MINISTRY OF FINANCE
Resurgent Growth In Exports In October 2018 To A Historic High Of RM96.4 Billion And A Record Trade Surplus Of RM16.3 Billion Indicates That Malaysia Is On The Right Track Towards Our 3 Year Fiscal Consolidation Plan To Put Malaysia’s Dynamic Economy Back On Track
Malaysia was truly magnificent when the Harimau Malaya football team drew with defending champion Thailand 2-2 in Bangkok to qualify for the Suzuki Cup Final. Congratulations to the team and best wishes for the final.
Another piece of good news for Malaysia was on the trade front. The resurgent growth in exports in October 2018 to a historic high of RM96.4 billion and a record trade surplus of RM16.3 billion indicates that Malaysia is on the right track towards the new Pakatan Harapan Federal government’s 3 year fiscal consolidation plan to put Malaysia’s dynamic economy back on track.
The key indicators by the latest Department of Statistics’ provisional data revealed:
- Exports in October 2018 recorded a new high of RM96.4 billion increasing 17.7% year-on-year (y-o-y). On a month-on-month (m-o-m) basis, exports increased 16.2% or RM13.4 billion from RM83.0 billion.
- On a y-o-y basis, export growth was contributed by expansion in exports to China (+RM3.7 billion), Hong Kong (+RM2.2 billion), Singapore (+RM2.1 billion), Taiwan (+RM1.4 billion) and Australia (+RM1.3 billion).
- Total trade which was valued at RM176.4 billion increased RM22.7 billion or 14.8% from October 2017. It also posted an increase of RM25.8 billion or 17.1% when compared to September 2018. The trade surplus was RM16.3 billion, an increase of RM6.3 billion (+63.1%) from a year ago. It was also higher by RM1.1 billion (+7.2%) when compared to the previous month.
On a m-o-m basis, exports increased RM13.4 billion (+16.2%) from RM83.0 billion. All main products recorded increases.
- Electrical and electronic (E&E) products increased RM5.5 billion (+16.8%) from RM32.9 billion;
- Crude petroleum increased RM1.1 billion or 40.7% from RM2.7 billion due to the increase in both export volume (+31.8%) and average unit value (+6.7%);
- LNG increased RM927.7 million (+29.5%) from RM3.1 billion due to the increase in both export volume (+27.5%) and average unit value (+1.6%);
- Palm oil and palm oil-based products increased RM599.3 million or 10.8% from RM5.6 billion. Exports of palm oil increased RM253.0 million or 7.5% due to the increase in export volume (+9.2%) as average unit value decreased 1.5%;
- Timber and timber-based products rose RM393.0 million (+22.3%) from RM1.8 billion; and
- Natural rubber recorded an increase of RM8.2 million or 2.7% from RM306.5 million due to the increase in export volume (+3.5%) as average unit value decreased 0.8%.
What is encouraging is that exports of our primary commodities which had been severely hit by falling prices and falling demand, especially palm oil and natural rubber, recorded increases in October as compared to September 2018.
This good news on the trade front must be treated with caution, because the global trade and economy is still fragile despite the 90-day truce declared in the trade war between the US and China. Such positive news follows the announcement by the Malaysian Investment Development Authority (MIDA) that approved Foreign Direct Investments (FDI) in the manufacturing sector increased by RM 35 billion, or 250%, to RM49 billion for the first nine months of 2018, from RM14.0 billion in the same period last year.
What is noteworthy is that for the months from May to September 2018, total approved FDI in the manufacturing sector was RM35 billion compared to RM7.3 billion from May to September 2017. This demonstrates that foreign investors’ confidence in Malaysia is resurgent under the new leadership of Prime Minister Tun Dr Mahathir Mohamad, with a RM27.7 billion or 379% hike in the said figures, after the peaceful transition of power that took place on 9 May 2018.
There is therefore every reason for Bloomberg on 28.11.2018 to place Malaysia as No. 1 on the top of the list of 20 emerging economies in the world, “because of its current-account surplus, relatively stable economic growth outlook, and valuations. The data also showed inflation came in at 0.6 percent in October from a year earlier, compared with its 10-year government bond yield of about 4.17 percent.”
Lim Guan Eng
Minister of Finance
Ministry of Finance Malaysia
6 December 2018