In 2022, Malaysia was the ROK’s 6th largest supplier of electronic integrated circuits, 6th largest supplier of equipment for manufacturing semiconductor boules and wafers,
By Publisher Lee Kyung-sik with Vice Chairmen Choe Nam-suk/Cho Kyung-hee, Feature Editor Kim Hyung-dae (president), Reporter Jeong Da-jeong
Here are excerpts from the interview:
Question: Our heartiest congratulations on the most auspicious National Day of Malaysia on August 31! Please introduce the National
Day of Malaysia in details.
Answer: The road to merdeka was a reflection of unity where leaders from three main races in the then Malaya worked hand-in-hand towards the successful negotiation with the British.
Merdeka Day which is celebrated on 31 August each year must be distinguished from Malaysia Day which is celebrated on 16 September each year.
For 2023, the theme of Merdeka Day is Malaysia Madani: Tekad Perpaduan, Penuhi Harapan which signifies the strong determination by the current Government to imbue the spirit of solidarity towards the creation of a better Malaysia. Such a determination is further depicted in the logo of the Merdeka celebration.
Q: What are the key industries of Malaysia and what are the main products of these industries?
A: In 2023, Malaysia’s trade is expected to grow by 1.3% while exports and imports are estimated to increase by 1.5% and 1.1%, respectively as reported in Economic & Monetary Review 2022 by Bank Negara Malaysia (BNM).
Softer export growth is anticipated amid weaker global growth outlook, especially in Malaysia’s key trade partners in the advanced economies. Nevertheless, the impact would partly be mitigated by the reopening of China’s economy and continued growth in regional economies.
Malaysia’s Key Industries:
The E&E industry is the leading sector of Malaysia’s manufacturing industry and the largest contributor to Malaysia’s exports, accounting for 38.3% of Malaysia’s total exports as of 2022, 58.2% of which comprised semiconductors.
Q: Please introduce in detail the bilateral trade relations.
A: In 2022, Malaysia was the ROK’s 6th largest supplier of electronic integrated circuits, 6th largest supplier of equipment for manufacturing semiconductor boules and wafers, 3rd largest supplier of semiconductor measuring devices, and the top supplier of refined palm oil.
For the period of January to June 2023, E&E products is the largest export contributor with a share of 40.8% (Jan-June 2022: 38.3%).
Exports of E&E products increased by 1.2% (in Ringgit terms) to RM286.79 billion (USD 64.28 billion) during the first six months of 2023 (Jan-June 2022: RM281.9 billion; USD 65.97 billion) owing to higher shipments of semiconductor devices, electronic ICs, transistors & valves; electrical apparatus for electrical circuits & printed circuits; as well as electric power machinery & parts.
This is despite challenges faced by the industry amid inventory correction for phones, PCs & other consumer electronics as well as soft economic outlook on the back of rising inflation and geopolitical tensions.
Malaysia is capable to export petroleum oil and gas, petroleum products, upstream and downstream products such as equipment and parts, chemical, pipelines, storages and vessels, platform fabrication, etc.
Malaysia is internationally recognized in the areas of (i) fabrication of offshore and onshore structures and complexes; (ii) capacity to complete value chain from conceptual engineering to installation and commissioning; (iii) marine repair and conversion; (iv) drilling fluids and waste management and oilfield product distribution.
Malaysia was the ROK’s 4th largest major import source for LNG, and 3rd largest source for aluminium in 2023.
There are a number of other potential sectors that could be further strengthened towards improving Malaysia – ROK’s trade relations. Malaysian companies produce high quality lifestyle products such as textiles, furniture, cosmetics, household products and jewelries which are high in demands in the ROK.
Similarly, Malaysian furniture companies supply furniture on OEM, ODM and OBM basis, undertaking furniture designing and own branding in the international market, using rubber wood and other wood species and various materials. As of 2022, Malaysia was the ROK’s 11th largest supplying country for wooden household furniture and 12th largest supplier for mattresses.
Malaysia is also strong at life science sector, particularly for pharmaceuticals, medical gloves and medical consumables. Malaysia is the world’s leading exporter of medical gloves and catheters, supplying 65% of the world market for gloves and 80% for catheters. Other strong exports are consumables like cannula, needles, medical & surgical instruments and appliances, and orthopedic appliances.
