 With rapid income and population growth, food consumption in Malaysia has shifted away from starchy staples and become more varied with the inclusion of greater quantities of wheat-based products, meat, dairy products, seafood, fruit and vegetables.
Because of Malaysia’s limited domestic agricultural production and a growing demand for many products (such as wheat-based products, livestock and dairy products, sugar and vegetables), imports have been a major source of Malaysia’s food supply. This provides market opportunities for Australia’s agricultural export industries.
Australia is the leading agricultural exporter to Malaysia. Malaysia’s key imports from Australia are wheat (valued at US$198 million in 2006), sugar (US$178 million) and dairy products (US$112 million). Others include wool, live cattle, vegetables, sheep meat, beef and fruits.
The food processing industry in Malaysia is growing, with many intermediate inputs being imported. For example, wheat and sugar are used for further processing for bakery products and confectionaries and meat is used in the production and export of halal products, providing export opportunities for Australia.
The Malaysian government plans to develop its food processing industry with a particular emphasis on halal food products, which have the potential to expand into international markets. This also provides an opportunity for Australian exporters to cooperate with the Malaysian food processing industry and participate in its plan for global expansion.
Despite some very high bound tariffs, applied tariffs on agricultural products in Malaysia are mostly low or zero. However, non-tariff protocols constrain Australian exports to Malaysia, including the requirement to obtain halal meat approval and the allocation of import licences for some agricultural commodities such as sugar and milk.
In Malaysia, despite some recent reforms, a range of products continue to be subjected to price controls. These include sugar and wheat products. Unless significant pressures on domestic prices emerge, imports will not be allowed to increase. This also constrains Australia’s exports of these commodities to Malaysia.
Freer domestic trade practices and elimination of price controls might improve Australia’s prospects in exporting more commodities to Malaysia. |
