Australia and Malaysia have a strong trade relationship, with Malaysia being our second-largest trading partner across the Association of Southeast Asian Nations (ASEAN) and ninth largest trading partner worldwide. About 3,800 Australian companies trade with Malaysia, and around 300 of them are physically present there.
Shipping to and from Malaysia presents a wealth of opportunities for Australian importers and exporters. Below, we’ll take a look at all you need to know – what the market offers, what free trade agreements you can take advantage of and how to smoothly ship cargo to and from Malaysia.
Generally doing business with Malaysia
Our business with Malaysia is governed by the Malaysia-Australia Free Trade Agreement (MAFTA) (discussed below), which secures tariff-free entry for virtually all Australian exports into the country. A Comprehensive Strategic Partnership between Australia and Malaysia (CSP) was also declared in January 2021, with economy prosperity as one of its key pillars.
Malaysia recently set a goal to be a fully developed nation by 2030, with the government committed to restructuring the economy, addressing inequalities and becoming the economic centre of Asia.
When doing business with Malaysians, it’s crucial to be respectful and maintain good etiquette. It is especially important to respect the elderly, prior to acknowledging the younger members present. Your first meeting will be about relationship-building, rather than negotiations, and don’t be surprised if you’re asked seemingly personal questions – it’s all part of Malaysia’s business culture.
You can read more about Malaysia’s business culture on Austrade’s website.
What the Malaysia Market Offers
Malaysia offers a range of goods and services that Australian businesses can import. As a fast-growing and competitive economy in Southeast Asia, foreign ownership laws have been relaxed and new incentives have been put in place to encourage overseas countries to trade and invest.
Because the country has grown so rapidly (an annual average of 5.4% since 2010), and is now set to recover from the COVID-19 pandemic, the economy requires imports of their own that Australian exporters can provide.
Below, we’ve outlined the key products that are both imported to and exported from Malaysia.
Key Malaysian exports
According to United Nations COMTRADE, exports to Australia from Malaysia were valued at US$6.86 billion in 2019. Some of the items that Malaysia exports to Australia include:
- Mineral fuels and oils
Malaysia exports a significant volume of mineral fuels and oils, especially crude oil, to Australia. We imported 33 million barrels of crude oil alone from Malaysia in 2019.
For the past two decades, Malaysia’s growth has been fundamentally strengthened by its oil and gas industries, accounting for 20 per cent of the country’s GDP in 2018-19.
Malaysia is also one of the largest oil and natural gas producers across Southeast Asia, with PETRONAS holding the exclusive rights to the country’s oil and gas exploration projects. Virtually all of Malaysia’s oil comes from offshore and, in January 2020, the country held oil reserves of 3.6 billion barrels.
- Machinery and electrical equipment
Malaysia exported nearly $740 million worth of machinery to Australia in 2019. Such machinery included data processing machines, air conditioners, refrigerators, freezers and heat pumps.
Exports of electrical and electronic equipment to Australia also accounted for around $585 million that same year.
Our Southeast Asian neighbour exported approximately $327 million worth of plastics to Australia in 2019.
The country has made a conscious effort to stop its import of plastics, with Malaysia freezing the import of plastic waste in 2018 and sending about 3,000 tonnes of non-recyclable plastic back to Western countries including Australia in 2019, in efforts to avoid becoming a ‘dumping ground’ for wealthier nations.
Malaysia exports a great deal of rubber to Australia, with exports worth about $175 million in Australia.
We expect these statistics to increase due to the COVID-19 pandemic, with Malaysia producing around two thirds of the global supply of rubber gloves. Massive rubber glove-producing corporations including Top Glove, Hartalega Holdings and Kossan Rubber Industries are all based in Malaysia.
Key Malaysian imports
Demand for Australian goods is high in Malaysia, and Australian exporters should investigate further if they are looking to trade. Some of the key goods that Malaysia imports from Australia include:
Australia exports large volumes of copper into Malaysia, worth around $865 million in 2019.
This may be set to increase, especially since the unofficial Chinese ban on Australian copper in late 2020 (with Chinese imports of copper falling to zero in December). Australian businesses have attempted to redirect their shipments of copper to other countries in light of the unofficial embargo, including to Malaysia.
Ores, especially iron ore and copper ore, accounted for approximately $315 million worth of exports from Australia to Malaysia in 2019.
While the bulk of Australian ores are exported to China, there has been a steady growth of exports to Southeast Asia. Shipments to Malaysia increased by nearly 14% from January to August 2020.
There are predictions that China will attempt to reduce its reliance on Australian iron ore, so there may be an increased opportunity to divert ore exports to Malaysia.
