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Required Report - public distribution

**Date:** 10/21/2003

**GAIN Report Number:** MY3053

MY3053

**Malaysia**

**Dairy and Products**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Bonnie Borris

U.S. Embassy, Kuala Lumpur

**Prepared by:**

Jacelyn Chang

**Report Highlights:**

Malaysia relies heavily on dairy imports for its dairy products
industry. New Zealand and Australia are the major suppliers in Malaysia.
Limited opportunities exit for U.S. to supply full cream milk powder,
skim powder and whey powder.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Kuala Lumpur \[MY1\]

\[MY\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Competition 3](#competition)

[Policy 4](#policy)

[Dairy, Dry Whole Milk Powder: PSD 5](#dairy-dry-whole-milk-powder-psd)

[Dairy, Dry Whole Milk Powder: Import Trade Matrix
6](#dairy-dry-whole-milk-powder-import-trade-matrix)

[Dairy, Milk, Non-Fat Dry: PSD 7](#dairy-milk-non-fat-dry-psd)

[Dairy, Milk, Non-Fat Dry: Import Trade Matrix
8](#dairy-milk-non-fat-dry-import-trade-matrix)

# Executive Summary

Malaysia relies heavily on imports for its dairy needs. The local dairy
industry does not produce sufficient quantities of fresh fluid milk to
satisfy Malaysia's fresh milk needs. Fresh fluid milk is substituted
with reconstituted fluid milk and other milk products. Ingredients such
as skimmed milk powder, whole milk powder and whey needed to produce
condensed milk and other milk products are imported mainly from
Australia and New Zealand.

# Production

In recent years, despite the various attempts by the GOM, as well as the
private sector, to expand the dairy industry, it has remained small.
Major factors limiting its development include low lactation and
reproduction performance, the hostile tropical weather condition, high
cost for quality feed and lack of trained personnel for farm management.
Investment in the dairy industry is still considered to be a risky
business and the prospect for future growth is not bright at all. Milk
production is expected to show insignificant growth in the near future.

# Competition

Malaysia remains heavily dependent on dairy imports, such as powdered
milk for its dairy product industry and finished products such as cheese
and butter. In 2002, Malaysia imported about 53,315 metric tons of
nonfat dry milk. In this category, New Zealand led with 23,813 tons,
followed by Australia with 22,681 tons. Imports from US of nonfat dry
milk and increased more than 100% in terms of quantity. However, the
volume is still insignificant compared to imports from New Zealand and
Australia in the same period. Imports of whole milk powder amounted to
70,899 tons, of which about 39,088 tons supplied were by New Zealand,
followed by Australia with 18, 416 tons.

The major dairy items produced in Malaysia are powdered milk (full
cream, skimmed and infant formula), sweetened condensed milk, evaporated
milk, liquid milk and milk drinks (fresh, ultrahigh temperature,
pasteurized and homogenized), yogurt and ice cream. The milk products
are locally produced by reconstituting and blending of imported milk
powder (skim and whole), whey and other ingredients. Most infant formula
is imported and packed locally except for a local brand, Nestle's
Lactogen, which is manufactured in Malaysia.

# The industry is willing to import dairy ingredients from any source as long as the price is competitive and the quality is good.

# 

# The market for finished dairy products for consumers is relatively small and is very brand-loyal. There are few prospects for imports and sales of U.S. branded milk products directly to consumers. It is also very costly to build the name of a new brand, particularly with the established competition. U.S. products are likely to be significantly more expensive due to freight costs.

# Policy

No duty is imposed on imports of nonfat dry milk, whole milk powder and
dried whey. Butter attracts 2% duty and sales tax of 5%. Duties incurred
for cheese (grated cheese, processed cheese and blue-veined) are between
5-10% with sales tax of 5%. An import license issued by the Department
of Veterinary Services and Ministry of International Trade and Industry
is also necessary for consignments of dairy products entering into
Malaysia.

# Dairy, Dry Whole Milk Powder: PSD

  ------------------- -------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                  

  **Country**         **Malaysia**                                               

  **Commodity**       **Dairy, Dry                                    (1000 MT)  
                      Whole Milk                                                 
                      Powder**                                                   

                      2002           Revised    2003       Estimate   2004       Forecast

                      USDA Official  Post       USDA       Post       USDA       Post
                      \[Old\]        Estimate   Official   Estimate   Official   Estimate
                                     New\]      \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                      01/2002               01/2003               01/2004
  Begin**                                                                        

  Beginning Stocks    0              0          0          0          0          0

  Production          0              0          0          0          0          0

  Intra EC Imports    0              0          0          0          0          0

  Other Imports       82             71         84         75         0          78

