Malaysia’s Trade Surplus Continues To Grow

In 2019, Malaysia’s trade surplus continued to register double-digit growth for 3 consecutive years, widening by 11% to RM137.39 billion compared to RM123.78 billion in 2018. This was the largest trade surplus since 2009, representing Malaysia’s achievement of 22nd consecutive year of trade surplus.

In tandem with softer global demand amid trade tensions and unfavourable external economic conditions, total trade contracted by 2.5% to RM1.835 trillion. Exports decreased marginally by 1.7% to RM986.4 billion, from the preceding year while imports declined by 3.5% to RM849.01 billion.

Lower trade was recorded with Singapore, Hong Kong SAR, France, Thailand and Japan. Nevertheless, higher trade was registered with the United States (US), the United Arab Emirates (UAE), the Philippines, Cambodia, Mexico and the United Kingdom (UK).

Trade Performance with Major Markets

ASEAN – Remained the Leading Regional Trading Partner ASEAN, which accounted for 26.6% of Malaysia’s total trade in 2019, with a value of RM488.91 billion, recorded a decrease of 4.4% in 2019. Exports to ASEAN amounted to RM284.03 billion, constituting 28.8% of Malaysia’s total exports.

Exports to the region posted a marginal decrease of 1.1%, weighed down by lower exports of electrical and electronic (E&E) products and commodity-based products especially petroleum products, crude petroleum as well as rubber products. However, the decline was offset by higher exports of iron and steel products, machinery, equipment and parts, liquefied natural gas (LNG) as well as petroleum condensates and other petroleum oil which collectively increased by RM7.19 billion.

In 2019, Singapore, Thailand and Vietnam remained as Malaysia’s top 3 export destinations, accounting for 80% of Malaysia’s exports to ASEAN. Meanwhile, expansion in exports were seen to the Philippines which increased by 7.3%, Cambodia (↑61.1%), Vietnam (↑1.2%) and Brunei (↑3.4%). Exports to Cambodia registered strong performance in 2019, growing at the fastest rate since 2001.

Singapore continued to be the largest export market in ASEAN with a share of 48.2% of total exports to the region. Exports to Singapore decreased by 2.4% to RM136.89 billion, the first decline since 2016 due to lower exports of E&E products, petroleum products and crude petroleum.

Similarly, exports to Thailand contracted by 2.2% to RM55.81 billion, underpinned by lower exports of E&E products. However, exports of LNG, machinery, equipment and parts, iron and steel products as well as transport equipment registered increases.

Exports to Vietnam recorded a growth of 1.2% to reach RM34.73 billion, owing mainly to higher exports of E&E products and manufactures of metal. These two products comprised 36.3% of Malaysia’s exports to Vietnam.

Imports from ASEAN decreased by 8.8% to RM204.88 billion. Main imports were E&E products, petroleum products as well as chemicals and chemical products.

China – Malaysia’s Largest Export Destination in 2019

China remained as Malaysia’s largest trading partner for 11 consecutive years and accounted for 17.2% of Malaysia’s total trade in 2019. Trade with China valued at RM315.19 billion with a marginal increase of 0.2% from 2018.

In 2019, exports to China amounted to RM139.61 billion, constituting 14.2% of total exports. China surpassed Singapore as Malaysia’s largest export destination after
being the 2nd largest export destination since 2012.

Exports to China grew by 0.3% with higher exports of broad-based products particularly iron and steel products, LNG, paper and pulp products, palm oil and palm oil based agriculture products, manufactures of metal, optical and scientific equipment as well as processed food. Exports of palm oil and palm oil based agriculture products to China rebounded by 17.8%, after declining for 7 consecutive years.

China 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, aided by higher imports of petroleum products, transport equipment and manufactures of plastics.
EU – Manufactured Goods Recorded Highest Export Share of 91.3% in 19 Years Trade with the EU in 2019 amounted to RM174.65 billion or 9.5% share of Malaysia’s trade, a decrease of 4.8% compared to 2018.

Exports to the EU declined by 2.9% to RM95.78 billion due to lower exports of manufactures of metal, palm oil and palm oil based agriculture products, chemicals and chemical products as well as iron and steel products. However, improved export performance were seen in exports of machinery, equipment and parts, petroleum products, transport equipment, palm oil-based manufactured products and processed food which collectively increased by RM1.44 billion. Manufactured goods continued to dominate exports to the region with the share expanded to 91.3%, marking the highest share since 2001, in comparison with the agriculture and mining goods.

Among the top 10 EU markets which accounted for 90.5% of Malaysia’s total exports to the EU, 3 countries recorded expansion namely, Spain which continued to record double-digit growth for 3 consecutive years, increased by 15.3%, the UK (↑5.2%) and Hungary (↑1.9%).

