Bright long-term outlook for exports

COMPANIES are optimistic of the long-term prospects of their exports despite the uncertain global outlook.

They are confident of continued strong and stable demand for their products and also, that the recovery momentum will improve with the lifting of movement restrictions worldwide.

The concern over exports arises as a marked effect on Malaysia’s trade and investment flows is anticipated for 2023, with recessions expected in the United States, European Union and Britain.

Nestle (M) Bhd has seen signs of recovery in the past year with solid growth in both its domestic and export sales.

“We are optimistic that prospects will continue to improve over the long term.

“While we expect the impact of rising commodity prices and foreign exchange volatility to persist in 2023, overall, we anticipate demand for exports to remain stable across the regions that we currently serve,’’ said Nestle Malaysia CEO Juan Aranois.

The global halal market is thriving and growing rapidly; given the status of Nestle Malaysia as the biggest halal producer in the Nestle world, the group is well-positioned to leverage on this growth opportunity.

Nestle Malaysia’s strategy is to continue to focus on high-quality, innovative halal products that meet consumer needs across the world.

Big player

Nestle Malaysia exports a variety of product categories to over 50 markets globally across Asia, the Middle East, Europe and North America.

Moving forward, Nestle Malaysia hopes to explore new territories with opportunities for growth, including regions where there is a growing demand for halal products.

Sime Darby Plantation Bhd sees that demand for crude palm oil (CPO) and palm oil products may improve, going into 2023.

The recent tightening of monetary and fiscal policies may help to bring down inflation, and a broader fall in inflation may be seen once the pressure on global supply disruptions eases.

Confidence in China seems to have also improved as it is willing to loosen its strict Covid-19 restrictions.

Overall, growth in emerging markets and developing economies in 2023 is expected to edge up slightly.

As the global population is projected to grow to 8.5 billion in 2030, and 9.7 billion in 2050, Sime Darby Plantation generally expects the demand for food and food ingredients, such as its palm oil products, to remain strong.

Inflationary pressure

Growth has been slowing due to higher inflationary pressure across countries and Russia’s ongoing aggression over Ukraine.

These had increased the risk of global supply chain disruptions in terms of the energy shock and food insecurity.

The frequent recurrence of Covid-19 outbreaks, lockdowns and the recent strict zero-Covid policy in China had further complicated growth, causing ripple effects across the globe and making it hard for demand to improve.

But palm oil holds a competitive edge as it is extremely versatile, and found in over 50% of products available in supermarkets.

Coming from the world’s most productive oil crop (in terms of yield/hectare), it is also a cheaper alternative to other vegetable oils.

At Sime Darby Plantation, major destination markets for bulk CPO and products are India, China and Europe; its packed products are marketed locally and to various markets in South-East Asia, the Middle East, Europe and the United States.

Sime Darby Plantation’s ability to move beyond the bulk business and increase its share in the manufacture of downstream products, that is, the higher value frying as well as specialty oils and fats market, allows the group to withstand challenging market conditions.

To PMB Technology Bhd, making predictions on future market conditions are always challenging, especially in the current volatile and uncertain times.

“However, the long term prospects for PMB Technology remains positive as the demand for materials critical for the transition to a low carbon economy, is expected to grow at a healthy rate,’’ said PMB Technology CEO Koon Poh Ming.

High levels of inflation and elevated energy prices are contributing to an uncertain outlook for global demand in 2023.

The severity of this impact on global demand, will depend on the duration of the disruptions.

This in turn, is highly reliant on the effectiveness of government actions to counter these negative occurrences, said Koon.

Supply is also impacted as several producers have announced curtailment of production due to their inability to cope with rising costs.

The two major exports of PMB Technology are value-added aluminium products and silicon metal of various grades for the aluminium alloy, polysilicon and silicones industries.

Major export destinations are North America, Europe and Asia.

PMB Technology is continuously working on developing its sales network, as there are major consumers with whom it has not yet established supply relationships.

Another area of focus is the domestic market for silicon.

Malaysia ranks among countries with the highest demand for silicon, as it is home to major producers of primary and secondary aluminium and polysilicon.

These domestic consumers of silicon have long-term plans for expansion, which will increase their demand for silicon in the years to come.

PMB Technology is strengthening its footprint in the domestic market, while growing its presence in export markets.

By increasing its coverage of both the domestic and export markets, PMB Technology should be in a better position to manage any possible slowdown in demand.

Despite the challenges, these companies are looking for opportunities to grow exports.

Yap Leng Kuen is a former StarBiz editor. The views expressed here are the writer’s own.

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