The halal food products and ingredients that carry Malaysia’s world-standard halal certification are widely accepted in the Muslim countries.
Based on the rich crops planted, Malaysia is a strong exporter of palm oil products, cocoa products, confectioneries such as cookies and snacks, dairy products, beverages, and seafood products.
.Besides BFSI, the subsectors of Malaysia’s ICT service such as telecommunications, Fintech, cloud, e-government can be found not only in ASEAN countries but also in Australia Hong Kong, UAE and USA.
Malaysia is currently exporting the services of ICT security, payment gateway solutions, system maintenance for airport, GPS tracking system, remote flood monitoring system, point-of-sales, network monitoring system, mobile application development, e-commerce platforms, social media analytics system and data mining for market research to mention a few.
From investment point of view, Malaysia attracted RM71.4 billion in approved investments for the period of January to March 2023 (Q12023), once again proving its value as a preferred investment destination. With an impressive number of 1,265 projects approved, it is expected that these projects will generate 23,977 new job opportunities across the manufacturing, services, and primary sectors.
With its conducive investment landscape, Malaysia continues to capture more Foreign Direct Investments (FDIs) than Domestic Direct Investments (DDIs). FDIs contributed RM37.5 billion, representing 52.5% of the total approved investments.
A majority of the approved investments in the manufacturing sector were allocated to key industries. Transport equipment took the lead with RM4.4 billion (28.2%), followed by machinery and equipment with RM2.6 billion (16.6%), basic metal products with RM2.3 billion (14.7%), electrical and electronics (E&E) with RM2.1 billion (13.2%), and non-metallic mineral products with RM1.6 billion (10.3%). Together, these industries accounted for a significant 83.1% of the total approved investments in the sector.
Q: Wat are the investment environment and opportunities in Malaysia for the Korean industries?
A: Malaysia remains a top investment destination among global investors and a hotspot for business expansion. Investors continue to show confidence to invest in Malaysia as the government continue to focus on strengthening the country’s economic growth and retain Malaysia’s reputation as a stable investment destination.
The ROK has consistently ranked among Malaysia's top 10 major investors for many years. Since 1980 to date, a total of 386 manufacturing projects with participation from ROK were implemented with total investments of USD9.4 billion. This clearly shows how important Korean investment to Malaysia’s economy.
Malaysia is currently hosting many prominent ROK’s MNCs and SMEs such as Lotte Chemical, Samsung, Hanwha Q-Cells, OCI, Lotte Energy Material (Iljin Materials), Kiswire and POSCO, to name a few.
Q: Which industrial sectors in Malaysia are deemed attractive to the prospective Korean investors?
A: Malaysia is focusing on targeting quality investments in line with its current policies and strategies to attract FDI which are high technology, high value-added, knowledge and capital intensive. Malaysia will opt for selective investment promotion approach given the high intensity of competition among its peers in ASEAN and also other regions.
Malaysia would also like to welcome more Korean investments in areas such as chemicals, E&E, machinery and equipment, aerospace, medical devices, energy efficient vehicles (EEVs), biotechnology, advanced materials, advanced electronics, pharmaceutical, petrochemicals, ICT, E-Commerce, creative industries such as animation, food products, agro-based products, and value-added products from natural halal resources.
Q: How do you evaluate the economic relations between the two
countries and what ought to be done to further increase and upgrade them?
A: As an overview, Malaysia’s trade with the ROK has a lot of prospects for further expansion. Malaysia is looking forward to cooperating with the ROK in a wider range of sectors such as high value and future technology sectors including smart technology, green technology, high value-added industries and creative industry.
There is seemingly a great room for cooperation considering the significance of a sustainable green economy in line with ESG initiatives in both countries as well as Malaysia’s drive for the national Fourth Industrial Revolution.
which is currently pushing ahead the development of the emerging technologies driven by the National Fourth Industrial Revolution policy (4IR) which was launched to harness the power of science and knowledge to achieve development, progress, and prosperity. The ROK may wish to partner with the Malaysian digital economy blueprint to utilize Malaysia’s digital ecosystem.
