IN the face of rising geopolitical tensions and a more fragmented global trading environment, the government is intensifying efforts to strengthen Malaysia’s trade resilience.
This includes pursuing ongoing structural reforms to strengthen the economy’s competitiveness, diversifying export markets and import sources, and building more resilient supply chains.
The government is also accelerating Malaysia’s integration into higher value-added supply chains, while strengthening technological capabilities and domestic innovation to cushion the economy from external shocks.
As a small and open economy with a trade-to-gross domestic product ratio exceeding 100%, Malaysia remains closely tied to global trade and supply chains.
Malaysia has shown a relatively strong capacity to absorb and rebound from external shocks, supported by a diversified export base and solid economic fundamentals.
This resilience was evident in the first half of 2026 (1H26), when total trade expanded 22.4% year-on-year (y-o-y) to RM1.8 trillion despite disruptions to global supply chains following the escalation of conflicts in West Asia.
Exports rose 27.5% to RM971.6bil, driven by manufactured and mining goods, while the trade surplus widened 161.4% to RM148bil from RM56.6bil a year earlier.
Electrical and electronics (E&E) products were a key driver, with exports in 1H26 rising 42.5% y-o-y amid the global technology upcycle.
Malaysia’s stronger manufacturing base has also helped diversify its export structure and reduce its reliance on commodities.
The share of commodities in total exports fell from 26.6% in 2011 to 12.7% in 2025, while manufactured goods increased their share from 72.7% to 86.4%.
E&E exports alone nearly tripled from RM237.1bil in 2011 to RM712.3bil in 2025, reinforcing manufacturing’s role as a key driver of exports, investment and technological advancement.
The government is seeking to build on this shift by attracting high-growth, high-value investments and increasing domestic participation in higher-value segments of global supply chains, particularly in advanced electronics and semiconductors.
The outlook for the semiconductor industry also remains strong, with the World Semiconductor Trade Statistics (WSTS) projecting the global market to grow 90% in 2026 to US$1.5 trillion, followed by a further 27% increase to US$1.9 trillion in 2027.
This could support continued growth in E&E exports and create opportunities for Malaysia to deepen its role in the global semiconductor supply chain.
Beyond manufacturing, Malaysia’s extensive network of free trade agreements (FTAs) has further broadened its access to global markets
To date, Malaysia has signed and implemented 17 FTAs, comprising eight bilateral FTAs and nine regional FTAs, including the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Trade with FTA partners reached RM2.01 trillion in 2025, accounting for 65.6% of total trade, a compound annual growth rate of 6.1% between 2012 and 2025.
In 1H26, such trade rose another 26.2% to RM1.42 trillion, accounting for 79.4% of Malaysia’s total trade.
China was Malaysia’s largest FTA trading partner, accounting for 17.7% of total trade, followed by Singapore at 13.2%, Japan at 4.7%, Thailand at 3.9% and South Korea at 3.8%.
The government sees the FTA network as increasingly important as global trade becomes more fragmented, providing Malaysian companies with wider market access while helping diversify markets and supply chains.
Together with stronger domestic capabilities and greater participation in higher- value activities, these measures are aimed at making Malaysia’s trade base more resilient while strengthening its position in global value chains.
