KUALA LUMPUR (Jan 19): Malaysia’s trade exceeded RM2 trillion for the third consecutive year in 2023 at RM2.64 trillion, albeit down 7.3% compared with 2022, in tandem with slower global demand, lower commodity prices, geopolitical uncertainties, high inflation rate, downcycle in the semiconductor sector and high base effect last year.

Malaysian exports surpassed RM1 trillion also for the third year in a row and achieved 82.4% of the target set for 2025 under the Mid-Term Review of the Twelfth Malaysia Plan (12MP), according to the Ministry of Investment, Trade and Industry (Miti).

However, exports contracted by 8% year-on-year to RM1.43 trillion.

Despite the challenging global economic landscape, Malaysia maintained its trade surplus trend for 26 successive years since 1998, amounting to RM214.1 billion in 2023, Miti said in a statement on Friday.

Imports weakened by 6.4% to RM1.212 trillion compared with 2022, but posted another milestone by crossing the RM1 trillion mark for the second time.

“The nation’s trade performance also realised the forecast published in the Economic Outlook 2024 by the Ministry of Finance (MOF) with trade, exports and imports achieving 100.1%, 99.7% and 100.5% of the projection, respectively,” Miti said.

“The challenging global economic landscape in 2023 has adversely impacted international trade including Malaysia’s trade performance, which experienced a contraction. This was in line with other key trading partners, notably China, Taiwan, the Republic of Korea and Indonesia, which also posted negative trade growth,” it added.

Malaysia’s exports in 2023 was dominated by electrical and electronic (E&E) products, which accounted for 40.4% share of total exports, albeit a contraction of 3% to RM575.45 billion compared with the previous year.

Despite the downcycle in the global semiconductor sector, the country’s exports of semiconductor devices and integrated circuits (ICs) attained positive growth of 0.03% to RM387.45 billion.

In 2023, Malaysia’s major trading partners were Asean, China, the US, the European Union (EU) and Japan. Asean remained a key trading partner for Malaysia, taking up 27.3% of Malaysia’s total trade in 2023, amounting to RM720.66 billion.

The top three export destinations within Asean in 2023 were Singapore, Thailand and Vietnam, which accounted for 78.5% of Malaysia’s total exports to the region.

China continued to be Malaysia’s largest trading partner for 15 consecutive years since 2009, taking up a 17.1% share of Malaysia’s total trade. China was also Malaysia’s largest import source, a position it has retained since 2011, absorbing 21.3% share of total imports in 2023.

This is followed by Singapore, the US, Taiwan and Japan.

The year 2023 also saw the growth of Malaysia’s exports to emerging markets, notably Kenya, Brazil, Nigeria, Tanzania, Yemen, Morocco, Puerto Rico, Namibia and Kyrgyzstan.

December exports contract for tenth consecutive month
On a monthly basis, Malaysia’s exports declined for a tenth straight month in December, edging down 10% year-on-year to RM118.45 billion. This was notably worse than economists’ consensus estimate of a 5% contraction.

While imports recorded the highest monthly value in the month of December, rising by 2.9% to RM106.66 billion, it was less than the consensus expectation of a 4.2% expansion.

Total trade was also lower compared to December 2022, contracting 4.3% to RM225.11 billion.

Compared with November 2023, trade dipped by 2.6%, exports by 2.7%, imports by 2.6% and trade surplus by 3.6%.

Malaysia’s trade to pick up in 2024
Moving forward, Miti said the government will continue to enhance the promotion of international trade to reinforce business resilience and sustain economic growth momentum.

The ministry sees continuous demand for E&E products in 2024, to be supported by an upcycle trend in the sector, aligned with the projection made by World Semiconductor Trade Statistics (WSTS) that global semiconductor sales will rebound by 13.1% in 2024.

Furthermore, the free trade agreements (FTAs), notably the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), are expected to add to the positive outlook of Malaysia’s external trade, as emphasised in the New Industrial Master Plan 2030 (NIMP 2030), which also focuses on enhancing utilisation of FTAs among Malaysian exporters.

“Nevertheless, global trade may still be impacted by key factors such as global uncertainties arising from prolonged geopolitical tensions, exporters’ ability and readiness in meeting environmental, social and governance (ESG) market demands, disruption in global supply chains and uncertainties in commodity prices,” Miti said.

“Additionally, 2024 will also be a year of significant political changes, with major elections scheduled to take place in our key trading partners, notably the US, the Republic of Korea, Indonesia and India, which could have a significant impact on trade and international relations,” it added.

According to the Economic Outlook 2024 published by the MOF, Malaysia’s trade is expected to grow by 5%, while exports and imports are estimated to increase by 5.1% and 4.9% in 2024.

By Emir Zainul. 19 January 2024.