2 nd NATIONAL EXPORT FORUM 2008 Steven C.M. Wong* Institute of Strategic and International Studies (ISIS) Malaysia

1. Future Outlook of Malaysia’s Export Performance 2nd NATIONAL EXPORT FORUM 2008 Steven C.M. Wong* Institute of Strategic and International Studies (ISIS) Malaysia * The opinions expressed are solely those of the speaker

2. Future Outlook of Malaysia’s Export Performance OUTLINE Present status Short-term outlook Medium- to longer-term horizon Conclusions

3. Future Outlook of Malaysia’s Export Performance PRESENT STATUS Strong growth in export value since 2001 Manufactured products account for more than 75%, and electrical and electronics about 45%, of total exports ASEAN countries, particularly Singapore, Thailand, Indonesia and Vietnam, represent a quarter of the total export market The US is the largest single market (16%), followed by the EU countries (13%) and Mainland China (9%) and Japan (9%) Fastest growing markets have been those of ASEAN, Northeast Asia and the South Exports to US, comprising mainly E&E products, have been tapering off and begun to show decline

4. Future Outlook of Malaysia’s Export Performance TOTAL EXPORT VALUE, 2000-2007(e)

5. Future Outlook of Malaysia’s Export Performance MAJOR EXPORTS, 2007(e)

6. Future Outlook of Malaysia’s Export Performance MAJOR EXPORT MARKETS, 2007(e)

7. Future Outlook of Malaysia’s Export Performance GROWTH OF MAJOR EXPORT MARKETS, 2000-2007(e)

8. Future Outlook of Malaysia’s Export Performance SHORT-TERM OUTLOOK Exports to the US look increasingly vulnerable, with high risks (not certainty) of an economic recession The combined impact on Malaysian exports could be substantial taking into account parts & component (P & C) trade with the US as the final destination market Compounding the uncertainty is the price-quantity effect of appreciated Asian currencies on US demand De-coupling scenarios only work if domestic absorption is substantially and simultaneously increased in the Rest of the World East Asian countries are investing too much and consuming too little Economic integration of East Asia is production-oriented and not consumption-based.

9. Future Outlook of Malaysia’s Export Performance SHORT-TERM OUTLOOK

10. Future Outlook of Malaysia’s Export Performance SHORT-TERM OUTLOOK

11. Future Outlook of Malaysia’s Export Performance • Intra-regional trade is concentrated. Just 30 exports account for 50% of total trade, primarily office machinery, telecommunications, electronics, textiles and clothing. • Intra-regional trade is parts and components-driven and China-centred. International production sharing has driven intra-regional trade, with Japan, Korea and Taiwan being major suppliers and China being the production platform. • Studies show before there is a sharp increase of East Asian exports to the US, intra-regional trade rises. An increase in Japanese exports to the region also leads to higher exports to the US. SHORT-TERM OUTLOOK

12. Future Outlook of Malaysia’s Export Performance SHORT-TERM OUTLOOK

13. Future Outlook of Malaysia’s Export Performance MEDIUM- TO LONGER-TERM HORIZON

14. Future Outlook of Malaysia’s Export Performance MEDIUM- TO LONGER-TERM HORIZON

15. Future Outlook of Malaysia’s Export Performance MEDIUM- TO LONGER-TERM HORIZON

16. Most Favoured Nation Free Trade Area Customs Union Economic Union Preferential Trading Arrangement Free Trade Area Plus Common Market Future Outlook of Malaysia’s Export Performance MEDIUM- TO LONGER-TERM HORIZON

17. Future Outlook of Malaysia’s Export Performance MEDIUM- TO LONGER-TERM HORIZON

18. Future Outlook of Malaysia’s Export Performance CONCLUSIONS