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Minister of International Trade and Industry Malaysia i MALAYSIA INTERNATIONAL TRADE AND INDUSTRY REPORT 2009 i Ministry of International Trade and Industry Malaysia ii ISSN 0128-7524 JUNE 2010 Copyrights Reserved For sale of copies and further technical information refer to: Senior Director, Strategic Planning Division, Ministry of International Trade and Industry, Malaysia 15th Floor, Block 8, Government Offices Complex, Jalan Duta, 50622 Kuala Lumpur. Tel : 603 - 6203 4571 Fax : 603 - 6201 2573 MITI Homepage: www.miti.gov.my e-mail : [email protected] Design, layout and printing services by: Reka Cetak Sdn. Bhd. No. 6, Jalan Sri Sarawak 20B Taman Sri Andalas 41200 Klang Selangor Darul Ehsan Tel : 603 - 3324 8272/ 3323 8272 Fax : 603 -3324 4584 e-mail : [email protected] Price : RM60.00 FOREWORD MINISTER OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA The Malaysian economy faced its toughest challenge from RM1.2 trillion in 2008. For the first quarter of in a decade in 2009. The global economic crisis 2010, trade volume recovered strongly, rising tested the strength and resilience of our economy, 32.6% from the corresponding period the previous particularly the manufacturing and services sectors. year. Our challenge now is to ensure sustainability As the Malaysian economy is highly dependent on of this growth trend. trade, many sectors of the economy had to contend with shrinking global demand. Meanwhile, Malaysia approved RM32.6 billion of investments in the manufacturing sector in 2009. However, Malaysia persevered through this difficult This exceeded our annual investment target of period. The Government was steadfast in fulfilling RM27.5 billion set in Malaysia’s Third Industrial Plan. our international trade commitments. Malaysia We must continue to increase the level of private did not retreat into protectionism to shield our investment if we are to achieve our target growth economy. Instead, we embarked on a series of bold rate of 6% this year. measures to liberalise the economy, implementing wide-ranging reforms to raise efficiency levels and The Ministry of International Trade and Industry boost investor confidence. will continue to work on measures to expand trade and to raise the level of private investment In March, the Government unveiled the New in the country. To further accelerate growth Economic Model to focus efforts on raising income and enhance competitiveness, we will continue iii levels and productivity. A far-reaching Government to improve the domestic business climate and Transformation Programme was also introduced to promote development of dynamic and innovative upgrade public sector delivery. The improvements SMEs and entrepreneurs. we made in terms of Government and business efficiency were recently recognised by the IMD We urge the private sector to complement the World Competitiveness Yearbook 2010 which Government’s efforts by putting resources into ranked Malaysia among the top 10 most competitive enhancing the quality of products and services. nations in the world for the first time. We aim to The Government will do its part to further improve further introduce additional measures to ensure the country’s physical and soft infrastructure. In that we remain among the most competitive turn, businesses must invest in R&D, undertake countries in the world. effective marketing and branding strategies and adopt industry best practices. Ultimately, At the international level, we strengthened economic we want the private sector to lead economic ties with our traditional trade partners and forged growth in the country. At MITI, we look forward new relationships with emerging economies. With to closer public-private collaboration to achieve the implementation of the ASEAN-India Trade our national goals. in Goods Agreement, the ASEAN-Australia-New Zealand FTA and the Malaysia-New Zealand FTA in 2010, market access for Malaysian products and services will be further enhanced. There remains a lot of work for us to do. The DATO’ SRI MUSTAPA MOHAMED year 2009 ended with Malaysia recording total Minister of International Trade and Industry trade of RM988.2 billion, a decrease of 16.6% Malaysia iv CONTENTS Chapter 1 WORLD ECONOMIC, TRADE AND INVESTMENT DEVELOPMENTS 1 Overview 1 Global Trade (Merchandise and Services) 1 Regional and Country Performance 2 Outlook 9 Chapter 2 MALAYSIA’S EXTERNAL TRADE 13 Overview 13 Exports 14 Imports 16 Trade in Services 17 Direction of Trade 17 Asean 21 Trade Measures Introduced by Malaysia’ s Trading Partners 27 Outlook 29 v Chapter 3 INVESTMENTS 33 Overview 33 Policy Initiatives to Enhance Investments 33 Investment Agreements 35 Investments in the Manufacturing Sector 35 Projects Approved by Ownership 39 Projects Approved by Location 40 Implementation of Approved Manufacturing Projects 42 