International Markets Bureau
MARKET ANALYSIS REPORT | AUGUST 2011

Foodservice Profile Malaysia

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Foodservice Profile Malaysia

EXECUTIVE SUMMARY
Malaysia is a developing economy located in Southeast Asia. It is ideally located for export business to Indonesia, China and India, and will likely benefit from the strong economic growth predicted for these countries in the coming years. Malaysia also has a young population and increasing wealth of its own. Because of these factors, Malaysia is poised to become a major consumer of agri-food and seafood products in the near future. This growing demand for agri-food and seafood products, as well as the changing demographics and culture of the country, will likely spur growth in an already fastgrowing consumer foodservice industry. While there exist significant differences among Malaysian demographics (Malaysia is culturally diverse), there remain some common themes. Malaysia as a whole is becoming more urban, and remains characterized by a young and growing workforce. The leading sectors in the Malaysian consumer foodservice industry are the café/bar segment, the full-service restaurant segment and the fast food segment. These three segments of the foodservice market account for over half of sales in both value and volume terms. However, there are opportunities to be found in the smaller sectors of the market as well. Malaysia has a strong tourism industry and this is reflected in the large number of hotels and resorts present in the country. The tourism sector is quite important to the foodservice industry as it is home to many five-star hotels (which usually have at least one full-service restaurant). This sector has been growing and is expected to continue doing so as the government has been encouraging expansion. It should be noted, however, that Malaysian tourism is recovering from a decline in 2009, caused by H1N1 and the global financial crisis. Malaysia is a net exporter of food products, but still imports significant amounts of food from the rest of the world. Canada ranks as the fourteenth largest supplier of agri-food products, and the twelfth largest supplier of seafood to Malaysia. Canada has significant opportunities in the export of soybeans, wheat, and shrimp, which are all major products consumed in Malaysia. Finally, it should be recognized that Malaysia has the most trusted halal industry in the world, and Canadian companies that meet Malaysian standards will be well poised for business in other Islamic nations.

INSIDE THIS ISSUE
EXECUTIVE SUMMARY THE MALAY TIGER REGIONS CONSUMER PROFILE OVERVIEW OF THE FOODSERVICE SECTOR THE FOODSERVICE SECTOR BY SEGMENT THE TOURISM SECTOR MALAYSIAN IMPORTS CANADIAN EXPORTS TO MALAYSIA MARKET ACCESS HALAL INDUSTRY CONCLUSION ANNEX RELATED AAFC REPORTS KEY CONTACTS RESOURCES 2 3 4 5 5-8 9-10 10-11 12-13 14 15 15 15 16 16 16 17

Source: CIA, 2010 PAGE 2

THE MALAY TIGER
Malaysia is a country located in Southeast Asia. It has a population of approximately 28 million, and is ethnically and religiously diverse. The country consists of a number of regions: the Malay Peninsula, and the states of Sabah and Sarawak on the island of Borneo. Established in 1963, Malaysia is a young country, but has developed rapidly from a post-colonial, raw-materials-dependent economy into a diversified economy with large service and manufacturing sectors (Central Intelligence Agency [CIA], 2010). The Malaysian agriculture sector accounts for 9.4% of the Gross Domestic Product (GDP), a large proportion of the economy (CIA, 2010). In addition, a significant portion of the manufacturing sector in Malaysia is related to agri-food processing. Agricultural products include cocoa, rubber and palm oil (CIA, 2010). Basic Economic Statistics
Total GDP: US$209 billion Per Capita GDP: US$6,810 Share of Agriculture in GDP: 9.4% Debt to GDP Ratio: 53.3%

Average Annual Real GDP Growth Rate: 4.0%
Sources: Euromonitor, 2010; CIA, 2010; Global Trade Atlas, 2010

Malaysia is the third-largest economy in the Association of South East Asian Nations (ASEAN), behind Indonesia and Thailand. In per capita terms, Malaysia has the third highest GDP, behind Singapore and Brunei. It is also ranked as the ninth-wealthiest country in East Asia. Malaysia had experienced uninterrupted growth from 1999 to 2009 before the international credit crisis impacted the world market. While the economy shrunk by 1.7% in 2009, it is expected to grow at an average real rate of 5.1% a year through to 2014 if no significant policy changes are made (Economist Intelligence Unit, 2011). However, due to its geographic proximity to China and a large minority of highly educated ethnic Chinese, Malaysia has an ideal advantage in trade. Malaysia has run a consistent trade surplus over the last six years. This trade surplus has increased over time as key Malaysian products, such as crude oil and processed palm and soy have grown in importance. Malaysia is expected to continue growing by approximately 4-5% (in real GDP growth) over the next five to ten years (Economist Intelligence Unit, 2011).

Malaysian Trade Balance - All Commodities - US$ 2005 World 2006 2007 2008 2009 2010

27,301,184,304 30,323,933,123 29,812,186,861 43,118,208,981 33,620,579,295 34,094,372,020

Source: GTIS, 2011

Malaysia announced 19 new projects in 2011 for the Economic Transformation Programme (ETP) across ten key economic areas, designed to help turn Malaysia into a high income state by 2020. ETP projects include the further development of oil and gas industry infrastructure; studying the potential of nuclear energy; expanding healthcare services and medical research; building new tourist attractions; a Mass Rapid Transit (MTR) project to reduce road congestion; an East coast herbal plantation to supply the nutraceutical market; the Skills Malaysia initiative, to provide graduates with vocational opportunities; and the development of an Internet Protocol Television system to distribute Malaysia-made media throughout the Middle East. These initiatives are projected to create 35,000 new jobs for residents, while furthering another ETP goal of attracting Malaysian talent back from overseas (Economist Intelligence Unit, 2011; New Asianist, 2011).

