Agriculture and processed foods market in Malaysia

Most Canadian exports to Malaysia are linked to the agriculture and agri-food sector. Malaysia's total agri-food and seafood imports from Canada in 2023 were approximately CAD $269.7 million, representing approximately 1% of Malaysia's total agricultural imports.

Wheat was Canada's second largest export at CAD $144.6 million and accounts for 53.6% of Canada's total agriculture and food exports to Malaysia in 2023. Other key exports were soybean (CAD $78.9 million), malt extract with flour and starch food preparations (CAD $12.2 million), pork (CAD $12.1 million), and food preparations (CAD $4.5 million).

Most soy milk consumed by Malaysians is allegedly sourced from Canadian non-GMO yellow soybeans. At their peak in 2019, Malaysian imports of Canadian canola oil and canola oil seeds accounted for 65.1% and 25.9% of Malaysia's total imports, respectively.

Canada plays a critical role in the Malaysian palm oil industry through exports of potash, the key ingredient in fertilizer, which is Canada's top export to Malaysia (CAD $225.1 million in 2023).

Key opportunities for Canadian agriculture and agri-food companies in Malaysia

• Malaysia is highly dependent on imports for food security (70%), even as it is a net agricultural exporter (highly concentrated in palm oil and rubber). The consumption of red meat, including pork, is reported to be as high as 90% foreign-sourced.
• Exporters can benefit from Malaysia's growing halal industry. The Department of Islamic Development Malaysia (JAKIM) currently recognizes three halal certification agencies in Canada: Halal Montreal Certification Authority, Halal Monitoring Authority Canada (HMA Canada) and the Islamic Food and Nutrition Council of America (IFANCA).
• Rising income levels among a growing middle-class, combined with increased awareness of public health issues may lower importers' price sensitivity, and offer opportunities for Canadian high-quality, nutritious food and beverage products to enter the market.
• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force in Malaysia in November 2022, eliminating tariffs for key Canadian exports such as:
  • sugar and chocolate confectionary, and food preparations containing cocoa
  • prepared potatoes
  • lobster and herring roe
  • breads, cookies and other baked goods
  • fresh apples, etc

Notable challenges for Canadian agriculture and agri-food companies in Malaysia

• Lack of options for direct logistical connections between Canada and Malaysian increases the cost of exports, putting Canada at a disadvantage.
• Strong competition from regional players, such as Australia and Japan, presents challenges for Canadian exporters.
• Relative lack of public awareness in Malaysia about production capabilities of Canadian businesses, as well as an assumption that Canadian products are not price competitive.
• While it is possible to have a market presence in Malaysia without achieving halal certification, the distribution of non-halal products is limited to select outlets in major urban areas.

Malaysian business landscape

Malaysia is among the largest economies in the Association of Southeast Asian Nations (ASEAN) and a member the Asia-Pacific Economic Cooperation (APEC), CPTPP, Regional Comprehensive Economic Partnership (RCEP) and Commonwealth. As of June 2024, the population of Malaysia was estimated to be 34.3 million people. In 2023, its real gross domestic product (GDP) advanced by 4.8%, while the inflation rate remained stable at 2.5%.

• Real GDP: CAD $434.1 billion (2022)
• GDP per capita: CAD $13,110 (2022)
• Corruption Perception Index: 50 of 180 (2023)

Bilateral trade rose 17% in 2022 to reach CAD $5.7 billion, with the growth in Canadian exports outpacing imports. Canadian merchandise exports to Malaysia were CAD $1.5 billion in 2022, while imports were valued over CAD $4.2 billion in 2022, consisting primarily of electric machinery, rubber, precisions instruments, furniture, and fats and oils. Heavily reliant on commodities such as hydrocarbons and palm oil, Malaysia is also a top exporter of electrical and electronic products.

Summary

Malaysia is a dynamic economy and a gateway to the increasingly important Southeast Asian region. Population growth and increasing wages are driving demand for Canadian agriculture and agri-food products, which enjoy a good reputation as natural and safe. However, promotion of the fact that common foods in Malaysia contain agricultural staples from Canada is needed. The participation of Canadian exporters to regional and local trade shows is useful in this context. Major annual trade shows in the agriculture and agri-food sector in Malaysia include:

• Food and Drinks Malaysia by SIAL in Kuala Lumpur (July)
• Malaysian International Food and Beverage Trade Fair in Kuala Lumpur (July)
• Malaysia International Halal Showcase (MIHAS) in Kuala Lumpur (September)
• Food and Hotel Malaysia in Kuala Lumpur (September)

For more information on Agriculture and Agri-Food in the Malaysian market, please contact my.commerce@international.gc.ca.