Malaysia’s Niche in China’s Shadow

I argued that strong China is good for our economy.

China is already a significant net importer of Malaysia’s goods. China’s trade deficit has widened considerably from US$3bn in 2001 to recent more than US$10bn.

China is now the third largest export market for Malaysia and is showing strong potential to be the second largest export market to overtake Singapore.
As China’s economy growing, further development of Malaysia’s upstream and downstream oil & gas industry has already found its way into China. Likewise, China is the largest importer of Malaysian palm oil with about a quarter of total Malaysian CPO exports year to date and our export market may expand further following the government-to-government barter trade over the KTM railway project between Malaysia, India and China. China accounts for 13% of global oil and fats production, but is not self-sufficient and is therefore, a major importer.

Meanwhile, China is the third largest market, after Japan and India for Sarawakian logs and plywood. Hence, a strong China’s construction sector should be positive for the Malaysian timber industry. China is also an important market for Malaysia’s tourist industry, which has seen huge growth since 1999. It is the fastest growing major tourist market for Malaysia, recording a five year CAGR of 30%. Malaysia Airlines and AirAsia are increasing the frequency of flights to China, as well as the number of destinations. Malaysia is a relatively inexpensive holiday destination, has a common language and gaming – all within a relatively short flight time.

With the relaxation of visa issuance, this has resulted in a flood of mainland Chinese tourist and educational tourism from China is another key attraction that this country is offering, given the English medium available and the relatively low cost of studying in Malaysia.

If we can improve the level of general service, reduce corruption and increase the confidence in the legal system, we stand a good chance of continued growth as the regional service centre.