Markets and Integration in Southeast Asia

Malaysia is a Southeast Asian nation with a population of over 30 million citizens. With a gross domestic product (GDP) of approximately US$800 billion, Malaysia has profound economic ties to the Asia Pacific region and, over the last several years, the national economic growth has stayed well above 4.5%. Within the Malaysian economy, agriculture represents about 9% of the total, the manufacturing industry approximately 38%, and services some 53%. Amongst Malaysia’s top agricultural products are palm oil, rubber, cocoa, and timber. Similarly, Malaysia belongs to the Association of Southeast Asian Nations (ASEAN), which is one of the largest and most important regional organisms in the world.

In fact, the ASEAN as a whole represents the world’s third largest labor market, with a total population larger than that of the European Union. Furthermore, as of 2015, the ASEAN Economic Community was created, which unites all ten member states into a free trade and economic integration bloc. Likewise, ASEAN represents the world’s fourth largest exporting region and national debt as a percentage of GDP is of approximately 50% throughout the member states. Finally, ASEAN member states, such as Malaysia, the Philippines, and Vietnam, form key sections within the Asia Pacific supply chains. This article explores the status of Malaysia’s food markets as well as Southeast Asia’s agricultural outlook.

Markets and Integration in Southeast Asia

Currently, Malaysian authorities only allow for the testing of certain genetically engineered (GE) crops within the country; however, the widespread planting of GE seeds is not allowed. Similarly, because more than half of Malaysia’s population eats Halal products, there are market development opportunities within this important sector. During 2015, the total value of food and beverage products imported into Malaysia came to US$9.3 billion. Amongst Malaysia’s most significant agricultural imports from international markets, there are cocoa, dairy, and vegetable products, as well as processed foods. However, in spite of self-sufficiency challenges presented by the national demographic boom, Malaysia has made significant advances in regards to domestic food processing during the last several years.

Taking into consideration the current political scenario, it is likely that the East Asia region will become increasingly integrated and self-sufficient during the coming years. The imminent collapse of the Trans-Pacific Partnership (TPP) initiative will draw the spotlight onto other economic schemes, notably the Regional Comprehensive Economic Partnership (RCEP). The RCEP seeks to integrate the economies of all ASEAN members with those of Australia, New Zealand, China, India, Japan, and South Korea. This initiative is significant because it includes the two most populous nations in the world, India and China, which have dynamic economies and are competing for regional hegemony within Asia. If the RCEP becomes a practical reality, led by the emerging champion of free trade and international supply chains that is China, then this economic union would account for more than 40% of the world’s population and approximately one-fourth of the global GDP. Finally, a strong United States dollar (USD) will likely increase exports from Asia markets, while hurting exports that originate in the US.

(Read more about Fruit Markets in the People’s Republic of China)