Imports from the EU dropped by 7% to RM78.88 billion and the main imports were E&E products, machinery, equipment and parts as well as transport equipment.

US – Exports to the US Continued to Rise for 6 Consecutive Years

Trade with the US expanded by 5.6% to RM164.45 billion, constituting 9% of Malaysia’s total trade in 2019. Exports to the US continued to grow for 6 consecutive years, rising by 5.5% to RM95.78 billion, the highest value since 2007.

The expansion in exports was led mainly by manufactured goods which increased by 6.4% to RM93.07 billion and accounted for 97.2% of Malaysia’s total exports to the country. This was supported by higher exports of E&E products, wood products, manufactures of plastics and processed food. Exports of E&E products rebounded by 7.7% to reach a record high of RM50.91 billion since 2009. This product represented 53.2% of Malaysia’s exports to the US.

Imports from the US grew by 5.7% to RM68.67 billion and the main imports were E&E products, chemicals and chemical products as well as machinery, equipment and
parts.

Japan – the 4th Largest Trading Partner for 5 Successive Years

Japan remained as Malaysia’s 4th largest trading partner since 2015. This is despite a decline in trade with Japan by 4% to RM128.83 billion in 2019. Trade with Japan accounted for 7% of Malaysia’s total trade.

Exports contracted by 7.3% to RM65.25 billion, on account of lower exports of LNG, wood products and E&E products. These products contributed 58.9% to Malaysia’s total exports to Japan. Nevertheless, exports of transport equipment and processed food registered a remarkable growth of 39.9% to RM992 million and 20.1% to RM1.14 billion, respectively.

These products recorded their highest export value, thus far. Imports from Japan decreased by 0.4% to RM63.58 billion in 2019. Major imports were E&E products, machinery, equipment and parts as well as transport equipment.

FTA Markets

In 2019, trade with Free Trade Agreement (FTA) partners were lower by 3.4% to RM1.224 trillion and accounted for 66.7% of Malaysia’s total trade. Exports to FTA partners decreased by 3.2% to RM672.11 billion, representing 68.1% of Malaysia’s total exports. Major export products were E&E products, petroleum products as well as chemicals and chemical products which contributed 51.4% to Malaysia’s total exports to FTA markets.

Imports dipped by 3.7% to RM551.45 billion and the major imports were E&E products, petroleum products as well as chemicals and chemical products.

Emerging Export Markets

In 2019, significant growth in exports were recorded to the emerging markets such as Mexico, Bangladesh, Sri Lanka, Qatar, Kenya, Togo and Nigeria. Exports to Mexico increased by 8% to RM9.05 billion due to higher exports of chemicals and chemical products. Exports to Bangladesh increased by 7.6% to RM9.7 billion, Sri Lanka (↑23.2% to RM3.56 billion), Qatar (↑64.9% to RM1.63 billion), Kenya (↑58.6% to RM1.5 billion), Togo (↑75.1% to RM1.02 billion) and Nigeria (↑16.6% to RM2.01 billion) driven by higher exports of petroleum products.

Performance of Major Sectors Highest Share of Manufactured Goods Since 2003

In 2019, exports of manufactured goods with a value of RM834.17 billion, accounted
for a larger share of total exports at 84.6% compared to 83.4% in 2018.

E&E products held the biggest share of Malaysia’s export composition in 2019, at 37.8% or RM372.67 billion, despite a decrease of 2.3% or RM8.88 billion. The decrease was due to lower exports of storage units for computers, other units of computers as well as data processing equipment. However, increase in exports of E&E products over RM1 billion were registered for, among others:
 Apparatus for transmission or reception of voice, images & data, increased by
19.3% to RM13.03 billion;
 Parts for electronic integrated circuits, ↑14.5% to RM13.98 billion;
 Microphones, loudspeakers, headphones, earphones, amplifier sets, and parts,
↑20.2% to RM7.75 billion;
 Electric control panels and parts for switching apparatus, ↑21.8% to RM6.64
billion; and
 Photosensitive semiconductor devices, ↑6.5% to RM19.39 billion.

Declines in exports of E&E products were registered to China, Hong Kong, Singapore, Thailand and Germany. However, expansion in exports were seen to Taiwan, the US, the Netherlands and Vietnam.

