A Buy Malaysian Products campaign was launched in 2021 in Langkawi to help traders suffering from the Covid-19 lockdowns. — LIM BENG TATT /The Star
MALAYSIAN-made goods can help mitigate, but not eliminate, price hikes from global trade wars, as the country still relies heavily on imported intermediate goods.
Think tank Bait Al Amanah research assistant Yugendran T. Kannu Sivakumaran highlights that, based on the latest figures from Matrade (the Malaysia External Trade Development Corporation), 54.6% of Malaysia’s imports consist of goods used in production, such as parts.
“Well, if you see, Malaysia is not a self-sufficient country in any way. We import a significant amount of goods used for manufacturing.
"So when we look at it, if there is a global trade war, it’s highly likely that we will still see an increase in prices.”
While locally-made products can help keep costs lower, Malaysia cannot fully offset the impact of a trade war.
“But of course, if it’s made in Malaysia, it will be cheaper than importing the finished product due to tariffs on that extra value added.”
However, Yugendran stresses that specialisation and efficiency are crucial when considering local production.
“There is not a single country that can produce everything. And if we spread too much and do not specialise, it can cause inefficiencies in terms of price and quality.
“So let’s say during a global trade war, we want to start pushing to mass-produce textiles in Malaysia again. This may not be efficient because we are not specialised in the field compared with other countries, for example, Vietnam. So even with a trade war, it may still be easier to import for certain industries we are not specialised in.”
At the same time, Malaysia’s electronics sector, particularly chip assembly, is highly competitive globally. However, capital investment is a bottleneck to a achieving high-tech manufacturing lead.
“What we can see is that in our manufacturing and assembly of electronic goods and chips, we are currently on the rise. One day, we could be industry leaders there. In chip assembly alone, we contribute over 10% of the worldwide market share. But when it comes to full-on manufacturing lines and advanced technology, that will take time.
“With the New Industrial Master Plan 2030, we should see a boost in our high-tech manufacturing sector. But again, that will take years. Right now, in terms of pricing and quality, we may not be fully competitive because, yes, labour-wise, we have the brains for it, but capital investment needs to keep up.”
Yugendran also points out that government policies, such as subsidies, tax benefits and awareness campaigns, can significantly influence consumer behaviour and business strategies in favour of Malaysian-made products. However, this approach comes at a high cost, as globalisation has reshaped consumer preferences.
“Policies and subsidies can definitely convince Malaysians to purchase made in Malaysia goods, but it would be very difficult and costly.
“Because of globalisation, Malaysians’ consumerism has grown, and their tastes and preferences have changed. To convince them, it’s going to take a mixture of pricing strategies plus social programmes such as awareness campaigns.”
Ultimately, Malaysia must ensure its locally produced goods meet the same standards of quality and price as imported products.
“Otherwise, it won’t work. But whatever is said or done, this will be an expensive initiative. The government is already doing this with ‘Made in Malaysia’ initiatives, but if they want to see a bigger shift, that is going to hurt the coffers,” he says.
