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Foodservice profile – Malaysia

June 2020

Executive summary

Malaysia's foodservice sector grew at a compound annual growth rate (CAGR) of 4.9% from 2014 to 2018, reaching US$20.1 billion sales in 2018. The Malaysian foodservice sector is forecast to reach US$24.8 billion by 2023, growing at a CAGR of 4.3% from 2019 to 2023.

Globally, Muslims' expenditure on food was valued at $1.4 trillion in 2018 and is forecast to reach $2.0 trillion by 2024 (Dinar Standard, 2019). As one of the Muslim-majority countries in Southeast Asia, Malaysia seeks to lead the global halal industry and plans to become the international halal centre (Abdullah & Azam, 2020).

To increase sales in Malaysia's foodservice sector, Canadian agri-food and seafood exporters and producers should evaluate the opportunities and challenges highlighted in this report.

Restaurants are Malaysia's largest foodservice subsector, with sales of US$12.6 billion in 2018, at a CAGR of 5.5% from 2014 to 2018. This subsector is expected to reach US$16.0 billion by 2023 with a CAGR of 4.7%. Accommodation channels ranked the second biggest in terms of value sales (US$2.0 billion) in 2018, followed by pubs, clubs & bars (US$1.8 billion); mobile operators (US$1.3 billion); and leisure outlets (US$833.5 million). All subsectors experienced strong growth from 2014 to 2018 and the outlook is promising for 2019 to 2023.

Malaysia's top imported products from Canada in 2019 were wheat and meslin (US$45.1 million), followed by low erucic acid rape or colza oil (US$22.3 million) and soybeans (US$19.9 million). Solid milk and cream had the most substantial import growth with a CAGR of 212.8% from 2015 to 2019.

Malaysia is a growing market for convenience, quality and healthy food products. Canada's small market share of Malaysia's imported food represents room for expansion. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will help improve Canada's competitiveness within the Malaysian market.

Consumer behaviour

Despite the global economic slowdown and the rising domestic cost of living (Tan, 2019), Malaysia's consumer confidence ranked sixth in the Asia-Pacific region in the fourth quarter of 2019, after India, the Philippines, Viet Nam, Indonesia and China (The Conference Board, 2020). According to the latest survey, conducted in 2016, household expenditure on restaurants and hotels increased to 13.4% in 2016 from 12.7% in 2014.This counted as being the fourth biggest component of total household expenditure after housing/ water/electricity/gas and other fuels (24.0%), food and non-alcoholic beverages (18.0%) and transportation (13.4%) (Department of Statistics Malaysia, 2017).

In Malaysia, Asian cuisine is the most popular cuisine in the full-service restaurant market. Chinese cuisine recorded the highest sales in 2018, reaching US$946.0 million in 2018; sales are expected to reach US$1.1 billion in 2023 at a CAGR of 3.9%. Italian cuisine recorded the highest growth in 2018 with a CAGR of 5.0%, and it is expected to lead in 2023 with a CAGR of 4.4%. In the quick-service restaurant market, burger sales led the pack in 2018 at US$788.2 million 2018, and they are expected to reach US$955.0 million in 2023 at a CAGR of 3.8%. Sandwich-based quick-service restaurants recorded the highest growth in 2018 at a CAGR of 5.0%, and are expected to lead in 2023 with a CAGR of 3.9%.

Sales value by cuisine type in Malaysia - full-service restaurants (FSRs) - historic/forecast in US$ million, 2014-2023
Cuisine type 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Other Asian 1,404.1 1,687.2 4.7 1,762.6 2,056.9 3.9
Chinese 788.5 945.9 4.7 987.0 1,148.4 3.8
Italian and pizza and pasta 538.5 654.7 5.0 685.04 812.3 4.4
Japanese (including sushi) 391.7 470.9 4.7 492.0 577.6 4.1
Indian 378.6 454.4 4.7 475.6 553.6 3.9
Steakhouses and grills 323.0 386.7 4.6 404.5 471.3 3.9
Fish and seafood 284.1 343.4 4.9 358.8 422.4 4.2
Thai 225.0 269.7 4.6 282.2 328.3 3.9
BBQ, churrascaria 106.6 128.1 4.7 133.9 156.5 4.0
French 98.4 117.9 4.6 123.2 143.2 3.8
Turkish, Levantine and Persian 20.3 24.3 4.6 25.5 29.6 3.8
African 3.2 3.9 4.6 4.0 4.7 3.9
Other 1,161.1 1,672.8 9.6 1,819.8 2,451.9 7.7
Total 5,723.2 7,159.9 5.8 7,555.1 9,156.5 4.9

