Malaysia: Trade outlook remains positive – UOB

Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group evaluate the Malaysian export sector.

Key Quotes

“Since US-China trade tensions and the ongoing COVID-19 pandemic started, this has prompted global investors to rethink their supply chain resilience and diversify trade. We noted that trade tensions and pandemic has benefited Malaysia’s exports to its top three trade partners (China, Singapore, and US) whereby export shipments to these countries have consistently risen across three specific periods (pre and during US-China trade tension, and COVID-19 pandemic).”

“Malaysia’s export gains to China were the most notable as exports to China rose by MYR60bn (or 9.3% compounded annual growth) between 2016-2020, while exports to the US grew MYR28.6bn (or 8.1%) and exports to Singapore expanded by MYR27.7bn (or 5.6%). Malaysia’s key export products that rose markedly include electrical & electronics (E&E), mineral fuels, machinery & transport equipment, optical & scientific, and rubber products.”

“Going forward, challenges remain to strengthen Malaysia’s investments and trade linkages particularly to attract high quality investments. Malaysia’s approved investments signal higher FDI interest (particularly from China and US). Global macro conditions will be the prime driver of actualised investments over the next 2-3 years. Policies should also be aligned to shifting global trends and ensure Malaysia remains a competitive investment destination. A holistic investment plan that engages investors to understand the issues hindering investments, improve investor services, and enhance the administration of investment incentives would help improve the investment climate.”