Nation building via trade excellence
How Matrade as the nation’s trade promotion organisation has driven our trade agenda
KUALA LUMPUR: It has been a most interesting journey for the Malaysia External Trade Development Corporation (Matrade) in its 25 year-history.
Many may not know that Matrade is the only government agency mandated with the mission to drive Malaysia’s international trade through the development of Malaysian exporters and export promotion activities.
History of trade
Although Matrade is only 25 years old, Malaysia’s history as a trading nation goes back centuries.
Her location by the Straits of Malacca, being at the confluence of the Indian Ocean and the South China Sea, makes Malaysia the ideal conduit in international sea trade routes.
This historical perspective provides a strong platform upon which Malaysia’s positioning and strength as an exporting nation was established.
Fast forward to the 1950s and 60s, Malaya then turned Malaysia was already looking at going global.
It traded various agricultural produce and was part of the Pan Malaya movement that was focused on boosting the nation’s presence globally through tourism.
It was in the 1970s that the manufacturing industry began to flourish. Businesses started to invest in machines for their production and a decade later, Malaysia saw a boom in its manufacturing industry.
The continuous inflow of foreign direct investments resulted in many multinational companies setting up its base in the country since the 1980s (till present).
This brings many benefits for Malaysians in the form of job creation and most importantly, it gives local companies opportunities to learn the tricks and trades of manufacturing.
This is a form of empowerment for the local companies and led to an increase in the production of local products and services. With this growing entrepreneurial spirit, there is a need to search for new markets, beyond just Malaysia.
Creating export champions
The idea for Malaysia to have its own trade promotion organisation was mooted by Tun Dr Mahathir Mohamad in the late 1970s during his first tenure as Cabinet minister. At the time, Dr Mahathir was deputy prime minister and minister for trade and industry.
In 1980, a small unit under the International Trade and Industry Ministry was formed, known as the Malaysia Export Promotion Office (Mexpo). This platform sparked a strong movement for the country to play a more proactive role in strategic planning and tactical moves to support our businesses in exploring opportunities in the global market place.
This eventually led to the enactment of the Matrade Act 1992 and the formation of Matrade in 1993 when it was incorporated as a statutory body. Since its inception, the organisation has stayed the course and strengthened its capacity to assist Malaysian companies to carve new frontiers in global markets.
The idea behind Matrade’s creation was to have an agency that provides a comprehensive trade information system to help Malaysian companies sell to a market that is relevant to them.
Trade intelligence is a set of data on consumer demands, regulations, business trends and other quantitative and qualitative information to facilitate local companies’ strategic moves in penetrating a market as well as to monitor competitors’ activities in the market. The power of this trade intelligence is often underestimated.
Now, how do you gather these information if you are thousands of miles away from your target market? You need your eyes and ears on the ground.
This is why Matrade has its own trade offices around the world – to discover what works and what doesn’t for Malaysian companies.
Matrade now has 46 trade offices in main cities around the world. These offices help gather, categorise and analyse market intelligence and find potential buyers for local companies, especially for small and medium enterprises (SMEs) that lack the means to find buyers for their brands.
It is pertinent to note that Matrade’s trade offices not only provide the opportunity for companies to have a perspective or glimpse of their future market; their roles are much more than just that.
Apart from providing market intelligence, the trade commissioners that lead the trade offices facilitate project-bidding for Malaysian companies through personal engagements; represent local industry players to promote Malaysian products and services; attend to trade complaints; work with Malaysian diaspora to boost Malaysian companies’ engagement; check the backgrounds of buyers in the market; facilitate negotiation meetings with MITI and other agencies on trade issues and Free Trade Agreement; as well as alert Malaysian investors on investment opportunities around the world.
All of these make Matrade’s trade offices an asset for Malaysian companies who get to enjoy the services at no cost.
Impact of trade promotion
Matrade’s efforts over the years have borne fruit as seen in Malaysia’s exports experiencing a growth since its inception.
In 1993, the year Matrade was established, Malaysia’s total exports were just over RM121bil.
In 2017, Malaysia’s exports grew about eight fold to RM935.9bil (2018 figures will be announced in February next year). In the same year, our trade registered a stellar performance with total trade recorded at RM1.77tril, which is the highest growth rate in 13 years.
Currently, Malaysia trades with over 234 markets and according to the World Trade Organisation, Malaysia is the world’s 25th exporting nation, 26th importing nation and 25th trading nation.
With a population of only 32 million peo- ple, we are able to supply to all these markets and this is something to be proud of.
Malaysia also now benefits from a diversified economy with services accounting for 54.5% of our Gross Domestic Product while manufacturing accounts for more than 80% of the country’s total exports. Higher trade was seen with Asean, China, Taiwan, Hong Kong, Australia, South Korea, Saudi Arabia, the United States, India and the European Union. All of this has also contributed towards a satisfactorily healthy trade surplus for Malaysia.
In October 2018, trade surplus widened by 63.1% to RM16.32bil, the largest trade surplus ever recorded, and marked the 252nd consecutive month of trade surplus since November 1997.
On-ground intel
SMEs account for a large segment of Malaysia’s economy with over 98% of the registered companies in the Companies Commission of Malaysia database. These companies also employ over 65% of the Malaysian workforce.
Despite this, SMEs’ export contribution is relatively small, recorded at less than 18%. There are many reasons for this such as lack of capacity, funding and to some extent fear of the unknown.
In today’s business climate, ecommerce is an excellent vehicle to help small traders be part of international trade by providing them access to buyers. Matrade along with many other government agencies is a strong proponent of the adoption of ecommerce among SMEs. Matrade introduced a programme dedicated to ecommerce called the eTrade Programme.
However, like anything online, how do you choose the right market to access, the right people to engage and how do you know the measures to mitigate new rules and regulations in the market of your choice?
You need on-ground intel. This again brings you back to the importance of Matrade’s trade offices, which offer comprehensive outreach for Malaysian exporters while enabling foreign buyers and business partners in each market to have a relevant and reliable support for timely engagement.
Moving into 2019
Matrade is proud to continue its role to support the SMEs – an important demography of Malaysia.
They are the creative innovators, the skilled manufacturers and the enterprising business owners of the nation – all of whom take great risks and work extremely hard to grow their businesses around the world.
As Matrade ventures into the next phase of its mission, it sees the need to push Malaysian SMEs to be more prepared for the new wave in international trade.
The impact of digital transformation is driving huge shifts in the way international business is done, particularly with the new developments in global supply chain systems, logistics as well as the financial transaction mechanism.
Industry 4.0, AI and the Internet of Things are no longer just buzzwords as all of these have already started to play significant roles in product design, manufacturing and marketing.
Malaysian businesses today, especially SMEs, must undergo significant levels of capacity building to be ready for this leap, and Matrade has taken active measures to help them in this area.
Malaysia is still a young country – just 62 years after gaining independence. However, the history of our country is steeped in a strong heritage of productivity, enterprise and a healthy international trade.
As we venture into the new era ahead for the country under a new leadership that is focused on national transformation for positive social economic growth, our emphasis will be on building the brand of Malaysia so that our products and services are well received by the markets of the world.
In a sense, this will be drawing on the strength of the historical roots of this nation that was built on the spirit of perseverance, ingenuity and enterprise of its people.