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

Sales value by cuisine type in Malaysia - quick-service restaurants (QSRs) - historic/forecast in US$ million, 2014-2023
Cuisine type 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Burgers 658.0 788.2 4.6 821.9 955.0 3.8
Chicken 558.4 676.9 4.9 708.2 826.2 3.9
Fish and seafood 451.7 528.5 4.0 548.9 636.3 3.8
Noodles and rice 252.3 296.5 4.1 308.1 357.2 3.8
Sandwiches 168.5 204.7 5.0 213.9 249.4 3.9
Pizza 146.7 176.1 4.7 183.5 213.4 3.8
Juices/smoothies 66.3 78.5 4.3 81.6 94.7 3.8
Mexican and tacos 10.3 12.4 4.6 12.9 15.0 3.8
Sushi 10.3 12.1 4.0 12.6 14.5 3.7
Kebabs/gyros 9.9 11.8 4.6 12.3 14.3 3.8
Other 1,171.5 1,539.5 7.1 1,638.7 2,064.3 5.9
Total 3,503.9 4,325.1 5.4 4,542.5 5,440.3 4.6

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

The overall foodservice market

Malaysia, with a population of approximately 32.6 million (Statistics Malaysia, 2019), is the second-largest foodservice market among four selected Southeast Asian nations (ASEAN). Malaysia's growing purchasing power and evolving urbanized lifestyles are stimulating demand for convenience, consistent quality, added value and diverse tastes in its foodservice industry. The country's foodservice sector grew at a CAGR of 4.9% from 2014 to 2018, reaching US$20.1 billion in sales in 2018, which is US$5 billion higher than the sales recorded in the Philippines' foodservice sector. The Malaysian foodservice sector is forecast to reach US$24.8 billion by 2023, growing at a CAGR of 4.3% from 2019 to 2023.

Foodservice value sales by selected ASEAN economy, in US$ billion,historical and forecast
 Economy 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Indonesia 43.3 51.0 4.2 52.9 60.2 3.3
Malaysia 16.6 20.1 4.9 21.0 24.8 4.3
Philippines 12.7 15.1 4.5 15.9 19.7 5.5
Singapore 7.2 8.8 5.3 9.3 11.2 4.9

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

Opportunities and challenges facing Canadian food products in Malaysia
Opportunities Challenges
Malaysia is one of the top three emerging markets in Asia with excellent infrastructure and transport connectivity and a low burden of customs procedure (EDC, 2019). Due to the lower output of palm oil and the US-China trade war (Kumar, 2020; Yusof, 2020), Malaysia's GDP growth declined to 4.3% in 2019, the lowest since the last global financial crisis (Sukumaran, 2020).
The Malaysian industry is one of the fastest-growing sectors in the country supported by increasing tourism and growing consumer spending (U.S. Department of Commerce, 2019). To achieve the goal of attracting 30 million tourist arrivals, the country is now advocating Visit Malaysia Year 2020 - "Visit Truly Asia Malaysia" (Malaysia Tourism Promotion Board, 2020). The ongoing coronavirus outbreak is resulting in unexpected drops in Chinese tourists, who make up a big portion of the Malaysian tourism market (Mok, 2020). Malaysia's economy will be negatively affected by the virus in the first quarter of 2020 (Bank Negara, 2020). The Malaysian government is preparing an economic stimulus policy to reduce the impact of the epidemic (Shira, 2020).
Canadian agri-food and seafood products are considered high quality and safe. High quality health and hygienic food products are in demand in Malaysia. Food poisoning cases in Malaysia went up by 24% from 2017 to 2018 (Kaur, 2019). Income inequality persists in Malaysia. Canadian food products are still not affordable for most rural residents and some middle class families. In the Malaysian food retail market, Canada is facing strong competition from Australia, New Zealand, China and other South Asian countries.

Globally, Muslims' expenditure on food was valued at $1.4 trillion in 2018 and is forecast to reach $2.0 trillion by 2024 (DinarStandard, 2019). As one of the Muslim-majority countries in the ASEAN region, Malaysia seeks to lead the global halal industry and to become the international halal centre (Abdullah and Azam, 2020).

Agriculture and Agri-Food Canada has created an AgriAssurance program to help Canadian companies to implement third-party assurance certification projects that address international market requirements and expand export opportunities for Canadian agricultural and agri-food products (AAFC, 2018).

There is no globally standardized halal certification system. Each Muslim country has its own halal requirements for imported food products. The ASEAN region has inadequate investments and skill to build its halal ecosystem (Neo, 2019).

Most Canadian small and medium enterprises (SMEs) are unfamiliar with the halal food market in Asia and are sometimes reluctant to meet clients' specific requirements due to financial constraints and regulation burdens (VanRaes, 2017). Meat exporters in Alberta do not have any packaged food products or beef/lamb going into the Malaysian market (Government of Alberta, 2020).

Restaurants are Malaysia's largest foodservice subsector, with sales of US$12.6 billion in 2018 and a CAGR of 5.5% from 2014 to 2018. This subsector is expected to reach US$16.0 billion by 2023 with a CAGR of 4.7%. The accommodation subsector ranked second in terms of value sales (US$2.0 billion) in 2018, followed by pubs, clubs and bars (US$1.8 billion); mobile operators (US$1.3 billion); and leisure outlets (US$833.5 million). All subsectors experienced healthy growth from 2014 to 2018, and the prospects are promising for 2019 to 2023.

