| Before Malaysia was
a formally recognized nation, it was known throughout
the world as a regional trading hub. Even prior to
the era when colonial traders made arduous journeys
to gain rubber and tin, Arabs, Persians, Indians,
Chinese, and Europeans exchanged porcelain, textiles,
and spices. Today, Malaysia is more often associated
with electronic goods, but as one of the world’s
top 20 trading nations, the same spirit remains.
After the regional grouping of 10 ASEAN countries
(comprising Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand, and
Vietnam), the United States is Malaysia’s most
important trading partner. The U.S. is Malaysia’s
single largest export market, as well as its third
largest import source.
In 2002, Malaysia was the United States’ 16th
largest trading market.
Malaysia exported $18.8 billion worth of goods and
services to the United States last year, which comprised
approximately 20 percent of Malaysia’s total
exports. In turn, Malaysia imported $3.45 billion
worth of U.S. goods in 2002. Malaysian exports to
the U.S. grew by 5 percent over the previous year,
while imports from the U.S have grown by 10 percent
since 2001.
Overall, Malaysia is the 18th biggest exporter in
the world and has recorded more than 71 consecutive
months of trade surplus since the Asian financial
crisis. “The Malaysian government fully recognizes
that the export sector is a major contributor to economic
growth,” says Merlyn Kasimir, Chief Executive
Officer of the Malaysian External Trade Development
Corporation (Matrade).
Matrade’s role is to facilitate the expansion
of trade.
The United States is also the largest contributor
of foreign direct investment in the Malaysian economy.
Total U.S. investment is estimated to be around $20
billion.
Many American companies, particularly in the manufacturing
sector, use Malaysia as a base from which to export
their goods and services to the 500 million customers
in the ASEAN market, as well as the rest of the world.
Malaysia’s unique combination of pro-active trade
policies, transparent procedures, and cutting-edge
physical, financial, and telecommunications infrastructure,
all of which facilitate the flow of goods and services
around the globe is an often-cited reason.
Malaysia consistently seeks to upgrade the quality
of the products it produces, the facilities it offers,
and the skill sets of its laborers.
To promote international trade and investment, Malaysia
has set up 14 Free Industrial Zones (FIZs), which
are areas specifically designated for export-oriented
industries.
The country’s seven international ports and eight
domestic ports handle 95 percent of the country’s
trade. Port Klang, with two gateways Northport and
Westport, is a regional shipping hub. It links trade
among 120 countries and receives calls from more than
150 shipping lines. In 2000, Northport and Westport
handled 3.2 million TEUs, which ranks it among the
top 15 container ports in the world. Both Northport
and Westport also have designated free commercial
zones.
The country’s state-of-the-art Kuala Lumpur International
Airport has a current capacity of one million tons
of cargo per year. Its capacity is expected to grow
to three million tons by 2020. Import and export procedures
are fully electronic, which significantly minimizes
delivery time. Cargo that used to take between three
and five days to clear can now be expedited within
a day. The electronic system is supported by local
banks and allows for electronic transactions of customs
duty payments.
Nonetheless, Malaysia hopes to “intensify the
usage of [information and communications technology]
ICT and e-commerce in conducting international trade,”
says Dato’ Seri Rafidah Aziz, Minister of International
Trade and Industry.
“Malaysia’s recent participation in the
Container Security Initiative will [also] help speed
the flow of goods to the U.S.,” says Kasimir.
Although Malaysia has not yet pursued discussions
on the possibility of a bilateral free trade agreement
(FTA) with the United States, senior government officials
have confirmed that the topic is under discussion.
“Malaysia has initiated a bilateral Closer Economic
Partnership (CEP), which will incorporate an FTA with
Japan. Malaysia would also look into the possibility
of having FTAs with other potential trading partners
to further enhance trade and investment,” says
Rafidah.
Malaysia is currently working to strengthen and expand
regional and international trade through various frameworks
such as AFTA (ASEAN Free Trade Area) and APEC (Asia
Pacific Economic Cooperation). Malaysia has consistently
supported World Trade Organization (WTO) initiatives
designed to strengthen the global trading system.
“In expanding international trade, Malaysia is
giving equal emphasis to multilateral, regional, and
bilateral mechanisms to enhance trade,” says
Rafidah.
Malaysia has already signed bilateral trade agreements
with more than 61 countries. These agreements grant
most favored nation (MFN) treatment for customs duties
and import and export formalities.
Malaysia is also targeting new product and service
areas for promotion including ICTs, engineering and
multimedia, biotechnology and life sciences, traditional
medicines and herbs, health care products, advanced
electronics (such as photonics and nanotechnology),
aerospace technology, and consultancy services.
The majority of Malaysia’s exports to the United
States are electronic products and components, at
77.9 percent. Textiles and apparels follow at 3.9
percent. Wood products (3.3) optical and scientific
equipment (2.6) and rubber products (2.3) are also
important exports to the U.S.
Malaysia is one of the United States’ key suppliers
of rubber gloves, providing 45 percent of the market
share. Nearly 7 percent of electrical machinery in
the U.S. comes from Malaysia, and Malaysian electronic
and electrical products have a 6.2 percent market
share in the U.S.
“The expansion of Malaysia’s exports will
be achieved through the strengthening of Malaysia’s
presence in existing markets and diversifying into
new and emerging markets,” says Rafidah.
A new target market for Matrade will be facilitating
food exports to the United States. Because of Americans’
“growing familiarity with Asian food, and significant
Muslim population which seeks Halal food,” Kasimir
sees great potential growth in this market.
Using an integrated service network, bilateral trade
in the food industry is expected to increase. When
complete, the network will facilitate interaction
between Malaysian and American firms on matters relating
to inventories, service consignments, product promotion
and marketing, and transactions. The network is believed
to be necessary because present transactions between
U.S. and Malaysian companies sometimes fall apart
as a result of insufficient communication.
The Malaysian food products in highest demand in the
U.S. are biscuits, frozen shrimp, and canned drinks
and food.
Matrade organizes more than 60 international trade
fairs each year. “Our trade fair last October
(2002) in New York received a good response from the
local business community,” says Kasimir.
From June 23-27, Malaysian companies will be featured
in the National Plastics Expo, and from August 10-12
at the National Hardware Show, both in Chicago. In
the future, Matrade also plans to target cities outside
the U.S. mega-centers.
For more information on Matrade
activities, visit www.matrade.gov.my
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