Other manufactured products that recorded significant growth in exports for 2019 were:
 Iron and steel products, increased by 28.3% to RM19.89 billion;                                     Processed food, ↑12.1% to RM21.77 billion;
 Optical and scientific equipment, ↑5.5% to RM38.56 billion;
 Non-metallic mineral products, ↑24.5% to RM9.06 billion;
 Paper and pulp products, ↑29.3% to RM6.4 billion;
 Transport equipment, ↑6.1% to RM19.14 billion;
 Machinery, equipment and parts, ↑1.8% to RM41.39 billion; and
 Textiles, apparels and footwear; ↑4.2% to RM15.53 billion.

Mining Goods
Exports of mining goods declined by 10.6% to RM80.37 billion. This sector made up 8.1% share of total exports in 2019. Exports of crude petroleum decreased by 28.1% to RM26.35 billion due to lower Average Unit Value (AUV) and volume. However, petroleum condensates and other petroleum oil surged by 80.8%.

Agriculture Goods
Exports of agriculture goods contracted by 3.2% to RM64.86 billion and accounted for 6.6% of total exports in 2019. Exports of palm oil and palm oil-based agriculture products declined by 3.6% to RM43.1 billion, mainly due to lower exports of palm kernel oil on account of lower AUV.

Performance of Imports
Intermediate and Capital Goods Accounted for 66.8% of Imports In 2019, Malaysia’s total imports slipped by 3.5% to RM849.01 billion. The three main categories of imports by end use which accounted for 75.6% of total imports in 2019 were:
 Intermediate goods valued at RM467.18 billion or 55% of total imports,
increased by 1.1% from 2018, following higher imports of primary industrial
supplies particularly ores;                                                                                              Capital goods (RM100.32 billion or 11.8% of total imports), ↓10.8%, due mainly
to lower imports of transport equipment for industrial, particularly aircrafts; and
 Consumption goods (RM74.01 billion or 8.7% of total imports), ↑1.3%, buoyed
by higher imports of non-durables mainly for pharmaceutical products.

China remained the largest import source since 2011, followed by Singapore, the US, Japan and Taiwan. These countries represented 53.5% of total imports Q4 2019 – Trade Surplus Up by 0.6%. Imports from ASEAN amounted to RM204.88 billion or 24.1% share of Malaysia’s total imports while the EU accounted for 9.3% share, with a value of RM78.88 billion.

TRADE PERFORMANCE FOR FOURTH QUARTER 2019
Q4 2019 – Trade Surplus Up by 0.6%
Total trade for the fourth quarter (Q4) of 2019 contracted by 3.6% to RM479.22 billion compared with Q4 2018. Exports decreased by 3.3% to RM257.87 billion and imports
dropped by 4% to RM221.35 billion. This resulted in a trade surplus of RM36.52 billion, up marginally by 0.6%. Compared to the third quarter (Q3) 2019, trade, exports and imports increased by 4.1%, 4.4% and 3.7%, respectively.

TRADE PERFORMANCE FOR DECEMBER 2019
December Exports Up by 2.7% y-o-y, the Fastest Rate in 2019
Malaysia’s total trade in December 2019 recorded a growth of 1.9% to RM160.22 billion compared with a year ago. Significant increases in trade were recorded with China, the UAE, Indonesia and the US. Trade surplus was recorded at RM12.58 billion, higher by 14.7% compared to the same month in 2018. This was the 266th consecutive month of trade surplus since November 1997.

Exports rebounded in December with a growth of 2.7% to RM86.4 billion, after 4 consecutive months of decline. This was buoyed by higher exports of manufactured and agriculture goods particularly petroleum products, palm oil and palm oil based agriculture products, iron and steel products as well as transport equipment.

Manufactured goods accounted for 84.4% of total exports, mining goods (8.3%) and agriculture goods (6.6%). Major export products were:
 E&E products valued at RM31.05 billion, with a share of 35.9% of total exports,
decreased by 5.4% from December 2018;
 Petroleum products (RM7.01 billion, 8.1%, ↑36.5%);
 Chemicals and chemical products (RM4.97 billion, 5.8%, ↓7.3%);
 Palm oil and palm oil based agriculture products (RM3.97 billion, 4.6%,
↑34.2%); and
 Optical and scientific equipment (RM3.63 billion, 4.2%, ↑11.9%).

Imports in December 2019 grew by 0.9% to RM73.82 billion compared with December
2018. Imports increased on the back of higher uptake of intermediate and consumption goods. The three main categories of imports by end use were:
 Intermediate goods valued at RM41.85 billion or 56.7% of total imports,
increased by 6%;
 Capital goods (RM8.62 billion or 11.7% of total imports, ↓10.9%); and
 Consumption goods (RM6.82 billion or 9.2% of total imports, ↑3.2%).
On a month-on-month (m-o-m) basis, total trade and exports were higher by 3.3% and
6.8%, respectively while imports decreased by 0.6%.

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