Value sales and growth of Malaysia's foodservice by subsector, in US$ million - historical and forecast
Subsector 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Restaurants 10,171.7 12,602.1 5.5 13,256.4 15,933.7 4.7
Accommodation 1,675.8 1,981.2 4.3 2,066.0 2,443.6 4.3
Pubs, clubs and bars 1,557.1 1,815.4 3.9 1,880.3 2,146.5 3.4
Mobile operators 1,112.0 1,277.8 3.5 1,311.4 1,468.3 2.9
Leisure 709.9 833.5 4.1 864.0 992.0 3.5
Workplace 554.0 632.0 3.3 647.2 718.7 2.7
Retail 403.8 471.1 3.9 486.4 553.7 3.3
Travel 380.5 455.1 4.6 473.6 554.3 4.0
Total 16,564.8 20,068.1 4.9 20,985.3 24,810.7 4.3

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

Within the restaurant subsector, full-service restaurants recorded the highest sales at US$7,160.0 million in 2018, followed by quick-service food restaurants (US$4,325.1 million). These top two outlets accounted for 91.1% of total sales within the restaurant subsector (US$12.6 billion). Both outlets posted strong growth, with a CAGR of 5.8% and 5.4%, respectively, from 2014 to 2018, and are forecast to grow at a CAGR of 4.9% and 4.6%, respectively, from 2019 to 2023. Coffee and tea shops performed well at a CAGR of 4.2% from 2014 to 2018, reaching sales of US$856.4 million in 2018.

Within the accommodation subsector, hotels and motels recorded the highest sales (US$1.7 billion) in 2018, followed by holiday park outlets (US$146.3 million) and guest house outlets (US$62.8 million). These three outlets grew at a CAGR of 4.3%, 3.1% and 3.6%, respectively, from 2014 to 2018, and are forecast to grow at a CAGR of 4.4%, 3.5 and 2.9%, respectively, from 2019 to 2023.

Within the pub, club and bar subsector, pubs and bars recorded the highest sales of US$1.5 billion in 2018, followed by nightclubs (US$307.8 million). These top two outlets accounted for 98.0% of total sales within the pub, club and bar subsector (US$1.8 billion). Both outlets grew moderately well at a CAGR of 3.9% and 3.8%, respectively, from 2014 to 2018 and are forecast to grow at a CAGR of 3.4% and 3.1%, respectively, from 2019 to 2023.

Malaysia's foodservice by subsector and outlet type, in US$ million - historical and forecast
Subsector Outlet type 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Accommodation Bed and breakfasts 2.8 3.2 3.8 3.4 4.0 4.3
Guest houses 54.5 62.8 3.6 64.4 72.2 2.9
Holiday parks 124.6 146.3 4.1 151.4 173.4 3.5
Hostels 17.1 19.9 3.8 20.4 23.1 3.1
Hotels and motels 1,460.6 1,730.3 4.3 1,806.8 2,147.6 4.4
Others 16.1 18.8 3.8 19.6 23.3 4.5
Leisure Entertainment 373.5 438.8 4.1 455.1 523.0 3.5
Venues 213.3 251.1 4.2 260.7 300.3 3.6
Visitor attractions 123.1 143.6 3.9 148.2 168.7 3.3
Mobile operators Other mobile operators 872.8 995.8 3.4 1,018.5 1,130.5 2.6
Vans 239.3 281.9 4.2 292.8 337.8 3.6
Pubs, clubs and bars Nightclubs 265.5

307.8

3.8 317.1 358.5 3.1
Private member and social clubs 31.5 36.3 3.7 37.3 41.9 3.0
Pubs and bars 1,260.2 1,471.2 3.9 1,525.9 1,746.1 3.4
Restaurants Coffee and tea shops 726.1 856.4 4.2 888.4 1,023.5 3.6
Full-service restaurants 5,723.2 7,159.9 5.8 7,555.1 9,156.5 4.9
Ice cream parlours 218.6 260.6 4.5 270.4 313.3 3.8
Quick-service restaurants and fast food 3,503.8 4,325.1 5.4 4,542.5 5,440.3 4.6
Retail Bakers 240.7 283.0 4.1 293.3 336.9 3.5
Convenience stores 80.2 92.4 3.6 94.8 106.2 2.9
Delicatessens 5.9 6.9 3.8 7.1 8.0 3.1
Department stores 4.6 5.5 4.6 5.7 6.6 3.8
Other retail 4.1 4.7 3.4 4.8 5.3 2.7
Service station forecourts 27.5 31.1 3.1 31.8 35.0 2.4
Supermarkets and hypermarkets 40.7 47.4 3.9 48.9 55.6 3.2
Travel Air 330.2 399.4 4.9 416.3 489.2 4.1
Rail 5.1 5.8 3.3 5.9 6.6 2.6
Sea 45.2 49.9 2.5 51.4 58.5 3.3
Workplace Government departments and local authorities 57.7 67.4 4.0 69.8 79.6 3.4
Industrial 333.4 377.3 3.1 385.7 424.8 2.4
Retail, financial and office-based 163.0 187.3 3.5 191.7 214.3 2.8

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

Foodservice: chain franchises versus independent operators

Although independent operators account for a large market share in each channel, chain franchises are forecast to record higher CAGRs than the independent chains (4.8% vs 4.2%) by 2023. Despite the faster growth of the chain franchises, within the restaurant subsector, independent restaurant sales accounted for 75.5% of total sales, while chain restaurants accounted for 24.5% in 2018. Within the accommodation subsector, independent sales accounted for 93.7% of total sales, while chain franchise sales accounted for 6.3%. Among pub, club and bar outlets, independent sales accounted for 95.1% of total sales, while chain franchise sales accounted for 4.9%.

