Required Report - public distribution

**Date:** 5/17/2005

**GAIN Report Number:** MY5021

MY5021

**Malaysia**

**Food Processing Ingredients Sector**

**Food Processing Sector Malaysia**

**2005**

**Approved by:**

![](media/image1.wmf)Jonathan Gressel

U.S. Embassy, Kuala Lumpur

**Prepared by:**

Spire Research Consulting

**Report Highlights:**

Malaysia\'s GDP is expected to grow by 5-6 percent in 2005 and 2006.
Changes in consumer lifestyle and the government emphasis on encouraging
exports of processed foods from Malaysia are market drivers of the
country\'s food processing industry. Nearly 70% of the raw materials
used by the food processing industry are imported. The Government of
Malaysia has targeted the \$560 billion global halal foods market by
encouraging the development of a halal food hub. The goal of the halal
food hub is to boost the local food processing industry, utilizing many
imported ingredients, to meet the demand for medium and high quality
halal foods.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Kuala Lumpur \[MY1\]

\[MY\]

Table of Contents

[1. Country Summary 3](#country-summary)

[2. Market Summary 5](#market-summary)

[2.1 Malaysia's Food Processing Industry
5](#malaysias-food-processing-industry)

[2.2 Market Drivers of Malaysia's Food Processing Industry
6](#market-drivers-of-malaysias-food-processing-industry)

[2.3 Advantages and Challenges for US Exporters
6](#advantages-and-challenges-for-us-exporters)

[3. Road Map for Market Entry 8](#road-map-for-market-entry)

[3.1 Entry Strategy for US Food Exporter
8](#entry-strategy-for-us-food-exporter)

[3.2 Market Structure 8](#market-structure)

[3.3 Regulation on Imported Foods 9](#regulation-on-imported-foods)

[3.4 Sector Profile 10](#sector-profile)

[4. Competition 15](#competition)

[4.1 Competition Facing US Food Exporters
15](#competition-facing-us-food-exporters)

[4.2 Major Products Categories And Competitors' Market Share
15](#major-products-categories-and-competitors-market-share)

[5. Best Products Prospects 18](#best-products-prospects)

[5.1 Products Having Good Sales Potential
18](#products-having-good-sales-potential)

[5.2 Potential Products Not Present In Significant Quantities
21](#potential-products-not-present-in-significant-quantities)

[5.3 Products Facing Significant Barriers
23](#products-facing-significant-barriers)

# 1. Country Summary

  -------------------------- --------------------------------------------
  **Overview of Malaysia**   

  **Location of Malaysia**   South East Asia

  **Malaysia's land area**   329,735 square km (127, 311 square mile)

  **Form of government**     Parliamentary government under
                             constitutional monarchy

  **Capital**                Kuala Lumpur

  **Population in 2003**     25.05 million

  **Composition of           Bumiputera (61.3%), Chinese (24.5%), and
  population**               Indians (7.2%), other Malaysians (1.2%), and
                             non-Malaysians (5.9%)

  **Religious composition**  Islam (56%), Buddhism/Confucianism/Taoism
                             (29%), Hinduism (7%), Christianity (6%), and
                             others (2%)

  **Major languages**        Malay, English, Chinese (including various
                             dialects), and Tamil

  **Major festivals**        Eidil Fitri (Islam), Chinese New Year,
                             Deepavali (Hindu), Christmas, and Harvest
                             Festival (East Malaysia only)

                             
  -------------------------- --------------------------------------------

Malaysia is located in South East Asia and slightly larger than New
Mexico. The country comprises of Peninsular Malaysia (located between
Thailand's southern border and Singapore) and East Malaysia (occupying
nearly one-third of northern Borneo Island). The country has a hot and
humid climate with seasonal monsoons rains.

Malaysia's population in 2003 stood at 25.05 million and nearly 80% of
the population resides in Peninsular Malaysia while the remaining 20%
reside in East Malaysia. Malaysia's population consists of various
ethnic groups. The indigenous group known as *Bumiputera* accounts for
61% of the population and comprises of ethnic groups such as the Malays,
Ibans, Dayaks, Melanaus, Kadazans-Dusuns, Bajaus, and Dayaks. Chinese
account for 24% of the population followed by Indians at 7%. Islam is
Malaysia's official religion and nearly 56% of the population professes
to the Islamic faith. Other major faiths practiced in Malaysia include
Buddhism, Taoism, Hinduism, and Christianity. Thus various religious and
ethnic festivities are celebrated and are public holidays in Malaysia.

The proportion of Malaysia's population living in the urban area
increased from 50.7% in 1991 to 62.0% in 2000 while the proportion
living in rural areas declined from 49.3% to 38.0%. The proportion of
Malaysia's urban population is expected to increase further in the
coming years due to greater job opportunities coupled with higher pay
compared to the rural areas. Thus the average income of the working
population living in the urban areas is 1.8 times greater than those in
the rural areas.

Malaysia has enjoyed moderate to strong economic growth since the 1990s
except in 1998 during the Asian Economic Crisis and 2001 during the
global economic slowdown. Malaysia's GDP per capita is among the highest
in South East Asia after Singapore and Brunei. Inflation and
unemployment in Malaysia remains relatively low and the country has
nearly 1 million foreign workers mainly employed in unskilled and
semi-skilled work. Malaysia's currency has been pegged to the US dollar
since 1998 and currencies, such as the Euro and Japanese Yen, have
appreciated against the US dollar and Malaysian Ringgit since 2000.

  -------------------------- ---------- ---------- ---------- ---------- ----------- -----------
  **Malaysian Economy in                                                             
  Brief**                                                                            

                             **2000**   **2001**   **2002**   **2003**   **2004e**   **2005f**

  GDP (US\$ billion)         90.3       88.0       94.9       103.7      111.0       117.2

  GDP per capita (US\$)      3,844      3,665      3,880      4,131      4,319       4,455

  Income per capita (US\$)   3,529      3,386      3,516      3,710      4,036       4,197

  Exchange rate - RM to      3.8        3.8        3.8        3.8        3.8         3.8
  US\$1                                                                              

  Overall CPI                1.5%       1.4%       1.8%       1.1%       1.5%        1.7%

  Population (million)       23.5       24.0       24.5       25.1       25.6        26.1

  Unemployment rate          3.1%       3.6%       3.5%       3.6%       3.8%        3.8%

  *Source: Malaysian                                                                 
  Statistics Department,                                                             
  Ministry of Finance, and                                                           
  Asian Development Bank.*                                                           
  -------------------------- ---------- ---------- ---------- ---------- ----------- -----------

Malaysia's GDP grew by 7.1% in 2004. The Asian Development Bank
forecasts Malaysia's GDP to continue to grow but at a slower pace of
5.6% in 2005 to reach US\$117.2 billion. Unemployment will continue to
remain low and per capita income to grow in 2004 and 2005 in line with
Malaysia's economic growth trends.

# 2. Market Summary

## 2.1 Malaysia's Food Processing Industry

There are nearly 3,200 manufacturers involved in the food manufacturing
industry in Malaysia and the industry accounts for nearly 10% of
Malaysia's manufacturing output. Output from the food processing
industry increased 7.5% from US\$3.12 billion in 1999 to US\$3.35
billion in 2003. The government has focused on the food processing
industry's potential for exports. Exports increased by 36.6% from
US\$1.92 billion in 1999 to US\$2.62 billion in 2003. Food manufacturers
operating in Malaysia include both Malaysian and multinational companies
such as Nestle, Unilever, Cerebos, and US based Campbell Soup.

