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Malaysia seen as ASEAN's Premier Market
TDC Study Highlights New Growth Opportunities for Hong Kong

August 15, 2007 - A new Hong Kong Trade Development Council (TDC) study reveals that Malaysia offers immense investment opportunities for Hong Kong companies, resulting from increased China-ASEAN trade and economic cooperation.

As one of the principal Asian investors in China, Malaysia has seen its trade with China grow to more than US$37 billion in 2006. Electrical and electronic items accounted for over half the trading value.

Malaysia's electronics industry is increasingly using China's parts and components. The demand for auto parts with higher technology is also surging, due to the upgrading of the automobile industry in Malaysia. With Hong Kong's competitive edge in these industries, Hong Kong companies have vast opportunities to explore.

Ranking as the third highest GDP in ASEAN, the Malaysian economy has a promising future, following a full recovery from the Asian financial crisis. The country's GDP growth has exceeded 5 per cent since 2003, and per capita GDP has increased from US$4,623 in 1997 to US$5,718 in 2006.

Malaysia's robust economic performance is reflected in its income growth, which in turn has boosted demand for consumer goods and durable items. The study estimates that Malaysia's middle-income class, the majority of whom are white-collar staff, earns an annual income ranging from US$10,300 to US$17,200.

Medium-end products of reasonable quality and affordable price are sought-after, which creates a favourable condition for Hong Kong's medium-priced products.

The potential for exports of Hong Kong electronics, clothing, travel goods, timepieces and household products to Malaysia is promising, due to Malaysia's low domestic supply of these products. The country is therefore a premier market for Hong Kong's branded or original design manufacturing (ODM) products.

Malaysia has a population of 26 million, a third of which is aged below 15. This relatively young population has fuelled the market for children's clothing, toys, games and sporting goods.

In order to tap the market successfully, the TDC report advises that consumer goods suppliers should observe Malaysia's unique culture, particularly in the areas of religion, brands and fashion culture. Asian culture and fashion are important, and goods such as food, cosmetics, clothing and footwear must conform with Muslim "Halal" standards, as Islam is the official religion.

With the development of the Malaysian economy and increasing trade ties between Malaysia, Hong Kong and the Chinese mainland, demand for trade-related services is growing. Hong Kong's financial, professional and logistics service providers are set to become prime choices for Malaysian investment, thanks to Hong Kong's expertise in the Chinese mainland. Demand for architecture and interior design is also likely to increase.

As direct access to Malaysia's services sector remains difficult, the study recommends that service providers could first make use of the Hong Kong platform to cater for demands arising from increasing trade and investment between Malaysia and China.

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About TDC
Established in 1966, the Hong Kong Trade Development Council (TDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 offices worldwide, including 12 in the Chinese mainland, the TDC promotes Hong Kong as a platform for doing business with China and Asia. The TDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and the mainland, while providing information via trade publications, research reports and online. For more information, visit www.tdctrade.com

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