Malaysia’s services trade deficit narrows in 2019
This is on exports hitting all-time high of Rm169.8bil
“diversifying and identifying the niche industries are pertinent in the current scenario to withstand the export of services.” Datuk Seri Mohd Uzir Mahidin
PETALING JAYA: Data from the Statistics Department shows that Malaysia’s trade deficit in services narrowed in 2019 as exports hit an all-time high of Rm169.8bil, a 4% increase from the previous year due to a higher demand in the travel, air transport and professional services.
The gap in the trade balance, which has been in deficit since 2011, was seen closing to Rm10.9bil from Rm17.5bil previously.
The largest component of the services trade remained travel, which in 2019 comprised 48.4% or Rm82.1bil of total exports. Travel abroad, meanwhile, rose at an annual average of 5.3% for five years to arrive at Rm51.3bil in 2019.
In light of the Covid-19 pandemic, chief statistician Datuk Seri Mohd Uzir Mahidin highlighted the importance of diversifying Malaysia’s services export, as the crisis takes a toll on the travel industry.
“All this while, Malaysia’s services exports were too concentrated on travel, but with the new norm of Covid-19, the tourist and hospitality industries may severely be affected this year.
“Thus, diversifying and identifying the niche industries are pertinent in the current scenario to withstand Malaysia’s export of services,” he said.
According to the Statistics Department, there was growing demand in non-traditional market segments in 2019. Electronic sports or esports has helped in the growth of the gaming industry, which contributed to a lower deficit of Rm1bil in the personal, cultural and recreational services space.
In transport services, the trade deficit narrowed to Rm25.9bil from Rm27.7bil in 2018, as exports increased with rising international air passengers, while imports declined on decreasing freight activities.
The Statistics Department added that a slowdown in construction activities due to the completion and absence of mega-projects led to a substantial drop in the import of construction materials and services, which backed the narrowing services trade deficit.
Business services, meanwhile, recorded higher exports in management and consulting, architectural, engineering and technical services, and accounting services.
Geographically, Singapore remained the main destination for Malaysian exports with Rm41.5bil in 2019.
Singapore, China and Indonesia were the leading markets for travel. Exports in manufacturing services were mainly to the United States, while exports on transport mainly went to India.
For the first year, Indonesia was the top surplus contributor of services while India and Singapore took up the rear spot. China, Thailand and the United Kingdom remained the countries contributing to the largest services trade deficit.