Malaysia's Export Growth Finds Momentum in Electronics Surge Amid Sector Challenges

Malaysia’s export growth accelerated to 6.8% year-on-year in March 2025, driven by a historic leap in electrical and electronic products amid sector-specific headwinds. The rebound underscores the resilience of Malaysia’s manufacturing powerhouse, even as global economic uncertainties loom.

The electrical and electronic (E&E) sector, which accounts for over 40% of Malaysia’s total exports, surged 25% year-on-year to RM54.9 billion in March, reaching an all-time high. This growth was fueled by robust demand for semiconductors, consumer electronics, and advanced manufacturing components. The U.S. market alone saw a 51% jump in Malaysian exports, as companies like Intel (which has major facilities in Penang) and Renesas Electronics ramped up production to meet pre-tariff demand ahead of potential U.S. trade restrictions.

The E&E sector’s dominance is reflected in its contribution to Malaysia’s trade surplus, which hit a record RM24.72 billion in March—nearly double the year-ago figure. This surplus was amplified by a 2.8% decline in imports, as domestic companies reduced spending amid slowing global commodity prices.

While the E&E sector soars, other industries face turbulence. Petroleum exports plummeted 32.5% year-on-year in March, likely due to shifting global energy demand and weaker crude prices. LNG exports, which fell 11% in February, remain under pressure despite Malaysia’s status as the world’s second-largest LNG exporter. Agricultural goods, including palm oil, edged up 3.3% after February’s steep decline, signaling tentative stabilization in commodity markets.

The Ministry of Investment, Trade, and Industry (MITI) emphasized that Malaysia’s trade performance reflects both structural strengths and external risks. “The E&E sector’s growth is a testament to Malaysia’s advanced manufacturing ecosystem,” said a MITI spokesperson. “However, lingering U.S. trade policies and volatile energy markets require vigilance to sustain momentum.”

The data also highlights a widening divergence in Malaysia’s export landscape. Over the past 15 months—since January 2024—exports have expanded year-on-year every month, with the E&E sector averaging 18% growth over this period. Meanwhile, petroleum exports have contracted for eight consecutive months, shrinking by an average of 15% annually during that span.

Investors should monitor two key trends:
1. U.S.-Malaysia Trade Dynamics: A potential U.S. tariff on Malaysian semiconductors could disrupt the E&E sector’s growth, but companies are already hedging by accelerating production ahead of possible restrictions.
2. Energy Sector Adjustments: As petroleum declines, Malaysia’s trade diversification strategy—centered on high-tech manufacturing—will be critical to offsetting losses.

The trade surplus’s record high suggests Malaysia’s export-driven economy remains on solid footing, but its reliance on cyclical sectors like petroleum introduces volatility. With the E&E sector now contributing over half of Malaysia’s export growth, the country’s economic trajectory increasingly hinges on global technology demand.

In conclusion, Malaysia’s March export data paints a picture of uneven but sustained growth. The E&E sector’s dominance has propelled a record trade surplus, but vulnerabilities in energy and agriculture underscore the need for continued diversification. Investors should watch for policy responses to U.S. trade threats and the resilience of Malaysia’s manufacturing base in the face of global headwinds. With 15 consecutive months of export growth, the question now is whether Malaysia can convert this momentum into a more balanced, long-term expansion.