Vietnam and Malaysia aim for new milestone in trade relations

The official visit to Malaysia by General Secretary To Lam and his wife will open up many opportunities and move towards a new milestone in economic and trade cooperation between Vietnam and Malaysia.

The products that Vietnam has strengths in when penetrating Malaysia are rice, fruits, vegetables, seafood, pepper, coffee, etc.

Since Vietnam and Malaysia established diplomatic relations in 1973, economic and trade relations between the two countries have been gradually developing. In particular, the two countries regularly coordinate their positions closely at regional and international multilateral forums, especially at ASEAN. Vietnam and Malaysia are each other's important economic, trade and investment partners.

The official visit to Malaysia by General Secretary To Lam and his wife takes place in the context of strong and comprehensive development of bilateral relations, especially since the two countries upgraded their relations to Strategic Partnership in 2015.

The visit will open up many opportunities and move towards a new milestone in Vietnam-Malaysia economic and trade cooperation.

Close friends

According to data from the General Department of Vietnam Customs, the total export turnover between Vietnam and Malaysia in the first 9 months of 2024 reached 10.63 billion USD, an increase of 14.1% over the same period in 2023. Of which, the export turnover was 3.81 billion USD, only a slight increase of 3.5% over the same period, the import turnover reached 6.82 billion USD, a sharp increase of 21.1% over the same period.

Because exports increased only slightly while imports increased rapidly, the trade balance suffered a deficit of 3 billion USD, an increase of 54.6% over the same period. In absolute value, the trade balance deficit was equal to 76.4% of the export value and increased to nearly 1 billion USD.

Regarding exports, the two items with the largest proportions, computers, electronic products and components, and iron and steel of all kinds, both decreased. Specifically, the item with the largest turnover, accounting for 12.2%, was computers, electronic products and components of 4%, while iron and steel of all kinds decreased slightly by 0.5%. This is the reason why exports to Malaysia increased slowly.

Notably, rice grew by 131.2% and became a major export item, accounting for 9.8%, ranking third among Vietnam's largest export items to Malaysia, surpassing all kinds of phones and components, accounting for 8.5%.

Thus, Malaysia has increased its rice purchases from Vietnam, more than luxury consumer goods such as phones. Along with rice, other agricultural products such as coffee also had an impressive growth rate of 117.5% compared to the same period last year, but mainly coffee beans as raw materials for the Malaysian coffee industry, not showing the market penetration of Vietnamese coffee brands.

Chemical products also increased by 124.1%, but the proportion of this product is still low, accounting for only 3.1% of the total turnover. Rubber products also increased sharply by 287.6%, but the proportion of the product is low, only 0.6%.

Regarding imports, it is worth noting that computers, electronic products and components have regained the first position with a proportion of 24.1% and increased to 25.8%, pushing petroleum products down to the second position with only 21.0% in proportion and this item also increased to 25.6% due to the reason being the reduction of import tariffs in ASEAN countries, causing a shift to imports to Malaysia. These are also the two items with the largest proportion and surpass the remaining items (all with proportions below 10%).

Most imported items increased sharply, except for electric wires and cables, which decreased slightly by 1.5%. Items with the strongest increases included liquefied petroleum gas, glass rubber and glass products, paper of all kinds, base metals, chemicals, and fabrics. Other machinery, equipment, and spare parts also increased, but accounted for 7.5%, second only to the two largest imported items from Malaysia.

According to experts, the Malaysian market has good purchasing power, diverse needs and a close consumer culture with Vietnamese goods. In addition, Malaysia has a large market openness and relatively low barriers to Vietnamese exports due to its participation in many regional free trade agreements. There is a shortage of domestic supply of many essential foods such as rice and seafood, but the Government has strong policies to support domestic businesses and farmers.

However, Malaysia has fierce competition with other exporting countries, especially China, Thailand, Indonesia... because the Malaysian market is relatively open to imports.

Food products require Halal certification, while the certification is not managed by the Vietnamese government but is recognized by the government agencies of some Muslim countries. Currently, there is only one non-governmental organization that issues halal certification in Vietnam that is recognized by JAKIM (under the Ministry of Religious Affairs of Malaysia).

