Published November 6, 2008

KL heads for hat-trick in external trade

Value set to top RM1 trillion again, but target could be a struggle next year

By PAULINE NG
IN KUALA LUMPUR
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MALAYSIA'S total trade for the year looks set to surpass RM1 trillion (S$419 billion) - its third in a row - but could struggle to hit the target next year should the decline in exports of electrical & electronic (E&E) products persist.

At the three-quarter point, total trade had reached RM915.4 billion, up by nearly 13 per cent compared with the RM811.4 billion in the same period last year. Exports grew at a faster 16 per cent to RM512.2 billion, while imports rose 9 per cent to RM403.2 billion.

The international trade ministry said the E&E sector should see marginal growth in the last quarter on forward orders already secured to meet the year-end holiday season. However, that reprieve is expected to end in the first quarter, on anticipation of weaker demand from the developed markets of the US and European Union.

Given that E&E products contribute nearly 40 per cent of Malaysia's total exports, the sector's performance is closely monitored for signs of weakness. In September, E&E exports rose marginally to RM24.8 billion from RM23.7 billion in August. Demand from the US and EU had noticeably dipped in August and with financial and stockmarkets heavily jolted in October, is expected to soften in the coming year as economies shrink.

On Tuesday the government revised its economic data forecast. Exports are now expected to contract 1.5 per cent in 2009 instead of expanding 4.6 per cent. Economic growth is now pegged at 3.4 per cent, down from 5.4 per cent previously.



Steeply lower palm oil and crude petroleum prices are also expected to put a dent in Malaysia's export value next year. Palm oil and petroleum contribute 7.6 and 6.7 per cent of total exports, respectively, but the former has plunged to about a third, while petroleum is down to half from earlier peaks.

International Trade Minister Muhyiddin Yassin who announced the latest trade figures yesterday could not say how much Malaysia's total export value would be hit next year should prices remain at these levels.

He suggested exporters look at new markets, pointing out there were 'vast trade opportunities' in the BRIC countries of Brazil, Russia, India and China which account for half the world's population.

Currently, Singapore, US, China, Japan and India receive 51 per cent or slightly more than half of Malaysia's total exports.