Manufacturing

In 2016, Malaysia’s beverage manufacturing industry contributed RM 5.5 billion to the national GDP, supported by 432 companies offering various services. The soft drinks market reached RM 7.5 billion, growing at a 5-year CAGR of 11.72%, while bottled water hit RM 923 million with a CAGR of 15.64%, driven by a shift toward healthier, less sugary options. Experts forecast an 8% growth in the bottled water sector in 2017, targeting RM 1.16 billion by 2019. F&N, the leading soft drink brand with a 50% market share, is expected to grow at 4% annually, reaching RM 8.5 billion by 2019. Overall, while bottled water outpaces soft drinks, manufacturers face challenges from rising costs and sugar-related health concerns.

Malaysia’s cocoa processing industry is growing, with ex-factory sales rising from RM 5.1 billion in 2010 to nearly RM 8.0 billion in 2016. However, the country relies heavily on imported cocoa beans due to declining local production. Key exports include cocoa butter and cocoa powder, with strong demand from Japan and China. The low per capita chocolate consumption in Asia presents significant growth opportunities. Overall, Malaysia is well-positioned for expansion in the cocoa sector, provided it manages its import dependency and leverages increasing regional demand.

Processed poultry and poultry products dominate Malaysia’s processed meat market, contributing 88% of the total gross output, which reached RM 4.7 billion in 2015 and is projected to grow at a CAGR of 21.68% to RM 12.6 billion by 2020. While Malaysia is largely self-sufficient in poultry, it relies heavily on imported feed grains, impacting production costs. The country also imports significant amounts of processed meat, with beef making up the largest share of imports. Additionally, Singapore stands as the largest export destination for Malaysian chicken and pork. Overall, Malaysia’s poultry sector shows promising growth, but its reliance on imports poses challenges that need addressing.

Palm oil products remain dominant in Malaysia’s processed food sector, accounting for 93% of the vegetable oils and 66.2% of processed food exports valued at USD 12.5 billion. Despite challenges from EU deforestation concerns and potential bans, Malaysia plans to diversify its markets, targeting regions like Myanmar and West Africa. Climate change poses significant risks to agricultural productivity, potentially impacting food security. Additionally, the global halal market is a major growth driver, projected to reach USD 1.9 trillion by 2021, with significant opportunities in the Asia Pacific, Middle East, and Europe. Overall, while challenges exist, the sector shows strong potential for growth and diversification.