Malaysia - Agricultural Sector Malaysia - Agricultural Sector
Overview
Malaysia is one of the most developed markets in Southeast Asia. The country is politically and economically stable, and with a population of nearly 32.7 million, is increasingly urbanized. About half of the country’s population falls in the middle to upper income group of consumers with a national per capita income of $10,564 in 2018 (according to the World Bank). Malaysia’s economy is mainly driven by services (55.5 percent), manufacturing (23 percent) and agriculture (7.8 percent). Although the country’s strict halal requirements complicate trade for certain products, Malaysia’s trade and regulatory policies are relatively open and provide opportunities for a broad range of imported foods and beverages. Malaysia’s total agricultural product imports in 2018 reached nearly $18.5 billion USD, roughly 6 percent of which was sourced from the United States.
According to Global Trade Atlas data, the United States was Malaysia’s seventh largest supplier of consumer-oriented food and beverage products in 2018. Total sales for the year reached $504 million USD. Top U.S. consumer-oriented food and beverage products in the market include prepared foods, dairy, potatoes, fresh fruit, tree nuts and poultry.
The Malaysian hotel, restaurant, and institutional (HRI) industry is one of the fastest growing sectors in the country and is largely driven by robust tourism and increased consumer spending. According to the Malaysian Department of Statistics, the tourism industry has played a significant role in recent economic expansion and now represents nearly 15 percent of the country’s GDP. According to Euromonitor data, the country’s hotel and restaurant industry has performed particularly well during this expansion with real growth of over 54 percent during the past five years.
Malaysia’s retail food sector is also developing rapidly and high-end/premium grocery stores are increasingly popular. With the abolishment of the Malaysian Goods & Services Tax in June 2018, consumer spending on retail food products is expected to significantly increase. Total sales for the sector in 2018 are forecast to reach $26 billion USD.
The Malaysian food processing industry represents 12 percent of the country’s manufacturing output and is growing at a pace of roughly three percent per year. Several multi-nationals have regional production facilities in and around Kuala Lumpur and the Government of Malaysia has identified the food processing industry as a critical sector for future economic growth.
Many food products (e.g. beef or poultry) require halal certification in order to enter the country. Currently, the Islamic Development Foundation of Malaysia (JAKIM) is the only authorized entity allowed to issue halal certification. In the United States, JAKIM has appointed two Islamic institutions to inspect and halal certify food and beverage products for export to Malaysia; the Islamic Food and Nutrition Council of America (IFANCA) and the Islamic Services of America (ISA).
Malaysia’s Food and Agricultural Market Situation
|
Unit: $US millions |
2016 |
2017 |
2018 |
CAGR (%) |
|
Total Local Food and Agricultural Production |
2,385 |
2,532 |
2,787 |
8.1% |
|
Total Food and Agricultural Exports |
21,192 |
22,444 |
21,133 |
-0.1% |
|
Total Food and Agricultural Imports |
14,603 |
15,942 |
16,179 |
5.3% |
|
Total Food and Agricultural Imports from the United States |
867 |
1,048 |
1,104 |
12.8% |
|
Total Food and Agricultural Market Size |
4,204 |
3,970 |
2,167 |
-28.2% |
|
Exchange Rates |
4.137 |
4.299 |
4.030 |
|
$US millions (total market size = (total local production + imports) - exports)
Data Sources: Malaysia Department of Agricultural and Global Trade Atlas
Leading Sub-Sectors
|
Major Products, Market Shares by Value and Competitor Situations | |||
|
Product Category (2018) |
Major Supply Sources (2018) |
Foreign Supplier Situation |
Local Supplier Situation |
|
Dairy Products |
New Zealand: 37.6% |
New Zealand and Australia dominate the market due to free trade agreements. |
Local production is insufficient to meet consumer demand. |
|
Beef |
India: 73.1% |
Major foreign suppliers have a significant portion of their beef industry halal certified for export to Malaysia. |
Inadequate supply of local beef. |
|
Wheat and Wheat |
Australia: 36.9% |
Australia dominates the wheat and wheat flour market. |
No local production |
|
Processed Fruits |
China: 28.4% |
Dried and processed fruits from China and Thailand are price competitive. |
Limited local production. |
|
Tree Nuts |
Indonesia: 32.7% |
Imported nuts are in increasingly strong demand for use in the bakery and snack food industry. |
Limited local production. |
|
Potatoes |
China: 32% |
Chinese potatoes are very price competitive. |
Limited domestic production. |
|
Pork – Fresh, Frozen, Chilled |
Germany: 37.9% |
Currently EU prices are very competitive and several EU plants are approved for export to Malaysia. |
Domestic demand for pork has grown significantly over the past several years and local industry is limited. |
(Data Source: Global Trade Atlas)
Opportunities
-
U.S. food and agricultural products are trusted and perceived to be of high quality.
-
The growing Malaysian HRI, Retail and Food Processing sectors require a wide range of imported food products and ingredients.
-
Rising disposable income in Malaysia is driving demand for high quality imported food and beverage products.
-
A large number of U.S.- style restaurants operate throughout the country, enabling new-to-market U.S. products easier market acceptance.
Challenges for U.S. Products in the Malaysian Market
-
Many U.S. products need to be halal certified, which can be a lengthy process.
-
Australia and New Zealand both have free trade agreements with Malaysia and have a strong presence in the country’s consumer-oriented food and beverage market.
-
In addition to strong competition from Australia and New Zealand, products from China and other ASEAN countries are gaining market share.
-
Many U.S. exporters are unfamiliar with the market and are therefore sometimes unable to meet specific requirements and order sizes.
Best Prospective U.S. Products for the Malaysian Market
|
U.S. Product |
2012 Import Value |
2018 Import Value |
CAGR |
|
Frozen Potatoes |
$37.9 |
$49.8 |
4.7 % |
|
Fresh Fruits |
$39.1 |
$55.1 |
5.9 % |
|
Tree Nuts |
$19.4 |
$36.0 |
10.9 % |
|
Seafood |
$14 |
$16.4 |
2.7 % |
|
Wine & Beer |
$3.5 |
$10.7 |
20.5 % |
|
Beef |
$0.3 |
$0.5 |
8.9 % |
Source: Global Trade Atlas
Notes: Although total seafood sales decreased, demand for high-end U.S. products is strong; Excellent opportunities for U.S. beef exist in the market provided required Malaysian halal certifications can be obtained
Web Resources & Contacts
USDA Foreign Agricultural Service Malaysia
Office of the Agricultural Affairs
Embassy of the United States of America
376, Jalan Tun Razak
Kuala Lumpur, Malaysia 50400
Tel: (011-60-3) 2168-5082
Fax: (011-60-3) 2168-5023
E-mail: AgKualaLumpur@fas.usda.gov
Malaysian Government:
Ministry of Health Food Safety and Quality Division: http://fsq.moh.gov.my/fsq/ms/
Ministry of Agriculture Department of Veterinary Services: www.dvs.gov.my
Ministry of Finance Customs Headquarters: http://www.customs.gov.my