Image credit: ING Think
TIME passes by so fast that it almost feels like a year has passed in a blink of an eye and we are just days away from the new year.
Looking back, the year 2022 was truly an outstanding milestone for Malaysia's trade. As Malaysia's trade promotion organisation, Malaysia External Trade Development Corporation (Matrade) is proud of the country's achievement in international trade, and with a comprehensive understanding of how Malaysia's trade has transformed through time, we will continue progressing the nation's economic resiliency.
Our nation, a trading nation
Malaysia has always been historically associated with international trade. Our potential as a trading nation has been evident since the era of the Malaccan Sultanate.
After Malaya gained its independence in 1957, our international trade continued to flourish through exports, thanks to our enormous resources in the commodity sector, particularly tin and rubber.
It was in the 1960s that the commodity sector was acknowledged as the foundation of the economy, enabling Malaysia to progress economically and better realise the goals of the National Economic Policy, which had been put in place in the early 1970s.
We cultivated the capabilities of our local micro, small and medium enterprises (MSMEs) through the transfer of knowledge and technology as we welcomed more foreign direct investments since the early 1970s, particularly in the electrical and electronic (E&E) sector, strengthening the already burgeoning entrepreneurial culture among Malaysians.
Undoubtedly, this spurred a major impetus for our reputation as an economic tiger of Asean at the time being one of the founding members of the regional grouping.
Throughout the 1990s, Malaysia's export grew steadily and became one of the major global exporters of EE components as well as other manufactured goods such as value-added products of rubber, timber, palm oil and chemicals.
Creating homegrown export champions
In the current context, considering various political and geopolitical situations including market conditions and of course, the pandemic, Malaysia is among the world's top-25 trading nations and ranked in the top five for Asean countries.
As other developing countries become more competitive and Malaysia is no longer seen as a
manufacturing hub with inexpensive labour, Malaysia's trade ranking has undoubtedly declined compared to 20 years ago.
Despite this, we have made great strides in our capabilities, making history in 2021 when Malaysia's trade reached the RM2 trillion mark for the first time, barely a year after the Covid-19 epidemic.
This year, according to the latest figure published by the Department of Statistics of Malaysia, for the period of January to November 2022, Malaysia's trade expanded by close to 30 per cent to RM2.613 trillion.
Within this period, exports increased by 27.2 per cent to reach RM1.42 trillion while imports rose by 33.3 per cent to RM1.193 trillion. Trade surplus edged up by 2.6% to RM227.89 billion.
However, this is not a reason to rest on our laurels. We must continue our concerted efforts to ensure Malaysian MSMEs remain a part of the global supply chain and be prepared for any adverse changes in global economic conditions.
Matrade is placing a strong emphasis on high-value industries, developing access into new and emerging markets and creating partnerships that are in line with its key pillars - digitalisation, adopting values of sustainability and to be guided by the National Trade Blueprint (NTBp).
We should be proud that we have strengths in high-value industries like E&E, machinery and equipment, aerospace, halal, medical devices, pharmaceuticals, healthcare, construction, chemicals, and energy, to name a few, for a country with only 33 million people.
As I mentioned earlier, foreign investments in Malaysia played a significant role in the growth of Malaysia's trade over the last few decades.
This is still very much the case, but it is also important to highlight that our own MSMEs contributed 37.4 per cent of Malaysia's GDP and 11.7 per cent to overall Malaysia's exports for 2021.
Nonetheless, we still need to pursue the goal of a 25 per cent contribution by MSMEs to the nation's export by 2025 as set under the 12th Malaysia Plan and the National Entrepreneurship
Policy.
Along with the advancement of technology, cross-border e-Commerce opportunities are also growing. Hence, it is vital for Malaysian MSMEs to adopt digitalisation to be more competitive globally. In 2021, gross value added of eCommerce amounted to RM201.1 billion, an increase of RM37.2 billion in 2021 with a growth of 22.7%.
In the same vein, we must also recognise our Mid-Tier Companies (MTCs) significant efforts in contributing 30 per cent of the GDP and 22 per cent of our Malaysian workforce.
Despite making up only 1.0 per cent of businesses in Malaysia, MTCs play an important role in developing a competitive domestic supply chain, where 75 per cent or more than 7,000 SMEs are involved in the MTCs export supply chain.
Future-proofing Malaysia's trade
The requirement to compete in international markets has changed significantly over the past few years. Buyers no longer base their decisions on price solely.
Policymakers, numerous stakeholders, and consumers now have different expectations and are more concerned about the significance of adopting sustainability measures. Our exporters must invest in developing sustainable export strategies that promote and adopt ESG principles in their production process and global supply chains to meet changing market requirements.
Therefore, it is imperative that MSMEs development programmes are catered to help MSMEs become globally competitive. Business governance and operations including community care must be centred on socioeconomic trends.
Our MSMEs need the relevant certifications, standards, labelling and global endorsement in order to compete on a global scale and in high-value markets. To do this, we must keep up our effective facilitation while pragmatically modifying some programmes to fully realised our global potential in the current economic climate.
Source: https://www.nst.com.my/business/2022/12/865466/making-malaysia-great-trade