  ------------------------ -------- -------- -------- -------- -------- ----------
  **Production and Exports                                              
  of Processed Foods in                                                 
  Malaysia (US\$ Mil)**                                                 

                           **\      **\      **\      **\      **\      **Avg.
                           \        \        \        \        \        Annual
                           1999**   2000**   2001**   2002**   2003**   Growth**

  Production of processed  3,116    3,174    3,210    3,198    3,351    1.9%
  foods\                                                                
  (factory value)                                                       

  Export of processed      1,915    2,022    2,076    2,308    2,616    8.2%
  foods\                                                                
  (FOB)                                                                 

  *Source: Malaysian                                                    
  Statistics Department.*                                               
  ------------------------ -------- -------- -------- -------- -------- ----------

Nearly 70% of the raw food materials used by the food processing
industry are imported and imports grew from US\$1.05 billion in 1999 to
US\$1.54 billion in 2003. Raw food materials imported into Malaysia are:

-   Primary food materials -- Agriculture commodities such as wheat and
    soybean that are processed into semi-processed food materials or
    finish food products;

-   Semi-processed food materials - Partially processed food materials
    such as starch and whey that are processed further to produce the
    finished food products; and

-   Processed food materials -- Finished food products imported in bulk
    and repacked in Malaysia.

  ---------------- ---------- ---------- ---------- ---------- ---------- ------------
  **Imports of                                                            
  Food Materials                                                          
  for the Food                                                            
  Processing (US\$                                                        
  Mil)**                                                                  

                   **1999**   **2000**   **2001**   **2002**   **2003**   **Avg.
                                                                          Annual
                                                                          Growth**

  Primary food     523        492        543        615        729        9.1%
  materials                                                               

  Processed and    530        518        669        739        806        11.6%
  semi-processed                                                          

  Total            1,053      1,010      1,212      1,354      1,535      10.3%

  *Source: MITI                                                           
  Report 1999-                                                            
  2003.*                                                                  
  ---------------- ---------- ---------- ---------- ---------- ---------- ------------

To encourage development of the food processing industry, the government
offers various incentives to food manufacturers to encourage investments
in the industry. In 2003, Malaysia received US\$289.5 million worth of
investments for food manufacturing of which 59% were from local
investments and the remaining 41% from foreign investments. Further
investments in the food processing industry are expected according to
the Malaysian Industrial Development Authority (MIDA).

## 2.2 Market Drivers of Malaysia's Food Processing Industry

Changes in consumer lifestyle and government emphasis encouraging
exports of processed foods from Malaysia are the market drivers of the
country's food processing industry.

-   Malaysia's rising per capita income and increasing urban population
    has lead consumers to lead a more modern but busy lifestyle. Thus
    there is a trend towards meals that are convenient to prepare or
    ready to eat. Consumers are also demanding more variety in their
    foods, becoming accustomed to international cuisines including
    western foods, and also healthier foods. This has provided
    opportunities for food manufacturers in Malaysia to develop and
    introduce new food products.

-   An important trend affecting the local food processing industry is
    the establishment of new supermarkets and hypermarkets throughout
    Malaysia. Shopping at these retails outlets is becoming increasingly
    popular among consumers. These supermarkets and hypermarkets have
    cold storage facilities to stock and display chilled and frozen
    foods. This provides opportunities for food manufacturers to develop
    and market frozen and chilled processed foods.

The Malaysian government has identified the food processing industry as
a priority sector for industrial development and increase exports.
Malaysia's Ministry of International Trade and Industries (MITI)
estimates the global market for *halal* foods (foods suitable for Muslim
consumption) at US\$560 billion annually and a potential for exports of
processed foods from Malaysia. Already one-third of the foods produced
in Malaysia are exported.

## 2.3 Advantages and Challenges for US Exporters

The Malaysian market for raw food materials used in the food processing
industry poses both advantages and challenges for US exporters. Local
production is only able to supply 30% of the raw food materials used in
the food processing industry and the remainder has to be imported.
However, US exporters face strong challenges from imports originating
from Thailand, China, Australia, and New Zealand.

  -----------------------------------------------------------------------
  **Advantages and Challenges for US  
  Exporters**                         
  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  Malaysia is dependent on imports    Only *halal* meat (beef, lamb, and
  for nearly 70% of the raw food      poultry) and their products
  materials used in food processing   certified by an approved Islamic
  and includes agriculture            institution are allowed to be
  commodities such as wheat, soybean, imported into Malaysia. Australia
  sugar, and dairies and              and New Zealand have a competitive
  semi-processed food materials such  edge since these countries have an
  as malt extracts, whey, starches,   established *halal* food industry
  and sugar derivatives.              catering for the export markets.

  To support the local food           Usage of genetically modified (GM)
  processing industry, which is       foods is permitted but proposed
  dependent on imports of raw food    regulations on labeling of foods
  materials, there are no quota on    containing more than 3% GMF
  imports and import duty on many raw material may discourage food
  food materials.                     manufacturers from purchasing GMF.

  The government is encouraging local Though Malaysia is dependent on
  food manufacturers to expand their  imports for 70% of the raw food
  exports and take opportunity of the materials, US exporters face
  US\$560 billion global *halal*      competition from locally produced
  foods market.                       raw food materials that are in
                                      sufficient supply (e.g. poultry)
                                      including substitute products (e.g.
                                      palm oil that is substitutable with
                                      soybean oil).

  Malaysia's moderate to strong       Food manufacturers are price
  economic growth, rising per capita  sensitive and even European and US
  income, and increasing urbanization food manufacturers operating in
  of the country's population is      Malaysia may source from countries
  creating demand for processed       that are able to supply raw food
  foods.                              materials at competitive prices.

  Major food manufacturers compete by Strong price competition from
  developing and marketing new food   exporters from China, Thailand,
  products into the market creating   Australia, and New Zealand who are
  demand for new raw food materials   also major suppliers of raw food
  including ingredients.              materials to Malaysia.

  There are nearly 3,200 food         Raw food materials from China,
  manufacturers in Malaysia           Thailand, Australia, and New
  comprising both multinational       Zealand have shorter delivery times
  (including US) and local companies  and lower freight costs than from
  producing a variety of local, other the US due to their closeness to
  Asian, and western foods.           Malaysia.

  *Source: Trade sources.*            
  -----------------------------------------------------------------------

# 3. Road Map for Market Entry

## 3.1 Entry Strategy for US Food Exporter

The market for import of raw food materials into Malaysia is open to
foreign competition. Thus it is important for US exporters to understand
their major competitors and requirements of the food manufacturers
before adopting a market entry strategy. US exporters should consider
the price sensitiveness of their customers, their product requirements,
purchasing policies, and expected purchase volumes.

  -----------------------------------------------------------------------
  **Key Entry Strategies  
  for US Exporters**      
  ----------------------- -----------------------------------------------
  **Strategy**            **Reasons**

  Acquire *halal*         Muslims account for more than half of
  certification to cater  Malaysia's population and consume foods that
  to the Muslim consumer  are *halal*. Furthermore, the government is
  market.                 encouraging local food manufacturers to take
                          advantage of the global market for *halal*
                          foods.

  Emphasize on the        The Malaysian market is open to imports from
  competitive advantage   any country and major competitors include
  of the exporter's       Thailand, China, Australia, and New Zealand.
  products to the food    Thus it is beneficial for US exporters to
  manufacturers.          explain the advantages of using their products
                          such as price competitiveness, uniqueness,
                          sufficient supplies, reliable delivery,
                          technical support, and customer service.

  Ensure quality of the   Though food manufacturers are price sensitive
  raw food materials to   towards purchases, they are also sensitive
  instill manufacturers'  towards consumer demand for more quality foods.
  confidence.             Furthermore, manufacturers have to ensure the
                          quality of their food products for their export
                          markets.

  Market and promote to   Many Malaysian food manufacturers are unaware
  increase awareness      of many semi-processed and processed raw food
  among food              materials available from the US. Thus marketing
  manufacturers.          and promotional activities increases awareness
                          of an exporter's products and includes
                          participating in events such as trade
                          exhibitions and advertising in the local trade
                          directories.

  Establish an efficient  US exporters should establish the most
  distribution network to efficient distribution channel for their
  maximize market         products depending on the volume, frequency of
  penetration.            purchase, purchasing policy, and location of
                          their customers. Thus single or multiple
                          distribution channels may be required such as
                          direct sales, through importers, and/or agents.