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REGIONS
Malaysia consists of three major regions: Peninsular Malaysia, Sarawak and Sabah. Peninsular Malaysia is a part of the Asian continent while Sarawak and Sabah are located on the island of Borneo.

Source: CIA, 2010

Peninsular Malaysia Peninsular Malaysia is home to Kuala Lumpur, Malaysia‟s largest city and capital. The bulk of the country‟s wealth is concentrated in this region. Major industries include: rubber; palm oil processing; light manufacturing; pharmaceuticals; electronics; tin mining and processing; and logging and timber processing. Chief agricultural products of the regions are rubber, palm oil, cocoa and rice (CIA, 2010). Sarawak Sarawak is located on the island of Borneo and is the largest state by total land. The state is home to a population of over 2 million (Sarawak Government, 2010). Sarawak is also home to 27 different ethnic groups and can be termed the most multi-ethnic state within Malaysia (Sarawak Government, 2010). The state is also diverse in religion, with Christianity being the most prominent, followed by Islam, Buddhism and other religions (Sarawak Government, 2010). The largest city in the region is Kuching, which is also the state capital. Major industries include: agricultural processing, energy, and logging. Major agricultural crops include rubber, timber and pepper (CIA, 2010). Sabah Sabah is a state located on the island of Borneo and is the second largest state in Malaysia by land area (Sabah State Government, 2011). It is also the least wealthy state in Malaysia. Sabah is similar to Sarawak in that it has a very diverse population (Sabah State Government, 2011). Sabah‟s major industries include logging and energy, while major agricultural products include subsistence crops, coconuts, rice, rubber, and timber (CIA, 2010).

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CONSUMER PROFILE
Unless otherwise noted, all information in this section was derived from Euromonitor International, 2009.

There is no such thing as a “standard” Malaysian consumer. The vast ethnic and religious diversity of the country means that there are wide variations in food preferences. However, despite the varying ethnic and religious backgrounds, Malaysians have some commonalities. First, the population is young and growing. Second, the income of the average Malaysian grew steadily between 2001 and 2008, but this growth was briefly interrupted in 2009. Third, the average Malaysian is becoming an urban consumer - 71% of households currently reside in urban centres. This increasing urbanization means that people will be living in higher density areas, resulting in reduced costs in bringing products to market due to more concentrated demand. In addition, urban consumers in Malaysia tend to consume more value-added products, whether in foodservice or in processed food products procured from grocery stores. Most importantly, it is not uncommon for Malaysians to eat all their meals outside of the home on a daily basis. While this is primarily found amongst younger families and single people, it represents a trend across a significant portion of the Malaysian population (United States Department of Agriculture [USDA], 2009). Pork and alcohol can be legally imported into Malaysia, and are in demand by the country‟s large, non-Muslim minority. Approximately 40% of Malaysians are not Muslim. For a more comprehensive profile of Malaysian Consumers, please consult the 2011 AAFC report entitled: The Malaysian Consumer: Behaviour, Attitudes and Perceptions toward Food Products.

OVERVIEW OF THE FOODSERVICE SECTOR
The Malaysian foodservice sector is very diverse and offers an array of options for consum ers. Approxim ately 75% of the foodservice sector consists of small foodservice chains or stand-alone operations (USDA, 2010). This means the sector is highly fragmented and competitive as the varying operations battle for market share. Acc ording to the USDA, the sector is composed of the following groups (2010): 19% food caterers 8% full-service restaurants 3% fast food restaurants 70% other areas of the industry

Structure of the Malaysian Foodservice Sector, 2007

Source: USDA, 2010

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OVERVIEW OF THE FOODSERVICE SECTOR (CONTINUED)
Value The Malaysian foodservice sector is in a period of expansion, with the value of sales increasing faster than volume. In the review period of 2004 to 2009, Malaysian consumers had more disposable income than ever before and were interested in trying new and higher quality food products. This has allowed for significant growth in the industry at a compound annual growth rate (CAGR) of 8.25%, and absolute growth of 48.64% In the period of 2004 to 2009, the fastest growing sector in the foodservice industry was the pizza foodservice industry, which grew at a CAGR of 13.4% and by 87.11% in absolute terms. However, the sector is quite small when compared to the fast food sector (CAGR of 11.46%; absolute rate of 72.06%) and the café/bar sector (CAGR of 10.48%; absolute rate of 64.58%). Historic Market Value - US$ mn - Current Prices - Fixed 2009 Exchange Rates 2004 2005 2006 2007 2008 2009 Consumer Foodservice 4,475.0 4,926.8 5,463.3 6,148.3 6,533.5 6,651.5 100% Home Delivery/Takeaway 15.9 18.5 21.8 23.0 27.9 33.0 Cafés/Bars 860.2 982.4 1,125.5 1,312.8 1,385.0 1,415.7 Full-Service Restaurants 1,990.9 2,139.6 2,311.8 2,517.3 2,646.8 2,649.1 Fast Food 502.1 539.1 591.3 689.0 813.4 863.9 Self-Service Cafeterias 114.2 121.1 129.0 138.0 146.3 152.0 Street Stalls/Kiosks 991.6 1,126.1 1,284.0 1,468.2 1,514.3 1,537.8 Pizza Consumer Foodservice* 86.9 104.8 119.2 132.6 153.2 162.6
*Note: Pizza consumer foodservice includes three sub-sectors (pizza fast food, pizza full-service restaurants and pizza 100% home delivery/takeaway). These sub-sectors are already included in the total fast food, total full-service restaurants and total 100% home delivery/takeaway sectors. Source: Euromonitor, 2010

