E&E – A gateway to Malaysia’s trade

Technology is growing rapidly across the world. Countries are revolutionalising by implementing technology in every aspect of the economy and livelihood of the people.

As a major part of the supply chain in the technology sector, the importance of the electrical and electronics (E&E) sector has grown significantly while its contribution to the economy has grown more pronounce, especially through the trade industry.

For Malaysia, the E&E industry remains a major growth node the country’s economy as it has been the country’s top imported and exported product for the past few years.

Our E&E industry has also been highlighted as one of the 12 National Key Economic Areas (NKEA) under the government’s Economic Transformation Programme (ETP) to propel Malaysia into its 2020 vision of being a developed nation.

“For the E&E sector, keeping pace with fast evolving technologies is crucial to the industry’s overall competitiveness vis-a-vis other regional markets.

“Increasingly, global demand for E&E through its Internet of Things (IoT) and nanotechnology morphs the industry into a game-changer foreseen, catalysing growth in other sectors,” said Datuk Seri Mustapa Mohamed, Malaysia’s Minister of International Trade and Industry, in the ETP Annual Report 2014.

He further pointed out, “Massive opportunities loom for other sectors to adopt cutting-edge technologies as a result of E&E technological enhancement inherently increasing productivity.

“These global trends are set to create new growth opportunities in the upstream and downstream segments of the industry.

“This must be the way forward for Malaysian players to remain competitive globally.”

Malaysia’s Department of Statistics in Malaysia’s External Trade Statistics report, highlighted that in 2015 Malaysia’s total trade grew by 1.2 per cent to reach RM1.466 trillion, compared to RM1.448 trillion in the previous year. This was supported by stronger growth of 5.1 per cent in the second half (2H) of 2015.

Exports grew by 1.9 per cent despite the challenging economic environment, to reach a value of RM779.95 billion and one of the major contributors to better export performance in 2015 were continued growth for E&E exports driven by demand for new applications of internet of things (IoT) for wireless communications and wearable devices;

Malaysia’s Department of Statistics reported that E&E products accounted 35.6 and 29.4 per cent of total exports and imports for 2015 compared with 33.5 and 27.9 per cent of total exports and imports reported for 2014.

A breakdown on exports of E&E products from Malaysia shows that some of the main contributors to the increase in exports to Asean were higher exports of electronic integrated circuits and other E&E products.

Malaysia’s Department of Statistics also reported that there has been an increase of exports to the US and this was driven mainly by manufactured goods which accounted for 94.8 per cent of Malaysia’s total exports to the country.

“Exports of this sector rose 16.7 per cent to RM69.81 billion owing mainly to E&E products which increased by 15.8 per cent or RM5.74 billion.

“Higher exports of E&E products were seen for photosensitive semi-conductor devices, parts and accessories for office machines, computers and data processing equipment, apparatus for transmission, domestic vacuum cleaners, parts for electronic integrated circuits as well as, apparatus for transmission or reception of voice, images and other data; for the consumer electronics industry including smart phones, computer tablets, televisions, audio and visual equipment,” it said.

Growth in Malaysia’s manufactured exports to Japan was also attributed mainly to E&E products, in particular, electronic integrated circuits, optical and scientific equipment and others.

“E&E export markets with significant increases which exceeded RM1 billion were recorded for Singapore, the USA, Thailand, the Republic of Korea, Germany, Japan and India.

“Increased demand from the European Union (EU) and greater manufacturing activities in Asean saw higher exports of E&E products to these markets, by 10.4 and 15.5 per cent, respectively,” it said.

As the demand for E&E products are increasing worldwide, the implementation of free trade agreements such as the Trans-Pacific Partnership Agreement (TPPA) has been viewed as beneficial to sector as it could expose Malaysia’s E&E sector to a wider market.

For the E&E sector, the TPPA will not only offer huge market potentials for Malaysian suppliers or investors, it will also encourage innovation and productivity in the sector.

BizHive Weekly takes a closer look at the pros and cons of FTAs on the E&E sector.