  TOTAL Imports       82             71         84         75         0          78

  TOTAL SUPPLY        82             71         84         75         0          78

  Intra EC Exports    0              0          0          0          0          0

  Other Exports       0              0          0          0          0          0

  TOTAL Exports       0              0          0          0          0          0

  Human Dom.          82             71         84         75         0          78
  Consumption                                                                    

  Other Use, Losses   0              0          0          0          0          0

  Total Dom.          82             71         84         75         0          78
  Consumption                                                                    

  TOTAL Use           82             71         84         75         0          78

  Ending Stocks       0              0          0          0          0          0

  TOTAL DISTRIBUTION  82             71         84         75         0          78

  Calendar Yr. Imp.   0              1          0          1          0          1
  from U.S.                                                                      

  Calendar Yr. Exp.   0              0          0          0          0          0
  to U.S.                                                                        
  ------------------- -------------- ---------- ---------- ---------- ---------- ----------

# Dairy, Dry Whole Milk Powder: Import Trade Matrix 

  ------------------- ---------------- ---------------- -------------------
  **Import Trade                                        
  Matrix**                                              

  **Country**         Malaysia                          

  **Commodity**       Dairy, Dry Whole                  
                      Milk Powder                       

  Time Period         Jan-Dec          Units:           Metric Ton

  Imports for:        2001                              **2002**

  U.S.                1338             U.S.             602

  Others                               Others           

  New Zealand         43159            New Zealand      39088

  Australia           20496            Australia        18416

  Netherlands         6302             Netherlands      7880

  Germany             3218             Denmark          1325

  Ireland             1364             Ireland          592

  Denmark             1331             Germany          540

  Switzerland         622              Indonesia        519

  Spain               413              Spain            452

  Philippines         376              Argentina        450

  France              291              France           358

  Total for Others    77572                             69620

  Others not Listed   1340                              677

  Grand Total         80250                             70899
  ------------------- ---------------- ---------------- -------------------

#  Dairy, Milk, Non-Fat Dry: PSD

  ------------------ -------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                                 

  **Country**        **Malaysia**                                               

  **Commodity**      **Dairy, Milk,                                  (1000 MT)  
                     Nonfat Dry**                                               

                     2002           Revised    2003       Estimate   2004       Forecast

                     USDA Official  Post       USDA       Post       USDA       Post
                     \[Old\]        Estimate   Official   Estimate   Official   Estimate
                                    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                     01/2002               01/2003               01/2004
  Begin**                                                                       

  Beginning Stocks   0              0          0          0          0          0

  Production         0              0          0          0          0          0

  Intra EC Imports   0              0          0          0          0          0

  Other Imports      59             53         61         56         0          58

  TOTAL Imports      59             53         61         56         0          58

  TOTAL SUPPLY       59             53         61         56         0          58

  Intra EC Exports   0              0          0          0          0          0

  Other Exports      0              0          0          0          0          0

  TOTAL Exports      0              0          0          0          0          0

  Human Dom.         59             53         61         56         0          58
  Consumption                                                                   

  Other Use, Losses  0              0          0          0          0          0

  Total Dom.         59             53         61         56         0          58
  Consumption                                                                   

  TOTAL Use          59             53         61         56         0          58

  Ending Stocks      0              0          0          0          0          0

  TOTAL DISTRIBUTION 59             53         61         56         0          58

  Calendar Yr. Imp.  6              2          6          4          0          4
  from U.S.                                                                     

  Calendar Yr. Exp.  0              0          0          0          0          0
  to U.S.                                                                       
  ------------------ -------------- ---------- ---------- ---------- ---------- ----------

## Dairy, Milk, Non-Fat Dry: Import Trade Matrix

  -------------------- --------------- ------------------ ----------------
  **Import Trade                                          
  Matrix**                                                

  **Country**          Malaysia                           

  **Commodity**        Dairy, Milk,                       
                       Nonfat Dry                         

  Time Period          Jan -Dec        Units:             Metric Ton

  Imports for:         2001                               **2002**

  U.S.                 5982            U.S.               2162

  Others                               Others             

  New Zealand          21982           New Zealand        23813

  Australia            14637           Australia          22681

  Germany              3452            Netherlands        2410

  Netherlands          1655            Germany            849

  France               1030            France             488

  Belgium              629             Argentina          300

  Iran                 200             Belgium            213

  Ireland              147             Poland             125

  Ukraine              130             Singapore          75

  Sweden               125             Czech Rep.         75

  Total for Others     43987                              51029

  Others not Listed    6667                               124

  Grand Total          56636                              53315
  -------------------- --------------- ------------------ ----------------