Trading Partners of Malaysia

Table of Context

1.0 Introduction…………………………………….….3-4

2.0 Discussion……………………………………….....5-8

2.1 Malaysia-China…………………………........5-6

2.2 Malaysia-India.……………………................7-8

3.0 Analysis………………………………………….....9-10

4.0 Conclusion………………………………………....11

5.0 Recommendation………………………………......11

6.0 Appendix…………………………………………...12-13

7.0 References………………………………………….14-15

8.0 Image Source……………………………………….16

1.0 Introduction

Malaysia’s economy has grown on average at 7% p.a. over the past 25 years. Total trade for 2015 grew 1.2% to RM1.466 trillion, with exports expanding 1.9% to a high of RM779.95 billion and imports, up a marginal 0.4% to RM686.65 billion. With better exports, the country’s trade surplus registered a double-digit growth

of 14.3%to RM94.29 billion compared with 2014’s RM82.48 billion. (MITI Weekly Bulletin, 2016)  Its economy evolved from exporting raw materials such as tin and rubber to electrical equipment, electronic components, palm oil, and natural gas.  Growth has slowed to 5.7% post the Asian Financial crisis and the Global Financial Crisis.

Economic prosperity is not well distributed; while extreme poverty is less than 1% there is income imbalance between population groups and regions however the real income of the bottom 40% of households expanded an average 6.3% p.a. from 2009 to 2012 vis-a-vis 5.2% national average.

In 2010 Malaysia adopted the New Economic Model which envisions that by 2020 the nation will have high incomes with sustainable social development incorporating unemployment benefits and reskilling programs. Recent Governmental reforms include expanding its revenue base by introducing a Goods and Service Tax, removing subsidies on fuel and cooking oil while maintaining real household income with increases in minimum wage and public sector salaries. As the economy shifts to high value services and manufacturing challenges to be faced include boosting labor productivity and external risks related to the currency volatility and capital outflows.   (World Bank, 2016)

Custom tariffs are defined by Malaysia’s bi-lateral and trading bloc commitments; in 2014 the maximum tariff is 90% while the average tariff across all products is 3.37. The trade weighted average tariff is 1.2% Goods imported is 63.6% of GDP whereas goods exported is 71.0%.  Companies operating from Free Trade Zones have minimum Customs formalities in importing raw materials and equipment and exports are Duty exempt. (Ahluwalia & Kaur, 2012)

International trade is facing huge challenges due to recent events including China’s Economic rebalancing, Trump’s election in the U.S, Brexit and the volatility of oil prices.