Malaysia’s export trade has been growing steadily at a CAGR of 1.7% from 2017-2020. Over the years, Malaysia’s total exports recorded an average of RM 940 billion yearly. In 2018, the export value exceeded RM 1 trillion, a 7.3% hike compared to 2017. Based on our analysis, the export value in 2021 is expected to outperform the historical years and is estimated to achieve near to RM 1.2 trillion. As of June 2021, Malaysia’s exports value had already recorded RM 585 billion.
Manufacturing products are the largest contributor to Malaysia’s total exports accounted for more than 85% of Malaysia’s exports value. In 2018 and 2019, Mining was the second largest sector that contributed to the exports value but was taken over by the Agriculture sector in 2020. Agriculture became the 2nd largest sector contributing to exports (7.3%) in 2020, followed by Mining (5.9%).
Figure 1 below describes the performance of Malaysia’s export value by economic sector.
Figure 1
In 2020, the main contributor to the manufacturing exports was Electrical & Electronic (E&E) products (RM 386.3 Bil), followed by Petroleum products (RM 61.9 Bil), Chemical & Chemical products (RM 50.7 Bil) and Rubber products (RM 44.3 Bil). These manufacturing products had accounted for 64% of total manufacturing exports in 2020. The Top 3 Exporting countries of these manufacturing products are China, Singapore and the United States. It is to note that Malaysia export trade is performed by either Direct Foreign Trade or done with and via Singapore (17% of total exports are done with and via Singapore).
Agricultural exports accounted for 7.3% of total Malaysia exports in 2020. One of the main observations for agricultural exports to overtake mining exports in 2020 is the hike in Crude Palm Oil (CPO) prices in 2020. Palm oil is the main export contributor in this sector, accounted for 64% of total Agriculture exports or RM 45.6 Bil in 2020 and mainly exported to India, China and European Union (EU). CPO prices had been fluctuating aggressively in the last two years. In 2019, CPO prices recorded a range of RM 2,100/MT (Jan 2019)– RM 3,000/MT (Dec 2019) and further hike up to RM 3,600/MT (Dec 2020). As of Aug 2021, CPO prices have reached RM 4,200/MT and doubled in 2019.
Mining exports accounted for 5.9% of total Malaysia exports in 2020, recorded a drop of 23% from RM 81.5 billion in 2019 to RM 58.4 billion in 2020. It is observed that liquefied natural gas (LNG) exports fell by 30% in 2020, while crude petroleum exports reduced by 28% as well. The performance was in line with the International Gas Union prediction where coronavirus pandemic will cut global natural gas and LNG demand by about 4% in 2020 from record highs in 2019. The demand is expected to recover to pre-COVID-19 levels as the world economic regains momentum in the next few years.
How are Malaysia’s Exports being affected by COVID-19?
The outbreak of the COVID-19 pandemic has had a significant impact on the world, including Malaysia. Many countries have implemented restrictions on the movement of people to slow the spread of coronavirus. After Malaysia detected its first case of COVID-19 on 25th January 2020 and the situation deteriorated, the Malaysian government-enforced Movement Control Order (MCO) on 18th March 2020.
Figure 2 below shows Malaysia’s export values comparing four quarters of pre-pandemic and during pandemic years.
Figure 2
2019 was known as a “normal year” when COVID-19 did not impact the world yet and everything is running as usual. In Q2 2020, national Movement Control Order (MCO) measures were imposed, including restrictions on movement, assembly and international travel and mandated the closure of business, industry, government and educational institutions. All trades in Malaysia have been affected since the start of MCO.
It is observed that in Q2 2020, Malaysia export trade declined by 11.9% from Q1 2020, possibly due to the world lockdown measures. However, the export trade in Malaysia did not deteriorate further and was soon recovered in Q3 2020 with a hike of 24.6% from Q2 2020, recorded at RM 262 million.
Malaysia’s Top 10 Major Exports and Future Trends
Malaysia’s Top 10 export products accounted for near to 80% of total export values, of which 50% of the exports value are contributed by manufacturing products: E&E products (39.3%), Petroleum products (6.3%) and Chemical & Chemical products (5.2%).
Figure 3 below shows the breakdown of Top 10 major export products in 2020:
Figure 3
The E&E sector continues to be the major contributor to Malaysia’s export earnings for the past years, of which in 2020, it accounted for RM 386 Billion worth of exports or 39% of total exports.
Figure 4
Malaysia sees tremendous potential in the E&E industry
- Industrial Revolution 4.0 and unprecedented technology convergence have created benefits for E&E industries. Advances in technologies such as nanotech, biotech and information sciences have driven the creation of new products, particularly to advanced manufacturing of medical devices and imaging technology, ICT and green technology.
- Malaysia has strong back-end capabilities for IC packaging and testing. Semiconductors are a key enabling technology for many applications, including the Internet of Things (IoT), automotive, medical, industrial, transportation, aerospace, and energy applications. 9 out of 12 of the world’s largest semiconductor companies currently operate in Malaysia and their key focus segments are automotive electronics, sensors, actuators, and communications chips.
- The global market for solid-state lighting is estimated to grow from USD62.8 billion in 2018 to USD127.5 billion by 2023, with a CAGR of 15.2% during that time. Malaysia is strong in automotive lighting through the presence of Lumileds and OSRAM and 3 out of the 9 largest LED companies have operations in Malaysia. The main growth areas are industrial lighting, automotive lighting, commercial lighting and architectural lighting.
- Malaysia has a complete solar energy industry value chain, starting from manufacturing materials and PV modules right up to system integration. Malaysia has successfully developed an integrated ecosystem of solar-based products, with global players such as First Solar, Longi, SunPower, Hanwha Q Cells, Jinko, and JA Solar. More focus is planned to increase consumer adoption of renewable energy to create demand for solar service providers.
Conclusion
Malaysia’ top products are E&E and are still in strong demand. Despite the pandemic, it has consistently contributed an average of 37.9% of total exports in the past few years. It is worth mentioning that Malaysia ranks 7th in Global E&E exporters (World Trade Altas). Now, the evolution of Malaysia’s electronic industry has reached sensors, IoT, cloud computing, 3D integration, electric vehicle (EV), etc. The future plan is to master autonomous vehicles, robotic servants, telekinesis, virtual reality, artificial intelligence and smart machines to improve our advantages in response to the strong global market demand for E&E products. It is believed that if Malaysia continues to strengthen and expand its capabilities in the manufacturing industry, especially in E&E sectors, Malaysia’s exports can be elevated to another level, which can contribute to nation income.
References
- Reuters Staff. (Aug 6, 2020). Pandemic to cut global gas and LNG demand by about 4% in 2020 -industry group. Retrieved from https://www.reuters.com/article/natgas-lng-coronavirus-idUSL1N2F8114
- (Dec, 2020). Malaysia’s E&E Industry. Retrieved from https://www.mida.gov.my/wp-content/uploads/2020/12/E_E-High-Res-FInal-v1-1.pdf