Sales of Malaysia's foodservice sector: chain franchises versus independent operators, in US$ million - historical and forecast
Subsector Chain vs independent 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Accommodation Chain 103.7 124.8 4.7 131.0 155.7 4.4
Independent 1,572.1 1,856.4 4.2 1,935.0 2,287.9 4.3
Leisure Chain 245.6 288.2 4.1 298.5 341.8 3.4
Independent 464.3 545.3 4.1 565.5 650.2 3.6
Mobile operators Chain 27.4 31.6 3.6 32.5 36.4 2.9
Independent 1,084.6 1,246.1 3.5 1,278.8 1,431.9 2.9
Pubs, clubs and bars Chain 76.4 89.6 4.1 92.9 106.1 3.4
Independent 1,480.7 1,725.8 3.9 1,787.4 2,040.4 3.4
Restaurants Chain 2,430.0 3,089.2 6.2 3,254.8 3,973.0 5.1
Independent 7,741.7 9,512.9 5.3 10,001.6 11,960.7 4.6
Retail Chain 127.2 146.9 3.7 150.9 169.6 3.0
Independent 276.6 324.2 4.0 335.5 384.1 3.4
Travel Unspecified 380.5 455.1 4.6 473.6 554.3 4.0
Workplace Unspecified 554.0 632.0 3.3 647.2 718.7 2.7
Subtotal: chain franchises 3,010.3 3,770.3 5.8 3,960.6 4,782.6 4.8
Subtotal: independent operators 12,620.0 15,210.7 4.8 15,903.8 18,755.1 4.2
Total: chain and independent 15,630.3 18,980.9 5.0 19,864.4 23,537.7 4.3

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

In the Malaysian foodservice sector, the highest value per transaction in 2018 occurred in independent nightclubs and chain nightclubs (US$25.8), followed by independent pubs and bars (US$22.4). Bed and breakfasts (independent) are expected to grow the fastest at a CAGR of 4.3% from 2019 to 2023.

Value per transaction in chain foodservices by outlet, in US$ - historical and forecast
Subsector Outlet 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Accommodation Hotels and motels 13.4 11.3 −4.2 11.8 13.8 4.0
Leisure Entertainment 9.9 8.4 −4.2 8.7 10.0 3.4
Venues 13.4 11.3 −4.2 11.8 13.4 3.4
Visitor attractions 8.9 7.6 −3.8 8.0 9.2 3.7
Mobile operators Other mobile operators 6.1 5.2 −3.8 5.4 6.2 3.4
Vans 6.3 5.4 −3.7 5.7 6.6 3.7
Pubs, clubs and bars Private member and social clubs 19.4 16.6 −3.8 17.3 20.0 3.7
Pubs and bars 30.0 25.8 −3.7 27.0 31.4 3.9
Restaurants Coffee and tea shops 5.1 4.3 −4.2 4.5 5.2 3.5
Full-service restaurants 20.9 17.7 −4.1 18.4 21.3 3.6
Ice cream parlours 5.7 4.9 −4.0 5.1 5.8 3.5
Quick-service restaurants and fast foods 7.3 6.1 −4.2 6.4 7.0 2.5
Retail Bakers 9.5 8.1 −4.1 8.4 9.7 3.5
Convenience stores 4.8 4.1 −3.9 4.3 4.9 3.6
Department stores 3.8 3.2 −4.0 3.3 3.8 3.5
Other retail 4.9 4.2 −3.9 4.3 5.0 3.5
Service station forecourts 4.1 3.5 −4.0 3.6 4.1 3.3
Supermarkets and hypermarkets 5.8 5.0 −3.6 5.2 6.1 3.9

