KUALA LUMPUR (Dec 7): Standard Chartered (StanChart) has projected Malaysia's exports to grow at an average annual rate of more than 8% to cross US$498 billion by 2030.
It said the projection is based on its research, which revealed that 43% of global corporates currently do or plan to source/manufacture in Malaysia within the next five to 10 years.
"This is evidence that Malaysia will be a major driver of global trade growth over the next decade," the bank said in a statement on its research on the future of trade.
The bank said Mainland China and Singapore will continue to be the largest export corridors for Malaysia, accounting for 19% and 17% of total exports in 2030, respectively.
India, meanwhile, is a fast growing export corridor for Malaysia with an average annual growth of 11.85% between 2020 and 2030.
StanChart said its research also showed that Malaysia is investing to become a regional logistics hub and building advanced manufacturing capabilities while its machinery and electrical, metals and minerals as well as agricultural and food sectors will dominate exports in 2030.
It added that the machinery and electrical sector will have a compounded annual growth rate (CAGR) of 8.2% while making up 44% of forecast share of exports in 2030, followed by the metals and minerals sector with a 9.2% CAGR and 23% forecast share of exports in 2030, and the agriculture and food sector with an 8.6% CAGR and 10% forecast share of exports in 2030.
According to the research, global trade is expected to grow from US$17.4 trillion to US$29.7 trillion over the next decade.
The global trade will be shaped by five key trends moving forward and that almost 90% of corporate leaders surveyed agreed that these trends will shape the future of trade and will form part of their five- to 10-year cross-border expansion strategies.
The five key trends are wider adoption of sustainable and fair-trade practices, push for more inclusive participation, greater risk diversification, more digitisation and rebalancing towards high-growth emerging markets.
"Globalisation will drive the next decade of growth. Despite the recent push towards onshoring, growth corridors of the future will not just be intra-regional — they will be global spanning Africa-East Asia, ASEAN-South Asia, East Asia-Europe, East Asia- Middle East, East Asia-Europe, South Asia-US.
"Asia, Africa and the Middle East will see a ramp-up in investment flows, with 82% of respondents saying they are considering new production locations in these regions in the next five to 10 years, supporting the trend towards rebalancing to emerging markets and greater risk diversification of supply chains," said StanChart.
The research has also found a significant trend towards the adoption of sustainable trade practices in response to climate concerns and a rising wave of conscious consumerism but only 34% of corporate leaders surveyed rank it as a "top three" priority for execution over the next five to 10 years despite almost 90% of them acknowledging the need to implement these practices across their supply chains.
The statement also said that in line with StanChart's commitment to helping make global trade more sustainable and transition towards Net Zero, it has launched a "Sustainable Trade Finance" proposition, enabling companies to build more sustainable and resilient supply chains as well as offering a suite of sustainable finance solutions to channel capital towards helping companies achieve their Net Zero goals.
"Trade connectivity is a crucial engine in promoting economic development and the international expansion of Malaysian companies. In addition to expanding intra-regional trade pathways, the corridors of the future will still cut across continents.
"Against this backdrop, we work closely with the Malaysian External Trade Development Corp to focus on making globalisation work for Malaysian businesses, ranging from SMEs (small and medium enterprises) to multinationals, and drive a more sustainable and inclusive model for global trade.
"This includes growing our range of sustainable finance solutions to help our clients implement sustainable and fair-trade practices across their supply chains," said StanChart Malaysia's managing director and chief executive officer, Abrar A Anwar.