Forecasts for the Malaysian consumer foodservice industry expect growth to slow over the period of 2010 to 2014. However, the industry is still expected to record a CAGR of 4.13% and absolute growth of 17.54%. The fastest growing sector is expected to be the fast food segment, with a CAGR of 6.21% and absolute growth of 27.24%. It is expected to be followed by the pizza foodservice segment (CAGR of 6.20%; absolute rate of 27.19%) and the full-service restaurant segment (CAGR of 4.09%; absolute rate of 17.41%). It should be noted that the tiny self-service restaurant segment is expected to grow faster than the full-service restaurant segment, but the prospects for growth beyond 2014 are limited, and the sector is almost non-existent in comparison to the vast amount of sales in the full service segment. Market Value Forecasts - US$ mn - Current Prices - Fixed 2009 Exchange Rates 2010 2011 2012 2013 2014 Consumer Foodservice 6,893.6 7,169.7 7,470.7 7,786.9 8,104.9 100% Home Delivery/Takeaway 33.0 36.7 40.2 43.6 50.2 Cafés/Bars 1,465.1 1,519.4 1,577.7 1,638.2 1,697.6 Full-Service Restaurants 2,735.1 2,836.2 2,952.3 3,078.8 3,211.3 Fast Food 925.0 989.3 1,053.1 1,116.3 1,177.0 Self-Service Cafeterias 159.1 166.9 174.9 183.4 191.3 Street Stalls/Kiosks 1,572.6 1,617.8 1,668.9 1,723.3 1,777.6 Pizza Consumer Foodservice* 171.4 181.4 192.7 204.9 218.0
*Note: Pizza consumer foodservice includes three sub-sectors (pizza fast food, pizza full-service restaurants and pizza 100% home delivery/takeaway). These sub-sectors are already included in the total fast food, total full-service restaurants and total 100% home delivery/takeaway sectors. Source: Euromonitor, 2010

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OVERVIEW OF THE FOODSERVICE SECTOR (CONTINUED)
Volume The number of transactions in the restaurant sector increased significantly over the period of 2004 to 2009, at a CAGR of 6.80%, and recorded an absolute growth of 38.92%. While this growth was slower than the growth in value, it remains quite rapid. The fastest growth was recorded in the fast food sector (CAGR of 11.64%; absolute rate of 7.40%), followed by the café and bar segment (CAGR of 7.93%; absolute rate of 46.47%) and the street stall segment (CAGR of 5.16%; absolute rate of 28.60%). It should be noted that while both self-service cafeterias and pizza foodservice transactions grew faster than the café and bar segment, the overall number of transactions was small. Pizza foodservice transactions were especially notable, because the low transaction volume appears to indicate higher prices are paid for pizza products. Historic Transactions - '000 transactions 2004 2005 2006 2007 2008 2009 Consumer Foodservice 847,700 920,429 993,872 1,085,211 1,153,457 1,177,637 100% Home Delivery/Takeaway 6,681 7,446 8,181 8,507 8,936 9,472 Cafés/Bars 133,720 148,412 163,293 182,897 192,545 195,855 Full-Service Restaurants 196,219 209,437 222,671 235,931 245,976 245,804 Fast Food 141,992 156,182 170,693 199,079 231,362 246,210 Self-Service Cafeterias 16,475 18,883 21,336 23,896 25,928 26,828 Street Stalls/Kiosks 352,612 380,068 407,697 434,901 448,710 453,469 Pizza Consumer Foodservice* 11,470 13,061 14,395 15,383 16,541 17,226
*Note: Pizza consumer foodservice includes three sub-sectors (pizza fast food, pizza full-service restaurants and pizza 100% home delivery/takeaway). These sub-sectors are already included in the total fast food, total full-service restaurants and total 100% home delivery/takeaway sectors. Source: Euromonitor, 2010

The consumer foodservice industry is forecast to have increasing transaction volumes over the period of 2010 to 2014, but at a significantly slower pace than experienced in previous years. The CAGR is expected to be 1.56% with absolute growth at 6.40%. Fast food is expected to be the fastest growing segment of the foodservice industry with a CAGR of 3.47% and an absolute growth of 14.60%. It is expected to be followed by the café/bar segment (CAGR of 1.38%; absolute rate of 5.62%), and the full-service restaurant segment (CAGR of 1.12%; absolute rate of 4.57%). It should be noted again that self-service cafeterias and pizza foodservice are expected to grow faster than the café/bar segment, but they have very small bases to grow from. The pizza foodservice sector, however, is interesting in that it is expected to have significantly faster value than volume growth. This indicates higher pricing is predicted for this sector, perhaps indicating a further premiumization of the industry. Forecast Transactions - '000 transactions Consumer Foodservice 100% Home Delivery/Takeaway Cafés/Bars Full-Service Restaurants Fast Food Self-Service Cafeterias Street Stalls/Kiosks Pizza Consumer Foodservice* 2010 1,203,877 9,837 199,750 248,878 259,897 27,705 457,809 17,774 2011 1,227,107 10,158 202,919 251,866 271,989 28,475 461,700 18,296 2012 1,247,488 10,491 205,909 254,755 282,064 29,125 465,144 18,857 2013 1,265,720 10,812 208,702 257,547 290,844 29,703 468,112 19,427 2014 1,280,962 11,127 210,979 260,256 297,842 30,145 470,613 20,021