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

Value per transaction in independent foodservices by outlet, in US$ - historical and forecast
Subsector Outlet 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR*% 2019-2023
Accommodation Bed and breakfasts 2.5 2.1 −4.3 2.2 2.6 4.3
Guest houses 6.6 5.7 −3.6 5.9 6.8 3.6
Holiday parks 12 10.1 −4.2 10.5 12 3.4
Hostels 6.8 5.7 −4.3 6 6.9 3.6
Hotels and motels 11.3 9.5 −4.2 9.9 11.6 4.0
Others 9.6 8.2 −3.9 8.5 10 4.1
Leisure Entertainment 8.2 7 −3.9 7.3 8.3 3.3
Venues 11.2 9.4 −4.3 9.8 11.3 3.6
Visitor attractions 8.5 7.2 −4.1 7.6 8.8 3.7
Mobile operators Other mobile operators 2.7 2.3 −3.9 2.4 2.7 3.0
Vans 2.8 2.4 −3.8 2.6 3 3.6
Pubs, clubs and bars Nightclubs 30.1 25.8 −3.8 26.9 31 3.6
Private member and social clubs 22.5 19.3 −3.8 20.1 23.2 3.7
Pubs and bars 26.1 22.4 −3.7 23.5 27.3 3.8
Restaurants Coffee and tea shops 4.4 3.7 −4.2 3.9 4.5 3.6
Full-service restaurants 4.1 3.5 −3.9 3.6 4 2.7
Ice cream parlours 5.2 4.4 −4.1 4.6 5.3 3.6
Quick-service restaurants and fast food 2.7 2.2 −5.0 2.3 2.7 4.1
Retail Bakers 8.6 7.3 −4.0 7.6 8.8 3.7
Convenience stores 4.4 3.7 −4.2 3.9 4.5 3.6
Delicatessens 3.9 3.3 −4.1 3.5 4 3.4
Department stores 3.5 3 −3.8 3.1 3.6 3.8
Other retail 4.7 4 −4.0 4.1 4.7 3.5
Service station forecourts 3.7 3.1 −4.3 3.2 3.7 3.7
Supermarkets and hypermarkets 5.3 4.6 −3.5 4.8 5.6 3.9

Source: GlobalData, 2020

*CAGR: Compound Annual Growth Rate

Market trends

Association of Southeast Asian Nations economies

The Association of Southeast Asian Nations (ASEAN) economies, as a group, would be the world's fourth-largest economy in 2050 and Canada's sixth-biggest trading partner in 2018 (US-ASEAN Business Council, 2019; Global Affairs Canada, 2019). Canadian agri-food and seafood exports to the ASEAN markets combined were valued at US$1.6 billion in 2019, accounting for 3.2% of Canada's total exports to the world (US$50.5 billion). Canada's exports to the region were relatively small, with export values from Canada increasing by a CAGR of 1.7% from 2015 to 2019. However, Canada's agri-food and seafood exports to Malaysia declined at a CAGR of 1.1% from 2015 to 2019, with a value of US$151.1 million in 2019.

Canada's exports to ASEAN economies in agri-food and seafood, in US$ million
Country 2015 2016 2017 2018 2019 CAGR* % 2015-2019
ASEAN member states 1,524.9 1,145.6 1,667.2 1,525.1 1,630.3 1.7
Indonesia 528.2 367.8 495.3 602.4 673.6 6.3
Viet Nam 280.5 198.4 470.3 264.5 298.4 1.6
Philippines 291.0 147.5 253.8 251.5 193.5 −9.7
Thailand 176.5 129.5 128.6 138.8 179.3 0.4
Malaysia 158.2 166.1 174.9 141.8 151.1 −1.1
Singapore 75.8 96.9 98.7 70.4 85.6 3.1
Cambodia 8.1 21.9 27.5 45.4 30.3 39.1
Myanmar 6.0 17.0 17.8 9.4 17.9 31.6
Brunei Darussalam 0.5 0.3 0.4 0.6 0.5 −3.1
Lao 0.0 0.1 0.1 0.4 0.1 27.9

Source: Global Trade Tracker, 2020

*CAGR: Compound Annual Growth Rate

In 2019, Canada imported US$1.6 billion in agri-food and seafood imports from ASEAN countries. Canada's agri-food and seafood imports from Malaysia increased at a CAGR of 0.8% from 2015 to 2019 with a value of US$177.1 million in 2019.

Canada's agri-food and seafood imports from the ASEAN economies, in US$ million
Country 2015 2016 2017 2018 2019 CAGR* % 2015-2019
ASEAN member states 1,496.8 1,501.3 1,577.1 1,627.0 1,630.3 2.2
Thailand 588.2 579.5 586.9 594.5 615.7 1.2
Viet Nam 371.1 368.8 410.7 448.7 436.2 4.1
Indonesia 169.5 205.0 217.6 209.1 212.0 5.8
Malaysia 171.3 165.2 162.8 163.8 177.1 0.8
Philippines 168.6 143.2 166.1 151.1 134.6 −5.5
Singapore 18.5 21.4 20.9 50.7 45.1 25.0
Myanmar 8.7 9.5 10.5 6.4 7.0 −5.5
Cambodia 0.5 8.0 1.0 1.3 1.5 32.1
Lao 0.1 0.3 0.3 1.1 0.8 61.4
Brunei Darussalam 0.3 0.5 0.4 0.2 0.3 −6.5

Source: Global Trade Tracker, 2020

*CAGR: Compound Annual Growth Rate

Halal food products launch in Malaysia

The growing Muslim population is projected to account for 27% of the world population by 2030 (MIFB, 2019). Globally, Muslims' expenditure on food was valued at $1.4 trillion in 2018 and is forecast to reach $2.0 trillion by 2024 (DinarStandard, 2019). Between January 2015 and January 2020, 17.7% of food and beverage products (including pet food) launched in the Asia-Pacific regions had a halal claim (Mintel, 2020). As one of the Muslim-majority countries in the ASEAN region, Malaysia is seeking to lead the global halal industry and plans to become the international halal centre (Abdullah and Azam, 2020).

