Malaysia - Country Commercial Guide
Agricultural Sector

This is a best prospect industry sector for this country. Includes a market overview and trade data

Last published date: 2021-11-06

Overview

The agriculture, fisheries, and forestry sectors employ roughly 10 percent of the Malaysian labor force and account for about eight percent of the country’s GDP.  Palm oil, rubber, cocoa and wood products account for around half of the output while other significant contributors include tropical fruits and rice.

Malaysia is the world’s second largest palm oil producer and exporter after Indonesia. Malaysia palm oil production accounted for 26 percent of world production and 34 percent of world exports in 2020.  As additional land for palm oil production is unavailable, any increase in national production at this point would have to come from yield and productivity increases. Malaysian palm oil companies also have a big presence in Indonesia and have invested in palm oil refineries in major markets such as Europe, India, China, and the United States. Many of Malaysia’s largest and most successful companies are palm oil plantation enterprises where the state holds an ownership share. Even though the United States has been a significant importer of Malaysian palm oil for the past several years, Malaysian palm industry representatives can be highly critical of U.S. interests and policies. This stems from their belief that the U.S. soybean sector is a commercial competitor and because of the EPA’s ruling that palm oil is not an acceptable feed stock under the Renewable Fuel Standard.

Poultry is the dominant protein consumed in the country. The poultry sector is relatively strong and well developed. The swine sector is centralized and regulated by GOM to ensure the industry is free from disease outbreaks after the outbreak of Nipah virus in 1998. No significant beef industry exists.

Malaysia has a relatively strong agricultural research capability, especially in the palm oil sector, and the extension system is effective. The GOM subsidizes rice production through support prices, input subsidies, and consumer subsidies. Although the Ministry of Agriculture does focus on other sectors, almost all new meaningful agriculture investment is destined to the palm oil plantation sector.

There is no commercial production of genetically engineered (GE) plants in the country.  However, the Malaysia livestock feed industry is a significant importer of GE products and as of July 2021, 50 GE events have been officially approved for import and market release for food, feed, and processing. The Malaysian Ministry of Health (MOH) published guidelines on GE labeling in 2013 to ensure food safety and provide guidance to the food industry and consumer. The guidelines stipulate that labeling is mandatory for products with GE content over three percent. Although this regulation was published six years ago, it has yet to be enforced.

Malaysia’s Food Act 1983 and the Food Regulations of 1985 govern food import and export regulations or procedures. The MOH Food Safety and Quality division, along with several other government agencies are charged with implementing and enforcing the law under these statutes, including routine compliance, sampling, inspection, import control, and regulation. Malaysia’s halal certification and dairy facility registration requirements are notable among the many regulations and required procedures related to shipping food and agricultural products to the country.

Halal Certification: Many food products, e.g. beef and poultry, require halal certification to enter Malaysia. This requirement is easily the largest barrier to further expanding trade with the country. Currently, the Islamic Development Foundation of Malaysia (JAKIM) is the only authorized entity allowed to issue halal certification. In the United States, JAKIM appointed three Islamic institutions to inspect and halal certify food and beverage products for export to Malaysia: the Islamic Food and Nutrition Council of America (IFANCA), the Islamic Services of America (ISA), and the American Halal Foundation (AHF).

Dairy Facility Registration: In March 2018, Malaysia implemented a measure that requires foreign producers and exporters of dairy products to Malaysia to apply for registration with the government. According to trade contacts, Malaysia implemented this facility registration measure to improve the traceability of imported dairy products and to ensure imported dairy products were certified halal. Applications from dairy facilities with a history of exporting to Malaysia were given expedited review upon implementation of this statute while new to market suppliers were given standard reviews lasting a reported three to six months.

Agricultural Trade: Malaysia’s global agricultural trade reached $45.5 billion in 2020 with exports of $26.8 billion and imports of $18.7 billion. Palm oil is the dominant export, and the leading markets over the past several years for this Malaysian product include India, the European Union, China, Pakistan, and the United States. Thailand, Indonesia, and China are the top suppliers of agricultural products to Malaysia, with the United States ranked sixth in 2020. Despite the agricultural trade surplus with the world of $8.1 billion, Malaysia nonetheless still heavily relies on imports for many key products, including wheat, rice, protein meal, dairy products, beef, and most deciduous and citrus fruits.  

With a size equivalent to the state of New Mexico, Malaysia also supplies about 24 percent of the global demand for vegetable oil. The only non-perennial crop grown in significant quantity is paddy rice with 700,000 hectares (11 percent of the total area).  

U.S.-Malaysia bilateral agricultural trade was $2.15 billion in 2020 with the United States recording a $2.7 million trade deficit. U.S. agricultural product exports in 2020 saw a drop of 8 percent to $1.1 billion compared to $1.2 recorded in 2019. Soybeans continue to remain the top U.S. export to Malaysia with sales reaching $2.4 million for 2020.

