Speeches

SPEECH BY

YB DATO’ SRI MUSTAPA MOHAMED

MINISTER OF INTERNATIONAL TRADE AND INDUSTRY

MEDIA CONFERENCE ON MALAYSIA’S TRADE PERFORMANCE 2011

MATRADE, Kuala Lumpur

9 FEBRUARY 2012

 Yang Berusaha Dr. Wong Lai Sum

Ketua Eksekutif MATRADE

Your Excellencies Ambassadors and High Commissioners

Tan Sri-Tan Sri, Dato’-Dato’

Wakil-wakil media

Tuan-tuan dan puan-puan yang dihormati sekalian

Selamat tengahhari dan Salam 1Malaysia

1.      Saya amat berterima kasih kepada semua yang hadir ke majlis Sidang Media ini. Program pada hari ini amatlah penting kerana pencapaian perdagangan Malaysia sepanjang tahun 2011 akan diumumkan sebentar lagi.

Ladies and gentlemen,

2.      Last year was indeed a very challenging year for global trade. Many economies were just picking up growth momentum from the economic doldrums following the financial meltdown and economic crises of 2008 / 2009 when new hurdles and challenges surfaced.

3.      A flashback on major happenings in the global economic scenario in 2011 that impacted trade:-

 -      Firstly, the lethargic growth of the US economy coupled with high unemployment for most part of the year had depressed consumer demand and slowed industrial production in the world’s largest economy, a major export destination for many countries around the world.

 -      Secondly, unfolding of the sovereign debt crises in the Eurozone reducing manufacturing activities and consumerism.

 -      Thirdly, supply chain disruptions following the tsunami / earthquake in Japan and floods in Thailand, particularly in the Automotive and E&E sectors where many affected companies had to reschedule or cancel orders due to production delays.

 -      The robust economic growth in China and increase in manufacturing activities in India provided the buffer that cushioned the impact of slowdown in global trade for many.

 -      Lastly, the political changes and unrest following the Arab Spring in West Asia that impacted surrounding countries but fortunately did not adversely impact businesses within the GCC.

4.      Despite the global economic situation in 2011, I am glad to announce that Malaysia’s merchandise trade for the year expanded by 8.7 per cent, with exports expanding also at 8.7 per cent and imports at 8.6 per cent. The trade surplus rose 9.4 per cent to RM120 billion. This was the 14^th consecutive year of trade surplus recorded by the country since 1998. This is comparable to other developed countries in the region, where Singapore and ROK had registered similar records.

5.      Total trade of RM1.269 trillion in 2011 was the highest value ever recorded by Malaysia. Exports was valued at RM694.55 billion, while imports, RM574.23 billion. According to the World Competitiveness Yearbook 2011 Report by the Institute for Management Development (IMD), Malaysia was ranked among the Top 5 countries in terms of international trade, after Singapore and Hong Kong. It has surpassed most of the developed countries such as the USA, Switzerland, Australia, Canada and the United Kingdom.

6.      Manufactured goods was again the mainstay, accounting for 67.7 per cent share or RM470.3 billion of total exports. Mining and Agriculture goods contributed 18.1 per cent and 13.6 per cent share respectively, boosted by both higher prices and demand.

7.      Rising demand for production inputs and consumer goods from markets in Asia boosted its contribution to Malaysia’s total exports to 71.3 per cent. Exports to Asia increased by 11.2 per cent to RM495.19 billion in 2011. Within the span of five years, the share of exports to Asia had grown by 8 per cent from 63 per cent in 2007. This is in tandem with Asia becoming the new economic growth centre of the world.

8.      Meanwhile, EU accounted for 10.4 per cent share of exports; North America mainly the USA, 8.7 per cent and Oceania, primarily Australia 4.4 per cent.

9.      Among the top ten export destinations for 2011, all markets recorded increases except the USA and Hong Kong, which declined by 5.5 per cent and 3.6 per cent, respectively. The weak performance of these two markets was mainly due to the lower exports of E&E products.