In Malaysia, 6,199 halal food products were launched from 2015 to 2019. In the same period, the top 10 food companies in Malaysia launched 1,520 products, growing by a CAGR of 8.2%. The company in Malaysia with the highest number of launches of halal food was Nestlé, with 347 product launches. The two categories with the highest number of launches of halal food were bakeries and snacks.

Number of hot drink products launched in Malaysia, 2015 to 2019
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  • 2015: 1,173
  • 2016: 1,350
  • 2017: 1,151
  • 2018: 1,302
  • 2019: 1,223

Source: Mintel, 2020

Number of launches by the top 10 companies in Malaysia, 2015 to 2019
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Company Number of launches
Nestlé 347
Mondelez  159
Dairy farm  153
Petra foods 135
Delfi marketing 135
Delfi foods 135
GCH retail 134
Mondelez 119
Tong garden 102
Unilever 101

Source: Mintel, 2020

Number of launches by the top 10 categories, 2015 to 2019
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Category Number of launches
Sugar and gum confectionery 212
Baby food 246
Desserts and ice cream 267
Processed fish, meat and egg products 339
Chocolate confectionery 374
Meals and meal centers 528
Dairy 767
Sauces and seasonings 850
Snacks 889
Bakery 1,161

Source: Mintel, 2020

Global market

Malaysia is a net agri-food and seafood exporter to Canada with a net sales valued at US$26 million. Canada imported US$177.1 million in agri-food and seafood products from Malaysia, while Canada's exports were valued at US$151.1 million in 2019.

Malaysia's total agri-food and seafood imports from the world were valued at US$16.3 billion in 2019, of which US$148.9 million was from Canada, representing 0.9% of Malaysia's total agricultural imports. The gap between Malaysia's imports from the world and Canada was US$16.1 billion in 2019.

Canada's gross export gap to Malaysia in agri-food and seafood, in US$ million
Import supplier 2015 2016 2017 2018 2019 CAGR* % 2015-2019
Malaysia's imports from the world 15,802.2 14,906.9 15,671.6 16,559.3 16,275.8 0.7
Malaysia's imports from Canada 187.7 205.2 219.0 209.1 148.9 −5.6
The gross export gap with Canada 15,614.5 14,701.7 15,452.6 16,350.2 16,126.9 0.8

Source: Global Trade Tracker, 2020

*CAGR: Compound Annual Growth Rate

Malaysia's top imported products from the world in 2019 were cocoa beans (US$0.8 billion), food preparations (US$0.7 billion), raw cane sugar (US$0.6 billion) and oilcake (US$0.5 billion). Imports of cocoa beans grew the fastest at a CAGR of 4.7% from 2015 to 2019, followed by imports of food preparations at a CAGR of 3.7%.

Malaysia's top 10 agri-food and seafood imports from the world, in US$ million, 2015-2019
HS 6 Code Description 2015 2016 2017 2018 2019 CAGR* 2015-2019 %
World total 15,802.2 14,906.9 15,671.6 16,559.3 16,275.8 0.7
180100 Cocoa beans 688.5 657.1 695.7 791.9 828.6 4.7
210690 Food preparations, n.e.s.[1] 598.1 640.1 594.9 651.5 690.6 3.7
170114 Solid raw cane sugar, (excluding cane sugar of 1701 13) 636.6 791.7 887.5 683.9 567.8 −2.8
230400 Oilcake and other solid residues, from soybean oil 576.3 460.5 609.6 590.4 521.7 −2.5
100590 Maize (excluding seed for sowing) 469.1 421.7 532.1 546.3 478.2 0.5
151110 Crude palm oil 437.0 128.5 211.0 275.2 456.8 1.1
100630 Semi-milled or wholly milled rice 528.9 375.6 346.6 404.4 450.3 −3.9
020230 Frozen, boneless meat of bovine animals 489.2 442.5 468.6 463.4 418.0 −3.9
100510 Maize seed for sowing 296.5 285.7 212.1 277.3 309.8 1.1
040210 Solid milk and cream, <= 1.5% 385.2 283.1 286.9 261.6 298.6 −6.2

Source: Global Trade Tracker, 2020

*CAGR: Compound Annual Growth Rate

1: not elsewhere specified

Malaysia's agri-food and seafood imports from Canada declined at a CAGR of −5.6% from 2015 to 2019, to reach US$148.9 million in 2019. Malaysia's top imported products from Canada in 2019 were wheat and meslin (US$45.1 million), followed by low erucic acid rape or colza oil (US$22.3 million) and soybeans (US$19.9 million). Canada's canola oil accounted for 65.1% of Malaysia's total imports of that product from the world. Canadian canola seeds accounted for 25.9% of Malaysia's total imports from the world. Solid milk and cream had the most substantial import growth with a CAGR of 212.8% from 2015 to 2019, while soybean seed for sowing was in decline with a CAGR of −19.1% over the same period.

