This article first appeared in The Edge Financial Daily on December 7, 2018

KUALA LUMPUR: While Malaysia saw a historic exports growth of 17.7% year-on-year (y-o-y) to RM96.38 billion and record trade surplus of RM16.3 billion in October, Finance Minister Lim Guan Eng warned that this good news on the trade front must be treated with caution as global trade and the economy remain fragile.

This is despite the 90-day truce declared in the trade war between the US and China.

“Such positive news follows the announcement by the Malaysian Investment Development Authority that approved foreign direct investments (FDIs) in the manufacturing sector increased by RM35 billion, or 250%, to RM49 billion for the first nine months of 2018, from RM14 billion a year ago,” he said in a statement yesterday.

“What is noteworthy is that from May to September this year, total approved FDIs in the manufacturing sector was RM35 billion compared with RM7.3 billion from May to September 2017,” he added.

Guan Eng said the record growth in October exports and the record trade surplus indicate that Malaysia is on the right track towards the new Pakatan Harapan government’s three-year fiscal consolidation plan to put Malaysia’s economy back on track.

Malaysia’s total trade increased to RM176.4 billion in October, up 14.8% from October 2017. The trade surplus was RM16.3 billion, up 63.1% from a year ago.

“What is encouraging is that exports of our primary commodities, which had been severely hit by falling prices and falling demand, especially palm oil and natural rubber, recorded increases in October compared with September 2018,” said Guan Eng.

Palm oil and palm oil-based products rose 10.8% y-o-y from RM5.6 billion. Exports of palm oil increased 7.5% due to the increase in export volume of 9.2% as average unit value decreased 1.5%.