                          
  -----------------------------------------------------------------------

## 3.2 Market Structure

Raw food materials are imported either directly by the food
manufacturers, through importers, or agents. Generally, products
purchased in high volume are imported directly by the food manufacturers
while those purchased in smaller volume are imported through importers
or agents. Importers and agents in turn sell directly to the food
manufacturers or through distributors. Distributors are generally used
to supply to smaller food manufacturers often located far away from the
importers' or agents' business operations. Local producers of raw food
materials generally sell directly to the food manufacturers but will use
distributors to supply to the smaller food manufacturers.

![](media/image2.wmf){width="5.607638888888889in"
height="2.046527777777778in"}

## 3.3 Regulation on Imported Foods

There are no government quotas for any country on import of raw food
materials into Malaysia. Clearance at the port of entry is generally
efficient provided all regulatory requirements on imports including
safety of the food materials are met. Currently, there is no government
regulation banning the use of genetically modified (GM) foods.

+-----------+----------------------------------------------------------+
| **        |                                                          |
| Important |                                                          |
| Import    |                                                          |
| Regu      |                                                          |
| lations** |                                                          |
+-----------+----------------------------------------------------------+
| *         | **Requirements**                                         |
| *Issues** |                                                          |
+-----------+----------------------------------------------------------+
| Meat and  | -   Exporters are required to conduct tests on their     |
| seafood   |     meat and seafood products to ensure they are free    |
| products  |     from hazardous substances. FSIS certification is     |
|           |     accepted by GOM.                                     |
|           |                                                          |
|           | -   All imported meat and seafood products are required  |
|           |     to have health certificates.                         |
|           |                                                          |
|           | -   Meat and meat products require an import license and |
|           |     must be free from anthrax and bovine spongiform      |
|           |     encephalopathy. Import licenses are sometimes used   |
|           |     to restrict imports of certain products depending on |
|           |     domestic supply.                                     |
+-----------+----------------------------------------------------------+
| *Halal*   | -   Imported *halal* meat and meat products (excluding   |
| meat and  |     pork) must be from a plant approved by the Malaysian |
| meat      |     Islamic Development Council and certified by a       |
| products  |     recognized Islamic institution based in the country  |
|           |     of export.                                           |
+-----------+----------------------------------------------------------+
| Food      | -   Maximum level of food additives (preservatives,      |
| additives |     dyes, flavoring substances, antioxidants, and food   |
|           |     conditioners) are imposed on finished food products  |
|           |     (processed food products meant for repacking).       |
+-----------+----------------------------------------------------------+
| *Source:  |                                                          |
| Ministry  |                                                          |
| of        |                                                          |
| Health.*  |                                                          |
+-----------+----------------------------------------------------------+

## 3.4 Sector Profile

Increasing consumer demand for more processed foods coupled with
Malaysia's emphasis to increase exports of processed food has led
towards the development of Malaysia's food processing industry.
Traditional forms of cooking require time to prepare. Increasing
consumer income coupled with a modern and busy lifestyle has created a
demand for more processed foods that are convenient to prepare. Major
foods consumed:

-   ***Dairy Products.*** Dairy products are traditionally not part of
    the Malaysian diet, except sweetened condensed milk commonly used in
    hot beverages. Dairy products now consumed include milk drinks, ice
    cream, yogurt, infant formulas, and milk powder.

-   ***Bakery Products.*** Consumption of bread and pastries are
    becoming popular since they are conveniently consumed and widely
    available in the retail outlets. Consumer health consciousness has
    encouraged food manufacturers to produce bakery products promoted as
    healthier foods such as those having high fiber, low fat, and high
    calcium.

-   ***Meat and Seafood Products.*** Beef and poultry products include
    burgers, mincemeat, hot dogs, sausages, and salami. Poultry meat is
    also used for frozen breaded chicken parts while canned beef and
    chicken are pre-cooked in curry and ready to eat. Canned fish
    includes mackerel in tomato sauce and tuna in oil or brine. Frozen
    and chilled seafood products include fish cakes, fish balls, and
    breaded products.

-   ***Confectionaries and Snack Foods.*** Nearly two-thirds of the
    confectionaries produced are sugar base while the remaining is
    chocolate base. Savory snacks include potato chips, corn chips,
    puffballs, and extruded snacks. Popular flavors include cheese,
    corn, tomato, BBQ, spicy, and onion. Common nuts used in snack foods
    are peanuts followed by almond while fruit snacks are dried fruit
    preserves.

-   ***Soft Drinks.*** Carbonated beverages produced by local bottlers
    are mainly brands from Coca-Cola and Pepsi-Cola. Popular
    non-carbonated soft drinks include soymilk, fruit juices, chocolate,
    coffee, tea, and herbal tea. Popular fruit juices include orange,
    apple, mango, guava, and pineapple.

-   ***Sauces.*** Soy and oyster sauce are an important part of
    Malaysian cooking and nearly all Malaysian homes have a bottle of
    soy sauce. A bottle of chili sauce and ketchup is also common in
    many Malaysian homes and often dipped in dumplings, meat, and
    seafood. Salad dressings such as mayonnaise and Thousand Islands are
    also becoming popular.

-   ***Oil and Fats.*** Margarines and cooking oils produced in Malaysia
    are mainly palm oil base since Malaysia is the world's largest
    producer of palm oil. However, manufacturers also produce margarines
    and cooking oils processed from soybean, canola, and sunflower for
    the more health conscious consumers.

***Canned Fruits & Vegetables.*** The local industry for processed
fruits and vegetables is limited since Malaysians have a preference for
fresh rather than processed fruits and vegetables. Locally processed
fruits and vegetables are mostly canned pineapples, baked beans, and
peas.

  -----------------------------------------------------------------------------------
  **Food Processing Output                                                 
  ('000 tons except where                                                  
  mentioned)**                                                             
  ---------------------------- ---------- ---------- ---------- ---------- ----------
  **Food Product**             **1999**   **2000**   **2001**   **2002**   **2003**

  Refined sugar                1,225.8    1,234.1    1,210.4    1,408.8    1,424.1

  Wheat flour                  760.7      706.4      664.0      664.3      701.0

  Carbonated drinks (mil       196.1      223.2      291.4      227.1      365.6
  liters)                                                                  

  Non-carbonated drinks (mil   155.3      179.9      210.2      213.1      159.1
  liters)                                                                  

  Sweetened condensed milk     165.1      156.8      149.9      137.9      143.6

  Bread                        115.4      121.7      127.4      132.5      138.1

  Biscuits/cookies             122.4      117.9      112.1      114.9      124.3

  Beer (mil liters)            111.1      112.5      109.3      113.1      115.6

  Milk drinks (mil liters)     75.0       88.7       82.0       91.0       97.6

  Blended cooking oil          87.6       68.3       85.8       63.8       60.3

  Full cream powdered milk     38.7       48.8       41.2       50.2       43.3

  Malt base drinks (hot        28.1       30.8       33.8       35.3       36.3
  drinks)                                                                  

  Frozen/chilled processed     25.2       25.8       28.1       29.5       30.9
  beef                                                                     

  Ice cream (mil liters)       26.1       27.4       28.1       28.6       29.2

  Frozen/chilled processed     19.7       20.0       20.6       25.2       26.7
  seafood                                                                  

  Canned fish                  16.4       18.2       20.7       21.9       23.3

  Savory snacks                19.4       20.3       20.9       21.6       23.0

  Frozen shrimps/prawns        18.4       17.6       19.3       20.6       24.4

  Margarine                    23.9       19.0       17.3       19.7       20.1

  Confectionery                18.2       19.4       19.3       19.1       19.2

  Canned pineapples            21.2       18.3       15.8       17.5       18.5

  Soy Sauce                    14.4       14.9       15.2       15.7       16.1

  Fermented milk drinks (mil   13.6       14.4       15.1       15.6       16.0
  liters)                                                                  

  Chili Sauce                  12.0       12.4       12.6       13.0       13.2

  Ketchup                      11.4       11.8       12.0       12.4       12.6

  Coffee (hot drinks)          7.4        8.8        10.6       11.2       12.0

  Frozen/chilled processed     8.1        8.4        8.5        10.9       11.7
  poultry                                                                  

  Canned meat                  10.4       10.5       10.5       10.5       11.0

  Yogurt                       6.6        7.1        7.3        7.4        7.7

  Oyster Sauce                 3.3        3.4        3.5        3.5        3.6

  Nuts                         2.2        2.4        2.5        2.6        2.6

  Canned beans                 1.7        1.7        1.7        1.6        1.6

  Fruit snacks                 1.2        1.2        1.3        1.4        1.4

  *Source: Malaysian                                                       
  Statistics Department,                                                   
  Euromonitor, trade sources,                                              
  and Spire analysis.*                                                     
  -----------------------------------------------------------------------------------

Food manufacturers in Malaysia include Malaysian and multinational
companies. Multinational companies are often joint investments between
foreign and Malaysian investments. Some foreign brands of food products
are produced under license by Malaysian companies with the rights to
market within specific geographical markets.