*Note: Pizza consumer foodservice includes three sub-sectors (pizza fast food, pizza full-service restaurants and pizza 100% home delivery/takeaway). These sub-sectors are already included in the total fast food, total full-service restaurants and total 100% home delivery/takeaway sectors. Source: Euromonitor, 2010

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OVERVIEW OF THE FOODSERVICE SECTOR (CONTINUED)
Outlets
Malaysia experienced growth in both the value and volume of transactions in the period of 2004 to 2009. It is thus unsurprising that during this same time period, growth in outlets was fairly robust at a CAGR of 3.71% and 19.96% in absolute growth. The fast food sector, once again, was the leader in new outlets, recording a CAGR of 10.74% and an absolute growth of 66.55%. The full-service restaurant sector (CAGR of 3.75%; absolute rate of 20.18%) and the café and bar segment (CAGR of 2.83%; absolute rate of 14.99%) followed. It should be noted that while the pizza foodservice and self-service cafeterias recorded higher growth than the full-service restaurant sector, the base of outlets was very small. Historic - Units/outlets Consumer Foodservice 100% Home Delivery/Takeaway Cafés/Bars Full-Service Restaurants Fast Food Self-Service Cafeterias Street Stalls/Kiosks Pizza Consumer Foodservice* 2004 23,849 151 4,256 8,106 1,647 180 9,509 312 2005 24,981 161 4,354 8,577 1,873 200 9,816 339 2006 25,966 170 4,464 9,010 1,988 220 10,114 368 2007 27,249 177 4,669 9,434 2,312 240 10,417 396 2008 28,187 189 4,804 9,717 2,574 258 10,645 429 2009 28,610 207 4,894 9,742 2,743 268 10,756 450

*Note: Pizza consumer foodservice includes three sub-sectors (pizza fast food, pizza full-service restaurants and pizza 100% home delivery/takeaway). These sub-sectors are already included in the total fast food, total full-service restaurants and total 100% home delivery/takeaway sectors. Source: Euromonitor, 2010

The Malaysian consumer foodservice industry is expected to experience slower outlet growth as value and volume growth slow. It is expected that over the period of 2010 to 2014, the industry‟s CAGR in outlet terms will be 1.00%, with 4.07% growth in absolute terms. The fast food sector is expected to lead the growth in the foodservice industry in terms of outlets with a CAGR of 3.84% and absolute growth of 16.28% over the period of 2010 to 2014. The café and bar segment (CAGR of 0.79%; absolute rate of 3.21%) and the full-service restaurant segment (CAGR of 0.40%; absolute rate of 2.85%) are expected to follow in terms of growth. Once again, it should be noted that the miniscule self-service cafeterias and pizza outlets have not been included, due to their small base, even though they are expected to experience moderately stronger growth. Forecast - Units/outlets Consumer Foodservice 100% Home Delivery/Takeaway Cafés/Bars Full-Service Restaurants Fast Food Self-Service Cafeterias Street Stalls/Kiosks Pizza Consumer Foodservice* 2010 29,036 218 4,958 9,831 2,906 277 10,846 465 2011 29,399 227 5,008 9,913 3,051 285 10,915 479 2012 29,716 236 5,052 9,986 3,177 292 10,973 493 2013 29,993 244 5,089 10,052 3,290 298 11,020 507 2014 30,217 251 5,117 10,111 3,379 303 11,056 520

*Note: Pizza consumer foodservice includes three sub-sectors (pizza fast food, pizza full-service restaurants and pizza 100% home delivery/takeaway). These sub-sectors are already included in the total fast food, total full-service restaurants and total 100% home delivery/takeaway sectors. Source: Euromonitor, 2010

*Note: Euromonitor and the USDA (as shown on page 5) use different methodologies for accounting for foodservice operations, which has a significant impact on the outcomes of the “composition” of the foodservice sector.
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THE FOODSERVICE SECTOR BY SEGMENT
Unless otherwise noted, all information in this section was derived from Euromonitor International, 2010

