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Malaysia's Trade Performance in 2006
(Thai Press Reports Via Thomson Dialog NewsEdge) Section: Business News - Malaysia's Trade Reached A Historical Landmark 1. Year 2006 is a major milestone in the history of Malaysia's external trade. The total trade has breached the RM1 trillion mark , with exports continuing on an uptrend to RM588.949 billion , and imports at RM480.493 billion . With this, the value of total trade for 2006 was RM1.069 trillion , 10.5 per cent higher than the preceding year .
Drivers Of Export Growth 2. Exports in 2006 expanded by 10.3 per cent , as a result of diversification in both products and markets . In addition, the growth was also attributed to : (i) the strong external demand from Malaysia 's major markets particularly ASEAN, the United States of America (USA) and China ; (ii) a significant increase of RM38.615 billion in manufactured exports, especially for electrical and electronic (E&E) products, manufactures of metal, chemicals and chemical products, iron and steel products, as well as , rubber products; (iii) higher prices for commodities such as crude petroleum, palm oil and crude rubber; and sustained competitiveness in the export sector in 2006, despite the higher petroleum prices during the year.
Broad-Based Growth 3. Growth in the key export sectors were as follows: - manufactured exports , grew by 9.3 per cent to RM451.747 billion in 2006. This sector accounted for 76.7 per cent share of Malaysia 's total exports; - agricultural exports increased by 12.7 per cent to RM46.411 billion , accounting for 7.9 per cent share; and - minerals and mineral fuels , with growth of 12.9 per cent to RM79.284 billion , taking 13.5 per cent share.
4. In 2006 , the majority of the manufacturing sub-sectors recorded double digit export growth . Some sub-sectors even exceeded 20 per cent growth , and these were: (i) manufactures of metal , which grew by 30.4 per cent to RM14.15 billion; (ii) iron and steel products , growing by 33.6 per cent to RM9.359 billion; (iii) rubber products increasing by, 33.6 per cent to RM9.333 billion; and (iv) transport equipment and parts , expanding by, 24.2 per cent to RM8.691 billion.
5. Strong global market demand , driven mainly by consumer electronics , was the major factor , that enabled Malaysia to sustain the export growth in E&E products . Electronic consumer products, such as digital cameras, televisions, MP3 players, multifunctional personal computer, hand phones and electronics devices for automotive industry, were among the demand drivers . As a result , exports of E&E products , which contributed to 62.2 per cent of manufactured exports, grew by 6.2 per cent , to RM281.006 billion .
6. Malaysia continues to export high value-added products , particularly from the E&E sector and Malaysian companies have become increasingly integrated into the global supply chain .
7. In 2006, the USA , Singapore , Hong Kong , China and Japan collectively accounted for 66.9 per cent of Malaysia 's total E&E exports and 60.8 per cent of imports of such products.
8. 2006 also saw greater contribution in terms of value, by chemicals and chemical products , to Malaysia 's total exports. Chemical exports were the second largest category of manufactured exports valued at RM29.091 billion . Growth in chemical exports was broad-based , and the major exports were : organic chemicals; plastics in primary form; essential oils, perfumery and toiletries; and chemical elements for electronics. 9. Essential oils, perfumery and toiletries registered an increase in exports of 18.4 per cent, to reach RM2.087 billion, with major markets being Singapore , China , Japan , the Philippines , the United Arab Emirates (UAE) and Thailand 10. Machinery, appliances and parts were the third largest manufactured export category , accounting for 3.4 cent of Malaysia 's total exports. Major export products were: pumps, compressors, fans and parts; air conditioning machines; and specialised machinery for mechanical handling equipment, printing and bookbinding machinery. 11. These products found in-roads into new markets , in particular Qatar, where exports increased by 71.6 per cent ; Viet Nam , increase of 54.2 per cent; Pakistan, 38.8 per cent increase; India, expansion of, 37.7 per cent; and Taiwan, increase of 34 per cent.
12. The markets for furniture continues to be diversified , with the strongest growth in 2006 registered in Australia, the UAE, India, China, Germany and Kuwait. Malaysia 's furniture exports grew by 7.8 per cent to RM8.08 billion in 2006. Wooden furniture was the largest export item, accounting for 79.1 per cent of Malaysia 's furniture exports, increasing by 9.7 per cent to RM6.39 billion . Other major furniture exports were metal furniture, seats and parts of furniture.