Investments in the Services Sector 42 Outlook 47 Chapter 4 PERFORMANCE OF THE MANUFACTURING SECTOR 51 Overview 51 Electrical and Electronics Industry 53 Transport Equipment Industry 57 Aerospace Sub-Sector 62 Marine Sub-Sector 63 Petrochemical and Chemical Industry 64 Pharmaceutical Industry 69 Metal Industry 71 Machinery and Equipment Industry 74 Textiles and Apparel Industry 76 Medical Devices Industry 79 Wood and Wood Products Industry 82 Rubber Products Industry 84 Palm Oil Industry 86 Processed Food and Beverages Industry 88 Outlook – The Manufacturing Sector 92 Development of Standards 92 Initiatives to Promote Information and Communication Technology for Trade Facilitation 95 Developments in the Halal Industry 98 Human Resource and Skills Development 101 Research and Development (R&D) 104 Branding 106 Automation 106 Utilities 107 Environment 108 Chapter 5 PERFORMANCE OF THE SERVICES SECTOR 121 Overview 121 Policy Initiatives and Measures in the Services Sector 121 vi Overall Performance 122 Performance of Selected Services Sub-sectors 123 Outlook 126 Chapter 6 PRODUCTIVITY AND COMPETITIVENESS 129 Overview 129 International Productivity Comparison 130 Productivity Performance of the Services Sector 132 Total Factor Productivity of the Services Sector, 2005-2009 132 Productivity Performance of the Manufacturing Sector 134 Total Factor Productivity of Selected Manufacturing Sub-Sectors, 2005-2009 135 Outlook 136 Chapter 7 DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES 139 Overview 139 Policy Initiatives in 2009 139 Performance of Financial Assistance Schemes 140 SME Development Programmes 142 International Cooperation 149 Outreach Programmes 151 Outlook 152 Chapter 8 ENTREPRENEUR DEVELOPMENT 159 Overview 159 Policy Initiatives on Entrepreneurial Development 159 Entrepreneurship Training Programmes 160 Training Programmes and Services 160 Promotion and Marketing 164 Major Promotion and Marketing Programmes 164 Cooperation Programmes with Malaysia Airport Holdings Berhad at LCCT and KLIA 169 Allocation of Bumiputera Special Shares 170 Entrepreneurs Outreach Programme 170 Outlook 171 Chapter 9 ENGAGEMENT IN BILATERAL FREE TRADE AGREEMENTS 173 Overview 173 Progress in Implementation 173 vii Concluded and On-going FTA Negotiations 177 Outreach Programmes 178 Outlook 178 Chapter 10 ASEAN ECONOMIC COOPERATION 181 Overview 181 Trade 181 Elimination of Non-Tariff Barriers 185 Investment 185 Services 187 Sectoral Cooperation 188 Regional Linkages with Dialogue Partners 191 Outlook 194 Chapter 11 DEVELOPMENTS IN THE MULTILATERAL TRADING SYSTEM 199 Overview 199 Developments in the Doha Round 199 Agriculture 200 Non-Agriculture Market Access 201 Services 202 Trade Facilitation 203 Special and Differential Treatment 204 Trade-Related Aspects of Intellectual Property Rights 205 Trade and Environment 205 Rules 206 Developments in Dispute Settlement Understanding 207 Implementation Issues under WTO Agreement 209 Accession to the WTO 209 Trade Policy Review 209 Technical Assistance 210 Other Issues 210 Outlook 211 Chapter 12 DEVELOPMENTS IN REGIONAL GROUPINGS 215 Overview 215 Asia Pacific Economic Cooperation 216 Organisation of the Islamic Conference 228 Group of Developing Eight 230 Other Regional Arrangemets 231 Outlook 232 viii BOX ARTICLES Chapter 1 Box 1.1 Stimulus Package Projects Implemented by the Ministry of International Trade and Industry (MITI) 11 Chapter 2 Box 2.1 The Rising Importance of Emerging Markets 30 Chapter 3 Box 3.1 Strategies to Enhance Domestic Investments 48 Box 3.2 Forbes Global CEO Conference 49 Chapter 4 Box 4.1 The Halal Industry Master Plan (HIMP) 110 Box 4.2 Reach Implementation - Malaysia’s Perspective 111 Box 4.3 Policy Review of Iron and Steel Industry and the Implementation of Mandatory Standards on Iron and Steel Products 112 Box 4.4 Review of National Automotive Policy 113 Box 4.5 Progress on the Implementation of the Third Industrial Master Plan 114 Chapter 5 Box 5.1 Services Sector Capacity Development Fund 127 ix Chapter 6 Box 6.1 Total Factor Productivity for a High Income Economy 137 Chapter 7 Box 7.1 The Establishment of SME Corp. Malaysia 153 Box 7.2 The Annual SME Integrated Plan of Action 154 Box 7.3 Impact of the Global Economic and Financial Crisis on SMEs 156 Chapter 9 Box 9.1 Malaysia-New Zealand FTA 179 Box 9.2 Malaysia-Japan Automotive Industry Cooperation (MAJAICO) 180 Chapter 10 Box 10.1 7th Package of the ASEAN Framework Agreement on Services 195 Chapter 11 Box 11.1 7th WTO Ministerial Conference, Geneva, 30 November – 2 December 2009 212 Box 11.2 Trade Policy Review of Malaysia 213 Chapter 12 Box 12.1 APEC Self-Certification of Origin Pathfinder Initiative 233 TABLES Chapter 1 Table 1.1 Leading Exporters and Importers in Merchandise Trade (2009) 2 Table 1.2 GDP Growth of ASEAN-6 Economies 2 Table
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