Economical Overview
Malaysia is a dynamic country which is constantly evolving. Being a middle-income country,
Malaysia has transformed itself since the 1970s from a producer of raw materials into an
emerging multi-sector economy spurred on by high technology, knowledge-based and capitalintensive industries. Malaysias Economic Performance ranking improved to 7th place out of 59
economies this year compared with 12th position in 2007.1 It is one of the 20 largest trading
nations worldwide and was headed of Taiwan, Sweden, Canada, Australia, the United Kingdom
Malaysias economy attains 7th position, New Straits Times, 20th May 2011
and Switzerland.2 The World Competitiveness Yearbook 2011 Report released by the Institute for
Management Development (IMD) continued to rank Malaysia as among the top 5 most competitive
nations in the Asia-Pacific region, taking 6th position in the 20 million population category and 2nd
position after Taiwan in the GDP per capita less than US$20,000 category.3 Moreover, the country
is the 21th largest exporter among all trading nations worldwide.
Strategically located in the heart of South-East Asia, Malaysia offers a cost-competitive location
for investors intending to set up offshore operations in order to manufacture advanced
technological products for both regional and international markets. In addition, Malaysia has a
market-oriented economy which is supported by pro-business government policies. Last year, the
Malaysian Government launched the Economic Transformation Programme (ETP) which is
managed by PEMANDU (Performance Management & Delivery Unit) under the patronage of the
Prime Minister.4 The ETP identifies 12 National Key Economic Areas (NKEAs) which are drivers of
economic activities that have the potential to materially contribute to the growth of Malaysia. Its
objective also known as Vision 2020 is to transform Malaysia into a high income country
by year 2020. The programme will lift Malaysias Gross National Income (GNI) to US$523 billion by
2020, and raise per capita income from US$6,700 to at least US$15,000, meeting the World Bank's
threshold for high income nation.5 To achieve the targets set, Malaysia needs an annual growth of
GNI of 6%. There are plans to revitalize Malaysia's private sector, to grow the service sector from
58 to 65% and to create 3.3 million new jobs.6 The Government will also introduce other
transformation plans in 2012.7
In Malaysia, the 2011 GDP growth edged lower to 4.0 percent year-on-year due to a weaker
domestic demand. Further implementation of ETP projects and a RM232.8 billion 2012 Budget
tabled by Prime Minister Datuk Seri Najib Razak will boost domestic demand, but unlikely to
offset underperformance in net exports8.
Ibid.
3 Ibid.
4 See www.pemandu.gov.my .
5 Forbes.com, 21st September 2011.
6 Ibid.
7 Malaysia Budget 2012 Main Highlights, www.financesentral.com accessed on 21st November 2011.
8 Malaysian Economic outlook by Malaysian Institute of Economic Research (MIER), www.mier.org.my/outlook 21.11.
2
Currency:
Exchange rates:
Inflation rate:
Exports:
Exports - commodities:
palm oil
Imports:
Imports - commodities:
Imports - partners:
Unemployment rate:
3.0% (2011)11
3,6%13
According to the Malaysian Investment Development Authority (MIDA)16, the growth of domestic
downstream plastic processing activities can be attributed to the existence of a developed
13
14
15
petrochemical sector in Malaysia. The sector provides a steady supply of materials for the plastic
industry with world-scale resin production facilities. Other engineering plastics, such as
polyamides (nylons) and polycarbonates (PC), continue to be imported. These engineering
plastics are mainly used for the production of parts and components for the E&E, automotive,
medical equipment and construction industries. In flexible packaging, more bio-, photo- or
chemical- degradable plastics are being introduced with increasing awareness on environment
protection.
