Malaysia-UAE ties on right growth track, more areas and opportunities to be explored — Economists
21 May 2023
The bilateral trade relation between Malaysia and United Arab Emirates (UAE) is currently on the right growth track with much more areas and opportunities to be explored by both countries moving forward, economists said.
Sunway University economics professor Dr Yeah Kim Leng said the UAE is among Malaysia’s top 20 export destinations and among the fastest-growing market for Malaysian exports, expanding by 43 per cent in 2022.
Therefore, he said there is strong potential for intensifying trade and investment between the two countries, where Malaysia could tap the Middle Eastern market through the UAE and likewise, the UAE could explore trade and investment opportunities in ASEAN through Malaysia.
“As the developed economies are facing strong headwinds in maintaining growth, trade-dependent countries like Malaysia will need to diversify its export markets to offset the developed markets’ weakening demand.
“Not surprisingly, Malaysia’s trade and investment with countries in Asia is already expanding. Hence, expanding the focus to other regions including the Middle Eastern countries will be a natural extension of export market diversification,” he told Bernama.
Sharing the same view, Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said he noticed that Malaysia’s export to the UAE is quite scanty.
“The latest print in April 2023 showed exports to UAE accounted for one per cent. So obviously, there is more room for further collaboration.
“I also noticed that most of the Gulf Cooperation Council (GCC) countries have been putting a lot of effort to diversify their economy away from fossil fuel industries.
Therefore, it makes sense to collaborate with UAE on any economic development that will benefit both parties,” he said.
In February, Prime Minister Datuk Seri Anwar Ibrahim said Malaysia and the UAE, via a telephone conversation, have agreed to boost cooperation between both countries in various fields including trade, investment, defence and energy.
Meanwhile, Yeah said besides the halal food sector whereby both countries could promote investments that could boost food production and enhance each nation’s food security, renewable energy and green investments are potential areas to explore for mutual gains.
On food security, Yeah said the rationale for promoting investment in food production is to assure long-term food supply and enhance food security in both countries.
“Malaysia will benefit from its role as a production and export hub as it can harness agricultural land resources and crop growing climate advantages.
“There will be even more development benefits if the capital investment is directed at smart agriculture that harnesses the power of digital technologies,” he said.
During the official visit to the UAE by the previous Prime Minister Datuk Seri Ismail Sabri Yaakob last year, Putrajaya officially invited the UAE to explore opportunities in the development of the revised Bandar Malaysia project by providing a package for more investors to participate.
Ismail Sabri also stated the interest from Malaysian companies in collaborating with UAE firms in the petroleum industry, including in the upstream sector and liquefied natural gas, renewable energy, fertilisers and carbon dioxide.
Yeah said the participation of UAE companies in Bandar Malaysia would be catalytic in strengthening investor confidence and attracting other Middle Eastern investors not only in the city development but economic activities such as Islamic finance, tourism and logistics.
On the oil and gas sector, he said the UAE accounted for six per cent of Malaysia’s total fuel imports while exports to the UAE constitute around one per cent of Malaysia’s total fuel exports in 2022.
He said the relatively low shares suggested room for boosting trade and investment in each other’s oil and gas industries, including exploration and production in the oil-rich gulf state.
The two countries had established bilateral relationships in the early 1970s, followed by the opening of the Malaysian diplomatic mission in Abu Dhabi in 1983 and the UAE Embassy in Kuala Lumpur in 1995.