Electrical and electronic (E&E) products from Malaysia will return as the main contributor of export earnings as the portfolio expands to include products in the nascent solar industry.
Malaysian External Trade Development Corp (Matrade) chief executive officer Datuk Noharuddin Nordin said major investments in the industry are expected to come on board by next year or 2013, extending demand for devices and products under the E&E sector.
He said the external demand for E&E products in March had "defied" market assumption that the sector's recent underperformance was due to structural defects.
"As seen in March, our E&E exports can sustain our presence in the global market," he said at a media briefing yesterday.
The increase in exports in March by RM4.64 billion from a year ago was largely contributed by higher exports of E&E.
E&E contributed RM23.8 billion or 37.2 per cent of the total exports of RM64.06 billion in March, a positive development since the export earnings had been propped up by commodities recently.
For the first quarter of the year, total exports increased 7.5 per cent to RM170.67 billion while imports increased by 12.4 per cent to RM134.59 billion.
Explaining the expansion of E&E demand in all its export markets except the US, Noharuddin said the surge had shown that demand for semiconductor devices such as microprocessor controller and electronic integrated circuits remained strong.
Malaysia supplies semiconductor products to the supply chains located in China, Asean and also in Mexico and the US market which focuses more on the finished products.
The slack in orders from the US has been picked up by China, which has overtaken Singapore.
With the strong performance in the first quarter, the outlook for the E&E market has been positive for the rest of the year, added Noharuddin.
The Semiconductor Industry Association, representing the semiconductor manufacturing and design players in the US, expects to see a 6.8 per cent growth in the global market this year while the Consumer Electronic Association in the US also expects shipment revenue to increase.
Malaysia is also encouraged by the recent growth records of Germany, Italy and France, which had offset the slowdown.
Despite the recent turmoil, countries in the West Asia such as Saudi Arabia and the United Arab Emirates still enjoyed strong imports from Malaysia, on the back of the strength of the oil prices.
Opportunities for building materials from Malaysia remained large, he said, as Saudi Arabia, Iraq and Qatar embarked on infrastructure and development projects.
On the impact of Japan's import orders from Malaysia following its major disaster in March, Noharuddin said it was too early to see the impact as March numbers still showed an increase of 13.9 per cent, due mainly to crude petroleum, liquefied natural gas, E&E and palm oil.
On the outlook for external demand in 2011, Noharuddin said: "I don't want to jump to the conclusion that the trend (of strong E&E exports) would continue as the recovery pace in both the US and Europe is still unstable."
China's move to cool its overheating economy may lead to lesser demand from the second largest economy in the world, he added.
The ringgit's recent strengthening to a 13-year high, he said, did not affect Malaysia's export competitiveness.
Companies with high import content were able to enjoy a lower cost in production.