20 September, 2002 (Business Times) - MALAYSIA’S export performance haspicked up since March this year.
With the gradual increase in momentum of economic recovery in the US andAsia Pacific during the second half, Malaysia’s exports are expected torecord a strong growth of 4.5 per cent by year-end.
Last year, Malaysia’s exports contracted by 10.4 per cent.
The favourable external demand outlook is mainly driven by thebetter-than-anticipated export performance of manufactured goods andhigher commodity prices.
The earnings of manufactured goods, which accounted for 85 per cent of thetotal value of gross exports, are expected to increase strongly by 5.4 percent (2001: -10.5 per cent), arising from the global pick-up in the demandfor electronics and information communication technology (ICT)-relatedproducts.
The rise in revenue from minerals, meanwhile, is expected to deteriorateby 18.2 per cent (2001: -11.9 per cent) due to lower volume and prices.
However, with the looming prospects of a West Asian war, earnings frompetroleum may improve.
Agricultural commodities are projected to recover firmly after facingcontraction for two consecutive years.
The forecast increase of 22.9 per cent in export earnings of this sector(2001: -14.7 per cent) is largely attributed to higher prices of palm oil.
Manufactured exports are poised for a stronger upturn in the second halfof the year with the gradual global economic recovery and a morecompetitive ringgit arising from the softening of the US dollar vis-à-visthe yen and the euro, as well as regional currencies.
Electronic and electrical (E and E) exports, which account for about 70per cent of total manufactured exports, will be the main driver of theexport growth of manufactured goods.
E and E exports are projected to grow by 6.9 per cent (2001: - 13.5 percent).
Meanwhile, semiconductor sales in the Asia-Pacific region, excludingJapan, recovered firmly from -17.8 per cent in the first half 2001 to 19.3per cent during the same period this year.
Similarly, exports of the non-electronic industries are expected to expandby 1.9 per cent (2001: -2.7 per cent), especially in food; chemicals andchemical products; non-metallic products; and machinery and transportequipment. Improvements in exports of these industries are attributed tothe turnaround in exports to the US, increased intra-Asean trade andstrong demand from China, Hong Kong and Taiwan.
Export earnings from primary commodities, comprising agriculture andmineral products, are expected to register RM40.02 billion this year.
Export receipts from the mining sector, which contracted 20.1 per centduring the first half of this year mainly due to slower demand for crudeoil and liquefied natural gas (LNG), is expected to improve in the secondhalf when demand for energy rise from Japan and South Korea due to winterrequirements.
Lower production of palm oil is translated into a lower volume of export,expected to drop by 3.3 per cent this year.
Earnings from palm oil exports, however, is projected to rise 37.7 percent this year due to higher prices.
Total export of rubber, the bulk of which is SMR, is expected to contract9.8 per cent this year, partly due to the reduction in total area ofrubber cultivation and 10 per cent drop in exports determined under theBali Declaration in 2001.
Export volume of crude petroleum is projected to fall by 8.8 per cent to13.4 million tonnes (2001:14.7 million tonnes), while its price isexpected to stablise around US$24 (US$1 = RM3.80) per barrel (2001:US$24.92).
Subsequently, export revenue from crude petroleum is projected to declineby 9.8 per cent to RM8.79 billion (2001:RM9.75 billion).
Similarly, LNG exports are forecast to drop by 23.2 per cent, while exportvolume will fall marginally by 1.9 per cent to 15.2 million tonnes.
This translates into a fall of 24.7 per cent in export earnings to RM10.18billion.
The US, Singapore, the European Union (EU) and Japan remain Malaysia’smajor trading partners, absorbing 63.1 per cent of Malaysia’s totalexports.
On the import performance, Malaysia is expected to maintain the increasein the gross value of imports, including cost, insurance and freight,throughout the year due to improvements in business and consumerconfidence.
Growth in imports is estimated to be 6.4 per cent this year (2001: -9.9per cent), mainly due to a rise in imports of intermediate and consumptiongoods.
Imports of intermediate goods, which accounts for 71.5 per cent of totalimports, grew in response to the rebound in manufacturing output andinventory adjustments.
In line with sustained private consumer spending, imports of consumptiongoods, which accounts for 6.2 per cent of total imports, strengthened by8.9 per cent during the first half this year.