports rose by 8.6 per cent to RM574.23 billion.

Trade surplus expanded by 9.4 per cent to RM120.31 billion, mak­ing it the fourteenth consecutive year of trade surplus achieved since 1998.

This was comparable with de­veloped countries in the region such as Singapore and Republic of Korea (Korea) that re­corded similar achieve­ments.

Malaysia’s trade performance for the year remained strong despite the slow economic re­covery in the United States (US), uncertainties arising from the sovereign debt crisis in the euro­zone, pockets of unrest in West Asia following the Arab spring, supply chain disruptions due to the tsunami in Japan and floods in Thailand.

All these factors impacted global trade for many economies in vary­ing degrees last year.

In fact, in 2011 the nation also recorded the highest export value ever recorded for the month of December at RM60.74 billion, an increase of 6.1 per cent from the previous corresponding period.

Imports in December 2011 in­creased by 10.4 per cent to RM52.43 billion compared with RM47.48 the previous corresponding period.

According to the external trade statistics released by Miti, the increase in exports was largely contributed by manufactured products and commodities.

Minister of International Trade and Industry Datuk Mustapa Mohamed stated that the bulk of the external trade was from lique­fied natural gas (LNG), palm oil, machinery, appliances and parts, rubber products, crude petroleum, chemicals and chemical products, iron and steel products as well as processed foods.

The top five export countries in 2011 were People’s Republic of China (China), Singapore, Japan, US and Thailand.

The top five export products of Malaysia in 2011 to these five destinations were E&E products which amounted to RM236.53 bil­lion; palm oil (RM64.83 billion); LNG (RM49.96 billion); chemical and chemical products (RM47.19 billion) and refined petroleum products (RM36.53 billion).

Asean countries accounted for a quarter of the country’s exports and recorded a 5.8 per cent growth in 2011 to RM171.54 billion mainly attributed to the strong inter-company and industry linkages within Asean as a result of more companies taking advantage of the free trade agreement which continued to support growth.

Currently more tha 60 per cent of Malaysia’s total trade is with free trade agreement (FTA) partners.

As at the time of writing, Malay­sia has signed five bilateral FTAs, namely with Japan, Pakistan, New Zealand, India and Chile.

It had also signed regional FTAs through Asean with China, Republic of Korea, India, Australia and New Zealand.

In the pipeline, the nation is poised to enter agreements with strategic partners and negotiations are under way for bilateral FTAs with Australia, Turkey and EU.

Others include regional Trans-Pacific partnership coun­tries and in Asean with India and Japan for services and investments.

According to the national trade promotion agency, Malay­sia External Trade Development Corporation (Matrade), the na­tion’s exports were expected to register a pick up in momentum from May onwards as the first quarter was usually a seasonally quieter period historically.

Matrade chief executive of­ficer Dr Wong Lai Sum revealed that like 2011, Asia was expected to provide the bulk of the trade volume, although she was encouraged by the economic recovery in the US.

With developments in the glo­bal scenario Matrade projected merchandise exports to grow by five per cent and services to expand between 4.9 per cent and six per cent.

Top five export destinations

1. Strong China connections
According to statistics from Matrade, Malaysia’s largest export partner in 2011 remained as China, a position that has been maintained since 2009 registering a total export percentage of 13.1 per cent.

In 2011, China for the first time has superceded Singapore as Malaysia’s largest export market.

Exports to China reached a value of RM91.25 billion, an increase of 13.9 per cent or RM11.14 billion compared with 2010.

In terms of export composition to China in 2011, manufactured goods accounted for the largest proportion with a share of 69 per cent, while chemicals and chemical products, rubber products, electrical and electronic (E&E) products, manufactured metal products, processed food and petroleum products contributed to 27.1 per cent or RM3.02 billion increase in exports.

While palm oil, crude rubber and LNG contributed to the RM7.19 billion increase in exports to China in 2011.

 2. Maintaining neighbourly ties
Statistics indicated that Malaysia’s second largest export destination in 2011 was Singapore with the value of RM88.16 billion, an increase of 3.4 per cent or RM2.91 billion compared with 2010.