Malaysia's top 10 agri-food and seafood imports from Canada, in US$ million, and Canada's share, 2015-2019
HS 6 Code Description 2015 2016 2017 2018 2019 CAGR* % 2015-2019 Canada's share % in world 2019
Canada total 187.7 205.2 219.0 209.1 148.9 −5.6 0.9
100199 Wheat and meslin (excluding seed for sowing, and durum wheat) 31.5 46.9 54.5 55.3 45.1 9.4 15.5
151411 Low erucic acid rape or colza oil < 2%, crude 25.0 55.2 32.0 40.4 22.3 −2.9 65.1
120190 Soybeans (excluding seed for sowing) 34.5 38.8 39.0 31.0 19.9 −12.8 12.9
120110 Soybean seed, for sowing 36.6 31.8 37.4 31.7 15.7 −19.1 9.9
430110 Raw furskins of mink 0.8 2.3 2.7 2.3 8.3 81.6 19.4
040210 Solid milk and cream, <= 1.5% 0.1 0.0 9.6 4.8 5.3 212.8 1.8
100191 Seed of wheat and meslin, for sowing (excluding durum) 4.5 1.6 0.9 2.0 4.4 −0.5 22.0
120510 Low erucic acid rape or colza seeds < 2%, < 30 micromoles/g 0.0 0.0 0.5 2.5 4.0 183.5 25.9
210690 Food preparations, n.e.s.[1] 4.6 3.3 2.2 2.2 2.5 −14.0 0.4
071340 Dried, shelled lentils 0.8 0.6 0.7 1.3 1.3 15.4 20.5

Source: Global Trade Tracker, 2020

*CAGR: Compound Annual Growth Rate

1: not elsewhere specified

Top 10 foodservice companies in Malaysia

Yum! Brands was the top foodservice company with value sales of US$853.4 million in 2017, accounting for a 4.5% share of the foodservice market in Malaysia. It was followed by McDonald's (US$330.8 million), Doctor's Associates (US$142.0 million), Starbucks (US$127.6 million) and Domino's Pizza (US$101.2 million).

Top 10 foodservice companies in Malaysia by value sales and share, 2017, in US$ million
Company US$ million Share %
Yum! Brands 853.4 4.5
McDonald's 330.8 1.7
Doctor's Associates 142.0 0.7
Starbucks 127.6 0.7
Domino's Pizza 101.2 0.5
Hot&Roll Holdings 90.1 0.5
Marrybrown 90.0 0.5
Secret Recipe Cakes and Café 81.9 0.4
SugarBun 58.4 0.3
Others 17,173.3 89.9
Total 19,106.4 100.0
Source: GlobalData, 2020

Competition and opportunities

Prospects for Canadian agri-food and seafood products in the Malaysian foodservice sector are promising for food preparations and solid milk and cream. Frozen pork and raw furskins are the fastest-growing Malaysian imports, growing at a rate of 2,058.1% and 267.1%, respectively, from 2018 to 2019. Canadian canola seeds exported to Malaysia increased by 59.7% with a market share of 25.9% in 2019. Canada also has the potential to increase exports of frozen pork and cranberries to Malaysia. The market share of these two products in Malaysia was under 5.5% in 2019.

Exporters are strongly recommended to work with the local import agent, distributor and end-user to make sure the products are in compliance with Malaysian regulations and all proper documentation has been completed. For more information, please consult Exporting food out of Canada (Canadian Food Inspection Agency), Step-by-Step Guide to Exporting - Step 6 - Opening the door: entering your target market (The Canadian Trade Commissioner Service) and customs regulations and compliance (Royal Malaysian Customs Department).

It is worth noting that CanExport provides funding to SMEs to reach export markets and execute strategic marketing projects such as participation in trade shows. Interested Canadian SMEs are encouraged to apply for CanExport for businesses (SMEs). If you have questions about exporting your agriculture or food products, or are looking for support, please contact the Market Access Secretariat, Agri-Food and Agriculture Canada, at aafc.mas-sam.aac@canada.ca .

Top 10 Malaysian imports of agri-food and seafood products and competition in 2019
HS 6 code Commodity Import valueUS$ millions Top three suppliers and market Share % Canada's share %
1st 2nd 3rd
180100 Cocoa beans 828.6 Côte d'Ivoire: 34.4 Ghana: 15.8 Cameroon: 11.3 0.0
210690 Food preparations, n.e.s.[1] 690.6 Singapore: 31.3 U.S: 17.4 Indonesia: 8.7 0.4
170114 Raw cane sugar (excluding cane sugar of 1701 13) 567.8 South Africa: 36.8 Thailand: 30.8 Brazil: 21.4 0.0
230400 Oilcake and other solid residues, from soybean oil 521.7 Argentina: 98 United States: 0.6 India: 0.6 0.0
100590 Maize (excluding seed for sowing) 478.2 Argentina: 51.3 Brazil: 47.8 United States: 0.5 0.0
151110 Crude palm oil 456.8 Indonesia: 91.7 Papua New Guinea: 3.0 Cambodia: 2.8 0.0
100630 Semi-milled or wholly milled rice 450.3 Viet-Nam: 44.5 Thailand: 26.6 India: 12.2 0.0
020230 Frozen, boneless meat of bovine animals 418.0 India: 82.8 Australia: 8.8 Brazil: 4.6 0.0
100510 Maize seed for sowing 309.8 Argentina: 71.4 Brazil: 27.2 U.S: 1.0 0.0
040210 Solid milk and cream, <= 1.5% 298.6 New Zealand: 32.4 United States: 19.3 Belgium: 9.0 1.8