Cafés and Bars  While the Malaysian café and bar sector of the foodservice industry suffered a slowdown in 2009, it experienced fast growth in the five years prior to the global economic downturn. It is widely expected that through to 2014, the sector will recover and experience further growth. This can be largely attributed to a young population and rising disposable incomes.  This sector innovated to deal with the economic downturn and began utilizing a number of promotions in order to ensure that growth remained positive. The sector is experimenting with new products, which will likely continue as well. Malaysia has a diverse diet as it is, and trying foods outside of traditional dishes is a regular practice. Exporters with new products may find this market to be an area of interest. Fast Food  The fast food sector continued to grow in 2009, in spite of the economic downturn, although at a slower pace. In 2009, the industry focused on boosting sales through marketing and limited time promotions. This allowed the industry to continue to increase volume and value of sales in the face of the downturn.  Again, the young population of Malaysia and rising incomes will likely drive growth in this sector into the near future.  Similar to the café and bar sector, the Malaysian fast food industry is on track to provide more diversified offerings, presenting many opportunities for potential exporters of new or different products.  It should be noted that the fastest growing area of consumption in the fast food industry is poultry products. While Canada has supply management in place, significant quantities of poultry products are still exported. Poultry products are more popular in the Malaysian fast food industry because of religious restrictions surrounding both pork and beef within the Islamic and Hindu populations, respectively. Full-service Restaurants  Similar to the fast food and café/bar sector, the full-service restaurant industry engaged in promotional activities to maintain sales growth in the midst of the 2008/2009 global economic slowdown. An example of such a promotion would be a “buy one, get one free” deal, where the adult meal is paid for and a child eats for free.  The most popular type of full-service restaurants are Asian cuisine. Thai, Chinese and Japanese cuisine are also all quite popular due to similarities to the Malay diet.  While there is a highly fragmented market with many independent operators, the trend in Malaysia has been towards franchising full-service restaurants. This is fairly common across countries as large corporations find it easier to reduce costs, which gives them competitive pricing advantages. Self-Service Restaurants/Cafeterias  The self-service sector is one of the slowest growing areas of the Malaysian foodservice industry. This is because prices for food at these locations are higher, and the sector is not innovative in its offerings. Also, self-service cafeterias are most successful in captive and semi-captive environments, where consumers have few, if any, other options for food. The sector is expected to grow at 4% in value terms over the period of 2010 to 2014.  This sector is dominated by independent players, with only two chained outlets in the entire industry.
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THE FOODSERVICE SECTOR BY SEGMENT (CONTINUED)
Street Kiosks  Street kiosks increased in popularity in 2009, although growth was muted by the economic downturn. The Malaysian government has been cracking down on unlicensed street vendors and improving hygiene standards at street stalls/kiosks in order to improve food safety.  The sector is poised for slower growth between 2010 and 2014 due to the expectation of increased regulation, coupled with the belief that the sector has become „crowded.‟ New entrants are still expected but they will be in the chained foodservice category, rather than independent operators. If this does occur, it can be expected that the street kiosk sector will face increased competition, and like other sectors, the chained stalls will likely overtake the independent operators in sales and outlets. Takeaway/Delivery  The takeaway and delivery segment of the consumer foodservice industry grew at a rate of 18% in 2009, apparently undisturbed by the global economic crisis. This sector is expected to continue to grow at a fast rate over the period of 2010 to 2014, as Malaysians seek more convenient options for food and more westernized cuisine.  It should be noted that the fastest growing segment of the takeaway and delivery segment was the pizza industry.

THE TOURISM SECTOR
Hotel Sector
Kuala Lumpur is the major tourist destination in Malaysia and it has the majority of four- and five-star hotels in the country. The city is also home to many resorts. Hotels which range from three to five stars generally have at least one restaurant on the premises, while many of the finer hotels have more than one restaurant on their premises and innovative dishes are quite important. There are other three- to five-star hotels located through Malaysia, naturally, but the bulk of them are concentrated around Kuala Lumpur (USDA, 2009). The quality of the food is generally higher in hotel establishments, and these places are generally frequented by people of higher income groups, not just the guests of the hotel, as they are seen as a symbol of status (these restaurants are frequented by celebrities and other famous people) and as a place to do business. Types of restaurants range from American to Indian to Turkish, and employ a variety of ingredients in their dishes. Hotel restaurants are also a common place for celebrations and weddings (USDA, 2009).

Historic Market Sizes - US$ mn - Current Prices - Fixed 2009 Exchange Rates Hotels Other Travel Accommodation
Source: Euromonitor, 2010

2004 2005 2006 2007 2008 2009 2,757.3 2,974.6 3,178.9 4,045.6 4,370.5 4,082.8 258.5 299.8 339.0 423.8 457.0 476.9

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THE TOURISM SECTOR (CONTINUED)
Domestic Tourism
Kuala Lumpur is, by far, the most popular tourism destination for Malaysians. The wide variety of options in terms of foodservice, shopping and entertainment, drives tourists to Kuala Lumpur. In addition to this, Kuala Lumpur, as the heart of domestic travel, is “a place where all roads lead to” and this helps lower the cost of trips to the city, encouraging tourism flows (Euromonitor, 2009). However, the dominance of Kuala Lumpur in Malaysia does not mean that other areas do not have significant tourist flows. One area of significant growth in 2009 was the state of Sarawak on Borneo. Sarawak is multi-cultural and has wide offerings of different foods, cultures and locations to visit (Euromonitor, 2009). The Malaysian government has also been active in its advertising of domestic tourism and this is expected to bode well for domestic tourism flows in the near future.

International Tourism
In 2009, the combination of H1N1 and the global economic crisis likely depressed global tourism demand. Despite this, Malaysia did receive increased tourism from some European countries due to the low cost of the destination, as well as its largest tourism partner, Singapore (Euromonitor, 2009).

Domestic Tourism - '000 trips International Arrivals - '000 people
Source: Euromonitor, 2010

Tourism Flows 2004 2005 33,744 36,380 15,815 16,567

2006 39,408 17,701

2007 43,416 20,972

2008 46,320 22,051

2009 49,806 23,302

Entrance to the Batu Caves Kuala Lumpur, Malaysia Source: C. Palluau

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MALAYSIAN IMPORTS
Agri-food
Total Malaysian agri-food imports were valued at US$13.3 billion in 2010, up from US$10.4 billion in 2009. Canada supplied Malaysia with US$172 million worth of agri-food in 2010, and was the country‟s fourteenth largest supplier, accounting for 1.3% of Malaysia‟s total agri-food import value. Canada‟s top five competitors were Indonesia (22.7%), China (9.3%), Argentina (7.6%), Australia (7.2%) and the Thailand (7.0%). Top 10 Suppliers of Malaysian Agri-food Imports - US$
2005 Total Indonesia China Argentina Australia Thailand United States India Brazil New Zealand Vietnam Canada (14) Source: GTIS, 2011 6,160,884,238 850,367,203 625,005,445 587,285,363 594,026,851 741,961,854 337,119,257 379,295,789 153,822,084 253,600,326 139,295,164 96,904,471 2006 7,119,494,724 1,114,517,072 711,356,390 679,325,252 598,916,085 763,676,103 393,562,359 431,507,571 213,196,409 237,594,311 239,010,679 127,461,593 2007 8,916,816,750 1,444,213,732 942,715,368 924,279,711 701,601,626 749,163,980 560,149,969 663,059,673 325,840,867 359,609,383 235,260,876 178,088,989 2008 11,433,933,199 2,332,613,587 821,721,687 1,270,615,270 619,060,356 900,602,140 1,035,101,707 704,899,814 312,078,422 546,765,918 491,720,729 210,555,396 2009 10,375,186,901 2,048,823,388 928,549,987 747,071,523 579,374,335 895,568,303 713,698,297 679,288,836 597,253,756 365,610,318 537,739,987 160,336,303 2010 13,334,509,204 3,030,553,486 1,243,887,748 1,015,052,901 963,456,433 939,208,349 841,954,193 826,376,352 719,176,359 478,521,947 456,437,741 172,162,701