Exports to Singapore stood at 12.7 per cent of total exports of the nation in 2011.

The major export product to Singapore remained E&E products valued at RM26.89 billion or 36.7 per cent of total exports to the island republic.

This was followed by petroleum, machinery, appliances and parts, manufactured metal as well as chemicals and chemical products.

 3. On the road to rebuilding
The third largest export partner was Japan with total trade of RM79.97 billion, which in­creased by 19.8 per cent or RM13.2 billion compared with 2010.

Exports to Japan stood at 11.5 per cent of Malaysia’s total exports in December 2011.

Exports to Japan were boosted by higher demand for energy and building ma­terials with LNG to the tsunami-stricken country rising by 34.2 per cent to RM34.42 billion, making it the biggest export to Japan. Meanwhile, crude petro­leum exports to Japan rose by 109.3 per cent to RM2.47 billion in 2011.

4. Ties across the globe
In fourth place was the US with total export valued at RM57.58 billion comprising 8.3 per cent of Malaysia’s total exports, in 2011 which translated into a decrease of minus 5.5 per cent or minus RM3.37 billion in comparison with 2010.

Exports to the US were relatively subdued due to the global economic turmoil and the slow American recovery but as the US economy was currently recovering it was slated to strengthen Malaysia’s position.

More than half of the nation’s exports to the US comprise E&E products such as semiconductor devices, integrated circuits, transistors.

5. The Thai connection
Thailand ranks as the fifth in terms of Malaysian ex-ports, constituting 5.1 per cent of total exports at RM35.72 billion in 2011, an increase of 4.6 per cent or RM1.58 billion compared with 2010.

Exports to Thailand are relatively small, comprising indus-trial goods and heavy industrial equipment that are utilised locally in Southern Thailand.

It exports more than it imports via Malaysia with rubber products being the main commodity.

Malaysia plays an important role as a transit country for Thai export goods.

Top five import trading countries
Malaysia in turn contributes towards the economic trade of its global trading partners. The nation imports a large number of products from overseas to compliment its own available and non-available national resources.

• The nation’s top five import countries in 2011 were China with the largest value at RM75.61 billion, an increase of RM9.18 billion from total import value of RM66.43 billion in 2010 contributing to 13.2 per cent of total imports in 2011.

• The second largest import country for Malaysia in 2011 was Singapore valued at RM73.51 billion compared with RM60.28 billion in 2010, an increase of 22 per cent or RM13.23 billion contributing to 12.8 per cent of the nation’s total imports in the corresponding year.

• Thirdly was from Japan with Malaysian imports of RM65.32 billion which was a decrease by RM-1.21 billion or -1.8 per cent valued at RM66.53 billion in 2010. The deline was mainly attributed to the tsunami. Imports from Japan made up 11.4 per cent of the country’s total imports for 2011.

• Fourth place was from the US with Malaysian imports valued at RM55.40 billion in 2011 that also saw a decrease by RM-853.6 million or -1.5 per cent that amounted to RM56.26 billion in 2010, contributing 9.6 per cent of total imports in 2011.

• Top fifth import country was Indonesia with Malaysian imports totalling RM35.10 billion in 2011 compared with RM29.39 billion in 2010, an increase of 19.4 percent or RM5.7 billion.

Imports from Indonesia constituted 6.1 per cent of the total Malaysian imports for 2011.

For the same period, Malaysia’s top five imports were E&El products (RM177.89 billion); chemicals and chemical products (RM51.12 billion); machinery, appliance and parts (RM46.96 billion); refined petroleum products (RM34.10 billion) and manufacturing of metal (RM32.85 billion).

Malaysia’s trade outlook for 2012

Noor Azian Romlan, Matrade Sarawak director

Industry sources, economists and analysts alike concur that the shaky global economic environment would impact all aspects of the economy in coun­tries worldwide.

The global economic outlook for 2012 remained grim and lacklustre with the continuing uncertainties on many quarters.

