By Dato’ Seri Reezal Merican Naina Merican
In tandem with the release by the Department of Statistics Malaysia (DOSM) of the Malaysia Monthly External Trade Statistics on 20 July 2026, I would like to share MATRADE’s analysis of Malaysia’s trade performance for the first half (1H) of 2026, including the key factors underpinning the nation’s trade resilience.
Malaysia’s 1H 2026 trade performance unfolded against a backdrop of real geopolitical tensions, from the re-escalation of conflict in West Asia to a global trading environment that has grown less predictable by the month. Against that backdrop, our total trade grew by 22.4% year-on-year to a record RM1.796 trillion. Exports rose by 27.5% to RM971.59 billion, the fastest pace since 2021, while our trade surplus expanded 159.8% to RM147.15 billion, matching 94% of what we achieved throughout the whole of 2025.
Equally significant, Malaysia recorded trade surpluses with 158 trading partners, with 92 posting wider surpluses than a year ago. We also achieved net trade surpluses across 14 major product categories, underscoring the resilience and diversity of our export base across markets and industries.
But numbers, however historic, only tell us what happened. They do not, on their own, explain why it happened or what it means for how Malaysia should think about its trade future.
More than just the numbers, MATRADE’s analysis provides a deeper understanding of the forces driving Malaysia’s trade performance.
Resilience Tested in Real Time
It is undeniable that Malaysia’s exports to West Asia declined by 18.3% in the first six months of the year amid ongoing geopolitical volatility in the region, with steep declines recorded in exports to the United Arab Emirates, Saudi Arabia and Iran.
Nevertheless, stronger exports to smaller and relatively stable markets helped cushion the decline, with exports to Bahrain surging by 35.8% (RM176.6 million), Jordan by 9.8% (RM424.9 million) and Cyprus by 84% (RM39.6 million).
Backed by MATRADE’s network of 47 overseas trade offices, we continue to unlock new demand, forge stronger commercial partnerships and expand market access for Malaysian exporters across non-traditional markets and emerging high-growth, high-value (HGHV) sectors.
MATRADE has long championed market diversification, proactively broadening Malaysia’s export footprint to mitigate concentration risks and strengthen resilience against global disruptions.
- Traditional markets are strengthening: Exports to the United States surged by 54.8% year-on-year to RM173.37 billion, while exports to ASEAN grew by 18.6% to RM259.60 billion. Exports also increased to the European Union (+28.4%; RM75.85 billion), China (+23.3%; RM107.28 billion), Taiwan (+66.5%; RM65.44 billion) and Hong Kong SAR (+48.6%; RM67.68 billion).
- Non-traditional markets are surging: Exports to Africa, Central Asia, Latin America and Oceania grew by a combined 13.3% to RM72.15 billion. Markets recording double- and triple-digit export growth included Sudan (+222.3%; RM219.7 million), the Democratic Republic of the Congo (+116.4%; RM137.7 million), Angola (+125.4%; RM531 million), Venezuela (+77.3%; RM30.3 million), Brazil (+30%; RM2.31 billion), Turkmenistan (+39.7%; RM48.7 million) and New Zealand (+29%; RM3.47 billion).
- FTA exports climbed 21.5% to RM616.55 billion: Nearly two-thirds (63.5%) of Malaysia’s total exports went to Free Trade Agreement (FTA) partners, with 19 out of 24 partners recording growth. The strongest performers included the Republic of Korea (+31.5%; RM32.19 billion), Japan (+9.1%; RM41.97 billion), Australia (+9%; RM5.66 billion), Mexico (+49.6%; RM20.03 billion) and the United Kingdom (+36%; RM5.66 billion).
- RCEP and CPTPP: Exports to RCEP markets rose by 19% to RM470.41 billion, while exports to CPTPP markets expanded by 17% to RM272.61 billion. This reflects the importance of our participation in these mega-regional agreements, which reinforce Malaysia’s trade resilience.
A Structural Foundation: Malaysian Hands Behind Malaysian Trade, Beyond Foreign Investment
Given the deep integration of Malaysia’s export sectors into global value chains, it is often assumed that our high-value exports are driven primarily by multinational investment. However, our half-year analysis paints a more complete picture.
