The drop is due to slower demand from major trade partners amid trade wars and headwinds in the global economic situation that is challenging for Malaysia
by ASILA JALIL/ pic by TMR GRAPHIC
MALAYSIA’S total trade registered a decline of 2.5% to RM1.84 trillion last year due to softer global demand as a result of trade tensions and unfavourable external economic conditions.
Exports also saw a decline by 1.7% to RM986.4 billion and imports dipped 3.5% to RM849.01 billion.
Deputy International Trade and Industry Minister Dr Ong Kian Ming said the drop in total trade was due to slower demand from major trade partners as trade tensions have also made 2019 a challenging year for the economy.
“In lieu of a very challenging 2019, there were many headwinds in the global economic situation that was very demanding for Malaysia and also other open economies around the world.
“We have rising trade tensions not just between the US and China, but also between Japan and the Republic of Korea, two of our very important trading partners,” he said during the presentation of Malaysia’s 2019 trade performance in Kuala Lumpur yesterday.
Ong said the country’s overall trade figures were also affected by lower commodity prices such as crude palm oil.
“Of course these prices have somewhat recovered, but because there were large portions of the year whereby these prices were in the doldrums, this affected our overall figures,” he said.
Malaysia’s trade surplus, however, recorded a double-digit growth for three consecutive years, increasing by 11% to RM137.39 billion in 2019 versus RM123.78 billion in 2018.
Ong noted it is the largest trade surplus in the country since 2009 and it represents Malaysia’s achievement of 22nd consecutive year of trade surplus.
Trade with Asean countries registered a decrease of 4.4% last year to RM488.91 billion, accounting for 26.6% of the country’s total trade.
Exports to the region dipped 1.1% to RM284.03 billion, weighed down by lower exports of electrical and electronics (E&E) products and commodity-based products, especially petroleum, crude petroleum and rubber products.
The decline was, however, offset by higher exports of iron and steel products, machinery, equipment, liquefied natural gas (LNG), as well as petroleum condensates and other petroleum oil which collectively increased by RM7.19 billion.
China remained as the country’s largest trading partner for 11 consecutive years and accounted for 17.2% of Malaysia’s total trade last year.
China has also surpassed Singapore as Malaysia’s largest export destination with total exports amounting to RM139.61 billion, comprising 14.2% of total exports.
Exports to China grew by 0.3% with higher exports of broad-based products mainly iron and steel, LNG, paper and pulp, palm oil and palm oil-based agriculture products, manufacture of metal, optical and scientific equipment, as well as processed food.
China also remained as Malaysia’s largest import source, accounting for 20.7% share of total imports in 2019. Imports from China increased by 0.1% to RM175.59 billion, backed by higher imports of petroleum products, transport equipment and manufactures of plastics.
“There is no one market that represents more than 20% of our export and import, and it shows we have a relatively diversified trading relationship with our major trading partners,” he said in a press conference when asked if there is an over dependence on China and if any danger is tied to it.
Ong added that the country is also aiming for RM2 trillion in overall trade this year, which would amount to almost a 2% increase in the country’s export and import.
He acknowledged the figure also depends on the novel coronavirus outbreak.
“If you were to ask me before the coronavirus outbreak, a healthy target is for us to see if we can reach almost RM2 trillion in total trade.
“We were not able to achieve that last year, but perhaps with improving global situation and with the improvement in oil prices that is beneficial to oil exporting countries like Malaysia, RM2 trillion is a good target to aim for,” said Ong.
He added that the trade figures will rebound in the second quarter of 2020 (2Q20) following a drop at the beginning of the year due to the coronavirus.
“If there is more certainty in the next couple of weeks in terms of the spread of this virus, then we hope to be able to see a V-shaped rebound, not just by China, but also other countries that trade and do business with China.
“(The figures) may go down a little in February and March in terms of trade and output, but once things get back to normal, we will see a rebound in terms of numbers in 2Q of this year,” said Ong.
Meanwhile, Malaysia External Trade Development Corp (Matrade) and CIMB Group Holdings Bhd signed a memorandum of understanding (MoU) yesterday to enhance local exporters’ capabilities in economic, environmental and social areas via a series of training for small and medium enterprises (SMEs) called SMEs Sustainable Exporters Programme.
The two parties will join forces in providing up to 12 training sessions for SMEs registered with Matrade which will commence in March 2020. This programme also aims to benefit and train 400 SMEs.
The MoU was signed by Matrade CEO Datuk Wan Latiff Wan Musa and CIMB Group CEO Tengku Datuk Seri Zafrul Aziz.
“We are seeing a strong shift towards sustainability among global businesses and industry policymakers, especially in high-value markets such as China, the US and Europe.
“This is mainly driven by the world’s business community commitment to United Nations’ Sustainable Goals and the Paris Agreement.
Malaysian exporters need to respond to this by preparing themselves to be sustainability-ready so they can future-proof their footprint globally,” said Wan Latiff.
Tengku Zafrul said CIMB is pleased to be the first bank to work with Matrade on the programme as it supports the national objective of SMEs to contribute 50% of Malaysia’s GDP by 2030.