13. China accounted for almost half of the total increase in exports of Malaysia 's rubber products , in 2006. Exports of rubber products surged by 33.6 per cent last year, to RM9.333 billion . The six-fold increase in exports of compounded rubber , and 19.6 per cent expansion in exports of rubber gloves , were the main contributors to this growth. The increase in exports of compounded rubber was attributed to higher demand , from overseas manufacturers of rubber products.
14. In 2006 , the Organisation of the Islamic Conference (OIC) countries accounted for 22.7 per cent of Malaysia's exports of processed foods ; beverages ; essential oils , cosmetics , perfumery and toiletries ; and pharmaceuticals . Exports of these products to OIC countries in 2006, amounted to RM2.664 billion , indicating the significance of the Halal market to Malaysia and the strong in-roads such products are making in West Asia .
15. Among agricultural exports , products such as cut flowers , ornamental plants , and ornamental fresh water fish , showed encouraging growth , ranging between 7.5 per cent and 16.5 per cent . Japan and Singapore remained the two major export destinations , for cut flowers.
Growing Importance of Regional Markets 16. Asia accounted for 61 per cent of Malaysia 's total exports in 2006. North East Asia , comprising Japan , China , Republic of Korea (ROK), Taiwan and Hong Kong , was the largest regional market, accounting for 27.4 per cent of Malaysia 's total exports. Exports to this region , registered an increase of 8.2 per cent in 2006, to RM161.442 billion from RM149.21 billion in the preceding year.
17. Over the last five years , Malaysia 's exports to North East Asia , continued to show an upward trend , with an average annual growth of 10.7 per cent . The gap between Malaysia's exports to Japan , which is currently Malaysia 's largest market in North East Asia, and exports to China , continues to narrow , due to the double digit growth of exports, to China in recent years .
18. ASEAN , the second largest regional export destination , recorded a growth of 10.3 per cent to RM153.544 billion . Among ASEAN countries, Viet Nam and Indonesia , were Malaysia 's fastest growing markets . Exports to Viet Nam expanded by 46.9 per cent to RM6.452 billion, while exports to Indonesia , grew by 18.6 per cent, to RM14.915 billion.
19. The sharp increase in exports of crude petroleum led to a 20.9 per cent increase in exports to South Asia , to reach RM25.683 billion in 2006. Other exports to South Asia that registered increases were E&E products, chemicals and chemical products, and petroleum products. Exports of palm oil to South Asia remained relatively unchanged at RM3.444 billion.
20. The active participation of Malaysian companies in promotional activities in West Asia , contributed to a 20.8 per cent growth in exports to the region. While the UAE remained the major destination for Malaysia 's exports to the region, with a 45.2 per cent share , exports also expanded significantly to Turkey , Iran , Yemen , Qatar and Kuwait . Malaysia 's top five exports to West Asia were E&E products, jewellery, palm oil, wood products, as well as machinery, appliances and parts.
21. Exports to the European Union (EU) grew by 19.7 per cent to RM74.939 billion , compared with RM62.629 billion a year ago. The strong growth of exports to the EU resulted from a number of factors , namely: the economic recovery in the EU where real GDP growth was estimated to expand by 2.8 per cent in 2006, compared with 1.8 per cent, in 2005; higher exports of E&E products, optical and scientific equipment, rubber products, wood products, palm oil and crude rubber; and significant growth in exports to non-traditional EU markets , such as Finland, Denmark , Sweden , Czech Republic , Poland and Greece .
Shifts In Ranking of Individual Markets 22. In terms of individual markets , there has been significant shifts in the ranking of export destinations, with Thailand moving to the fifth position from the sixth; the Netherlands , from ninth to seventh ; and India , from tenth to ninth . Exports to Malaysia 's top ten markets in 2006 accounted for 73.8 per cent of total exports, from 75.3 per cent a year ago, indicating further diversification of the country's export markets.
23. The USA , Singapore , Japan and China , were Malaysia 's top four export destinations . Exports to the USA , which is Malaysia 's largest single-country market , expanded by 5.3 per cent , to RM110.586 billion in 2006 .
24. Digital automatic data processing machines and parts, semiconductor devices, integrated circuits, as well as telecommunication equipment and parts, formed the largest proportion of Malaysia 's exports to the USA . E&E exports , comprising 77.7 per cent of Malaysia 's total exports to the USA increased by RM3.961 billion, or 4.8 per cent, to RM85.929 billion in 2006.
