Malaysia-Vietnam Aim for US$18 Billion in Two-Way Trade

Malaysia and Vietnam have become pivotal connections between each other and global supply chains broadly. Here’s how trade works between these two burgeoning Southeast Asian economies.

On the sidelines of the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Week in November, Vietnamese President Vo Van Thuong met with Malaysian Prime Minister Anwar Ibrahim. The two men discussed a number of joint challenges their respective countries face but also trade and how it is developing between the two nations.

In fact, these two countries have become major trade partners over the past two decades as each has served to take advantage of the shift out of China and the diversification of supply chains.

Furthermore, the Association of Southeast Asian Nations (ASEAN) has served to develop a myriad of free trade agreements that have made trading between these two countries cheaper and easier.

With this in mind, the Vietnam Briefing looks at where trade between Vietnam And Malaysia is now and where it may be headed.

Trade relations between Malaysia and Vietnam

Both members of the Association of Southeast Asian Nations (ASEAN) trade between Malaysia and Vietnam are covered by several free trade agreements. These include:

• ASEAN Trade in Goods Agreement (ATIGA)
• ASEAN-China Free Trade Area
• ASEAN-Japan Comprehensive Economic Partnership
• ASEAN-Korea Free Trade Area
• ASEAN-Australia-New Zealand Free Trade Area
• ASEAN-India Free Trade Area
• ASEAN-Hong Kong, China Free Trade Area (AHKFTA)
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• Regional Comprehensive Economic Partnership

See also: Vietnam’s Free Trade Agreements – Opportunities for Your Business

Malaysia FDI projects in Vietnam

At the end of 2022, Malaysian firms had started 702 projects in Vietnam with a collective registered capital of over UU$13 billion.

One notable project is Berjaya Vietnam International University Urban Area. This is a US$2.56 billion project in Ho Chi Minh City. This project was first approved in 2008, however, the project stagnated due to funding challenges. That said, in September 2023, it was announced that the project was back on track and expected to break ground in the first quarter of 2024.

Exports Malaysia to Vietnam

In 2022, Malaysia exported US$9.1 billion worth of goods to Vietnam. The biggest items were: computers, electrical products, spare parts, and auxiliaries; petroleum products; machines, equipment, tools, and instruments. These three categories alone accounted for US$4.4 billion worth of exports from Malaysia to Vietnam.

Malaysia’s exports to Vietnam, 2022

Source: General Department of Customs

Exports Vietnam to Malaysia

In 2022, Vietnam exported US$5.57 billion worth of goods to Malaysia. The three biggest exports from Vietnam to Malaysia were: computers, electrical products, spare parts, and accessories thereof; iron and steel; and machine, equipment, tools, and instruments. Collectively the dollar value of these three exports totaled US$ 2.37 billion.

Vietnam’s exports to Malaysia, 2022

Source: General Department of Customs

Malaysia-Vietnam trade moving forward

With two-way trade in 2022 totaling US$14.69 billion, there is still a way to go for trade between Vietnam and Malaysia to reach the US$18 billion goal the two countries are aiming for. That said, as the ASEAN trading bloc becomes more heavily integrated and supply chains become increasingly more diversified, this goal being achieved becomes increasingly more likely.

To find out more about building regional supply chains in Southeast Asia contact the business advisory experts at Dezan Shira and Associates.

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