MALAYSIA IN THE GLOBAL ECONOMY
Trade is recognized as an important tool for raising standards of living, ensuring full employment and developing the use of the world’s resources. In 2004, Malaysia was the 18th largest trading nation in the world (18th largest exporter and 20th largest importer). In 2005, total exports amounted to RM533.8 billion while total imports were valued at RM434 billion. Manufactured goods comprised 77 per cent of exports, with electrical and electronic products constituting half of this. Similarly, manufactured products, particularly electrical and electronic goods, also formed the bulk of imports.
Malaysia has established trading links with more than 230 countries and economies. Major export markets include the Association of Southeast Asian Nations (ASEAN), USA, Japan, China and the European Union. In 2005, Malaysia’s pattern of trade indicated that her trade with Asia was growing at a faster rate than that with North America or the European Union. From 1999 to 2004, total trade with Asia grew at a pace of 11.9 per cent compared with 4.6 per cent for North America, and 4.7 per cent for the 15 original members of the European Union. This pattern of trade can be expected to continue as Malaysia engages in Free Trade Agreements (FTAs) with its trade partners in Asia, both regionally or bilaterally. The first tranche of preferential market access under the ASEAN-China FTA came into effect in 2005. Trade with emerging markets, especially in West Asia, Eastern Europe, India, Russia, Latin America and Africa, continues to expand. Malaysia and the United States have begun to negotiate a FTA that is expected to be completed in 2007.
The 1997–98 financial crisis (see ‘Malaysia’s innovative response to the financial crisis’) underscored the necessity for international and regional cooperation in order to ensure financial stability and enhance economic integration and resilience. Malaysia has therefore continued to participate actively in various regional and international forums, particularly ASEAN, the Asia-Pacific Economic Cooperation (APEC) and the World Trade Organization (WTO). Work towards achieving an ASEAN Community (in terms of security, social and economy) by 2020 is still underway.
Direct investment abroad by Malaysian companies has increased over the years, reflecting expansion strategies that enhance the synergistic capabilities of their core operations locally and access overseas markets. Most of these investments were through acquistions and joint ventures. Investment overseas has mainly been in oil and gas, services, followed by manufacturing, agriculture and construction. In oil and gas, investments in recent years have been concentrated in large undeveloped oil fields in Africa and ASEAN countries.