25. An important feature in Malaysia 's exports to the USA , was the 21.1 per cent increase in exports of palm oil to a historically high level of RM1.669 billion . This was achieved despite the negative campaign against palm oil.
26. Exports to China expanded by 21.1 per cent to RM42.661 billion . This increase was driven by the demand for E&E products , palm oil and chemicals . China 's growing needs in the ICT sector, and enhanced linkages between multinational companies in both countries, had increased Malaysia 's E&E exports in 2006, which grew by 6.2 per cent .
27. The lifting of quotas on palm oil exports to China , led to an increase in Malaysia 's exports of this commodity by 30.8 per cent to RM5.818 billion from RM4.448 billion in 2005. The vibrant manufacturing sector in China , resulted in higher exports of chemicals , such as chemical compounds for electronics, and for the manufacture of packaging materials .
28. Malaysia 's strong export performance enabled it to sustain its position as one of the top imports source , for countries such as the USA , Singapore , Taiwan , Australia and Thailand .
Industry-Driven Imports 29. The composition of Malaysia 's imports reflects a robust manufacturing sector in 2006. Intermediate and capital goods made up 83.4 per cent of Malaysia 's total imports , which increased by 10.7 per cent to RM480.493 billion . Imports of intermediate goods accounted for 69.8 per cent share of total imports, at RM335.245 billion. This was followed by capital goods with 13.6 per cent share at RM65.333 billion, and consumption goods , accounting for 5.8 per cent at RM27.89 billion.
30. Japan was the largest source of imports for Malaysia , accounting for a 13.2 per cent share , followed by the USA , China , Singapore and Thailand . Several countries have moved up in rank as Malaysia 's major sources of imports. China moved up from fourth to third, Thailand from sixth to fifth, and Hong Kong from eleventh to tenth.
31. The most significant increases in imports were registered for: China , which increased by 16.7 per cent to RM58.2 billion; the USA , 7.7 per cent increase to RM60.21 billion; Singapore , 10.4 per cent expansion to RM56.126 billion; Thailand , 14.7 per cent growth to RM26.26 billion; and the ROK, 19.9 per cent increase to RM25.91 billion. Accessing World Markets 32. Malaysia 's continued efforts in 2006 to pursue greater trade liberalisation through regional and bilateral trade arrangements , had resulted in the expansion of market opportunities for the trading community.
33. There has been a marked increase in the utilisation of the Common Effective Preferential Tariff (CEPT) Scheme by Malaysian companies, to penetrate the ASEAN market. Malaysia's exports using the Certificate of Origin under the CEPT Scheme increased by 28.5 per cent to RM14.165 billion , from RM11.023 billion in 2005. Major export destinations under the Scheme were: Thailand , accounting for 32.9 per cent share; Viet Nam , 21.3 per cent; Singapore , 18.4 per cent; the Philippines , 14.1 per cent; and Indonesia , 13.1 per cent. 34. The Japan-Malaysia Economic Partnership Agreement (JMEPA) that came into force in July 2006 , has already shown some positive effects on Malaysia 's export performance . Exports utilising the preferential Certificate of Origin accorded under this Agreement for the second half of 2006 was valued at RM3.065 billion . The main products exported under preferential access , included palm oil , articles of ethylene , and veneered panels .
35. Other products that have gained better access into Japan , were tropical fruits , such as pineapples and watermelons. Although still small in value , exports of tropical fruits to Japan increased by four fold , during the six-month period, after the implementation of the Agreement .
36. The negotiations on the Malaysia-Pakistan FTA is currently ongoing . During the negotiations , the two countries have agreed to implement an Early Harvest Programme (EHP) effective from 1 January 2006 , covering products with tariffs of 10 per cent and below . Malaysia offered a total of 114 products covering yarn, clothing and textile products. Pakistan offered a total 125 products , covering electrical appliances and machinery, plastic products, chemical products, rubber and timber products.
37. Malaysia 's export community has already started capitalising on this facility . Malaysia 's exports to Pakistan under this programme in 2006 , was RM44.87 million .
38. Under the ASEAN-China FTA , full tariff liberalisation , will be achieved by 2010 for ASEAN-6 , and by 2015 by the CLMV countries , subject to certain flexibilities . The EHP and Trade in Goods (TIG) Agreement, under this FTA have been implemented beginning 1 January 2004 , and 1 July 2005 , respectively .
39. Malaysia 's exports using the preferential Certificate of Origin , under this FTA, in 2006 was valued at RM3.827 billion , which was almost two folds the RM1.297 billion value in 2005 . Malaysia 's major exports that benefited from this preferential access , were chemical products , palm oil and rubber products .