The top Malaysian agri-food imports in 2010 were palm oil, cocoa beans, coconut oil, cane, sugar, and corn.

Malaysia’s Top 10 Agri-Food Imports - US$
2005 Total Palm Oil Cocoa Beans Coconut Oil Cane Sugar Corn Rice Soybean Oilcake Food Prep Milk and Cream Malt Extract Source: GTIS, 2011 6,160,884,238 157,878,630 377,386,124 219,148,836 297,774,261 367,755,965 182,629,249 208,745,187 188,722,889 344,129,633 232,218,841 2006 7,119,494,724 285,098,685 671,440,477 230,859,657 394,058,815 401,483,459 286,460,680 198,482,836 201,804,780 334,605,204 235,288,958 2007 8,916,816,750 295,960,971 787,092,400 398,069,977 445,939,058 614,893,889 312,758,127 266,410,190 235,643,719 513,361,332 263,256,492 2008 11,433,933,199 638,036,379 1,185,914,260 588,125,235 416,214,042 676,775,129 827,374,589 395,122,168 277,473,347 552,793,416 312,720,927 2009 10,375,186,901 711,386,507 767,666,543 390,928,813 600,745,802 568,062,712 549,628,376 426,723,279 299,519,189 281,575,185 290,028,244 2010 13,334,509,204 1,086,936,794 969,823,427 804,655,268 802,030,985 770,511,824 496,899,611 467,185,263 427,915,226 378,235,781 355,740,202

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MALAYSIAN IMPORTS (CONTINUED)
Seafood
Total Malaysian seafood imports were valued at US$750 million, up from US$649 million in 2009. Canada supplied Malaysia with US$8.2 million, making it the twelfth largest supplier in 2010 and accounting for 1.1% of the country‟s seafood import value. Canada‟s top five competitors were China (32.3%), Indonesia (16.9%), Thailand (16.2%), Myanmar (4.7%) and Vietnam (4.2%). Top 10 Suppliers of Malaysian Seafood Imports - US$
2005 Total China Indonesia Thailand Myanmar Vietnam India Japan Norway Taiwan Pakistan Canada (12) Source: GTIS, 2011 513,229,214 106,454,772 66,599,944 111,679,088 26,479,829 31,935,781 45,928,318 5,741,016 4,695,806 15,036,831 11,817,976 1,411,665 2006 553,072,519 122,118,186 66,780,081 119,292,338 31,065,157 47,587,822 32,230,743 8,275,286 8,281,316 11,631,577 12,178,024 1,503,545 2007 620,297,452 133,214,507 96,712,222 125,615,298 30,274,097 52,986,813 30,392,206 10,498,038 10,177,972 10,937,935 12,995,930 2,076,496 2008 562,069,587 110,765,645 102,811,722 117,332,005 29,565,761 38,053,851 22,361,005 15,246,991 10,495,768 11,367,642 13,251,734 2,490,143 2009 648,666,446 182,179,042 106,294,676 115,194,251 31,567,724 32,338,155 24,087,292 14,800,669 11,365,164 10,504,865 13,758,895 8,468,000 2010 750,299,726 242,528,948 126,789,594 121,472,070 35,092,780 31,436,818 29,555,850 19,817,461 14,634,210 12,999,695 10,775,619 8,178,587

The top Malaysian seafood imports were live crustaceans, frozen fish, fresh or chilled fish, fish fillets, and prepared or preserved fish.

Malaysia’s Top 10 Seafood Imports - US$
2005 Total Live Crustaceans Frozen Fish Fresh/Chilled Fish Fish Fillets Prep/Pres. Fish Molluscs Live Fish Dried/Salted Fish Other Aqua. Invert. Extracts and Juices Source: GTIS, 2011 513,229,214 169,844,235 122,746,674 97,462,109 33,296,145 33,789,137 19,327,288 15,317,152 13,671,702 7,040,461 734,311 2006 553,072,519 146,853,881 142,333,886 102,547,177 54,702,015 40,924,814 24,114,828 15,646,599 16,305,287 9,226,088 417,945 2007 620,297,452 174,095,240 144,997,429 116,777,306 63,667,207 45,156,108 29,163,897 18,412,142 15,303,834 11,748,552 975,737 2008 562,069,587 115,468,578 143,888,411 121,061,650 48,852,853 53,433,912 31,565,226 19,616,383 15,428,966 11,025,576 1,728,032 2009 648,666,446 154,682,787 178,582,202 117,366,341 50,665,486 52,037,472 41,705,497 22,210,992 19,192,607 10,988,330 1,234,730 2010 750,299,726 204,392,832 181,546,594 144,104,364 56,856,748 50,445,994 50,269,011 24,510,074 22,345,837 14,207,250 1,621,023