Malaysia’s Food and Agricultural Market

Major Products, Market Shares by Value, and Competitor Situations

Product Category (2019)

Major Supply Sources (2019)

Foreign Supplier Situation

Local Supplier Situation

Dairy Products

Net Imports:

$1.56 billion

New Zealand: 29 percent

Thailand: 12 percent

U.S.: 10 percent

Australia: 9.5 percent

New Zealand and Thailand are strong competitors in the market due to free trade agreements.

 

The United States is one of the largest suppliers of whey.

Local production is insufficient to meet consumer demand.

Beef

Net Imports:

$5.29 million

India: 75 percent

Australia: 14 percent

New Zealand: 4.4 percent

Brazil: 4.2 percent

Major foreign suppliers have a significant portion of their beef industry halal-certified for export to Malaysia.

 

Beef from India is very cheap and serves low-end outlets.    

 

Australia dominates the higher-end market.

Inadequate supply of local beef.

Wheat and Wheat

Flour

Net Imports:

$326 million

Australia: 34 percent

U.S.: 24 percent

Canada: 15 percent

Ukraine: 12 percent

Australia is a strong competitor in the wheat and wheat flour market.

 

Demand for high-quality U.S. wheat for the local baking industry is growing.

No local production

Processed Fruits

Net Imports:

$2.31 million

China: 28 percent

U.S.: 17 percent

Thailand: 11 percent

Tunisia: 9 percent

Dried and processed fruits from China and Thailand are price competitive.

 

U.S. raisins are currently in very strong demand in the retail and bakery industries.

Limited local production.

Tree Nuts

Net Imports:

$1.83 million

Indonesia: 38 precent

U.S.:  19 percent

China: 12 percent

Vietnam: 5 percent

Imported nuts are in increasingly strong demand for use in the bakery and snack food industry.

Limited local production.

Potatoes (Fresh, Chilled and Frozen)

Net Imports:

$1.72 million

China: 52 percent

Pakistan: 10 percent

Bangladesh: 10 percent

U.S.: 7 percent

Chinese potatoes are price competitive.

 

High quality potatoes from the United States and other sources are in demand for the high-end retail market, the chipping industry, and for the manufacturing of snacks.

U.S. frozen potatoes dominate the fast-food chain industry.

Limited domestic production.

Pork (Fresh, Chilled, and Frozen)

Net Imports:

$5.8 million

Germany: 42 percent

Spain: 16 percent

Singapore: 14.5 percent

Netherlands: 12.4 percent

Currently E.U. prices are competitive and several E.U. plants are approved for export to Malaysia.   

 

Demand for U.S. pork has increased significantly in 2020 and multiple U.S. plants are now approved to export to Malaysia.

Domestic demand for pork has grown significantly over the past several years and local industry is limited.

Soybeans

Net Imports:

$3.07 million

U.S.: 80 percent

Canada:  12 percent

Brazil:  4 percent

Argentina:  2 percent

Demand for U.S. soybeans surged in 2020.

Roughly 85 percent of livestock feed ingredients are imported.

Soybean Meal

Net Imports:

$520 million

Argentina: 96 percent

Argentinian soybean meal is price competitive and dominates the market.

Roughly 85 percent of livestock feed ingredients are imported.

1. Source: Trade Data Monitor

Opportunities

  • U.S. food and agricultural products are trusted and perceived to be of high quality.
  • The growing Malaysian hotel, restaurant, and institutional retail and food processing sectors require a wide range of imported food products and ingredients.
  • Rising disposable income in Malaysia is driving demand for high quality imported food and beverage products.
  • Many U.S.-style restaurants operate throughout the country, providing new-to-market U.S. products easier market acceptance.   

U.S. Product Challenges in the Malaysian Market

  • Many U.S. products need to be halal certified, which can be a lengthy, complicated process.  
  • Australia and New Zealand both have free trade agreements with Malaysia and have a strong presence in the country’s consumer-oriented food and beverage market.  
  • In addition to strong competition from Australia and New Zealand, products from China and other ASEAN countries are gaining market share. 
  • Many U.S. exporters are unfamiliar with the market and are therefore sometimes unable to meet specific requirements and order sizes.

Best Prospective U.S. Products for the Malaysian Market

U.S. Products

2019 Import Value

(million USD)

2020 Import Value

(million USD)

Growth

(percent)

Soybeans

237

240*

1

Dairy Products

109

157*

44

Processed Vegetables

71

52

(27)

Tree Nuts

37

38*

3

Processed Fruit

36

24

(33)

Beef

1

0.6

(40)

2. Source: U.S. Census Bureau Trade Data

Notes: Excellent opportunities for U.S. beef exist in the market provided the required Malaysian halal certifications can be obtained. * Denotes record sales.

Resources

USDA Foreign Agricultural Service Malaysia 

Office of the Agricultural Affairs 

Embassy of the United States of America

376, Jalan Tun Razak 

Kuala Lumpur, Malaysia 50400

Tel: (011-60-3) 2168-5082

Fax: (011-60-3) 2168-5023

AgKualaLumpur@fas.usda.gov 

 

Malaysian Government:

  • Ministry of Agriculture Department of Veterinary Services
  • Ministry of Finance Customs Headquarters