Malaysia - Commercial Guide
Agricultural Sector

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

Last published date: 2020-08-19

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 28 percent of world production and 33 percent of world exports in 2019.  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 also 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 struggling, and with the official emphasis on making the country a “halal hub,” the government would likely prefer that it disappear completely.  No significant beef industry exists. 

Malaysia has a relatively strong agricultural research capability, especially in the oil palm sector, and the extension system is effective.  Rice production is subsidized 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 June 2020, 40 GE events have been officially approved for import and market release.  The Malaysian Ministry of Health 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 Food Safety and Quality Division of the Malaysian Ministry of Health 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.  Among the many regulations and required procedures related to shipping food and agricultural products to the country, of particular note are Malaysia’s halal certification and dairy facility registration requirements.

Halal Certification

Many food products (e.g., beef or poultry) require halal certification in order 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 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.

Malaysia’s global agricultural trade reached $43.5 billion in 2019, with exports of $25 billion and imports of $18.3 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 fifth in 2019.  Despite the agricultural trade surplus with the world of $6.7 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 20 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 at $2.17 billion in 2019, with the United States holding a $128 million surplus.  With a slight increase from the previous year, U.S. agricultural product exports in 2019 reached a record $1.18 billion.  Several key U.S. products were responsible for the new record, including soybeans, processed fruit, processed vegetables, tree nuts, and prepared foods.  As a group, consumer-oriented products were nearly half the total, reflecting growing consumer demand and the burgeoning food service sector.  Soybeans continue remain the top U.S. export to Malaysia with sales reaching $237 million for the year.   

Malaysia’s Food and Agricultural Market Situation

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:

USD $1.3 billion

New Zealand: 36%

Australia: 9%

U.S.A.: 9%

Thailand: 6%

New Zealand and Australia 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:

USD $485 million

India: 73%

Australia: 16%

New Zealand: 5%

Brazil: 4%

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 the low-end outlets.    

 

Australia dominates the higher-end market.

Inadequate supply of local beef.

Wheat and Wheat

Flour

 

Net Imports:

USD $331 million

Australia: 34%

U.S.A.: 24%

Canada: 15%

Ukraine: 12%

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:

USD $226 million

China: 27%

U.S.A.: 16%

Thailand: 11%

Tunisia: 8%

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:

USD $ 176 million

Indonesia: 30%

U.S.A.:  26%

China: 12%

India: 9%

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:

USD $ 141 million

China: 29%

Germany: 18%

Netherlands: 14%

U.S.A.: 12%

Chinese potatoes are very 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:

USD $61 million

Germany:  46%

Spain: 21%

China:  8%

Netherlands: 6%

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:

USD $313 million

U.S.A.:  75%

Canada:  13%

Brazil:  3%

Argentina:  1%

 

Demand for U.S. soybeans is surging in 2020.

Roughly 85% of livestock feed ingredients are imported.

Soybean Meal

 

Net Imports:

USD $521 million

Argentina: 98%

 

Argentinian Soybean meal is price competitive and dominates the market

Roughly 85% of livestock feed ingredients are imported.

 

(Data Source: Trade Data Monitor) 

 

Opportunities

  • U.S. food and agricultural products are trusted and perceived to be of high quality.
  • The growing Malaysian HRI, 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, enabling new-to-market U.S. products easier market acceptance.  

Challenges for U.S. Products 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

2018 Import Value

(million USD)

2019 Import Value

(million USD)

Growth

Soybeans

230

237*

3%

Prepared Food

94

117*

24%

Dairy Products

101

109

8%

Processed Vegetables

56

68*

21%

Tree Nuts

35

37*

6%

Processed Fruit

22

36*

64%

Beef

1

1

0.0

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

Web Resources & Contacts

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

E-mail: AgKualaLumpur@fas.usda.gov 

 

Malaysian Government:

Ministry of Health Food Safety and Quality Division

Ministry of Agriculture Department of Veterinary Services

Ministry of Finance Customs Headquarters