KUALA LUMPUR: As 2024 draws to a close, the trade and investment landscape stands as a testament to Malaysia's resilience and strategic vision amid global economic uncertainties.
The country's trade performance in 2024 showcases steady growth, underpinned by its strong export-oriented economy.
International Trade and Industry Ministry and the Malaysia External Trade Development Corporation have played pivotal roles in shaping a year marked by significant achievements and forward-looking initiatives.
Robust and Resilience
According to Matrade, Malaysia's trade demonstrated robust growth and resilience, marking a significant rebound after a challenging period.
In January, trade surged 13.3 per cent year-on-year (YoY) to RM234.73 billion, driven by a rise in exports and imports.
February maintained positive momentum with trade growing 3.3 per cent YoY to RM211.79 billion, despite a slight dip in exports.
By March, Malaysia achieved its highest historical first-quarter trade value of RM690.59 billion, reflecting a 7.1 per cent YoY increase and a trade surplus of RM34.22 billion.
The upward trajectory persisted into April, with trade expanding 12.1 per cent YoY to RM221.74 billion.
May saw the highest trade value since October 2022, with a 10.3 per cent YoY growth to RM246.31 billion, supported by strong exports of electrical and electronic (E&E) products and palm oil-based agriculture products.
June followed suit, achieving an 8.7 per cent YoY increase to RM237.81 billion, contributing to a first-half trade value of RM1.396 trillion, an 8.4 per cent rise over the corresponding period in 2023.
In the second half of the year, trade continued its growth streak.
July marked the fastest YoY growth rate in 21 months at 18.3 per cent, while August recorded a similar strong performance, with trade increasing 18.6 per cent YoY to RM252.65 billion.
By September, Malaysia's cumulative trade value for the first nine months reached RM2.13 trillion, reflecting a 10.2 per cent YoY increase, with exports and imports rising by 5.2 per cent and 16.1 per cent, respectively.
The agriculture sector played a significant role in September's growth, contributing to a 4.7 per cent YoY trade increase.
October reinforced Malaysia's trade resilience, posting the highest periodic value ever at RM2.38 trillion for the first 10 months, with exports rising by 4.8 per cent YoY and imports by 14.6 per cent.
November continued this robust trend, achieving a record RM2.62 trillion in trade for the first 11 months, an 8.7 per cent increase compared to the same period in 2023.
The month also saw the 11th successive YoY trade growth, with exports rising 4.1 per cent and imports by 1.6 per cent, culminating in a trade surplus of RM15.29 billion, the highest in 14 months.
Investment Trend
Malaysia secured notable investments in the technology and digital sectors in 2024.
On May 30, Google announced plans to invest RM9.4 billion (US$2 billion), including the establishment of its first data center and Google Cloud region in the country.
The initiative aims to address the growing demand for cloud services globally and support artificial intelligence (AI) literacy programs for students and educators.
In September, Google Cloud signed a multi-year partnership with Dagang NeXchange Bhd (DNeX) to deliver sovereign cloud services in Malaysia, complementing its broader investment in the data center and cloud infrastructure.
In October, Oracle revealed plans to invest over US$6.5 billion to launch its first public cloud region in Malaysia, further strengthening the country's position as a hub for digital innovation.
According to the Malaysian Investment Development Authority (MIDA), Malaysia approved RM254.7 billion of investments for the first nine months of 2024 (9M24), marking a steady 10.7 per cent increase from the previous year.
"The strong performance reflects Malaysia's sustained economic momentum, propelled by the services, manufacturing, and primary sectors," the authority said.
A total of 4,753 new projects were approved in 9M24, projected to generate 159,347 new jobs for Malaysians.
Domestic investments dominated during this period, accounting for 58.1 per cent of the total approved investments, valued at RM148 billion.
Meanwhile, foreign investments contributed RM106.7 billion, representing 41.9 per cent of the total.
Selangor led the way with RM66.8 billion in approved investments, followed by Kuala Lumpur (RM63.9 billion), Kedah (RM34 billion), Pulau Pinang (RM22.6 billion), and Johor (RM18.1 billion).
The top five foreign investment sources were Germany (RM30.9 billion), China (RM10.8 billion), the United States (RM8.4 billion), the Netherlands (RM4.9 billion), and Singapore (RM4.4 billion).
Trade and Investment Outlook
MIDF Research expects external trade to continue growing next year, with exports and imports to grow at 4.9 per cent and 4.5 per cent, respectively.
"We still expect the recovery in the E&E trade and increased demand for non-E&E commodities to support export growth in the coming months. Meanwhile, imports will continue to increase in line with growing domestic demand and business activities," the firm said.
MIDF Research remains cautious that Malaysia's external trade outlook may be adversely impacted by the escalation in geopolitical conflicts, weaker final demand from major markets and slowdown in global production and trade activities.
"The intensification of trade tensions between US and China (and other regions) and introduction of protectionist policy could also constrain global trade activity next year," it added.
Universiti Kuala Lumpur Business School economic analyst Associate Professor Aimi Zulhazmi Abdul Rashid said the Malaysian economy has had a good momentum in 2024 and this needs to be maintained for 2025.
He said from a domestic perspective, the economy is both growing and stable, supported by the government's fiscal policies that promote development and the central bank's monetary measures, including maintaining the overnight policy rate (OPR).
Aimi said the efforts ensure financial market stability and adequate cash flow within the banking system.
"The approved investment approved for 2024 of RM254.7 billion must be executed quickly in 2025 so that it becomes an impetus for the national economy in the government's efforts to make Malaysia a high-income country as targeted by the Malaysia Madani plan.
"This includes developing the aspect of micro, small and medium enterprises (MSMEs) which contribute 40 per cent of the country's gross domestic product (GDP) and are employers of 60 per cent of the Malaysian workforce.
"Malaysian MSMEs need to be improved through adopting as many digital aspects as possible in their businesses, using Intelligent Intelligence (AI) and the Industrial Revolution 4.0 (IR4.0)," he told Business Times.
Aimi added that the government must continue investing on a larger scale in producing skilled and semi-skilled workers through Technical and Vocational Education and Training (TVET).
This is crucial not only for attracting foreign investments and supporting diverse forms of investments but also for raising Malaysian workers' income levels, paving the way for the nation to achieve high-income status.
"It will also create more scientists and engineers who will be the catalyst for a culture of creativity, especially in the field of research and development (R&D)," he added.
Additionally, he said the value of the ringgit needs to be strengthened especially from being influenced by external macroeconomic factors.
"It needs to be strong, competitive and stable by lifting the country's economy to a higher level. A stronger ringgit means the ability to absorb higher hikes in imports of food, which Malaysia currently exceeds RM70 billion annually," Aimi said.
This would help mitigate the impact of rising inflation, particularly in mid-2025, when the government plans to implement targeted subsidies for RON95 petrol prices.
"Such a move will have a broader impact on the purchasing power of the people," he said.