16
Malaysian Investment Development Authortiy (2011). Industries in Malaysia. Retrieved December 16, 2011 from
http://www.mida.gov.my/env3/index.php?page=petrochemical
17
Malaysian Plastics Manufactueres Association (2011). http://www.mpma.org.my/p_ho.asp?ThemeID=211
5
builderwares
plastic furniture
Production
As the below table shows, there was an increase in the production of plastics in primary forms
and synthetic rubber. In comparison to the previous year, there was an increase of 26.1% and
therefore RM255,866Mio. more than in 2010. In October 2011, Malaysia recorded RM1.235,192Mio.
compared to RM979,326Mio. in 2010.
Exports
The table below shows that the total exports of plastic products in 2011 increased by 15.48%
compared to the previous year. While Malaysia spent RM4,095.659Mio. in 2010, there were RM
4,729.660Mio. spent already in 2011. Thereby, the market share of plastic exports was 3.14%
compared to the total exports Malaysia had.
Total plastic
sector
2009
2010
2011
Change
2010/11 (%)
Exports in US
Dollars (Mio.)
2,860.812
4,095.659
4,729.660
15.48
Market share
(%)
2.96
3.16
3.14
Table 2 - Plastics exports between 2010 & 2011 in the Malaysian plastic industry
With regard to the plastics exports there were three main products sold to other countries
naming plastics in non- primary form such as box, bags and closures and for plastics in primary
7
form firstly Ethylene and secondly Polyether. All of them had increases in 2011. While the export
of boxes, bags etc. recorded the smallest change of 8.85%, Ethylene and Polyether had 19.74%
and 28.73% respectively compared to 2010.
Box, bags,
closures etc.
Ethylene,
primary form
Polyether,
expoxide
2009
2010
2011
Change (%)
US$
507.402
687.503
748.340
8.85
Share (%)
17.74
16.79
15.82
US$
377.812
572.038
684.957
13.21
13.97
14.48
US$
344.362
514.913
662.824
12.04
12.57
14.01
19.74
28.73
Table 3 - Export of boxes, bags etc., ethylene & polyether in Malaysia from 2009 2011
Singapore continued to be the leading export destination for plastic products with a share of 20
per cent. Major export items includes, containers and bottles, plastic bags and sacks, plastic
stoppers, lids and articles of Plastics such as plastic pipe sealing tape, plastic medical and
surgical, welding protective mask, frames and handle.
Exports to Japan, as the second largest destination, recorded a decrease of 28.2 percent. The
main export items were, plates, sheets, film, foil and strips of plastic with a share of 61.2 per
cent and containers and bottles, plastic bags and sacks, plastic stoppers, lids and cap, 26.4 per
cent
Other major export markets were:
the UK
the USA
Thailand
Imports
The amount of money spent on the import of plastic has been steadily growing over the last three
years. Whereas Malaysia spent $2,268.551Mio. on the import of plastic in 2009, they had costs of
$3,432.452Mio. in the following year. Moreover, there has been an increase of 19.95% in 2011
which lead to costs of $4,117.241Mio. The shares of plastic for those years in relation to the total
imports of Malaysia were between 2.99% and 3.31%.
Total plastic
sector
2009
2010
2011
Change
2010/11 (%)
Imports in US
Dollars (Mio.)
2,268.551
3,432.452
4,117.241
19.95
Market share
(%)
2.99
3.24
3.31
With regard to the import of plastic in primary form, Ethylene and Polyether were the two with
the highest import rates. Once again, the money spent in Malaysia for plastic continued to growth
over the last three years. While imports recorded RM584.205Mio. for Ethylene and RM536.026Mio.
for Polyether in 2010, the data from 2011 showed Rm732,869Mio (Ethylene) and RM605,902Mio.
Thus, the market shares were about 17.02% and 15.62% respectively in 2010 and 17.80% and
14.72% in 2011.
