Malaysia Economic Update Report

Malaysia’s trade performance in the third quarter of 2024 demonstrated sustained growth, underpinned by strong export and import activities. According to data from Matrade, the National Trade Promotion Agency of Malaysia, the total export value reached RM384.1 billion, reflecting a year-on-year (YoY) increase of 7.8% and a quarter-on-quarter (QoQ) rise of 4.2%. Key export products included Electrical & Electronic (E&E) Products and Palm Oil & Palm Oil-Based Agriculture Products. Notably, the top three export products with the highest YoY growth in value were Machinery, Equipment & Parts (+22.8%), Palm Oil & Palm Oil-Based Agriculture Products (+21.7%), and Palm Oil-Based Manufactured Products (+21.2%). Malaysia’s primary export markets remained Singapore, the United States, and China, underscoring their critical role in the country’s trade landscape.

On the import side, Malaysia’s total import value for Q3 2024 stood at RM359.0 billion, marking a substantial YoY growth of 20.8% and a QoQ increase of 6.6%. Major imported products included E&E Products, Petroleum Products, and Machinery, Equipment & Parts. Among these, the fastest-growing import categories were E&E Products (+43% YoY), Machinery, Equipment & Parts (+32.6% YoY), and Processed Food (+16.1% YoY). Malaysia’s top import partners during this period were China, Singapore, and the United States, reflecting robust trade ties with these economies.

From January to September 2024, Malaysia’s total trade value rose 10.2% to RM2.139 trillion, surpassing the RM2 trillion mark within nine months, a milestone reached in ten months during 2023. Exports expanded by 5.2% to RM1.115 trillion, while imports surged by 16.1% to RM1.024 trillion, resulting in a trade surplus of RM91.2 billion. These figures align with the World Trade Organization’s (WTO) projection of 7.4% export growth for Asia in 2024, highlighting Malaysia’s growing contribution to the region’s trade activities.

Malaysia’s trade performance with its major trading partners during the first nine months of 2024 showed the following trends:

• ASEAN: Total trade with ASEAN expanded by 7.4% to RM576.2 billion, driven by a 4.9% increase in exports (RM330 billion) and an 11% rise in imports (RM246.2 billion). The growth was supported by higher exports of petroleum products, machinery, and metal-based goods.
• China: Trade with China grew by 9% to RM355.2 billion. However, exports to China declined by 1.9% to RM137.1 billion, primarily due to reduced demand for E&E products and chemicals. Imports from China increased significantly by 17.2% to RM218.1 billion, reflecting strong demand for industrial inputs.
• United States: Trade with the US surged by 28.3% to RM234.4 billion, with exports rising 17.6% to RM140.5 billion, driven by robust shipments of E&E products, machinery, and optical equipment. Imports from the US grew sharply by 48.6% to RM94 billion, supported by rising demand for capital goods.
• European Union (EU): Trade with the EU increased by 6.1% to RM163.1 billion. Exports edged up 2.8% to RM86.7 billion, fueled by strong demand for palm oil products, rubber goods, and processed food. Imports rose 10% to RM76.4 billion.
• Taiwan: Trade with Taiwan grew significantly by 37.5% to RM129.1 billion, with exports soaring 51.9% to RM48.7 billion, supported by higher shipments of E&E products and optical equipment. Imports from Taiwan increased by 30% to RM80.4 billion.
• FTA Partners: Trade with Malaysia’s Free Trade Agreement (FTA) partners rose by 6.2% to RM1.396 trillion, with exports up 1.8% to RM753.8 billion and imports increasing 12% to RM641.7 billion.

Malaysia’s national cloud policy will focus on four core areas, namely public service innovation and efficiency, economic competitiveness and growth, strengthening user trust and data security, and empowering citizens through digital inclusivity. The government would also set up a national AI office to coordinate initiatives, including completing a five-year technology action plan as well as a regulatory framework to increase adoption of ethical and sustainable AI within the next 12 months.

Fadillah emphasized that the AI framework will focus not only on economic returns but also on ensuring inclusivity. “AI can transform industries and generate new opportunities,” he stated, underscoring the government’s intention to use AI to bridge gaps between urban and rural communities, promote equal access to education, and improve healthcare delivery. The government’s proactive stance reflects its desire to embed AI into the national development agenda, contributing to both economic productivity and social equity.

Google’s growing involvement in Malaysia aligns with these ambitions. The tech giant recently announced that its ongoing investments in the country’s digital ecosystem are projected to add $3 billion to Malaysia’s GDP by 2030, along with creating 26,500 new jobs. These developments highlight the increasing role of technology in Malaysia’s economic landscape, demonstrating how cloud computing and AI can drive growth across multiple industries, from manufacturing and logistics to education and healthcare.

As the government works on finalizing AI regulations, the focus is on creating a framework that fosters innovation while safeguarding public trust. The new rules aim to ensure ethical AI deployment, data privacy protection, and transparency, mitigating potential risks associated with advanced technologies. This regulatory approach is intended to balance Malaysia’s push for technological advancement with social responsibility, aligning with global best practices.

With the national cloud policy complementing the AI agenda, Malaysia is setting the foundation for a robust digital ecosystem that integrates cloud infrastructure with AI-driven solutions. The government sees this dual strategy as essential for driving sustainable economic growth and improving public services. By adopting forward-thinking policies, Malaysia seeks to position itself as a regional leader in digital transformation, with AI at the core of efforts to achieve both economic progress and social inclusivity.

This report was compiled with contributions from the team of business experts in our Malaysia office.

ARC Consulting, a division of ARC Group, is an advisory firm specialised in supporting western companies operating in Asia. Our mission is to bridge between the business ecosystems of Asia and those in Europe and the US. Our services cover market entry and expansion, production and sourcing, cross-border M&A as well as ESG and operational improvement and compliance.

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