+------------------------+----------+----------+--------+------------+
| **Profile of Major     |          |          |        |            |
| Food Manufacturers**   |          |          |        |            |
+========================+==========+==========+========+============+
| **\                    | **Parent | **Sales  | **\    | **\        |
| Company\               | Company\ | in 2003\ | End    | Production |
| (Foods Produced)**     | Owner    | (US\$    | Use    | Location** |
|                        | ship\*** | Mil)**   | Cha    |            |
|                        |          |          | nnel** |            |
+------------------------+----------+----------+--------+------------+
| Nestle Products Sdn    | Swiss    | 699      | Retail | Malaysia   |
| Bhd                    |          |          | and    | (8)        |
|                        |          |          | HRI    |            |
| (Baby food,            |          |          |        |            |
| confectionary, snack   |          |          |        |            |
| foods, bakery          |          |          |        |            |
| products, cereals,     |          |          |        |            |
| dairy products,        |          |          |        |            |
| ice-cream, pasta,      |          |          |        |            |
| noodles, milk, yogurt, |          |          |        |            |
| beverages, sauces, and |          |          |        |            |
| soups)                 |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Yeo Hiap Seng Sdn Bhd  | Sin      | 107      | Retail | Malaysia   |
|                        | gaporean |          | and    | (4)        |
| (Curry, canned fish,   |          |          | HRI    |            |
| jam, condensed milk,   |          |          |        |            |
| instant noodles,       |          |          |        |            |
| sauces, vinegar, and   |          |          |        |            |
| beverages)             |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Dutch Lady Milk        | Net      | 98       | Retail | Malaysia   |
| Industries Bhd         | herlands |          | and    | (1)        |
|                        |          |          | HRI    |            |
| (Sweetened condensed   |          |          |        |            |
| milk, milk powder,     |          |          |        |            |
| infant formula,        |          |          |        |            |
| pasteurized & UHT      |          |          |        |            |
| milk, yogurt, and      |          |          |        |            |
| fruit juice)           |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| F&N CC Beverages Sdn   |          | 95       | Retail | Malaysia   |
| Bhd                    |          |          | and    | (6)        |
|                        |          |          | HRI    |            |
| (Soft drinks including |          |          |        |            |
| carbonated drinks and  |          |          |        |            |
| juice),                |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Premier Milk Sdn Bhd   |          | 93       | Retail | Malaysia   |
| and F&N Foods Sdn      |          |          | and    | (1)        |
|                        |          |          | HRI    |            |
| (Dairy products        |          |          |        |            |
| including sweetened    |          |          |        |            |
| condensed milk,        |          |          |        |            |
| creamers, and          |          |          |        |            |
| evaporated milk)       |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Mamee Double-Decker    | M        | 68       | Retail | Malaysia   |
| Bhd                    | alaysian |          |        | (7)\       |
|                        |          |          |        | China (1)\ |
| (Snacks, dairy         |          |          |        | Myanmar    |
| products,              |          |          |        | (1)        |
| confectionary, and     |          |          |        |            |
| beverages)             |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Hup Seng Perusahaan    | M        | 46       | Retail | Malaysia   |
| Makanan Sdn Bhd        | alaysian |          |        | (1)        |
|                        |          |          |        |            |
| (Bakery products       |          |          |        |            |
| including cookies,     |          |          |        |            |
| wafer rolls, crackers, |          |          |        |            |
| and sandwich cookies)  |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Apollo Foods Holding   | M        | 30       | Retail | Malaysia   |
| Bhd                    | alaysian |          |        | (1)        |
|                        |          |          |        |            |
| (Chocolate wafers,     |          |          |        |            |
| chocolate peanuts,     |          |          |        |            |
| chocolate biscuits,    |          |          |        |            |
| and nougat)            |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Mafipro Sdn. Bhd       | M        | 27       | Retail | Malaysia   |
|                        | alaysian |          |        | (1)        |
| (Spices and canned     |          |          |        |            |
| food -- fish, green    |          |          |        |            |
| pepper, vegetable,     |          |          |        |            |
| sauces).               |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Hunza Consolidated Bhd | M        | 25       | Retail | Malaysia   |
|                        | alaysian |          |        | (3)        |
| (Processed frozen      |          |          |        |            |
| seafood including      |          |          |        |            |
| lobster, squid, and    |          |          |        |            |
| shrimps)               |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Hwa Tai Industries Bhd | M        | 25       | Retail | Malaysia   |
|                        | alaysian |          |        | (1)        |
| (Bakery products       |          |          |        |            |
| including cookies,     |          |          |        |            |
| cake rolls, and        |          |          |        |            |
| digestive biscuits)    |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Yee Lee Edible Oils    | M        | 23       | Retail | Malaysia   |
| Sdn. Bhd               | alaysian |          | and    | (1)        |
|                        |          |          | HRI    |            |
| (Vegetable fats and    |          |          |        |            |
| oils including cooking |          |          |        |            |
| oil, margarine, and    |          |          |        |            |
| shortening)            |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Oriental Food          | M        | 20       | Retail | Malaysia   |
| Industries Holding Sdn | alaysian |          |        | (1)        |
| Bhd                    |          |          |        |            |
|                        |          |          |        |            |
| (Snack foods including |          |          |        |            |
| potato chips, rice     |          |          |        |            |
| crackers, cheese       |          |          |        |            |
| balls, crackers, and   |          |          |        |            |
| wafers)                |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Perfect Food           | M        | 18       | Retail | Malaysia   |
| Manufacturing (M) Sdn. | alaysian |          |        | (1)        |
| Bhd                    |          |          |        |            |
|                        |          |          |        |            |
| (Bakery products       |          |          |        |            |
| including cookies,     |          |          |        |            |
| crackers, wafers,      |          |          |        |            |
| tarts, and pies)       |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Khee San Food          | M        | 13       | Retail | Malaysia   |
| Industries Sdn Bhd     | alaysian |          |        | (1)        |
|                        |          |          |        |            |
| (Confectionaries       |          |          |        |            |
| including hard and     |          |          |        |            |
| soft candies, wafers,  |          |          |        |            |
| chewing gum, and       |          |          |        |            |
| chocolate products)    |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| Dewina Food Industries | M        | 9        | Retail | Malaysia   |
| Sdn Bhd                | alaysian |          |        | (1)        |
|                        |          |          |        |            |
| (Ready-to-eat meals,   |          |          |        |            |
| ready-to-use cooking   |          |          |        |            |
| sauces/curries,        |          |          |        |            |
| stocks, seasonings,    |          |          |        |            |
| condiments, and        |          |          |        |            |
| spreads)               |          |          |        |            |
+------------------------+----------+----------+--------+------------+
| *Source: Published     |          |          |        |            |
| company information    |          |          |        |            |
| including websites,    |          |          |        |            |
| trade sources, and The |          |          |        |            |
| Star newspaper.        |          |          |        |            |
| Note:\*Foreign         |          |          |        |            |
| companies operating in |          |          |        |            |
| Malaysia have          |          |          |        |            |
| Malaysian              |          |          |        |            |
| investments.*          |          |          |        |            |
+------------------------+----------+----------+--------+------------+

# 4. Competition

## 4.1 Competition Facing US Food Exporters

US exporters face minimal competition from local producers for many raw
food materials used in the Malaysian food processing industry. Main
reason is the food processing industry is dependent on imports for
nearly 70% of the raw food materials used. However, US exporters face
stronger competition from exporters in Thailand, China, Australia, and
New Zealand. Their products are competitively priced and their closeness
to Malaysia compared to the US puts these countries at an advantage in
terms of delivery time and freight costs. Furthermore, Australia and New
Zealand have an established *halal* food industry geared towards exports
to Muslim markets.

