Emerging marts to help sustain Malaysia's exports

It was the Middle East, Japan and India markets which propped up the demand in the first half of the year when Malaysia was hurting from the US and EU crises


Kuala Lumpur: Developing and emerging markets will support Malaysia's export growth in the second half, thanks to the significant free trade agreements (FTAs) inked with regional neighbours, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

During the first half of the year when Malaysia was hurting from the weaker demand from the US and European Union for its products, it was the Middle East, Japan and India markets which propped up the demand.

For instance, exports to India jumped by 33.9 per cent, while exports to the Middle East and a disaster-hit Japan rose by 17.2 per cent and 17.5 per cent, respectively.

"Exports to China, which only saw a 6 per cent increase during the period, was the largest in absolute terms, with a RM2.42 billion."

Mustapa said exports expanded by 6.6 per cent in the first half of this year and has hinted that July numbers still look encouraging.

"Export numbers for the first half of the year have come in within target and it looks like the trend is continuing in the seventh month. What remains to be seen will be the last five months," he said in an interview with Business Times.

July's trade numbers will be released by his ministry on Thursday. The 10th Malaysia Plan targets a 10.6 per cent growth for exports.

"Achieving this target will depend greatly on the economic and political developments in the developed and emerging markets during the period of the Plan."

Total trade from January to June 2011 rose by 7.9 per cent to RM614.35 billion compared with the corresponding period last year, contributed by exports of RM336.60 billion and imports of RM277.74 billion.

Exports for the second half of 2011 are expected to grow but at a slower rate as compared with the corresponding period of 2010.

"Major occurrences and developments such as the March 11th Japanese earthquake, the slow economic recovery of the US, the reduction in GDP (gross domestic product) growth that has been forecast for China, and the EU (European Union) sovereign debt crisis will all have an impact on the growth of Malaysia's overall exports."

The global supply chain disruption due to the impact of the Japanese earthquake will affect Malaysia's export performance primarily for the manufacturing sector.

Being the largest sector contributing to Malaysia's overall exports, E&E products make up almost one-third of Malaysia's total exports.

Malaysia is also concerned with the fall in exports to the US, mostly due to lower consumer spending as unemployment in the US reached 9.2 per cent in June 2011.

Higher consumer spending in the fourth quarter of 2011 due to coming festive season generally has contributed to a slight rise in exports to the country.

This economic growth projection will translate into gains for Malaysia's trade. Large regional economies such as China, India and Indonesia will not only provide markets for Malaysia's exports but will also serve as a major source of technology, investment and business partnership.

For the second half of 2011, both developing and emerging markets will continue to contribute to Malaysia's export growth.

Mustapa expects exports to China to continue to grow in view of the strong economic growth of 8.7 per cent forecast for China and the increased utilisation of the FTA that had been signed.

The Comprehensive Economic Cooperation Agreement (CECA) between Malaysia and India, which came into effect on July 1 on the back of a strong 8 per cent growth for India, is expected to help Malaysia to register double-digit export growth in 2011.

Malaysia's exports to Asean are expected to post significant growth in tandem with the growth forecast for Singapore, Indonesia and Thailand.