2009
2010
2011
391.605
319.605
584.205
18
536.026
732.869
605.902
http://www.ice.gov.it/paesi/asia/malaysia/upload/173/MALAYSIA%20PLASTIC%20PROCESSING%20MACHINERY%20MARKET%20REPORT
%202010.pdf
9
Market share
(%)
17.26
14.09
17.02
15.62
17.80
14.72
Projects of MPMA
Malaysian Plastics Design Centre (MPDC)20
The Malaysian Plastics Design Centre was initiated in 1995 with assistance and support from the
Ministry of International Trade and Industry (MITI). MPDC is a company limited by guarantee
formed in January 1998 to operate the Centre. The main objective of the Centre is to develop
new designs for plastic products aimed at creating own brand names for Malaysian-made plastic
products.
19
20
http://www.aseansources.com/jsp/malaysia_plastic.jsp
http://www.mpma.org.my/p_ho.asp?ThemeID=212
10
MPDC provides design services from concept design to engineering design. The other related
services rendered by MPDC are graphic design and rapid prototyping. MPDC in collaboration with
local and international institution also offers short courses in design in future.
MPMA Plastics Technology Training Centre21
MPMA-PTTC was set up in 1993 with the objective of upgrading the skills of the workforce in line
with the technological progress of the plastics industry. The role and objectives of MPMA-PTTC is
to provide facilities for developing and upgrading manpower skills, to act as a "vehicle" for
technology transfer from foreign to the local plastics industry and to assist in the establishment
of links between the plastics industry and the government, research institutions, local or foreign
training agencies. Currently, MPMA-PTTC has three branches, namely MPMA-PTTC Northern
Branch/PSDC, MPMA-PTTC Johor and MPMA-PTTC Selangor.
21
http://www.mpma.org.my/p_ho.asp?ThemeID=253
11
http://www.miti.gov.my/cms/documentstorage/com.tms.cms.document.Document_422f978c-c0a8156f-d9c0d9c082fe5b9b/MQB_Q22011.pdf
22
http://www.mpma.org.my/p_ho.asp?ThemeID=192
12
environmental impacts have came up, environmental friendly packaging in the plastic industry
has became an often discussed topic. It is not only that consumers are buying products that are
eco-friendly but manufacturers also realize the potential of cost savings from materials and
packaging, making pro-environment designs and materials become the preferred choice of
houseware producers and buyers. Besides, manufacturers use more recycled content in their
production and make their products more readily recyclable. Above all, according to the MPMA
the use of biodegradable plastics will reduce the proportion on non-biodegradable and ozone
depleting plastic bags.
Conclusion
Prospects for future developments are still bright as plastics will continue to be the materials for
the future in many industrial and consumer applications. According to the Malaysian Plastic
Manufacturers Association (2011), there are benefits for the industry in various ways. The three
most important benefits are arising from the export sector and the local demand. First of all, an
increase in the exports for plastic packaging is expected since for example the food sector will
need more packaging material. Moreover, the local demand will increase as well since the
automotive sector in Malaysia itself needs plastic due to improving consumer spending. Finally,
the increase in in-direct export for electrical and electronics appliances will lead to bigger
production in the plastic sector which can be lead back to a stronger purchasing power.
The globalization nowadays will increase trade opportunities for the resins and plastic industry,
however at the same time it will also expose Malaysian manufacturers to competition. Thereby,
the major problems that come with globalization are higher production costs and environment
concerns. Furthermore, regulations such as the Registration, Evaluation and Authorization of
Chemical Substances (REACH) or Waste Electrical and Electronics Equipment (WEEE) initiated by
the EU and other economies, make the use of plastics stricter for the global plastic industry.
Thus it is crucial for the Malaysian plastics industry to strengthen its competitiveness through the
continued acquisition of the appropriate technologies as well as enhance skills training and
marketing capabilities. If they do so, Malaysia can continue to penetrate new markets in
developed and developing economies successfully.
13
Contact:
Mr. Thomas Brandt at: thomas.brandt@malaysia.ahk.de
Ms. Schvonne Choo at: schvonne.choo@malaysia.ahk.de
We hope the market report serves you with actual information on the Malaysian market. Our
core business is to establish contacts, finding distribution partners, project acquisitions, etc. our
Office-in Office will give you a permanent address to develop the market. Please contact us
for further information.
14