10.    In the case of the USA, export performance was mixed. While E&E exports fell by RM5.16 billion, exports of palm oil rose by 33.8 per cent or RM1.16 billion and rubber products, 4.3 per cent. Even within the E&E sector, the performance was varied, with exports of ADP machines and parts falling by RM3.05 billion but semiconductors expanding by 15.9 per cent or RM1.14 billion. It is important to note exports of E&E make up 52.8 per cent of Malaysia’s total exports to the USA. 

11.    Ladies and gentlemen, I am pleased to inform that China for the first time has emerged as Malaysia’s largest export market in 2011. Exports to China grew 13.9 per cent to RM91.25 billion. Close to 70 per cent of exports to China were manufactured goods fuelled by industrial needs of the country. The main exports were chemicals & chemical products; rubber products; E&E products; manufactures of metal; processed food; and petroleum products.

12.    Exports to Singapore grew only 3.4 per cent due to suppressed global demand for E&E products while exports to Japan rose 19.8 per cent boosted by higher demand for energy and building materials. LNG accounted for 43 per cent of exports to Japan. The new eco point programme for construction of new houses and renovation for existing houses stimulated demand for plywood and veneer. Exports of wood products grew 24.5 per cent while chemicals & chemical products rose by 34.5 per cent.

13.    Despite the concern of the supply chain disruptions particularly in the E&E and automotive sectors due to the floods in Bangkok that occurred in the last quarter of the year, Malaysia’s exports to Thailand increased 4.6 per cent or RM1.58 billion to RM35.72 billion.

14.    Improved preferential access coupled with strong economic growth and high manufacturing activities boosted Malaysia’s exports to India by 34.6 per cent. The main drivers of export expansion were E&E products, which increased by 37.1 per cent and accounted for 23.4 per cent share of total exports to India. Products that increased were semiconductor devices; automatic data processing machines; telecommunication equipment for distributing electricity; electrical household equipment; as well as electrical machinery & apparatus. Other exports that recorded increases were crude petroleum; palm oil; and chemicals & chemical products.

15.    Notwithstanding the uncertainties in the Eurozone, Malaysia’s exports to all major markets in the EU, excluding the Netherlands and the UK, increased last year. Exports grew 4.7 per cent or RM3.26 billion to RM71.95 billion. Palm oil was the largest export to the EU, with increase of 31 per cent or RM1.63 billion to RM6.88 billion. E&E products contributed to the rise in exports to Hungary, Czech Republic, France and Germany, while to Belgium, it was manufactures of metal mainly aluminium alloy.

16.    ASEAN accounted for 25 per cent share of the country’s exports, with a 5.8 per cent growth recorded in 2011 to RM171.54 billion. Strong intercompany and industry linkages within ASEAN as a result of more companies taking advantage of the free trade area continued to support export growth.

17.    Accounting for 4 per cent share of exports, West Asia provided a steady growth market for exports which rose 15.1 per cent to RM28.06 billion. The UAE remained the largest market, followed by Saudi Arabia and Iran. In 2011, exports of palm oil rose 47.3 per cent; jewellery, 6 per cent; chemicals & chemical products, 13.7 per cent; and machinery, appliances and parts, 14.5 per cent.

18.    I wish to draw your attention that major growth markets in 2011 were Indonesia, Nigeria, Bangladesh, Saudi Arabia, Belgium and Germany where exports expanded by more than RM1 billion for each country.

Ladies and gentlemen,

19.    Almost all subsectors of manufactured goods recorded increase in exports, with the exception for E&E; wood products; and transport equipment. The composition of manufactured exports for 2011 showed that E&E continued to remain Malaysia’s largest export contributor with 34.1 per cent share of total exports and 50.3 per cent of manufactured exports.

20.    The poor performance of E&E sector in 2011 was a result of the decrease in exports of mainly ADP machines following relocation of manufacturers to lower cost producing countries. However, other sub-sectors performed better and buoyed up exports of E&E. These were semiconductors devices, which rose 9.3 per cent or RM9.12 billion; telecommunication equipment 10.1 per cent or RM1.77 billion; electrical machinery & apparatus; equipment for distributing electricity; and electro diagnostic apparatus, medical and radiological apparatus.

