KUALA LUMPUR: MALAYSIA would miss its export growth target this year but will likely see a slight improvement next year on the back of a pick-up in the global economy, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
Next year will remain challenging, underpinned by the global phenomenon from China’s rebalancing policy as well as challenges in Europe, including geo-political tensions.
“We can expect to see a small increase in trade but not at the five to six per cent level,” he said at a media briefing, here, yesterday.
The ministry’s two to three per cent projection for export growth this year was initially thought to be a modest target but it does not look achievable based on the first 10 months’ performance.
The government has projected gross exports to grow at a faster pace of 2.7 per cent next year, spearheaded by a rebound in exports of commodities and continued demand for electrical and electronics products.
“The National Export Council has been addressing the issues and has identified services, namely healthcare, education and tourism, as areas of growth in this current environment. In the case of tourism, the multiplier effect (of tourism receipts) is high and immediate.”
Trade diversification will remain on the ministry’s agenda, and already Iran and Sri Lanka feature as new potential partners for bilateral free trade agreements.
The Regional Comprehensive Economic Partnership (RCEP), which is the International Trade and Industry Ministry’s focus now following the Trans-Pacific Partnership, looks to be delayed despite 16 negotiation rounds.
“We have progressed but there remains a big gap between Asean and our six partners in our ambition for zero tariffs ,” he said, adding that the next round of talks would be in Tokyo, Japan, in February.
Negotiations, which concluded only two out of the 20 chapters, are now targeted for conclusion by the end of next year
On investments, Mustapa said the outlook for next year would see an increase in the manufacturing sector.
“If oil prices remain at US$50 (RM223.50), we will see a pick-up in investments, especially in the oil and gas sector, which suffered due to the slump in oil prices.”
Approvals by the Malaysian Investment Development Authority (Mida) were lower this year due to last year’s high base when many projects were announced for Pengerang.
Mida deputy chief executive officer Datuk Phang Ah Thong said improvements would be seen in the semiconductor industry, led by “smart manufacturing”.
“The focus will be on automotive electronics due to autonomous driving hybrid and electric vehicles,” he opined.
Mida also expects machinery and equipment to do well with data analytics and was working with some German companies in this area. Investments in medical devices are also expected to improve.
As at last month, Mida had 258 projects in the pipeline with investments worth RM30.8 billion for the manufacturing and services sectors and was currently in negotiations which would lead to another RM30 billion investments .
For export promotion agency, Malaysia External Trade Development Corp (Matrade) CEO Datuk Dzulkfli Mahmud said the thrust would be in pushing services-based companies to go abroad.
“If they can consolidate they can seek to capture market share overseas.”
Apart from helping mid-tier companies, Matrade is also promoting small- and medium-sized enterprises to take advantage of the National eCommerce Strategic Roadmap and expand their export market share.
On recent measures by Bank Negara Malaysia to stabilise the ringgit, Mustapa said the central bank had been actively reaching out to the affected market players
Times are tough and the United States interest rate hike will have an impact on all emerging markets, not just Malaysia, he added.