THE Russia-Ukraine conflict will cause minimal direct impact on Malaysia’s trade, says Deputy International Trade and Industry Minister Datuk Lim Ban Hong.

       Lim said the total trade volume between Russia and Ukraine with Malaysia is only about 0.5%.

       In 2021, Malaysia’s total exports to Russia and Ukraine was at 0.3% and 0.1% respectively, while imports amounted to 0.5% and 0.1% respectively, he said.

       “If we look at these numbers, the direct impact is minimal, but we also need to look at the indirect impact towards Malaysia’s trade, especially in other sectors.

       “These sectors, such as the electrical and electronic devices sector in Malaysia contribute around 13% of the world’s chip testing and packaging, which is an important process in the production of semiconductors that are used in the automotive and smartphone industries, among others.

       “With the disruption to the ongoing global supply chain, the weak export demand from the European markets and the regional countries involved in the same supply chain in the semiconductor industry will bring an indirect impact to our trade,” he said when winding up his ministerial replies on the Motion of Thanks on the Royal Address.

       Lim said Malaysia is one of the leading countries in the global semiconductor trade which accounts for 7% of global trade.

       “This clearly shows that the government’s policy has succeeded in strengthening the competitiveness and resilience of the country’s semiconductor industry. In fact, local companies are becoming part of the global value chain through cooperation and integration programmes with multinational companies that choose Malaysia as their regional centre of operations,” he said.

       Separately, Lim also said that the government always prioritises domestic direct investment (DDI) as the main contributor to the country’s economy and not just foreign direct investment (FDI).

       He said this is proven through the performance of the DDI from 2017 - 2021.

       “The total investments in the manufacturing, services and key sectors during that period was worth RM1.1tril. The investments involved 25,234 projects and created a total of 613,108 new jobs.

       “DDI is the largest contributor with RM598.1bil (54.9%), while FDI contributed RM492.2bil (45.1%),” he said.

       On the status of the Malaysia-EU Free Trade Agreement (MEUFTA) and the ratification status of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Lim said the government was taking steps to restart the MEUFTA discussions that were halted on August 14, 2019.

       On the CPTPP, he said a cost-benefit analysis on it has been completed and will be presented to the Cabinet soon.