21.    Exports of chemicals & chemical products grew 16 per cent to RM47.19 billion, with China, Japan, Thailand and Indonesia being major markets. Exports to China increased 17.9 per cent mainly to cater for the demand created by the automotive, construction, agriculture, plastic and detergent industries, while the 14.4 per cent increase to Indonesia was to cater to the pharmaceuticals and personal care industries.

22.    Other sectors that registered double digit growth in exports were machinery, appliances and parts; textiles & clothing; non-metallic mineral products; rubber products; and processed food.

23.    New products that registered increase in exports were medical devices; aircraft parts & equipment; and energy saving devices.

24.    To support increase in production activities and domestic demand, imports rose 8.6 per cent in 2011. Manufactured goods comprised 78 per cent of these imports, with E&E accounting for 31 per cent; chemicals & chemical products, 8.9 per cent; and machinery, appliances and parts, 8.2 per cent. China was the largest import source, followed by Singapore, Japan, the USA and Indonesia.

Ladies and gentlemen,

25.    The Government continues to undertake efforts to improve market access and reduce trade barriers for Malaysian products. Exports under preferential arrangements in 2011 increased by 23.3 per cent from RM79 billion to RM97.4 billion.

26.    Currently, Malaysia has signed five bilateral FTAs, namely with Japan, Pakistan, New Zealand, India and Chile. Malaysia has also signed regional FTAs through ASEAN with China, Republic of Korea, Japan, India, Australia and New Zealand.

27.    In the pipeline, Malaysia is poised to enter into agreements with strategic partners and negotiations are underway for bilateral FTAs with Australia, Turkey and EU and regional with Trans-Pacific Partnership countries and ASEAN with India and Japan for Services and Investment.

28.    Efforts to increase the contribution of services to exports continue to be given focus as more services are identified for promotion overseas in potential markets. For the first 9 months of 2011, exports of services increased by 1.7 per cent to RM79.03 billion from RM77.7 billion in the same period in 2010.

29.    While travel and transportation services declined by 7.2 per cent and 1.1 per cent, respectively, exports of Other Services such as construction, ICT, insurance, financial and other business services increased by 20.3 per cent to RM27.09 billion for the first 9 months of 2011.

30.    Based on inputs provided by industry and professional bodies, major markets for Malaysia’s services in 2011 were in Asia, Australia, parts of Europe, Latin America and Africa.

Ladies and gentlemen,

31.    Moving forward into 2012, the outlook for global economy and trade is not expected to be strong. According to the International Monetary Fund (IMF), global economic growth this year is projected at 3.3 per cent compared with 3.8 per cent in 2011, 5.2 per cent in 2010 and -0.7 per cent in 2009. World trade is expected to moderate to 3.8 per cent from 6.9 per cent in 2011, 12.7 per cent in 2010 and -10.7 per cent in 2009.

32.    Emerging and Developing Economies are expected to grow by 5.4 per cent compared to the Advanced Economies by 1.2 per cent. East and South Asia will have the fastest growth. China, India and ASEAN will continue to be the major drivers of this growth.

33.    Malaysia’s merchandise exports for 2012 is projected to grow between 5 to 6 per cent. Services exports is projected to expand by 4.9 per cent this year. For this to materialise, we have to undertake aggressive promotion programmes overseas in both new and emerging markets while targeting new and high value exports in niche and affluent markets. New investments in 240 projects in export oriented industries commencing production and export operations in 2012 will further contribute to this.

34.    Recognising that SMEs are a critical force in driving exports, the Government will assist them to sustain their performance in 2012. As we all know, the cost of overseas promotion is growing. To facilitate SMEs in export ventures, the Market Development Grant that provides reimbursable matching grants to qualified SMEs has been recently reviewed for 2012 to provide for a higher ceiling for each company from RM30,000 to RM100,000.

35.    I urge all sectors of the exporting community to continue working together towards achieving these targets for 2012. On that note I wish all Malaysian exporters success in their business ventures for the year.