According to the International Monetary Fund (IMF), global economic growth this year was projected at at 3.3 per cent com­pared with 3.8 per cent in 2011; 5.2 per cent in 2010 and minus 0.7 per cent in 2009.

World trade was expected to moderate to 3.8 per cent from 6.9 per cent in 2011; 2.7 per cent in 2010 and minus 10.7 per cent in 2009.

econ­omies were expected to grow by 5.4 per cent compared with advanced economies by 1.2 per cent.

East and South Asia were pro­jected to have the fastest growth, while China, India and Asean would continue to be the major drivers of this growth.

Although the global economic environment remain uncertain, Miti, through its agency, Matrade was set to continue to play its role in reaching out to companies and countries around the world to promote the exports of Malaysian products and services.

Matrade Sarawak director, Noor Azian Romlan told BizhiveWeekly in an exclusive interview recently commented that even though the world economy was overshad­owed by the many economic crises in the past couple of years, Malaysia’s overall economy was able to survive because of its strong export position that leveraged on the major markets and wider regions of Asean.

“Malaysia is doing well despite the global economic downturn and the result is shown in the total trade statistic of 2011 that reached RM1.27 tril­lion which was the highest total trade ever over the past years,” she said.

The Corporate Affairs division of Matrade stated that among its short term strategies planned for the coming year were to intensify promotions to increase market share; target selected fast growing markets for exports; internation­alising Malaysian companies and increase investment in export-led industries.

“For the mid to long term strate­gies, we will focus on increasing exports of products by leveraging on the growing services exports; widening and deepening of Malay­sian companies’ market share; and enhancing the export competitive­ness of Malaysian companies,” it said in its response.

As part of the initiatives to overcome the volatile trading environment, Malaysia is also actively participating in free trade agreements (FTAs) either bilaterally or multilaterally to widen access for local export of products and services.

It made economic sense for the nation to continue to explore op­portunities with other countries and create an encouraging envi­ronment with the least number of trade barriers.

Noor Azian elaborated that despite the challenge of lower-cost producing countries, Malaysian products and services remained competitive and well accepted throughout the world.

She pointed out that the Asian market was receptive to Malay­sian products because they were comparable in terms of quality, reliabilty and design with those of western nations.

Malaysian companies were also reputed for providing efficient pre-sales and post-sales services.

“A major strategic advantage that Malaysia offers to other Asian countries is its extensive ties with markets in other parts of the globe.

“When you look at Malaysia, you must look at it in a global context, we trade with more than 200 countries and the value of trade is almost twice that of our gross domestic product.

“We are strategically located in the Asia Pacific basin with access to the world’s two fastest growing economies, China and India and have the people, language skills and network to conduct business in both countries.

“We also have the infrastruc­ture, human capital, economic stabilty, efficient delivery system and innovative ecosystem.

“If you want value for money, Malaysia is the answer,” she reasoned.

On new sources of growth identified to further boost export of services, Azian included ICT, oil and gas services, environment management, facility manage­ment, engineering design serv­ices, maintenance, repair and overhaul services, healthcare, education,franchise, financial, business and logistics services as potential areas.

“Outsourcing of services by international clients in various sub sectors will also provide op­portunities for Malaysian compa­nies to expand export markets,” she said.

In manufacturing, export growth will come from resource and non-resource sectors.

“Opportunities abound for increasing exports with greater­value added downstream products in sectors like processed food, herbal, biotech, palm oil, wood, rubber and petrochemical seg­ments.

“In the non-resource base sec­tor, E&E currently account for 39 per cent of total exports and will continue to shine,” she added.

Higher value upstream projects were also lucrative, as well as green and innovative products.

Other areas of growth included solar, light emitting diodes (LED), industrial electronics and electri­cal home appliances.

Noor Azian said Matrade was increasing its export promotion in the fast growing markets of China, India and West Asia and also strengthening its market presence in Central Asia, Africa and Latin America.

With the Asean region trans­forming into the next global engine of growth and with the nation’s close proximity to the two emerging powerhouses, China and India, the prospects continue to be bright and Malaysian busi­nesses can capitalise on the rapidly emerging opportunities in the region.