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CANADIAN EXPORTS TO MALAYSIA
Agri-food
Canada exported CAD$116 million1 of agri-food products to Malaysia in 2010, down from a peak year in 2008 (CAD$239 million). Canada‟s top three exports were: soya beans (41.1% of total trade), wheat (28.7%) and crude canola oil (13.9%), at values of CAD$48 million, $33 million and $16 million respectively. Canada‟s fastest growing products within the top ten exported goods were: frozen pork (CAGR: 76.2%), peas (43.6%), and ice cream (28.2%). Top 10 Agri-food Products Exported to Malaysia from Canada ($CAD)
2006 Total Agri-food Exports Soya beans Wheat Crude canola oil, low erucic acid Ice cream Food preparations Frozen pork offal Frozen pork Frozen fries Non-alcoholic beverages Peas Source: Statistics Canada, 2011 129,702,010 21,614,292 46,484,160 18,595,304 1,112,996 1,291,480 1,357,083 181,790 2,094,596 875,794 151,144 2007 129,625,220 35,021,928 58,338,295 12,151,236 1,987,199 1,718,561 1,862,738 75,723 3,854,266 2,454,796 110,494 2008 239,378,043 44,004,727 116,710,948 18,158,028 2,325,688 2,052,636 1,035,679 590,574 3,452,576 4,667,960 447,677 2009 114,343,732 45,870,156 34,713,450 4,117,450 2,471,604 1,730,506 1,391,057 1,781,036 4,475,666 1,505,713 600,389 2010 116,046,428 47,706,300 33,283,954 16,086,748 3,002,923 2,449,588 1,834,033 1,754,089 1,290,021 1,158,232 643,200

Seafood
Canada exported CAD$4.2 million of seafood products to Malaysia in 2010, down from a peak year in 2009 (CAD$5.1 million). Canada‟s top three exports were: frozen sardines (80.9% of total trade), live lobster (12.6%) and frozen shrimp and prawns (2.6%), at values of CAD$3.4 million, $534 thousand and $110 thousand respectively. Canada‟s fastest growing products within the top ten exported goods were: frozen sardines (CAGR from 2008-2010: 103.3%), marine mammal fats (CAGR from 2008-2010: 89.5%), and seaweeds and other algae (CAGR not calculable as 2010 figure is the only data available). Top 10 Seafood Products Exported to Malaysia from Canada ($CAD)
2006 Total Seafood Exports Frozen sardines Live lobster Frozen shrimps and prawns Stimson's clams Seaweeds and other algae Non chemically modified marine mammal fats Frozen tunas Live whales, dolphins/porpoises Seal meat Live ornamental fish Source: Statistics Canada, 2011
1

2007 1,235,723 0 780,186 154,752 70,982 0 0 0 0 0 0

2008 2,103,258 826,665 563,265 0 102,930 0 2,880 0 0 0 0

2009 5,063,202 3,991,920 758,949 0 92,517 0 2,880 0 0 0 0

2010 4,225,707 3,418,035 534,115 110,143 78,146 65,106 10,338 9,824 0 0 0

1,194,131 0 654,083 0 37,960 0 0 0 0 0 0

The discrepancy between Malaysian import and Canadian export figures is explained by differences in methods of calculation and transshipments. For further detail, please see the Annex on page 16. PAGE 14

MARKET ACCESS
Malaysia is a country devoted to free trade. However, like all countries, it has various procedures that must be completed prior to import. It is strongly recommended that Canadian exporters contact the trade commissioner responsible for the country, as well as Agriculture and Agri-Food Canada (see page 16 for contact information).

HALAL INDUSTRY
Southeast Asia has the largest Muslim population in the world and is considered the centre for halal foods. Malaysian halal standards are considered something of a “gold standard.” Canadian businesses seeking to do business with Malaysian companies should be aware of the various requirements with respect to halal food, and should also be aware that preparing halal food for Malaysian standards will open doors to other Islamic countries. For more information on halal requirements and market information in Malaysia and the world, contact the trade commissioner responsible for the country, and consult the following AAFC report (2011): Global Pathfinder Report—Halal Food Trends.

Source: Shutterstock

CONCLUSION
Malaysia is a young, rich, dynamic market with potential for Canadian agribusiness. Malaysia has experienced unprecedented growth over the last two decades and has become a leader in Southeast Asia. The country is poised for continued strong growth due to its close proximity to China and strong export potential. Malaysia is also ethnically diverse, posing challenges in getting food to suit a large population as there are varying tastes across ethnic groups. However, this also creates opportunities for companies seeking to diversify and create innovative products for the market. Growth in the Malaysian consumer foodservice market will likely be led by the café/bar segment, full-service restaurant segment and the fast food segment. These three sectors account for over half the existing value in the Malaysian economy and will continue to play an important role into the foreseeable future. Malaysia has also experienced significant import growth in agri-food and seafood products. Canada has been a major beneficiary of Malaysian import demand growth and will continue to be as Canada supplies a number of products that Malaysia demands. Finally, Malaysia represents a doorway to the international halal market for Canadian producers. With the most populous Islamic country in the world as a neighbour (Indonesia) and high standards in halal regulations, Malaysia is an excellent entry point for Canadians looking to expand their businesses into new and growing markets.

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ANNEX
There are discrepancies between the import data reported by the Malay government and what Canada reports as exports to Malaysia. These discrepancies can be explained by many factors, such as: 1. 2. The method of valuation: Canada‟s method is based on FOB (Freight On Board), which excludes the cost of freight and insurance, whereas Malaysia reports its imports based on CIF (Cost Insurance and Freight) and includes these fees. Trans-shipments: It is very likely that Canada is exporting to South East Asia through other ports such as Japan, Hong Kong and others before entering Malaysia.

