Malaysia's Food Processing Industry

The food processing sector accounts for about 10% of Malaysia manufacturing output. Processed foods are exported to more than 80 countries, with an annual export value of more than RM6 billion (US$1.9 billion) which amounts to two-thirds of the total Malaysian food exports of over RM10 billion.

Although the export performance of this sector has doubled over the last ten years, Malaysia continues to be a net importer of food products with annual import of more than RM15 billion (US$4.7 billion).

In terms of numbers, small and medium-sized firms dominate the food industry in Malaysia. The major groupings are the fish and fish products, livestock and livestock products, fruits and vegetables, and cocoa-based sectors.

The fish processing industry is largely export-oriented and encompasses the processing of prawns, canning of fish, and the production of surimi products. Most aquaculture farms in Malaysia are involved in prawn farming and processing and largely for export market. Some companies have moved into the production of higher value-added products including breaded and battered products, as well as food supplements.
In the livestock industry, Malaysia is an exporter of poultry meat.However, the country is still a net importer of meat products, particularly beef and mutton. The processing of chicken meat has backward linkages to the poultry sector and this represents more than 60 per cent of the total meat processed.

The fruit and vegetable processing industry in Malaysia has great potential for import substitution as well as in the export sector. Dragon fruit is becoming a popular fruit for value added activities. Other fruits that have been well received in the export market were pink guava, passion fruits and pineapple for puree and juices. Investors are encouraged to undertake commercial cultivation of fruits and vegetables to ensure consistent supply and quality control.

Malaysia is currently the largest cocoa processing country in Asia and ranked fourth in the world.Malaysia is a net exporter of cocoa products including chocolates.Malaysian cocoa products are exported to over 66 countries, including USA, Australia, France, Japan, Singapore and New Zealand.

Currently, the key areas for growth and development in the food processing industry in Malaysia are functional food, convenience food, food ingredients and halal food.

Busier lifestyle and rising disposable incomes have led to the growing popularity of convenience food.Further improvements in the preparation of convenience food with focus on health have led to the rapid growth in the demand for products such as cereals, fruit bars, and fresh ready-to-eat salads or fruits. Value-added palm oil-based specialty product to cater to demand from health conscious and vegetarian consumers is also potential for further development in Malaysia.The increasing consumer awareness and focus on nutrition and health has created a demand for minimally processed fresh food, organic food and natural food flavours from plants and seafood.Functional/health food produced in Malaysia is mainly in the form of food products that are enriched.Food ingredients such as customized formulations required by the food manufacturers, natural food additives and flavours have the potential for further growth. Currently, Malaysia imports about 70 per cent of its food ingredient requirement.

For the halal food, global market value is estimated at about US$547 billion a year.Recognising the importance and potential of the industry, Muslim and non-Muslim countries are undertaking various initiatives to capitalise on the growth prospects in the industry.The halal food industry in Malaysia provides immense opportunities for Malaysian manufacturers

Last Updated : Mon, 23 June 2008

Source: MIDA (http://www.mida.gov.my/)