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| The Malaysian economy has experienced strong economic growth over the past few decades, with economic growth averaging around 6 per cent a year since 2000. Income per person reached around US$5800 in 2006, ranking the third highest in South East Asia (beneath Brunei and Singapore). With rising incomes, food consumption has shifted away from starchy staples and moved toward wheat and livestock products, seafood, fruit and vegetables (Mitchell et al. 1997; Lee and Kennedy 2006). In Malaysia, industrialisation has led to strong competition for domestic resources such as land and labour. This has resulted in a decline in the share of agriculture in gross domestic product, from around 15 per cent in 1990 to 9 per cent in 2006 (figure a). Production in the agricultural sector is dominated by palm oil, rubber and forestry products (Wong 2007). Other major agricultural production includes rice, poultry, fruits and vegetables. Because of relatively limited production of, and rising demand for, many agricultural products, such as wheat, beef, sheep meat and dairy products, imports have been a major source of Malaysia’s food supply. In 2005, for example, imports of beef and dairy products accounted for around 77 and 98 per cent respectively of domestic consumption. Despite the significant reliance on imports for food supplies, the Malaysian government remains committed to a high level of self-sufficiency in some food products, especially rice. Current government policies, as reflected in the Ninth Malaysia Plan, aim to revitalise agricultural production to become one of the engines of economic growth. Currently, there are government controls on domestic prices for specific food products, including wheat flour and sugar, and regulations on food imports. Some of those regulations impose additional costs to exporters and/or could restrict access to Malaysia’s domestic market. Malaysia’s continuing economic growth and industrialisation are likely to place considerable pressure on its policy of increasing food self-sufficiency. With competitive pressure for resources from non-agriculture sectors, there is likely to be limited capacity to increase agricultural production. In broad terms, freer trade practices in Malaysia could lead to more efficient allocation of domestic resources to sustain high economic growth. This report discusses the current conditions of agricultural consumption, production and imports in Malaysia. It also analyses the current market access arrangements and the implications for Australia as a major agricultural exporting country to Malaysia. |
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