Source: Global Trade Tracker, 2020

1: not elsewhere specified

Top 10 fastest growing Malaysian imports of agri-food and seafood products from Canada inUS$ million
HS 6 Code Description Imports 2018 Imports 2019 Growth difference % (2018-2019) Market share % 2019
030383 Frozen toothfish 0.0 0.7 N/C 17.2
020329 Frozen meat of swine 0.0 0.5 2058.1 1.0
430180 Raw furskins 0.3 1.1 267.1 46.0
430110 Raw furskins of mink 2.3 8.3 255.8 19.4
100191 Sowing seed of wheat and meslin (excluding durum) 2.0 4.4 122.0 22.0
050400 Guts, bladders and stomachs of animals (other than fish) 0.4 0.8 118.5 6.3
071310 Dried, shelled peas 0.6 1.1 79.9 7.5
120510 Low erucic acid rape or colza seeds,< 2% and < 30 micromoles/gram 2.5 4.0 59.7 25.9
230990 Preparations for animal feed (excluding dog or cat food) 0.7 1.0 46.8 0.5
130239 Mucilages and thickeners 0.3 0.5 46.4 3.5
200893 Cranberries, n.e.s.[1] 1.0 1.3 26.4 5.2

Source: Global Trade Tracker, 2020

N/C: not calculable

1: not elsewhere specified

According to the 2019 national trade estimate report published by the office of the United States Trade Representative (USTR) in 2019, "Malaysian halal standards require slaughter plants to maintain dedicated halal production facilities and ensure segregated storage and transportation facilities for halal and non-halal products. In contrast, Codex Alimentarius Commission allows for halal food to be prepared, processed, transported, or stored using facilities that have been previously used for non-halal foods, provided that Islamic cleaning procedures have been observed. All domestic and foreign meat (except pork) must be certified as halal by the Malaysian authorities or a Foreign Halal Certification Body (FHCB)."

Meat producers and exporters in Alberta do not have any packaged food products or beef/lamb going into the Malaysian market (Government of Alberta, 2020). Malaysian halal requirements are some of the strictest in the world. The Department of Islamic Development Malaysia (JAKIM) is the regulatory body issuing halal certification in Malaysia. In Canada, JAKIM has recognized two organizations (PDF version) to inspect and halal certify food and beverage products for Canadian exports to Malaysia: the Halal Montreal Certification Authority and the Halal Monitoring Authority (HMA).

Halal Montreal Certification Authority logo

Halal Montreal Certification Authority
1510 Chemin Chambly
Suite 270
Longueuil QC  J4J 3X5
Canada

Taibi Baaja
Phone: 514-296-7360
Fax: 450-332-7072
Email: info@halalmontreal.com / taibi@halalmontreal.com

Halal Monitoring Authority Canada logo

Halal Monitoring Authority (HMA)
1825 Markham Road, #211
Scarborough ON  M1B 4Z9
Canada

Hafiz Faizan Ul-Haq (Chairman)
Phone: 416-731-2247
Fax: 416-981-3247
Email: info@hmacanada.org
Website: Halal Monitoring Authority Canada

Source: JAKIM - The Recognized Foreign Halal Certification Bodies & Authorities, as of February 13, 2019

Conclusion

Malaysia is a growing market for convenience, quality and healthy food products. Canada's low market share of Malaysia's imported food represents room for expansion and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will help improve Canada's competitiveness within the Malaysian market. On March 8, 2018, Canada signed the CPTPP with 10 countries: Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Viet Nam. The CPTPP represents a significant step toward closer trade and investment between Canada and Malaysia.

The CPTPP gives Canadian agriculture and agri-food products preferential market access to key export markets, including Malaysia. Under the agreement, tariffs should be eliminated or reduced on a wide range of Canadian exports for the agricultural sector, including meat, grains, pulses, maple syrup, wines and spirits, seafood and other agri-food products. Read the Global Affairs Canada overview of the CPTPP and Canada's agriculture and agri-food sector for more information.

Significant gains are possible for Canadian producers, who could grow market share in economies such as Malaysia. The CPTPP ensures that Canadian agricultural products can compete on a level playing field with key competitors, specifically in countries where Canada formerly faced high tariffs and did not have preferential market access through existing free trade agreements. To obtain more information on the CPTPP regarding trade opportunities under this agreement see CPTPP for Agri-Food Exporters. To understand how the CPTPP helps Canada-Malaysia trade and investment in the agricultural sector see CPTPP partner: Malaysia.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be accessed through the International agri-food market intelligence page.

For additional information on Food & Hotel Asia 2020, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and agri-food Canada
ben.berry@canada.ca

Resources

Foodservice profile – Malaysia
Global Analysis Report

Prepared by: Zhiduo Wang, Market Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2020).

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