Outlook For 2007 40. The World Bank forecasted that the growth of the world economy , and global trade , will moderate in 2007 . The forecast is for the world economy to grow at 3.2 per cent in 2007 , compared with 3.9 per cent in 2006. The Bank also forecasted that the growth of world trade will moderate to 7.5 per cent in 2007, compared with 9.7 per cent in 2006.
41. Despite the forecasted moderation in the expansion of the world economy and world trade , Malaysia is expected to continue to sustain the growth of its exports . One factor that will support the growth , is the forecasted stronger expansion of the South East Asian economies , from 5.2 per cent in 2006 to 5.6 per cent in 2007. ASEAN accounted for 26.1 per cent of Malaysia 's total exports in 2006 .
42. Another factor that works in Malaysia 's favour , is the continued demand projected for 2007 , for high technology consumer electronic products , such as hand phones, personal computers with multifunctional features, digital televisions and MP3s, which will enhance export opportunities , for Malaysia 's E&E products. According to the Semiconductor Industry Association , global semiconductor sales will continue to expand , at a rate of 10 per cent in 2007 , to reach US$273.8 billion.
43. In 2007 , Malaysia will further extend the scope of engagement, either bilaterally or regionally , under ASEAN , with major trading partners , such as China , the ROK, India , Australia , New Zealand and the USA .
Promoting Exports 44. As part of the effort to assist exporters , MATRADE has lined up a wide range of activities in 2007 .
45. The promotional programmes , covering 66 countries , as well as 16 product and services sectors , will be executed through : 14 trade and investment missions; 64 international trade fairs; 8 marketing missions; and several buying missions to Malaysia . 46. MATRADE will be organising two international trade fairs in Malaysia , namely , the Malaysia International Halal Showcase (MIHAS) 2007 , and Intrade Malaysia 2007 . With the objective of strengthening Malaysia 's image , as a strategic and reliable global source of goods and services , these events are open to participation by both foreign and local companies . MIHAS 2007 will also strengthen Malaysia 's position, as an international centre for production and trade in Halal products and services .
47. To enhance the capabilities of Malaysian exporters, MATRADE will organise 45 workshops and seminars covering various aspects of doing business internationally. To ensure a wider outreach , these workshops and seminars will also be held outside the Klang Valley , and including Sabah and Sarawak .
48. To ensure that Malaysian exporters are provided with comprehensive and up-to-date information, on the global market, MATRADE will intensify its information and intelligence gathering , as well as, information dissemination activities.
49. It is hoped that companies will continue to use various support services provided by the Government, and strategise to enhance their efficiency and competitiveness, to successfully access into, and compete in, the regional and global markets.
Notes: It should be noted that, conceptually, the export and import figures in the external trade statistics are different from that in the goods account of the balance of payments. The compilation of international merchandise trade statistics is usually based on customs records, which essentially reflect the physical movement of goods across borders. It also follows the international guidelines on concepts and definitions, which do not fully conform to the principles of the System of National Accounts (SNA) and the Balance of Payments Compilation. Goods are defined in the SNA as physical objects for which a demand exists, over which ownership rights can be established and whose ownership can be transferred from one institutional unit to another by engaging in transactions on markets.
This is a preliminary release, full details would be published in the MONTHLY EXTERNAL TRADE STATISTICS report by the Department of Statistics, Malaysia , to be disseminated at 1201 hours Monday 12 th February 2007 . The December 2006 data are not fully validated. The validated data would be updated in the publication of the External Trade Statistics. This report can be accessed through the homepages of the Department of Statistics, Malaysia ( http://www.statistics.gov.my ) under Latest Releases: Malaysian External Trade Statistics, Ministry of International Trade and Industry ( http://www.miti.gov.my ) and Malaysia External Trade Development Corporation ( http://www.matrade.gov.my ).
mance in December 2006 Total Trade In December 2006, Malaysia 's exports were valued at RM52.51 billion and imports at RM40.66 billion. With this, Malaysia 's total trade was RM93.17 billion. Malaysia recorded a trade surplus of RM11.84 billion compared with RM9.17 billion in November 2006.
Exports Exports increased by 2.1 per cent to RM52.51 billion, compared with RM51.42 billion in November 2006. Compared with December 2005, exports increased by 6.2 per cent, from RM49.47 billion. Source - Government of Malaysia
Copyright 2007 Thai Press Reports
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