RELATED AAFC REPORTS
A Strategic Review of Areas of Future Opportunity for Canadian Exporters in Malaysia‟s Livestock Genetics, Meat and Animal Feed Markets: An Executive Briefing http://www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia Characteristics of Malaysia‟s Animal Feed Market http://www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia Characteristics of the Markets for Bakery and Other Food Ingredients in Malaysia http://www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia Malaysia‟s Market for Imported Fish and Seafood http://www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia Global Pathfinder Report: Halal Food Trends (April 2011) The Malaysian Consumer: Behaviour, Attitudes and Perceptions Toward Food Products (July 2011)

KEY CONTACTS
Caroline Mourand Trade Commissioner, Kuala Lumpur, Malaysia 17th Fl., Menara Tan & Tan 207 Jalan Tun Razak, Kuala Lumpur, 50400, Malaysia Phone: (011-603) 2718-3333 Fax: (011-603) 2718-3391 Email: Caroline.Mourand@international.gc.ca Website: http://www.international.gc.ca/kualalumpu Martin Foubert Agriculture and Agri-Food Canada 1341 Baseline Road, Tower 5 Floor 3, Room 203 Ottawa, Ontario, Canada K1A 0C5 Phone: (613) 773-1618 Fax: (613) 773-1666 Email: martin.foubert@agr.gc.ca

Helen Prentice Trade Commissioner, Kuala Lumpur, Malaysia 17th Fl., Menara Tan & Tan 207 Jalan Tun Razak, Kuala Lumpur, 50400, Malaysia Phone: (011-603) 2718-3333 Fax: (011-603) 2718-3391 Email: Helen.Prentice@international.gc.ca Website: http://www.international.gc.ca/kualalumpur

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RESOURCES
Central Intelligence Agency [CIA]. (2010). CIA World Factbook: Malaysia. Retrieved December 8, 2010 from: [www.cia.gov/library/ publications/the-world-factbook/geos/my.html] Economist Intelligence Unit. (2011). “5 Year Forecast Table”. Retrieved on March 15, 2011 from: [http://viewswire.eiu.com/] Economist Intelligence Unit. (2011). “Malaysia Economy - The Prime Minister Announces More EPPs”. Retrieved on March 17, 2011 from: [http://viewswire.eiu.com/]. Euromonitor International. (2010). Trade Statistics. Retrieved on December 8, 2010. Euromonitor International. (July 2009). “Consumer Lifestyles in Malaysia.” Retrieved on December 8, 2010. Global Trade Information Services [GTIS]. (2010). “Global Trade Atlas.” Retrieved on January 27, 2011. Kwintessential. “Malaysia - Language, Culture, Customs and Etiquette.” Retrieved on February 25, 2010 from: [http:// www.kwintessential.co.uk/resources/global-etiquette/malaysia.html] Sabah State Government. (2011). “Introduction to Sabah.” Retrieved on March 17, 2011 from: [http://www.sabah.gov.my/ about.asp] Sarawak State Government. (2010). “The Demographics of Sarawak.” Retrieved on March 17, 2011 from: [http:// www.sarawak.gov.my/en/about-sarawak/demographics] Sarawak State Government. (2010). “The Economy of Sarawak.” Retrieved on March 17, 2011 from: [http://www.sarawak.gov.my/ en/about-sarawak/economy] Sarawak State Government. (2010). “The Geography of Sarawak.” Retrieved on March 17, 2011 from: [http:// www.sarawak.gov.my/en/about-sarawak/geography] Stanton, Emms & Sia. (2010). “Characteristics of Malaysia‟s Animal Feed Market.” Retrieved February 24, 2010 from: [http:// www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia] Stanton, Emms & Sia. (2010). “Characteristics of the Markets for Bakery and Other Food Ingredients in Malaysia.” Retrieved February 24, 2010 from: [http://www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia] Stanton, Emms & Sia. (2010). “Malaysia‟s Market for Imported Fish and Seafood.” Retrieved February 24, 2010 from: [http:// www.ats-sea.agr.gc.ca/info/ase-eng.htm#Malaysia] Stanton, Emms & Sia. (2010). “A Strategic Review of Areas of Future Opportunity for Canadian Exporters in Malaysia‟s Livestock Genetics, Meat and Animal Feed Markets: An Executive Briefing.” Retrieved February 24, 2010 from: [http://www.atssea.agr.gc.ca/info/ase-eng.htm#Malaysia] Statistics Canada. (2011). CATSNET Analytics Database. United States Department of Agriculture. (2009). “Malaysia-HRI Food Service Sector-Food Service Malaysia 2009.” Global Agriculture Information Network. Retrieved on December 2010 from: [http://gain.fas.usda.gov/Pages/Default.aspx]

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The Government of Canada has prepared this report based on primary and secondary sources of information. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada assumes no liability for any actions taken based on the information contained herein.

Foodservice Profile - Malaysia © Her Majesty the Queen in Right of Canada, 2011 ISSN 1920-6593 Market Analysis Report AAFC No. 11495E Photo Credits All Photographs reproduced in this publication are used by permission of the rights holders. All images, unless otherwise noted, are copyright Her Majesty the Queen in Right of Canada. For additional copies of this publication or to request an alternate format, please contact: Agriculture and Agri-Food Canada 1341 Baseline Road, Tower 5, 4th floor Ottawa, ON Canada K1A 0C5 E-mail: infoservice@agr.gc.ca Aussi disponible en français sous le titre : Profil des services alimentaires - Malaisie