Malaysia, which is the gateway to Asia, can be considered as a production and logistics hub by Turkish businesspeople for access to countries in the region

COUNTRY PANORAMA 10.05.2021, 22:46 11.05.2021, 00:38


The new outbreak of coronavirus (COVID-19) has had a severe impact on the socio-economic situation in Malaysia, as with the rest of the world. In fact, during this period, Malaysia has experienced one of the largest economic recessions since the Asian Crisis in 1998. While unemployment rates in the country were around 3.7% during the 2009 global financial crisis, this number rose to 4.5% in 2020 due to the pandemic.

Malaysia, which grew by 5.3% on average in the last 10 years, contracted 5.6% as of the end of 2020. During the second quarter of 2020, the most vicious impact of the pandemic was witnessed when industrial and business operations were curtailed. During this period, the country downsized by 17.1%. On the other hand, however, according to the World Bank, Malaysia is projected to grow by 6% in 2021Nevertheless, despite the negative image portrayed above, we can assume that trade has been less affected by COVID-19 compared to the economy. Malaysia has continuously maintained its foreign trade surpluses since 1998, and in 2020 it continued this tradition with an increase of 26.9% to approximately $45.9 billion in foreign trade surplus.


Even though vaccination aims to assist in returning to normal,it is clear that this will define a new normal along with new paradigms and transformations. Thus, e-commerce is one of the most important topics as it is foreseen that transition, physical distancing, and mobility will still take time. Within this context, the focus will be on economic digitalisation and training a qualified workforce in this area following the pandemic. In order to achieve this, the Malaysian government supports business and companies to develop a related infrastructure and policies for the improvement of e- commerce. Support and economic improvement packages have been announced, for SMEs in particular, to assist them in eliminating the economic losses of COVID-19.

Food safety is another area that stands out with the pandemic. In this context, the aim is to modernise the agriculture and food industries to increase R&D efforts and food safety. Thus, local companies have been given support in micro-crediting issues in this respect. The diversification of supply chains is also a key topic for post-COVID economies. Malaysia has developed initiatives to address the issue by establishing trade policies to increase alternatives. Among the sectors with high potential are aviation and space, halal production, smart agriculture, automation and digitalisation, which the Malaysian government provides incentives. Furthermore, diversifying foreign investments in the health, food and agriculture sectors are also encouraged. The rubber sector seems to have accumulated profits due to the increasing demand for plastic medical gloves amid the pandemic. In 2020, the Malaysian rubber products industry exported nearly $9.7 billion with a 75.6% increase. 90% of this amount is mainly gloves and other medical products such as endotracheal tube. There are further investments made in medical glove production.

Bilateral and multilateral trade agreements are becoming increasingly important today as trade wars between the US and China continue, and globalisation takes on a different dimension. Another crucial agenda of the countries in the region include producing alternative raw materials to prevent production setbacks. Within this framework, 10 member countries of the Association of Southeast Asian Nations (ASEAN) and China, Japan, South Korea, Australia, and New Zealand, signed the most extensive free trade agreement in the world, the Regional Comprehensive Economic Partnership (RCEP). This agreement, which covers a population of 2.1 billion, is crucial for both regional economic integration and global supply chains.

About 60% of Malaysian foreign trade is carried out with RCEP countries. Although it is not possible to clearly understand the opportunities that the agreement will bring to the Malaysian economy, it is foreseen that it could contribute to the selection of the country as a hub by international companies. Some of the main sectors in Malaysia to be positively affected by RCEP are telecommunication, banking and finance, electric-electronic, chemical products, machine and equipment, and rubber. However, due to the low price competition from Vietnam, the textile industry may suffer. The RCEP agreement is expected to provide a positive value of between 0.8% and 1.7% of the GDP growth rate in Malaysia. RCEP will allow Malaysia to import raw materials at more competitive prices and enable the country to better integrate with global value chains.


Malaysia is an important economic partner for Turkey with its strategic location. Malaysia offers many opportunities for our business people with a positive image of Turkey in the country, the Free Trade Agreement between the two countries, the high-level leader visits, and close cultural relations. Ranking 12th in the World Bank’s Ease of Doing Business Rankings, the country stands out in defence, energy, food, ready-made clothing and home textiles, construction, tourism, aviation and space industry, Islamic finance and halal industries. Likewise, Malaysia imports significant amounts of machinery, tools, and equipment. Considering that Turkey is highly developed in these industries, Malaysia can be considered a significant potential for our machinery and equipment manufacturers. Malaysia imports 70% of its total food consumption along with these potentials, which provides the opportunity for fresh fruıt and vegetable export. Malaysia, which is the gateway to Asia, can be considered as a production and logistics hub by Turkish businesspeople for access to countries in the region.

Chairman of DEIK/Turkey-Malaysia Business Council Hasan Gümüş

You can view the content in the 25th issue of Katılım Finans. (MALAYSIA FOCUSES ON DIGITALISATION IN POST-PANDEMIC ECONOMY)

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