## 4.2 Major Products Categories And Competitors' Market Share

+----------------+-------------------+----------------+----------------+
| **Major        |                   |                |                |
| Imports in     |                   |                |                |
| 2003**         |                   |                |                |
+================+===================+================+================+
| **\            | **\               | **\            | **Advantages   |
| \              | Major Supply      | Strengths of   | and            |
| Product**      | Sources\***       | Key Supply     | Disadvantages  |
|                |                   | Countries**    | of Local       |
|                |                   |                | Suppliers**    |
+----------------+-------------------+----------------+----------------+
| Oils and fats  | 1.  Indonesia --  | Indonesia and  | Malaysia's is  |
|                |     61%           | the            | the world's    |
| Import:\       |                   | Philippines    | largest        |
| 8.22 mil tons  | 2.  Philippines   | are major      | producer of    |
| (US\$348.8     |     -- 9%         | suppliers of   | palm oil and   |
| mil)           |                   | coconut oil,   | competes       |
|                | 3.  Argentina --  | Indonesia      | directly with  |
|                |     9%            | supplier of    | soybean oil.   |
|                |                   | fats, and      |                |
|                | 4.  US - \<1%     | Argentina      |                |
|                |                   | sunflower seed |                |
|                |                   | oil.           |                |
+----------------+-------------------+----------------+----------------+
| Sugar and      | 1.  Australia --  | Australian and | Malaysia's     |
| sugar          |     44%           | Thai exporters | climate limits |
| derivatives    |                   | target         | cultivation of |
|                | 2.  Thailand --   | Malaysia since | sugarcane and  |
| Import:\       |     34%           | Malaysia is a  | therefore has  |
| 1.08 mil tons\ |                   | major regional | to depend on   |
| (US\$257.3     | 3.  Brazil -- 10% | importer of    | imports for    |
| mil)           |                   | sugar.         | two-thirds of  |
|                | 4.  US - \<1%     |                | its            |
|                |                   |                | requirements.  |
+----------------+-------------------+----------------+----------------+
| Cereal grains  | 1.  China -- 40%  | Wheat is the   | Malaysia's     |
| (excluding     |                   | main import    | cultivation of |
| rice and corn) | 2.  Australia --  | and though     | grain crop is  |
|                |     21%           | imports from   | limited to     |
| Import:\       |                   | Australia and  | rice and the   |
| 1.05 mil tons\ | 3.  India -- 12%  | US are         | country's      |
| (US\$174.3     |                   | similarly      | climate is     |
| mil)           | 4.  US -- 8%      | priced,        | unsuitable for |
|                |                   | Australia's    | cultivating    |
|                |                   | advantage is   | temperate      |
|                |                   | its closeness  | grain crops.   |
|                |                   | to Malaysia    |                |
|                |                   | while imports  |                |
|                |                   | from China and |                |
|                |                   | India are      |                |
|                |                   | known for      |                |
|                |                   | their lower    |                |
|                |                   | prices.        |                |
+----------------+-------------------+----------------+----------------+
| Soybean        | 1.  US -- 40%     | The US and     | Malaysia's     |
|                |                   | Canada are     | tropical       |
| Import:\       | 2.  Argentina --  | traditional    | climate does   |
| 587, 606 tons  |     34%           | suppliers to   | not favor      |
| (US\$170.4     |                   | Malaysia while | cultivation of |
| mil)           | 3.  Canada -- 14% | Argentinean    | soybean and    |
|                |                   | imports are    | therefore      |
|                |                   | priced lower   | demand is met  |
|                |                   | than the US    | by imports.    |
|                |                   | and Canada.    |                |
+----------------+-------------------+----------------+----------------+
| Cocoa and      | 1.  Indonesia --  | Indonesian     | Though         |
| semi-processed |     94%           | cocoa is       | Malaysia       |
| cocoa products |                   | suitable for   | cultivates     |
|                | 2.  Ghana -- 3%   | blending with  | cocoa on a     |
| Import:\       |                   | Malaysian      | wide scale,    |
| 373,438 tons\  | 3.  Ivory Coast   | cocoa and is   | much has to be |
| (US\$290.7     |     -- 2%         | the nearest    | blended with   |
| mil)           |                   | supplier while | imported       |
|                | 4.  US - \<1%     | cocoa from     | cocoa.         |
|                |                   | Ghana and the  |                |
|                |                   | Ivory Coast    |                |
|                |                   | are used to    |                |
|                |                   | produce        |                |
|                |                   | premium        |                |
|                |                   | chocolate      |                |
|                |                   | products.      |                |
+----------------+-------------------+----------------+----------------+
| Fresh,         | 1.  Thailand --   | Lower priced   | Established    |
| chilled, and   |     26%           | imports from   | fishing        |
| frozen         |                   | Thailand,      | industry but   |
| seafood\       | 2.  Indonesia --  | Indonesia, and | have to        |
| Import:        |     20%           | China and      | compete        |
|                |                   | short delivery | against cheap  |
| 315,360 tons\  | 3.  China -- 13%  | time due to    | imports and    |
| (US\$286.5     |                   | closeness to   | local fishing  |
| mil)           | 4.  US -- 2%      | Malaysia.      | is often       |
|                |                   |                | hindered by    |
|                |                   |                | the seasonal   |
|                |                   |                | monsoons.      |
+----------------+-------------------+----------------+----------------+
| Dairies        | 1.  Thailand --   | Thailand,      | Malaysia is    |
|                |     35%           | Australia, and | dependent on   |
| Import:\       |                   | New Zealand    | imports of raw |
| 239,659 tons\  | 2.  Australia --  | are major      | dairy food     |
| (US\$302.7     |     19%           | suppliers due  | materials used |
| mil)           |                   | to their       | in food        |
|                | 3.  New Zealand   | closeness to   | manufacturing  |
|                |     -- 18%        | Malaysia       | since dairy    |
|                |                   | coupled with   | farming is     |
|                | 4.  US -- 2%      | the price      | conducted on a |
|                |                   | c              | limited scale  |
|                |                   | ompetitiveness | in Malaysia.   |
|                |                   | of their       |                |
|                |                   | products.      |                |
+----------------+-------------------+----------------+----------------+
| Beef and lamb\ | 1.  India -- 40%  | Indian imports | Local industry |
| Import:\       |                   | are lower in   | for rearing    |
| 127,948 tons\  | 2.  N. Zealand -- | price than     | cattle, lamb,  |
| (US\$234.3     |     16%           | local beef     | and sheep is   |
| mil)           |                   | while          | small and      |
|                | 3.  Australia --  | Australian and | therefore      |
|                |     15%           | New Zealand    | production is  |
|                |                   | beef and lamb  | limited.       |
|                | 4.  US -- 2%      | are a major    |                |
|                |                   | source of      |                |
|                |                   | quality        |                |
|                |                   | *halal* meat.  |                |
+----------------+-------------------+----------------+----------------+
| Starches and   | 1.  Thailand --   | Large          | Malaysia does  |
| gluten         |     48%           | cultivation of | not cultivate  |
|                |                   | tapioca in     | wheat and      |
| Import:\       | 2.  Vietnam --    | Thailand and   | local          |
| 120,669 tons   |     13%           | Vietnam        | cultivation of |
| (US\$32.9 mil) |                   | provides the   | tapioca is     |
|                | 3.  China -- 11%  | raw material   | limited to     |
|                |                   | to produce     | produce        |
|                | 4.  US - \<1%     | competitively  | sufficient     |
|                |                   | priced starch  | starch for the |
|                |                   | while China    | food           |
|                |                   | provides lower | processing     |
|                |                   | price starch   | industry.      |
|                |                   | made from      |                |
|                |                   | wheat.         |                |
+----------------+-------------------+----------------+----------------+
| Nuts           | 1.  India -- 30%  | Groundnuts are | Malaysia has   |
|                |                   | the main       | limited        |
| Import:\       | 2.  China -- 29%  | imports, which | cultivation of |
| 47,790 tons\   |                   | India and      | crops used to  |
| (US\$20.5      | 3.  US -- 6%      | China supply   | produce        |
| million)       |                   | at competitive | various nuts.  |
|                |                   | prices while   |                |
|                |                   | US imports are |                |
|                |                   | noted for      |                |
|                |                   | their quality. |                |
+----------------+-------------------+----------------+----------------+
| Poultry        | 1.  Thailand --   | Poultry from   | Well           |
|                |     38%           | southern       | established    |
| Import:\       |                   | Thailand       | and organized  |
| 39,858 tons\   | 2.  Denmark --    | supplies to    | poultry        |
| (US\$49.1      |     26%           | Peninsula      | industry       |
| million)       |                   | Malaysia which | managed by     |
|                | 3.  Holland --    | it shares a    | large poultry  |
|                |     10%           | land border    | companies.     |
|                |                   | while Denmark  |                |
|                | 4.  US -- 5%      | and Holland    |                |
|                |                   | have been      |                |
|                |                   | traditional    |                |
|                |                   | suppliers of   |                |
|                |                   | frozen *halal* |                |
|                |                   | chicken.       |                |
+----------------+-------------------+----------------+----------------+
| *Source:       |                   |                |                |
| Malaysian      |                   |                |                |
| Statistics     |                   |                |                |
| Department and |                   |                |                |
| trade sources. |                   |                |                |
| Note: \*US     |                   |                |                |
| included if    |                   |                |                |
| not among the  |                   |                |                |
| top three      |                   |                |                |
| major          |                   |                |                |
| suppliers.*    |                   |                |                |
+----------------+-------------------+----------------+----------------+

