Malaysia should ‘increase trade with regional partners’

Malaysia should take advantage of its unilateral free trade agreements to further expand market potential and to counteract any possible impact from the implementation of tariffs by United States President Donald Trump.

On 2 April, the US government announced that Malaysia will be hit with 24% tariffs, effective 9 April 2025.

Director of the Master of Business Administration Programme at Putra Business School, Associate Professor Ahmed Razman Abdul Latiff, said this effort could ensure that Malaysia is not overly dependent on one or two major trading countries, such as the US and China.

Among the free trade agreements that Malaysia has signed are the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and also as a partner country of Brazil, Russia, India, China and South Africa (BRICS).

“Also as ASEAN chair, Malaysia should take the opportunity to increase trade activities within the region for the benefit of the country and its member countries,” he said.

Regarding Malaysia’s chairmanship of ASEAN this year, Ahmed Razman said the smooth running of ASEAN-related meetings so far would have a positive impact on the country from an economic, investment or trade perspective.

This, he said, was evident when Bank Negara Malaysia had projected the country’s economic growth at 4.5% to 5.5% this year, which would be driven by increased domestic economic activity alongside the influx of foreign investment, including from ASEAN countries themselves.

Economy grows by 5.1% last year

Malaysia’s economy grew by 5.1% in 2024, up from 3.6% in 2023, according to the country’s Chief Statistician, Mohd Uzir Mahidin.

“All major sectors recorded growth, with the services sector leading at 5.4%. The manufacturing sector expanded by 4.2%, while construction saw a remarkable increase of 17.5%. The agriculture sector registered a growth of 3.1%, reflecting steady progress in the sector,” he said, adding that mining and quarrying posted a slower rise of 0.9%, contributing to the overall economic expansion.

Maintaining its upward trend, Malaysia’s industrial production recorded moderate growth in January 2025, with the Industrial Production Index (IPI) rising by 2.1% year-on-year.

The increase was primarily driven by the manufacturing sector, which expanded by 3.7%, though at a slower pace than the 5.8% growth recorded in December 2024. Meanwhile, the mining sector contracted by 3.1% whereas the electricity sector recorded a slight decline of 0.1%. On a month-on month basis, the overall IPI slipped by 0.4%, reflecting a slowdown in industrial activity.

Sustaining its growth trajectory, Malaysia’s manufacturing sector continued to expand, with total sales reaching RM1.9 trillion (£325 billion) in 2024. In January 2025, the sector recorded a 3.5% increase in sales value, reaching RM158.1 billion, following a stronger growth of 5.7% in December 2024.

Leading this expansion, the food, beverages and tobacco industry recorded a notable rise of 10.6%. Similarly, the electrical and electronics sector posted solid growth, climbing 7.3%. Contributing further, non-metallic mineral products, basic metal, and fabricated metal products registered a moderate increase of 2.1%. However, on a month-on-month basis, this sector recorded a dip of 0.2% compared with December 2024.

Taking a broader perspective, Malaysia’s wholesale and retail trade sector recorded RM148.9 billion in sales in January 2025, marking a 4.6% increase compared to the same month last year. This growth was primarily driven by strong performances in retail trade, which expanded by 8.2%, and wholesale trade, which grew by 4.9%.

In tandem with this upward trend, the volume index also registered a year on-year increase of 3.8%, reflecting sustained demand in both retail and wholesale segments. However, on a month-on-month basis, total sales declined by 2.1% as compared with December 2024. This contraction was largely attributed to a significant drop in motor vehicle sales, which plummeted by 19.4%, highlighting a slowdown in consumer spending within the automotive sector.

Amid steady economic conditions, Malaysia’s inflation remained stable at 1.7% in January 2025, holding steady at the same rate recorded in December 2024.