Malaysia, primarily a Muslim country, is a large consumer of halal meat. The country imported approximately $196 million worth of meat from Australia in 2019.
Meat & Livestock Australia predict that demand for live cattle in Southeast Asia will increase in 2021. Even throughout 2020, there was a rise in exports of slaughter cattle primarily to Malaysia.
Australia is well known for its cereals and grains, exporting around $157 million worth of cereals to Malaysia in 2019. It’s one of our country’s largest export commodities by value, with around 20% of cereals and grains being exported to Malaysia in 2016-17.
Due to Chinese tensions in 2020, Australian wheat exporters were reportedly holding back from selling to China. Malaysia may present an opportunity for wheat and barley exporters in 2021 and beyond, with exports potentially diverted there instead.
Shipping methods to and from Malaysia
There are two main ways you can ship goods to (or receive goods from) Malaysia: air freight or ocean freight.
- Ocean freight
A carrier will ship your goods from Australia to Malaysia (or vice versa) usually on a large container vessel. Ocean freight services typically cater for both Full Container Load (FCL) or Less than Container Load (LCL) shipments and can also offer specialised services.
Ocean freight carriers offer a contracted service, with bulk space allocations with high volumes for freight.
There are services that offer direct shipments: from Australia directly to Malaysia, with Port Klang being the main port.
There are also transhipment services: shipping your goods to your destination via all ports including Port Klang, Pasir Gudang and Penang, routing via Singapore or Port Klang.
- Air freight
There are also a range of air freight options you can choose to safely and quickly transport your goods to and from Malaysia.
This includes specialised air freight consolidation services, whereby multiple shipments are grouped together and treated as one shipment, saving on shipping costs. We offer an air freight consolidation services throughout Malaysia. We can offer both direct and economical service options.
Some items you may consider shipping via air freight include furniture, plastics, machinery, food items, specialised cargo (i.e. very large cargo demanding special handling), electronics and pharmaceuticals.
Getting the documentation correct
One of the most important aspects of shipping anywhere around the world, including to and from Malaysia, is the documentation involved. A failure to have all the correct documentation in order may cause delays and extra unexpected costs for your business.
The general shipping documents you need, include:
- Commercial invoice– the commercial invoice outlines who is buying what, and who from, as well the terms agreed between an Australian company and a Malaysian supplier (or vice versa).
- Packing Declaration – only required for ocean shipments, the Packing Declaration outlines the type of material used to pack goods.
- Packing list – this will outline several details of your goods such as how the shipment is packed. Whilst it is not mandatory, a packing list assists if your goods are held for inspection and certain items need to be unpacked.
- Certificate of Origin – this document facilitates free trade between Malaysia and Australia and is useful to avoid paying duties in both countries
You can download a range of useful documentation for your shipment from this page.
What free trade agreements are in place?
MAFTA is Australia’s free trade agreement with Malaysia, signed in 2012 and coming into effect on 1 January 2013.
Dozens of industries have benefited from this agreement, ranging from the milk and food industries to plastics, chemicals, iron and steel. All tariffs on iron and steel imported from Australia have virtually disappeared. Australian wine is guaranteed to have the best tariff treatment, while open access arrangements are scheduled to take off in 2023, with all tariffs removed by 2026.
The CSP declared between Australia and Malaysia on 27 January 2021 was a declaration of joint co-operation in economic prosperity, society and technology, and defence and regional security, underpinned by a Plan of Action to be developed.
Both country’s leaders expressed a commitment to deepening bilateral trade, removing further barriers to trade and investment. Malaysia’s Prime Minister welcomed Australia’s multi-million-dollar investments into its commitments under the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), and both countries expressed an intention to strengthen the partnership in agricultural trade.
You can read more about Australia’s free trade agreements here.
Our Malaysian network offers
At ICE Cargo, we have an extensive network of offices and distribution hubs throughout Malaysia. This includes:
- A road and rail fleet, with a trucking fleet haulage of over 150 prime movers and 600 trailers;
- A large-scale bonded warehouse – stretching over 8000 m2, equipped with 3PL, supplier loading/unloading facilities, and customs/quarantine facilities;
- In-house brokerage with connections across Malaysia to ensure your shipment to and from our Southeast Asian neighbour flows smoothly;
- A worldwide distribution hub to handle cargo, and manage and arrange exports worldwide; and
- A market-leading e-commerce logistics platform.
If you’re looking for further information on importing from or exporting to Malaysia, contact our friendly team here at International Cargo Express.
You can give us a call on 1300 227 461 or leave a message below.