Furthermore, Vietnamese enterprises are reluctant to access the market due to language barriers, cultural differences, etc. Many enterprises have experienced fraud, reducing trust in trade (enterprises need to know the business registration number of Malaysian enterprises for verification) because enterprises do not contact the Trade Office for support in verifying partners.

Many businesses are reluctant to set up distribution channels for their products, send samples, participate in fairs or meet customers locally and limit investment in product innovation to suit local consumer tastes, while local consumers are already familiar with competitors' products.

Support and development

Recently, Minister of Industry and Trade Nguyen Hong Dien and Minister Tengku Zafrul Aziz, Minister of Investment, Trade and Industry of Malaysia co-chaired the 4th Meeting of the Vietnam-Malaysia Joint Committee on Trade.

At the meeting, Minister Nguyen Hong Dien highly appreciated and always considered Malaysia as an important economic, trade and investment partner of Vietnam. Since the 3rd meeting of the Joint Committee, the cooperative relationship between the two countries has developed well and achieved many encouraging results.

The 4th meeting of the Vietnam-Malaysia Joint Trade Committee on July 9, 2024 in Hanoi.

Total two-way trade turnover between Vietnam and Malaysia in 2023 will reach nearly 13 billion USD. Cooperation in energy, labor supply, and cooperation within multilateral frameworks will continue to develop well, contributing to the development of each country. Cooperation between the two countries in other fields such as agriculture, investment, banking, labor, etc. has also seen many new developments.

In particular, the two sides are actively researching and discussing to draft and sign bilateral cooperation agreements such as the Memorandum of Understanding on cooperation in the field of trade promotion in the industry and trade sector, the Memorandum of Understanding on cooperation and information exchange in the field of banking inspection and supervision, and the Memorandum of Understanding on cooperation in the agricultural sector in the coming time.

Despite many remarkable achievements, Minister Nguyen Hong Dien said that there are still some cooperation contents that are not really as expected by both sides, not commensurate with the potential of the two countries. Cooperation activities to promote and facilitate trade, cooperation in the field of Halal, and cooperation in industrial fields are still limited.

Therefore, the task of the 4th Session is for both sides to make more efforts, propose directions and measures to better exploit the potential and advantages of each side, to develop economic-trade cooperation more comprehensively and in depth.

To strengthen the relationship between Vietnam and Malaysia, experts said that localities and associations need to increase trade promotion activities to bring local production and export enterprises and association members to participate in trade promotion activities directly in the Malaysian market such as organizing specialized fairs or synthesizing Vietnamese export products in Malaysia...

In addition, localities and associations need to closely coordinate with the Malaysian Trade Office in implementing promotional activities in the Malaysian market, especially in verifying partners.

Particularly for export enterprises, before paying for goods or making a deposit for a new enterprise that has not been met in person, the enterprise representative needs to check the business registration information, including the enterprise name and business registration number, and send it to the Trade Office for verification.

Along with that, food exporting enterprises need to pay attention to exporting Halal certified food products to the Malaysian market due to the large proportion of Muslims in Malaysia and only choose Halal certified products.

On the other hand, Malaysia is strengthening control over the cost of living due to a shortage of some food supplies. Enterprises producing essential products such as eggs, rice, etc. should pay attention to connecting with the distribution system to increase exports...

Loading rice.

In particular, the enterprise coordinates with the Trade Office to send goods to display at the sample room at the Trade Office to introduce goods to import units working with the Trade Office as well as display at promotional events of the Vietnamese Embassy in Malaysia.

Malaysia is developing strongly in digital technology, green technology, especially the pillars of Malaysia's new economic framework, called the MADANI Strategy, which the Malaysian Prime Minister has proposed. Meanwhile, Vietnam is preparing to enter a new era, an era of national growth with very big orientations; including issues related to digital technology, green economy, and energy.

The two countries will complement each other, creating more strength to enter a new stage of development; at the same time, strengthen more effective cooperation to coordinate, respond to new challenges as well as promote advantages in the international environment./.

According to VNA

Source: https://baobinhduong.vn/viet-nam-va-malaysia-huong-toi-dau-moc-moi-trong-quan-he-thuong-mai-a335911.html