# 5. Best Products Prospects

The best product prospects are developed from a broad base study of the
Malaysian market and should not be construed as detailed market studies
of each segment. US exporters who are interested to develop viable
markets should consider conducting a detailed market study for the
products they represent.

## 5.1 Products Having Good Sales Potential

+----------+--------+--------+-------+---------------+---------------+
| **       |        |        |       |               |               |
| Products |        |        |       |               |               |
| Having   |        |        |       |               |               |
| Good     |        |        |       |               |               |
| Sales    |        |        |       |               |               |
| Pot      |        |        |       |               |               |
| ential** |        |        |       |               |               |
+==========+========+========+=======+===============+===============+
| *        | **\    | **\    | **I   | **Key         | **Market      |
| *Product | 2003   | 2003   | mport | Constraints   | A             |
| C        | Ma     | Im     | T     | Over Market   | ttractiveness |
| ategory\ | rket** | port** | ariff | D             | for US        |
| (HS      |        |        | R     | evelopments** | Exporters**   |
| Code)**  |        |        | ate** |               |               |
+----------+--------+--------+-------+---------------+---------------+
| Fish     | 1.42   | 2      | None  | Main catch    | Seafood       |
|          | mil    | 69,588 |       | are for       | manufacturers |
| (HS      | tons   | tons   |       | fishes from   | are exporting |
| 0304)    |        |        |       | the tropical  | various       |
|          |        |        |       | seas          | processed     |
|          |        |        |       | including     | frozen        |
|          |        |        |       | local catch   | seafood       |
|          |        |        |       | and imports   | products to   |
|          |        |        |       | mainly from   | "high-end     |
|          |        |        |       | Thailand and  | markets" such |
|          |        |        |       | Indonesia.    | as cod and    |
|          |        |        |       |               | flatfish.     |
|          |        |        |       | Consumers     |               |
|          |        |        |       | generally     |               |
|          |        |        |       | prefer fresh  |               |
|          |        |        |       | or chilled    |               |
|          |        |        |       | unprocessed   |               |
|          |        |        |       | seafood for   |               |
|          |        |        |       | cooking.      |               |
+----------+--------+--------+-------+---------------+---------------+
| Milk     | 1      | 1      | None  | Thailand, New | Milk          |
| cream    | 98,742 | 98,742 |       | Zealand, and  | production in |
| and      | tons   | tons   |       | Australia     | Malaysia is   |
| powder   |        |        |       | produces and  | limited and   |
| con      |        |        |       | exports milk  | has to depend |
| centrate |        |        |       | concentrates  | on imports of |
|          |        |        |       | to countries  | milk          |
| (HS      |        |        |       | with limited  | concentrates  |
| 0402)    |        |        |       | milk          | to produce    |
|          |        |        |       | production.   | various dairy |
|          |        |        |       |               | foods.        |
+----------+--------+--------+-------+---------------+---------------+
| Starches | 1      | 1      | None  | Starch made   | Malaysia      |
|          | 40,000 | 19,544 |       | from tapioca  | depends on    |
| (HS      | tons   | tons   |       | and rice is   | imported      |
| 1108)    |        |        |       | imported from | starch since  |
|          |        |        |       | Thailand and  | local         |
|          |        |        |       | Vietnam and   | production is |
|          |        |        |       | is lower      | limited.      |
|          |        |        |       | priced than   |               |
|          |        |        |       | starch made   |               |
|          |        |        |       | from wheat.   |               |
+----------+--------+--------+-------+---------------+---------------+
| Beef and | 1      | 1      | None  | Meat must be  | Malaysia's    |
| lamb     | 55,000 | 13,684 |       | *halal* and   | production of |
|          | tons   | tons   |       | concerns over | beef and lamb |
| (HS      |        |        |       | bovine        | is limited    |
| 1601,    |        |        |       | spongiform    | and mainly    |
| 1602,    |        |        |       | e             | for the       |
| and      |        |        |       | ncephalopathy | retail and    |
| 0202)    |        |        |       | from imported | HRI sector.   |
|          |        |        |       | beef.         |               |
|          |        |        |       |               | Malaysian     |
|          |        |        |       | Competition   | manufacturers |
|          |        |        |       | from low      | are still at  |
|          |        |        |       | price Indian  | the infancy   |
|          |        |        |       | imports and   | stage of      |
|          |        |        |       | food          | producing     |
|          |        |        |       | manufacturers | various       |
|          |        |        |       | are more      | processed     |
|          |        |        |       | familiar with | *halal* meat  |
|          |        |        |       | imports from  | products for  |
|          |        |        |       | Australia and | the export    |
|          |        |        |       | New Zealand.  | markets.      |
|          |        |        |       | Australia is  |               |
|          |        |        |       | also a major  |               |
|          |        |        |       | supplier of   |               |
|          |        |        |       | beef for beef |               |
|          |        |        |       | patties used  |               |
|          |        |        |       | for fast food |               |
|          |        |        |       | restaurants   |               |
|          |        |        |       | in Malaysia.  |               |
+----------+--------+--------+-------+---------------+---------------+
| S        | 3      | 45,772 | 0-20% | Availability  | Seafood       |
| hellfish | 70,000 | tons   | i     | from local    | manufacturers |
| and      | tons   |        | mport | catch and a   | are exporting |
| cru      |        |        | duty  | local         | various       |
| staceans |        |        | and   | industry      | processed     |
|          |        |        | for   | breeding      | frozen        |
| (HS 0306 |        |        | some  | shellfish.    | seafood       |
| and      |        |        | 5%    |               | products to   |
| 0307)    |        |        | sales | Consumers     | "high-end     |
|          |        |        | tax.  | generally     | markets".     |
|          |        |        |       | prefer fresh  |               |
|          |        |        |       | or chilled    |               |
|          |        |        |       | unprocessed   |               |
|          |        |        |       | seafood for   |               |
|          |        |        |       | cooking.      |               |
+----------+--------+--------+-------+---------------+---------------+
| Poultry  | 1.23   | 39,858 | None  | Imported      | Imported      |
|          | mil    | tons   |       | poultry meat  | poultry offal |
| (HS      | tons   |        |       | and meat      | is combined   |
| 0207)    |        |        |       | products must | with local    |
|          |        |        |       | be *halal*.   | poultry meat  |
|          |        |        |       | Well          | as an         |
|          |        |        |       | developed     | alternative   |
|          |        |        |       | local poultry | to beef and   |
|          |        |        |       | farming       | pork to       |
|          |        |        |       | industry and  | produce       |
|          |        |        |       | able to meet  | frozen        |
|          |        |        |       | industry      | poultry       |
|          |        |        |       | demands.      | products such |
|          |        |        |       |               | as patties,   |
|          |        |        |       |               | minced meat,  |
|          |        |        |       |               | and sausages. |
+----------+--------+--------+-------+---------------+---------------+
| Malt     | 58,282 | 58,282 | No    | Singapore     | Malaysia does |
| extracts | tons   | tons   | i     | supplies      | not produce   |
|          |        |        | mport | nearly half   | malt extracts |
| (HS      |        |        | duty  | of the malt   | for use in    |
| 1901)    |        |        | and   | extracts to   | food          |
|          |        |        | for   | Malaysia from | processing.   |
|          |        |        | some  | its re-export |               |
|          |        |        | 5%    | trade while   |               |
|          |        |        | sales | Indonesia     |               |
|          |        |        | tax.  | supplies      |               |
|          |        |        |       | extracts      |               |
|          |        |        |       | containing    |               |
|          |        |        |       | cocoa.        |               |
+----------+--------+--------+-------+---------------+---------------+
| Gr       | 40,000 | 37,929 | No    | Low price     | Local         |
| oundnuts | tons   | tons   | i     | imports from  | cultivation   |
|          |        |        | mport | India, China, | of groundnuts |
| (HS      |        |        | duty  | and Indonesia | has declined  |
| 1202)    |        |        | but   | and their     | and therefore |
|          |        |        | 5%    | closeness to  | must depend   |
|          |        |        | sales | Malaysia      | on imports.   |
|          |        |        | tax.  | shortens      |               |
|          |        |        |       | delivery time |               |
|          |        |        |       | and freight   |               |
|          |        |        |       | costs.        |               |
+----------+--------+--------+-------+---------------+---------------+
| Soybean  | 33,116 | 33,116 | 5%    | Palm oil      | Malaysia does |
| oil      | tons   | tons   | i     | competes      | not produce   |
|          |        |        | mport | directly      | soybean oil   |
| (HS      |        |        | duty  | against       | and the US    |
| 1507)    |        |        | and   | soybean oil   | supplies      |
|          |        |        | 5%    | and Malaysia  | nearly half   |
|          |        |        | sales | is the        | of Malaysia's |
|          |        |        | tax   | world's       | import since  |
|          |        |        |       | largest       | US soybean    |
|          |        |        |       | producer.     | oil are well  |
|          |        |        |       | Furthermore,  | known for its |
|          |        |        |       | imports of    | quality.      |
|          |        |        |       | soybean oil   |               |
|          |        |        |       | from China    |               |
|          |        |        |       | and Argentina |               |
|          |        |        |       | are lower     |               |
|          |        |        |       | priced than   |               |
|          |        |        |       | the US.       |               |
+----------+--------+--------+-------+---------------+---------------+
| Whey     | 20,005 | 20,005 | None  | Australia,    | Malaysia does |
|          | tons   | tons   |       | France, and   | not have a    |
| (HS      |        |        |       | Finland       | cheese making |
| 0404)    |        |        |       | produce and   | industry to   |
|          |        |        |       | export        | produce whey  |
|          |        |        |       | premium grade | a byproduct   |
|          |        |        |       | whey suitable | of curdling   |
|          |        |        |       | for use in    | milk.         |
|          |        |        |       | infant        |               |
|          |        |        |       | formulas and  |               |
|          |        |        |       | nutritional   |               |
|          |        |        |       | food          |               |
|          |        |        |       | products.     |               |
+----------+--------+--------+-------+---------------+---------------+
| *Source: |        |        |       |               |               |
| M        |        |        |       |               |               |
| alaysian |        |        |       |               |               |
| St       |        |        |       |               |               |
| atistics |        |        |       |               |               |
| Dep      |        |        |       |               |               |
| artment, |        |        |       |               |               |
| Euro     |        |        |       |               |               |
| monitor, |        |        |       |               |               |
| trade    |        |        |       |               |               |
| sources, |        |        |       |               |               |
| Spire    |        |        |       |               |               |
| a        |        |        |       |               |               |
| nalysis, |        |        |       |               |               |
| and      |        |        |       |               |               |
| M        |        |        |       |               |               |
| alaysian |        |        |       |               |               |
| Customs  |        |        |       |               |               |
| Tariff   |        |        |       |               |               |
| on       |        |        |       |               |               |
| Import/  |        |        |       |               |               |
| Export.* |        |        |       |               |               |
+----------+--------+--------+-------+---------------+---------------+

