The Southeast Asia Country Series: The Federation of Malaysia

In order to promote Pakistan’s trade with its non-traditional trading partners, the Pakistan Business Council (PBC), since 2015, has been doing a Country Profile Series aimed at introducing non-traditional markets to Pakistan’s exporters. This is the second publication of the South-east Asia Country Series and features the Federation of Malaysia.

The Federation of Malaysia is located in Southeast Asia and is divided into two regions by the South China Sea: The Peninsular Malaysia (West Malaysia) and Malaysian Borneo (East Malaysia). It covers a total area of 330,803 km² and has a population of 31.62 million. Bahasa Malaysia is the official language and Islam is the dominant religion of the country.

Malaysia is one of the largest palm oil producers in the world, with a current GDP of $314.50 billion. Malaysia’s services sector generates 54.7% of the GDP, the industrial and agricultural sectors contribute 36.9% and 8.4% respectively. Tourism is the 3rd largest source of foreign exchange earnings for Malaysia; receipts from tourism amounted to $18.08 billion in 2016.

For more than a decade, Malaysia has maintained a Balance of Trade surplus; this equaled $22.57 billion in 2017. Electrical machinery, mineral fuels and mechanical appliances were the top export and import items. Singapore, China and the United States of America were the top 3 export as well as import partners of Malaysia. According to the Doing Business Index, Malaysia ranks 24^th in the world as of 2018.

In 2008, a Free Trade Agreement was signed between Malaysia and Pakistan, following which Malaysia became one of the top 5 import partners of Pakistan. The graph above shows Malaysia’s trade surplus over the last five years, recorded at $1.00 billion in 2017.

This study shows that the actual trade between the two countries is minimal considering the indicative trade potential. Malaysia’s export potential for the top 25 products at HS-06 level to Pakistan was $6.33 billion, and Pakistan’s export potential to Malaysia for the top 25 products in 2017 was $1.88 billion. Currently, the major Malaysian exports to Pakistan include palm oil, machinery, organic chemicals, and plastics. Meanwhile, major imports from Pakistan are cereals, fish and crustaceans, fertilizers and textile articles.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 74) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk