This article first appeared in The Edge Financial Daily on February 5, 2020 - February 11, 2020

KUALA LUMPUR: Malaysia’s total trade declined 2.5% to RM1.8 trillion in 2019, from RM1.9 trillion in 2018, no thanks to lower exports and imports.

Deputy International Trade and Industry Minister Dr Ong Kian Ming said exports fell 1.7% to RM986.4 billion, while imports dropped 3.5% to RM849.01 billion.

“The decline in total trade was due to lower demand from Malaysia's major trading partners,” Ong said in his presentation on Malaysia’s 2019 trade performance yesterday.

This, nevertheless, resulted in a trade surplus of RM137.39 billion, an increase of 11% over the surplus of RM123.78 billion in 2018.

Ong noted this is the largest trade surplus since 2009 and also marks the 22nd consecutive year of trade surplus for Malaysia since 1998.

Lower trade was recorded with Singapore, Hong Kong, the European Union, Thailand, Japan, Indonesia, Taiwan and South Korea, according to the Malaysia External Trade Development Corp.

“In lieu of a very challenging 2019, there are a lot of headwinds for Malaysia as well as other open trade economies last year.

“While the global commodity prices, such as crude palm oil (CPO), have somewhat recovered towards the end of last year, large portions of the year saw weaker prices which have affected our overall figures,” said Ong.

On prospects, he said, Malaysia’s external trade will remain modest amid the challenging global environment in 2020.

Prior to the Wuhan virus outbreak, Ong said his ministry had a total trade target of RM2 trillion for 2020, on the back of improving global trade, CPO prices and oil prices.

On the impact of the Wuhan virus outbreak on Malaysia’s trade, he said it is “still too early to tell” .

“We don’t know what exactly the impact is ... but if we reference back to SARS outbreak in 2003, the economic value chain now is bigger compared with back then, so it is likely that the impact will be bigger than in 2003,” said Ong, adding that there was no need to feel overly panicked over this.

“We hope there can be more certainty in the next couple of weeks in terms of the spread of this virus.  

“Once things get back to normal, we hope to see a rebound in numbers in the second quarter of this year,” he said.

For the fourth quarter of 2019 (4Q19), Malaysia’s total trade contracted 3.6% to RM479.2 billion, from RM497.3 billion in 4Q18, said the ministry of international trade and industry (Miti) statement.

“Significant increases in trade were recorded with China, the UAE (United Arab Emirates), Indonesia and the US,” it said.

Exports for the quarter fell 3.3% to RM257.9 billion, while imports declined 4% to RM221.4 billion.

However, December 2019 recorded a year-on-year increase of 1.9% in trade to RM160.2 billion, following six consecutive months of decrease since June 2019.

“Exports decreased by 3.3% to RM257.87 billion and imports dropped by 4% to RM221.35 billion.

“This resulted in a trade surplus of RM36.52 billion, up marginally by 0.6%,” said Miti.