## 5.2 Potential Products Not Present In Significant Quantities

+----------+--------+--------+-------+---------------+---------------+
| **       |        |        |       |               |               |
| Products |        |        |       |               |               |
| Not      |        |        |       |               |               |
| Present  |        |        |       |               |               |
| in       |        |        |       |               |               |
| Sig      |        |        |       |               |               |
| nificant |        |        |       |               |               |
| Quan     |        |        |       |               |               |
| tities** |        |        |       |               |               |
+==========+========+========+=======+===============+===============+
| **\      | **\    | **\    | **I   | **Key         | **Market      |
| Product  | 2003   | 2003   | mport | Constraints   | A             |
| Ca       | Ma     | Im     | T     | Over Market   | ttractiveness |
| tegory** | rket** | port** | ariff | D             | for US        |
|          |        |        | R     | evelopments** | Exporters**   |
|          |        |        | ate** |               |               |
+----------+--------+--------+-------+---------------+---------------+
| Sugar    | N/A    | 16,413 | No    | Thailand is   | Malaysia is   |
| d        |        | tons   | i     | the leading   | dependent on  |
| erivates |        |        | mport | supplier of   | imports since |
| and      |        |        | duty  | competitively | cultivation   |
| syrup    |        |        | but   | priced        | of sugarcane  |
|          |        |        | 5%    | industrial    | and corn is   |
| (HS      |        |        | sales | grade sugar   | limited. The  |
| 1702)    |        |        | tax   | derivatives   | US is         |
|          |        |        |       | and syrup     | Malaysia's    |
|          |        |        |       | sourced from  | second        |
|          |        |        |       | its large     | largest       |
|          |        |        |       | cultivation   | supplier.     |
|          |        |        |       | of sugar cane |               |
|          |        |        |       | and corn.     |               |
+----------+--------+--------+-------+---------------+---------------+
| Corn     | 20,300 | 13,844 | None  | Thailand,     | Corn is       |
| (not for | tons   | tons   |       | China, and    | cultivated on |
| animal   |        |        |       | Indonesia     | a small scale |
| feed)    |        |        |       | supplies more | by local      |
|          |        |        |       | than 90% of   | villagers     |
| (HS      |        |        |       | Malaysia's    | destined for  |
| 1005)    |        |        |       | import due to | the retail    |
|          |        |        |       | their low     | sector and    |
|          |        |        |       | pricing and   | therefore     |
|          |        |        |       | closeness to  | industry must |
|          |        |        |       | Malaysia.     | depend on     |
|          |        |        |       |               | imports.      |
+----------+--------+--------+-------+---------------+---------------+
| Yeast    | 10,500 | 9,951  | None  | Imports from  | Production is |
| i        | tons   | tons   |       | China         | limited in    |
| ncluding |        |        |       | dominate the  | Malaysia      |
| a        |        |        |       | market in     | since cheaper |
| utolyzed |        |        |       | Malaysia.     | imports are   |
| yeast    |        |        |       |               | available.    |
|          |        |        |       |               |               |
| (HS      |        |        |       |               |               |
| 2102)    |        |        |       |               |               |
+----------+--------+--------+-------+---------------+---------------+
| Brazil   | 9,862  | 9,862  | No    | Limited to    | No commercial |
| nuts,    | tons   | tons   | i     | use in snack  | cultivation   |
| walnut,  |        |        | mport | foods and     | in Malaysia   |
| cashew,  |        |        | duty  | c             | and therefore |
| pi       |        |        | but   | onfectionary. | dependent on  |
| stachio, |        |        | 5%    |               | imports.      |
| and      |        |        | sales |               |               |
| almonds  |        |        | tax.  |               |               |
|          |        |        |       |               |               |
| (HS      |        |        |       |               |               |
| 0801)    |        |        |       |               |               |
+----------+--------+--------+-------+---------------+---------------+
| S        | 8,319  | 8,319  | No    | Competition   | Malaysia does |
| unflower | tons   | tons   | i     | not only from | not produce   |
| and      |        |        | mport | palm oil but  | sunflower and |
| s        |        |        | duty  | also soybean  | safflower oil |
| afflower |        |        | but   | oil since     | and sunflower |
| oil      |        |        | for   | sunflower oil | oil is        |
|          |        |        | some  | is higher     | promoted as a |
| (HS      |        |        | 5%    | priced.       | healthier     |
| 1512)    |        |        | sales |               | choice.       |
|          |        |        | tax.  |               |               |
+----------+--------+--------+-------+---------------+---------------+
| Extracts | 5,823  | 5,823  | 0-5%  | Indonesia and | Cultivation   |
| of       | tons   | tons   | i     | Brazil are    | of tea and    |
| coffee   |        |        | mport | world         | coffee in     |
| or tea   |        |        | duty. | producers of  | Malaysia is   |
|          |        |        |       | coffee beans  | limited and   |
| (HS      |        |        |       | while India   | mainly to     |
| 2101)    |        |        |       | tea leaves    | produce dried |
|          |        |        |       | and therefore | tea leaves    |
|          |        |        |       | able to       | and coffee    |
|          |        |        |       | export        | powder to be  |
|          |        |        |       | extracts at   | used directly |
|          |        |        |       | competitive   | for hot       |
|          |        |        |       | prices.       | drinks.       |
+----------+--------+--------+-------+---------------+---------------+
| Cereals  | 4,602  | 4,602  | None  | China         | These cereal  |
| (rye,    | tons   | tons   |       | followed by   | crops are     |
| barley,  |        |        |       | Australia and | from the      |
| sorghum, |        |        |       | India are     | temperate     |
| oats,    |        |        |       | traditional   | climate and   |
| and      |        |        |       | suppliers to  | therefore not |
| millet)  |        |        |       | Malaysia.     | cultivated in |
|          |        |        |       |               | Malaysia.     |
| (HS 1002 |        |        |       |               |               |
| to 1007, |        |        |       |               |               |
| and      |        |        |       |               |               |
| 1008)    |        |        |       |               |               |