It shows that Malaysian-owned companies are also making significant contributions across most of our strategic export sectors.
The first-half trade performance was fuelled by two global tailwinds: the AI boom, which drove unprecedented demand for electrical and electronics (E&E) products, and sustained global energy demand. But the real story is that Malaysian-owned companies were not passive beneficiaries of these trends. They were active participants, capturing the value created by them.
- Electrical and Electronics (E&E): The E&E sector remains Malaysia’s crown jewel. Exports surged by 42.5% year-on-year to RM467.95 billion, accounting for 48.2% of total exports. Within the sector, semiconductors contributed 73.7% of E&E exports, reflecting strong demand from key markets including the United States, Singapore, the European Union and Japan.
- Commodity export growth: Our energy exports continue to demonstrate Malaysia’s strategic importance in global energy supply chains. Led by PETRONAS, which holds full ownership of the sector’s trade value, petroleum product exports expanded by 27.4%, while liquefied natural gas (LNG) exports increased by 12.4%. This performance was supported not only by elevated global energy prices but also by a 21.4% increase in LNG export volumes, signalling sustained international demand.
- Agriculture and edible oil refining: Malaysia’s strength in the palm oil value chain continues to translate into higher-value exports. Malaysian-owned companies command approximately 70% ownership across agriculture and edible oil refining, and more than 63% ownership in downstream palm-based oleochemicals, industrial fatty acids and biodiesel. This competitive advantage is reflected in export performance, with palm oil-based manufactured products growing by 7.1% to RM20.83 billion during the first half of 2026, driven primarily by stronger oleochemical exports.
- Chemicals and chemical products: Malaysian-owned companies account for more than 72% of the industry, spanning specialty chemicals, polymers, fertilisers, cleaning preparations, polyethylene resins and personal care products. This highlights the growing depth and sophistication of our domestic industrial capabilities.
Taken together, across nine of Malaysia’s top 10 export sectors, these findings reveal that Malaysian-owned companies hold more than 40% ownership, demonstrating that our export success is increasingly driven by competitive, globally connected local enterprises.
Trade That Builds the Domestic Economy
None of these activities exist in isolation from the rest of our economy.
Our export momentum has directly supported GDP growth of 5.6% in the first half of the year. This is evident on our factory floors, where the Industrial Production Index rose by 8.4% in May, driven by export-oriented industries and electronics manufacturing.
This is further reinforced by Malaysia’s rise to 15th place in the IMD World Competitiveness Ranking, up from 23rd in 2025. It is our strongest performance in a decade and recognises that our trade achievements are underpinned by genuine structural strength rather than a temporary cyclical upswing.
MATRADE’s Continuing Commitment
As encouraging as this half-year has been, MATRADE does not view it as a moment for complacency.
The situation in West Asia remains fluid, and global supply chains will continue to require careful navigation in the months ahead. This is precisely why MATRADE’s role does not end with the publication of a set of statistics.
Through our network of 47 overseas trade offices, we continue to monitor market conditions in real time, feeding intelligence back to Malaysian exporters as conditions evolve.
Through our Trade Resilience Task Force, we bring together the insights needed to help our exporters, from our largest industrial players to our smallest SMEs, anticipate disruption rather than merely react to it.
Through our continued engagement with the business community, we remain committed to ensuring that every Malaysian company, regardless of size or sector, has access to the market intelligence, commercial diplomacy and strategic guidance needed to convert global demand into sustained, domestically rooted growth.
This half-year’s numbers show one thing clearly: Malaysian exports have made a significant contribution to our national export success.
MATRADE’s task, as it has always been, is to reinforce and strengthen our trade resilience and export competitiveness in global markets.
Before I conclude, I would like to extend my heartfelt appreciation to all Matraders, both at our headquarters and across our 47 overseas trade offices, whose unwavering dedication, professionalism and tireless efforts have been instrumental in sustaining Malaysia’s strong trade performance.
Let us continue to build on this momentum with the same spirit of excellence and commitment as we work together to strengthen Malaysia’s position as a leading trading nation.
Thank you.
The author is the Chairman of MATRADE
Data source: Department of Statistics Malaysia (DOSM), Royal Malaysian Customs Department and MATRADE’s internal analysis.
