Malaysia’s trade in services deficit widened in 2020 while digital-based activities stood up amid the COVID-19 crisis
In 2020, Malaysia’s exports of services recorded RM92.6 billion as compared to RM170.2 billion in the preceding year resulting from a disruption in the key services components, namely Travel and Transport. Simultaneously, imports of services decreased to RM140.1 billion as against RM181.1 billion in 2019, relatively a slower decline than exports of services. The international trade in services deficit widened to RM47.4 billion (2019: deficit of RM10.9 billion), the highest deficit ever recorded. Malaysia’s total trade in services contracted by 33.8 per cent to RM232.7 billion as against RM351.3 billion in a year ago. Total trade in services as a contribution of Gross Domestic Product (GDP at current prices) accounted for 16.1 per cent in 2020.
Other business services was catalyst for exports services with RM27.1 billion in 2020. However, the exports decreased by 7.6 per cent from preceding year amid the lockdown measures in many countries that affected technical and trade-related activities. Comparatively, imports of this component decreased faster than exports by 9.3 per cent to RM29.8 billion, contributing to a smaller deficit of RM2.8 billion.
Travel, the mainstay of Malaysia’s services trade all this while has faced a challenging situation which led to the highest deficit in services in 2020. This hardest-hit industry in the COVID-19 pandemic turned to a deficit of RM7.7 billion, for the first time in 30 years from a surplus of RM30.8 billion in 2019. Exports of Travel nosedived 84.7 per cent to register RM12.6 billion due to substantially lower number of tourist arrivals. Malaysia recorded 4.3 million international tourists in 2020, a significant decrease of 83.4 per cent compared to the preceding year following the border closure and travel restrictions imposed by countries around the world.
Nevertheless, services that undergo accelerated digital transformation seems to perform much better during the COVID-19 crisis. Telecommunications, computer and information services have seen a windfall opportunity throughout the year 2020 in the forms of teleworking, video streaming, cloud computing and other digital services. Exports of this component increased by 7.9 per cent to RM13.4 billion. At the same time, imports rose by 14.8 per cent to RM16.8 billion due to the spike in subscriptions of streaming services, especially for online movies.
Besides that, Personal, cultural & recreational services posted a higher exports at RM2.4 billion, an increase of 3.1 per cent as against 2019. This was steered by the fastest-growing gaming markets through digital platforms as well as flourishing streaming entertainers like You-tubers and Tiktokers..
In 2020, the USA overtook Singapore by being the top destination of Malaysia’s services exports with a value of RM24.8 billion (2019: RM23.1 billion), mostly in Manufacturing services and Other business services. Singapore which was the leading market for exports since 2010 became the second destination with RM18.9 billion (2019: RM35.9 billion), pulled by exports of travel. This was followed by United Kingdom, Hong Kong and China which collectively amounted to RM15.4 billion in 2020.
The full publication of the Statistics of International Trade in Services 2020 can be downloaded through eStatistik portal.
DATO' SRI DR. MOHD UZIR MAHIDIN
CHIEF STATISTICIAN MALAYSIA
DEPARTMENT OF STATISTICS, MALAYSIA
9 June 2021
Mohd Yusrizal Ab Razak
Public Relation Officer
Strategic Communication and International Division
Department of Statistics, Malaysia
Tel : +603-8885 7942
Fax : +603-8888 9248
Email : yusrizal.razak[at]dosm.gov.my