+----------+--------+--------+-------+---------------+---------------+
| Ice      | 2,877  | 2,877  | None  | Exporters in  | Malaysia's    |
| cream    | tons   | tons   |       | the           | dairy farming |
| powder   |        |        |       | Netherlands   | industry is   |
|          |        |        |       | have ties     | limited to    |
| (HS      |        |        |       | with European | produce ice   |
| 21       |        |        |       | multinational | cream powder. |
| 0690)**\ |        |        |       | food          |               |
| **       |        |        |       | manufacturers |               |
|          |        |        |       | who           |               |
|          |        |        |       | manufacture   |               |
|          |        |        |       | ice cream in  |               |
|          |        |        |       | Malaysia.     |               |
+----------+--------+--------+-------+---------------+---------------+
| Protein  | N/A    | 1,720  | None  | Manufacturers | The US        |
| conc     |        | tons   |       | prefer not to | supplies      |
| entrates |        |        |       | use protein   | nearly        |
|          |        |        |       | concentrates  | two-thirds of |
| (HS      |        |        |       | of animal     | the protein   |
| 210610)  |        |        |       | origin that   | concentrates  |
|          |        |        |       | are not       | to Malaysia.  |
|          |        |        |       | *halal*.      |               |
+----------+--------+--------+-------+---------------+---------------+
| *Source: |        |        |       |               |               |
| M        |        |        |       |               |               |
| alaysian |        |        |       |               |               |
| St       |        |        |       |               |               |
| atistics |        |        |       |               |               |
| Dep      |        |        |       |               |               |
| artment, |        |        |       |               |               |
| Euro     |        |        |       |               |               |
| monitor, |        |        |       |               |               |
| trade    |        |        |       |               |               |
| sources, |        |        |       |               |               |
| Spire    |        |        |       |               |               |
| a        |        |        |       |               |               |
| nalysis, |        |        |       |               |               |
| and      |        |        |       |               |               |
| M        |        |        |       |               |               |
| alaysian |        |        |       |               |               |
| Customs  |        |        |       |               |               |
| Tariff   |        |        |       |               |               |
| on       |        |        |       |               |               |
| Import/  |        |        |       |               |               |
| Export.* |        |        |       |               |               |
+----------+--------+--------+-------+---------------+---------------+

## 5.3 Products Facing Significant Barriers

+---------+---------+----------+---------+-------------+--------------+
| **P     |         |          |         |             |              |
| roducts |         |          |         |             |              |
| Facing  |         |          |         |             |              |
| Sign    |         |          |         |             |              |
| ificant |         |          |         |             |              |
| Bar     |         |          |         |             |              |
| riers** |         |          |         |             |              |
+=========+=========+==========+=========+=============+==============+
| **\     | **\     | **\      | **\     | **Key       | **Market     |
| \       | 2003    | \        | Import  | Constraints | At           |
| Product | Market  | 2003     | Tariff  | Over Market | tractiveness |
| Cat     | Size**  | Import** | Rate**  | Dev         | for US       |
| egory** |         |          |         | elopments** | Exporters**  |
+---------+---------+----------+---------+-------------+--------------+
| Sugar   | 2.76    | 1.06 mil | 5%      | Imports are | Malaysia's   |
|         | mil     | tons     | import  | subjected   | exports of   |
| (HS     | tons    |          | duty    | to quotas   | processed    |
| 1701)   |         |          | but no  | with import | foods are    |
|         |         |          | sales   | licenses    | increasing   |
|         |         |          | tax     | issued to   | demand for   |
|         |         |          |         | sugar       | sugar.       |
|         |         |          |         | millers and |              |
|         |         |          |         | refiners.   |              |
|         |         |          |         | Malaysia    |              |
|         |         |          |         | has long    |              |
|         |         |          |         | term        |              |
|         |         |          |         | a           |              |
|         |         |          |         | rrangements |              |
|         |         |          |         | to import   |              |
|         |         |          |         | sugar from  |              |
|         |         |          |         | Australia,  |              |
|         |         |          |         | Thailand,   |              |
|         |         |          |         | and Fiji.   |              |
+---------+---------+----------+---------+-------------+--------------+
| *       |         |          |         |             |              |
| Source: |         |          |         |             |              |
| Ma      |         |          |         |             |              |
| laysian |         |          |         |             |              |
| Sta     |         |          |         |             |              |
| tistics |         |          |         |             |              |
| Depa    |         |          |         |             |              |
| rtment, |         |          |         |             |              |
| trade   |         |          |         |             |              |
| s       |         |          |         |             |              |
| ources, |         |          |         |             |              |
| Spire   |         |          |         |             |              |
| an      |         |          |         |             |              |
| alysis, |         |          |         |             |              |
| and     |         |          |         |             |              |
| Ma      |         |          |         |             |              |
| laysian |         |          |         |             |              |
| Customs |         |          |         |             |              |
| Tariff  |         |          |         |             |              |
| on      |         |          |         |             |              |
| I       |         |          |         |             |              |
| mport/E |         |          |         |             |              |
| xport.* |         |          |         |             |              |
+---------+---------+----------+---------+-------------+--------------+

END OF REPORT