Malaysia borders Thailand, Indonesia and Brunei, and has maritime boundaries with Indonesia, Singapore and the Philippines.
Since Malaysia gained independence in 1957, it has been developed from a goods-based economy focusing on rubber and tin, to one of the world’s largest producers of electronic and electrical products.
Malaysia is a significant trading nation as measured by trade as a share of gross domestic product (GDP), with its goods and services exports amounting to around 90 per cent of GDP.
How foreign logistics companies are positioned
Malaysia has established itself as an attractive business location for top logistics companies and global manufacturers; foreign direct investment (FDI) has played a large part in Malaysia’s development. The Malaysian Government has sought to drive investment into export-oriented manufacturing and technology industries.
At present Malaysia’s major trading partners are the United States, Singapore, Japan and China. There have, however, been many potential opportunities identified for countries like Australia and New Zealand with Malaysia, specifically in goods and services with a particular focus on export opportunities.
Malaysia is a strong supporter of the multilateral trading system and actively participates in regional economic arrangements such as the ASEAN Free Trade Area (AFTA) and the Asia-Pacific Economic Cooperation (APEC). Malaysia is also a member of the Cairns Group – which advocates more liberalised global trade in agriculture. (source: http://www.unescap.org/tid/projects/egmtf_s3Damiri.pdf)
Malaysia’s Growth is Long Term
The Malaysian government has recognized that logistics is vital to the economic performance of the country and its future. As part of the government’s commitment to accelerate improvement in logistics and transport it set up the Malaysia Logistics Company (MLC) to facilitate the coordination of; strategy, policy and regulation as it relates to the logistics sector.
Logistics has assumed a major role in the Malaysian economy as it provides the backbone to facilitate international trade.
Logistics is Critical to Malaysia’s Growth
Rather than viewing logistics as a supportive industry to other functional areas the Malaysian government recognized that logistics is a strategic industry worthy of investment on its own. The role and importance of the logistics industry has been officially highlighted by this with the development of the Third Industrial Master Plan introduced in 2006, which aims to achieve overall growth of 8.6% by the year 2020.
Malaysia’s Economic Areas
There are 12 major economic areas in Malaysia which include; Oil gas and energy, palm oil and rubber, wholesale and retail, financial services, tourism, electronics and electrical, business services, communications content and infrastructure, education, agriculture and healthcare.
The key to a successful market Malyasian market entry is to begin by engaging with a dedicated local company preferably a local importer/distributor.
As with most of the ASEAN region, the same is true for Malaysia, you need to visit and understand the market and the culture before you even consider doing business in the region. You also need to ensure that you have in place close and stable relationships with any companies you wish to do business with, and most importantly that you have the resources you can dedicate into to maintaining and developing those relationships.
It should also be understood that a license is required to import and export into Malaysia and only those licensed can handle import procedures. Different product categories also require different licenses.
Export Opportunities into Malaysia
There are several excellent export opportunities into Malaysia for foreign companies especially Australian and New Zealand companies in the areas of food and beverages. As well as opportunities for companies providing services such as education and training, specifically in logistics management and risk.
International grocery stores are changing the way Malays shop from traditional neighbor grocers and markets to the one stop shop ‘superstore’ culture. These include (source: Malaysia Food & Drink Report (First Quarter 2013)).
GCH Retail (M) Sdn. Bhd. – part of Dairy Farm Group:
- Giant hypermarket
- Cold Storage
- Jason’s Food hall
Tesco Stores (Malaysia) Sdn. Bhd. – owned by Tesco Stores Ltd:
- Tesco Extra
AEON Co. (M) Bhd. – owned by AEON Group:
- AEON supermarket (formerly known as Jaya Jusco)
B.I.G. Group (retailer and restaurants operator):
- Ben’s Independent Grocer
- Ben’s General Food Store
Malaysia’s Logistics Infrastructure
Malaysia has an excellent logistics infrastructure, which comprises of;
Five international airports, and 15 domestic airports, which handle in excess of 800,000 tonnes of cargo each year.
5 major maritime ports; Port Klang, Tanjung Phelpas, Penang, Kuantan and Bintulu, as well as 24 more main ports throughout Malaysia which handle in excess of 15,388, 007 TEU’s each year.
Rail transport with land feeder services to five port container terminals, three inland ports, four inland container ports and four freight terminals, delivering over 4,400,000 tonnes of freight traffic and 298, 000 TEU’s of container traffic.
The Malaysian government has invested into significantly improving logistics infrastructure in the last 10 years and continues its commitment to improve. In order to improve this sector the Malaysian government needs to investigate regulations that impede services exports and identify issues that slow the growth and development of services sub-sectors, though indentifying policy/regulation issues for long-term competitiveness.
Malaysian Logistics Education
Over the past 20 years Malaysian education has gone through a metamorphosis and is currently ranked the world’s 11th most preferred study destination by UNESCO. The Malaysian government has a firm commitment to turning the country into a high quality education destination for students from all over the globe.
It is Malaysia’s intent to become a regional” international meeting place of the minds” as part of this specialist foreign logistics companies are also well placed to bring their knowledge and expertise to the Malaysian market.
Considering Entry to the Malaysian Logistics Market?
Australian, USA and Canadian companies in particular with large ex pat Malaysian populations should be looking to leverage that resource to investigate the market opportunities.
Alternatively undertaking courses like our ASEAN Logistics Intensive enable foreign companies to learn and network with Viet Namese logistics professionals to identify potential opportunities.
Malaysia is a remarkable country with a resourceful and enterprising population. It is certain that Malaysia will continue to grow and develop. Foreign logistic companies should be seriously investigating the opportunity Malaysia offers for their logistics skills and expertise.