43% Of Global Corporates Currently Do, Or Plan To, Source, Manufacture In Malaysia Within Next 5 To 10 Years

The Malaysia External Trade Development Corporation (MATRADE) recently concluded the 18th edition of the Malaysia International Halal Showcase (MIHAS 2022). Hosting exhibitors from over 30 countries and trade visitors both physically and virtually, MIHAS, organised by MATRADE, draws on its synergies with industry heavyweights to offer key lessons and tips to encourage more Malaysian enterprises to start exporting.

MATRADE’s CEO, Datuk Mohd Mustafa Abdul Aziz, reflected on the success of its iconic programme. “MIHAS this year was indeed bigger and better.  Thanks to the hybrid approach. My sincere appreciation goes to the MIHAS 2022 sponsors and partners for playing a major role in the showcase’s record-breaking success,” Datuk Mohd Mustafa said.

Sharing his take on the future Halal businesses and economy, Datuk Mohd Mustafa said that considerations for the Halal economy are reflected in the recent Budget 2023, includes allocation to promote Halal products in the global market via the Malaysia Services and Halal programme, and development initiatives to raise Halal certification compliance and innovation to reinforce the potential of the industry.

“Leveraging on our 46 overseas offices, MATRADE has primed the International Sourcing Programme (INSP) during MIHAS 2022 to connect Malaysian exporters and international buyers where high-value trade deals were closed.  The physical event was conducted on 6 September 2022, whereas the virtual INSP was extended to 15 November 2022 due to an overwhelming response. MATRADE is ready to help more businesses realise the vast opportunities available in international markets and make a move to capitalise on them,” Datuk Mohd Mustafa said of the global Halal economy which is estimated to reach RM22.34 trillion (US$4.96 trillion) by 2030.

Seasoned exporters and enablers; CIMB Islamic Bank Berhad (CIMB Islamic), Fraser & Neave Holdings Berhad (F&N), Standard Chartered Saadiq Malaysia (SC Saadiq), and Alibaba.com, also weighed-in to offer Malaysian enterprises crucial tips for successful export endeavours following MIHAS 2022.

Export readiness from a financial standpoint

CIMB Islamic Bank Berhad Chief Executive Officer, Ahmad Shahriman Mohd Shariff

advises businesses to:

  1. Be aware of the charges / costs, i.e., hidden cost, fees on banking transactions, International Commercial Terms (Incoterms) related to your trade, logistical arrangements and the tax implications on the buyer when importing your product. All these factors impact the commercialisation of your product in the buyer’s country, so it’s best to have a pulse check on these items, and
  2. Be clear of the underlying currency you are trading in and what is the forecast for the next three to six months, i.e., whether the currency is expected to appreciate or depreciate, hedging is recommended if your exports are sizeable.

Standard Chartered Saadiq Malaysia Chief Executive Officer, Mohd Suhaimi Abdul Hamid explained the fundamentals to export readiness which include:

  1. Reviewing financial strength and resources – in addition to local market knowledge, businesses should review their current financial capabilities to ensure they are export- ready and should plan its resources in advance to meet the demand by increasing production or expanding its workforce to accommodate sales growth,
  2. Financial and working capital planning while taking into consideration payment terms (for example credit terms, advance payment or sight terms) that would best benefit the business, and
  3. Price modelling to factor in the foreign exchange (FX) and logistics and any other relevant costs.

Understand the market and work with an export partner

CIMB Islamic offers its top three takeaways for exporters to succeed, starting with:

  1. Identifying a market that has a need or values your product / services vis-à-vis a market that is large from a population standpoint or located close to you,
  2. Take the time and effort to understand the regulatory landscape, what additional certification or approvals your product requires so that it is well accepted in the export market, and
  3. Engage your bank to gain market intel and network support to do your first trade. Banks are not only financiers but your partners who would like to see you succeed, hence spend time to discuss your plans with your relationship manager and request for guidance in matters that you are unclear of.

To improve cross-border expansion strategies, Standard Chartered Saadiq Malaysia advised that businesses need to be aware that global trade will be reshaped by five key trends:

  1. Fair and sustainable trade: Companies are increasingly focused on implementing fair and sustainable trade practices,
  2. Inclusive participation: Globalisation needs to become more equitable to provide smaller businesses the chance to participate in global supply chains,
  3. Digitalisation: The increased adoption of digital trade platforms will make trade faster, more transparent and secure,
  4. Risk diversification: Companies will accelerate diversification of their supply chain locations and partners to protect against future disruptions, and
  5. Rebalancing: Global trade will continue to shift to Asia, Africa and the Middle East.

Drawing from personal experience, export giant, F&N encouraged businesses to work with relevant government agencies such as MATRADE and participate in exhibitions such MIHAS, Gulf Food and French trade fair, SIAL, for a greater level of exposure and promotion for respective brands. It also encouraged SMEs to set a higher vision and target in order to propel themselves further in the export market.

Global trade growth and Malaysia

According to Standard Chartered’s ‘Future of Trade 2030: Trends and markets to watch’ report, Malaysia will be a key driver of global trade growth, with its exports projected to grow at an average annual rate of more than 8 per cent to cross USD498 billion by 2030.

“43 per cent of global corporates currently do or currently plan to source or manufacture in Malaysia within the next five to 10 years. This is evidence that Malaysia will be a major driver of global trade growth over the next decade,” Standard Chartered Saadiq Malaysia CEO, Mohd Suhaimi, shared.

Speaking about growth areas, leading B2B platform for global trade, Alibaba.com, highlights that online buying behaviour continues to place e-commerce as part of a core strategy for businesses’ growth. “The pandemic has resulted in a massive shift to digital in the B2B landscape. More B2B buyers are now willing to go online, with 70% of decision makers in fact preferring remote or digital self-service channels not only to identify suppliers, but also to place and complete bulk orders, according to a McKinsey research on decision makers’ behaviour globally across industries. SMEs in Malaysia should capitalise on this trend and leverage B2B e-commerce platforms to expand beyond their local market,” said Alibaba.com APAC Head of Marketing and Business Development, Nianci Phang.

“There are assistance programmes from financing, capacity and capability building to market information presently ready to help businesses to propel internationally. Furthermore, MIHAS has grown better and stronger over the years since its inception in 2004. This year (2022), we raised the bar again having successfully generated a total of RM2.36 billion in sales and attracted 1,258 exhibitors from 33 countries. Thus, we look forward to meeting familiar and new visitors as well as more organisations to take part in MIHAS 2023 that will be held from 12 to 15 September 2023 at MITEC, Kuala Lumpur,” Datuk Mohd Mustafa concluded.

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