Guest Article by Derrick Cowan, Marketing Officer at MATRADE Frankfurt
Malaysia’s trade performance with Germany in 2015 was exceptional. Malaysia’s exports to Germany topped EURO 7 billion for the very first time.
Malaysia is now Germany’s 29th largest global import source closely behind India and South Korea. Should oil prices remain depressed, Malaysia may displace Norway and gain 28th position in the near future. The gap with South Africa in 30th position has widened as economic difficulties in that country worsen.
Malaysia remained Germany’s 2nd largest source of imports from ASEAN behind Vietnam and has widened the gap with Indonesia and Thailand which are in 3rd and 4th place respectively.
Generally speaking, Malaysia’s bilateral trade with Germany in 2015 benefitted from a healthy German economy resulting in a strong expansion of imports from Malaysia. Indeed, the total visible trade between Malaysia and Germany reached an all-time high in 2015. Valued at €11.8 billion (ca. RM 57 billion), it was 8.1% higher than the €10.9 billion achieved in 2014. Moreover, Malaysia is one of only a handful of countries enjoying a trade surplus with Germany according to the official German and Eurostat figures. Malaysia’s visible trade surplus with Germany grew by a further 62.25% to almost €2.2 billion in 2015 (RM 10 billion).
Imports from Malaysia to Germany increased by 14% to €7 billion. This compares very favourably with the 4.26% average growth rate for German imports from all global sources in the same period albeit depressed by lower energy import costs.
Broad range of products
German imports from Malaysia are broad based and cover a number of products in up to 100 customs categories. They encompass established items such as palm oil, cocoa, rubber and timber together with derivative down-stream products including organic chemicals, soap stock, rubber gloves, tyres, latex and chocolate. The top five import product categories accounted for 85.78% of total German imports from Malaysia in 2015.
The single largest product group are E&E products which contains a wide variety of high-tech items, components and finished electrical products. They make up 50.5 % of the total and grew by almost 16% in value to €3.6 billion in 2015. Malaysia’s import market share moved up to 3.18% from 3.05% to become Germany’s 12th largest supplier in this product category. Only China, Japan and Taiwan export more E&E products from Asia to Germany.
The current growth items are semiconductors including LED components and photovoltaic (solar) cells (+ 21.9%). Together with vacuum cleaners, primary cell batteries and radio receivers which were also performing well, they have kept Malaysia in the forefront of import sources to Germany. In other areas product obsolescence, weak demand and lower prices caused falls in import values.
The total value of imports of machinery products from Malaysia to Germany rose by over 15 % to €1.14 billion mainly as a result of a substantial increase in imports of printers. Import value soared by 30% to €457 million to meet rising demand.
Imports from Malaysia have also been rising in a number of other product areas at above average growth rates. These include motor engines, gas turbines, tobacco machinery, industrial furnaces and ovens, air & vacuum pumps and air conditioning equipment. Further growth in the machinery sector can be expected as business contacts between Malaysian and German manufacturers intensify. The third largest import product category behind E&E and machinery products includes a range of medical instruments and equipment such as catheters, spectrometers, oscillators and optical products used mainly for medical examination and analysis. Imports of medical devices (excluding apparel) from Malaysia were up by an impressive by 21.37% to €244.2 million. In 2015 Malaysia overtook Poland and pulled ahead of several competitors recording much lower rates of growth such as Mexico, Italy Austria and South Korea.
Taken together with imports of other medical devices such as surgical and examination gloves the market for medical products is currently generating over RM 2.5 billion in export revenues for the Malaysia.
Speaking of gloves: Malaysian manufacturers increased their share of the German gloves market to 54% leaving their rivals well behind. Thanks to the presence of brand leaders of among others, Supermax, Top Glove and Sempermed, further growth can be forecasted.
Latex gloves imports from Malaysia were up by 30.6% to the record level of €263 million. This figure includes rubber gloves for household, garden and industrial use.
German imports of rubber and rubber products have been lower in recent years as a result of weak commodity prices but recovered in 2015 rising marginally in value by 0.89% to €13.11 billion. Within this total, imports from Malaysia grew at the faster rate 0f 5.7% to €425 million.
This respectable growth rate was achieved as a result of buoyant demand for finished products such as tyres and industrial rubber products used in the engineering sector which more than compensated for yet another drop in the value of natural rubber imports, down by 20.87 % to €127.4 million.
Fats & oils comprising mainly of refined palm kernel oil increased as Malaysia gained market share at the expense of competitors. While global imports of all fats & oils to Germany grew by 2.84% to €3.66 billion in 2015, imports from Malaysia rose at the faster rate of 3.54% to €186.3 million. This also indicates that palm kernel oil is gaining market share at the expense of other oils. Recent adverse publicity concerning plantation development at the expense of the natural jungle and habitat of Orang Utangs in Kalimantan have had little if any commercial impact on trade.
Palm oil is established as a leading resource in terms of properties, quality and cost effectiveness. The establishment of integrated distribution facilities via the Netherlands has helped to consolidate palm oil’s competitive position vis-a-vis other vegetable oils. There is growing competition from relatively new suppliers in West Africa and South and Central America but growing world–wide demand is expected to absorb any increases in supply.
Closer economic and trade ties between the diverse nations in South East Asia are being reflected in the regional trade figures. There is also little doubt that Malaysia is one of the main beneficiaries of this development which is increasingly attracting highquality inward investment from Europe and elsewhere. Malaysia stands out as a stable business partner in an increasingly unstable world.
Malaysian enterprises are also showing keen interest to find mutually profitable investment projects in Europe by means of mergers, acquisitions and joint ventures. Potential German partners in Germany should contact MATRADE in Frankfurt if they are seeking Malaysian investment partners.