Creative economy sector between Malaysia and the ROK can be strengthened by active co-production of digital contents such as animation and games to contribute to further solidify the bilateral economic relations. Malaysia is an emerging animation powerhouse, operating high-tech 3D animation subcontracting studios as well as exporting its own IP-produced works to 120 countries around the world including neighboring ASEAN countries. The ROK companies who wish to expand to global market can gain leverages through joint production with Malaysia.
There have been numbers of co-production taking place between Malaysia and ROK companies. The co-produced animations by Malaysian and ROK companies have been on the air over the past ten years. Jointly produced animation titled ‘Sino Stone’ was on air on the ROK’s national TV channel KBS from 2019 to 2020. Other co-produced animation series include ‘Eori Story’ which was aired in the ROK’s KBS TV from 2011 through 2015, “Boing the Play Ranger” which was broadcasted in the ROK’s TV channel EBS in 2013 and 2015.
Malaysia is championing halal and MATRADE is tasked to spearhead the country’s effort in the halal industry and to position Malaysia as a leading halal hub in the world. Through MIHAS, Malaysia aspires to bring more exhibitors, buyers and visitors to MIHAS as it is a well-known platform for the annual gathering of industry players and entrepreneurs in the halal sector to showcase the latest products and services, as well as to explore new opportunities.
It is projected that the bilateral trade between Malaysia and the ROK to increase further in the future, capitalizing on the Regional Comprehensive Economic Partnership (RCEP) that entered into force in February 2022 in addition to the existing ASEAN-Korea FTA.
Key and potential sectors which have strong export capacity as well as strong global demand should be prioritized in shaping the Malaysia’s economy. Robust export ecosystem and support to develop the value chain should be emphasized to further capitalize on the opportunity in the global market and enhance productivity. Besides, increasing export promotion and market penetration within these groups would further bolster the potential of these sectors. In the short to medium term, these sectors are the low hanging fruits that Malaysia should further leverage its opportunities.
Improved performance in these sectors will contribute to reducing the country’s trade deficit and through the value chain approach, to improving its terms of trade. The identification of export themes can help governments make the most out of the limited capabilities and resources.
MITI through its trade promotion agency, Malaysia External Trade Development Corporation (MATRADE) is organizing International Sourcing Programs (INSP) in conjunction with established trade fairs of various sectors in Malaysia all year round. MATRADE has been inviting Korean companies looking for quality products and services from Malaysia, to participate in INSP to have the opportunity to involve in one-to-one business meeting sessions with relevant Malaysian suppliers and exporters.
For example, at MIHAS 2022, four ROK companies participated in the INSP on site and seven companies virtually for sourcing Malaysia-made quality food ingredients and finished food products, generated a total potential sale of USD29.24 million.
At the INSP in conjunction with Biomass Northeast Asia 2022, one ROK company participated to source wood-based biomass materials. The ROK’s top furniture company also joined the INSP in conjunction with two renowned Malaysian furniture exhibitions to source for high quality furniture from Malaysia.
Malaysia has a diverse range of high-quality products and services. We have reliable suppliers with good manufacturing practices, and their products are complied with international standards.
Malaysian Investment Development Authority (MIDA) is actively working to attract investments in targeted industries from all over the globe to upgrade Malaysia’s industrial ecosystem and trade landscape. These initiatives include giving necessary business facilitation and value network to foreign, local, and start-up companies to ensure they can optimize operations in this dynamic market. The Government is eager to help businesses succeed and make Malaysia the ideal place for them to reach their full potential.
Editor’s note:
Ambassador Datuk Lim Juay Jin completed his tour of duty in the Republic of Korea on 15 August 2023 and retired from the civil service of Malaysia with effect from 17 August 2023
Following the retirement of H.E. Datuk Lim Juay Jin and while waiting for the formal appointment of the next Ambassador of Malaysia to the Republic of Korea is finalized, Mr Nazarudin Ja’afar, who holds the rank of Minister at the Embassy of Malaysia in Seoul has been assigned as the Charge d’Affaires a.i. with effect from 16 August 2023 in line with the provision provided for by Article 19 of the Vienna Convention on Diplomatic Relations 1961.
A lawyer by training, he holds a degree in law from the University of Wales at Aberystwyth and a Master in law from the University of Kent at Canterbury, both in the United Kingdom. Prior to assuming his post in Seoul, he served Malaysian diplomatic missions in Bangkok and Perth as First Secretary and Consul-General respectively.