TRADE IN TECHNOLOGY
7.3 TRADE IN SERVICES
7.3.1 Payments and Receipts
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TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYSource: Department of Statistics Malaysia
2003 2004
Industry
-8 -7 -6 -5 -4 -3 -2 -1 0 1
2 Electrical machinery and
apparatus
Motor vehicles, trailers and semi-trailers
Chemicals excluding pharmaceuticals
Railroad and transport equipment
Machinery equipmentand 0.6 0.7
-5.7 -7.2
-0.3 -0.5 0.0 -0.1
-0.7 -1.0 Figure 7.8: Medium-High Tech Manufacturing Trade Balance, 2003-2004
RMBillion
Industry
Source: Department of Statistics Malaysia
2003 2004
29.8
-6.2
139.1
37.9
-8.0
132.2
-20 0 20 40 60 80 100 120 140 160
Medium High Tech Others High Tech
Figure 7.9: Structure of Overall Trade Balance, 2003-2004
RMBillion
Industry
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TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYSource: Department of Statistics Malaysia
2003 2004
Industry
-8 -7 -6 -5 -4 -3 -2 -1 0 1
2 Electrical machinery and
apparatus
Motor vehicles, trailers and semi-trailers
Chemicals excluding pharmaceuticals
Railroad and transport equipment
Machinery equipmentand 0.6 0.7
-5.7 -7.2
-0.3 -0.5 0.0 -0.1
-0.7 -1.0 Figure 7.8: Medium-High Tech Manufacturing Trade Balance, 2003-2004
RMBillion
Industry
Source: Department of Statistics Malaysia
2003 2004
29.8
-6.2
139.1
37.9
-8.0
132.2
-20 0 20 40 60 80 100 120 140 160
Medium High Tech Others High Tech
Figure 7.9: Structure of Overall Trade Balance, 2003-2004
RMBillion
Industry
7.3 TRADE IN SERVICES
In the absence of data compiled along the OECD Technology Balance of Payments (TBP) manual, this section relies on transaction information on royalties, contract and professional charges, and construction and engineering fees across national borders supplied by Bank Negara Malaysia.
7.3.1 Payments and Receipts
Royalty payments abroad made by Malaysian residents in the period 1999-2004 fell in 2002 but rose sharply again in 2003-2004 (see Figure 7.10). Because receipts collected from abroad by residents in Malaysia only grew slightly over the same period, the balance of payments in the royalty account improved only in 2002 worsening in the subsequent years. An important point to note is that receipts from abroad remained extremely low demonstrating that little innovations in the country are occurring at the technology frontier.
Charges incurred and collected on contract and professional fees fared differently. Payments rose steadily over the period 1999-2004 except for 2002-2003 when it recorded a big jump (Figure 7.11). Receipts collected rose gradually over the same period except for 2001-2002 when it fell slightly. The overall balance fell in 2001-2003 before showing an improvement in 2004.
Construction and engineering payments fell in the period 1999-2002 (Figure 7.12). Although payments rose in 2003 it fell again in 2004. Indeed, the most significant improvement in the services account was recorded in construction and engineering fees. Following a slight worsening in 1999-2001, receipts have steadily risen since 2001 with the figures growing more rapidly towards 2004. With the exception of 2003 these developments translated in a rise in the construction and engineering balance over the period 1999-2004.
The overall trade in service account showed improvements in payments in the period 1999- 2002 before rising sharply in 2003 (Figure 7.13). Except for 2001, receipts rose over the period 1999-2004. Apart from a sharp fall in 2003 the overall trade in services balance improved in the rest of 1999-2004. The composition of construction and engineering in the overall payment account of trade in services fell sharply over the period 1999-2004 (Figure 7.14).Contract and professional charges in the payment account continued to rise in this period. Contract and professional fees accounted for the biggest share of receipts in the trade in services account though the composition of construction and engineering fees has risen steadily since 2001 in the face of a falling share in the former (Figure 7.15). Royalty receipts remained extremely small in the trade in services account throughout 1999-2004.
Deficits in the royalty account grew further in 2002-2004.
Although receipts grew during the period, the deficit widened because of faster growth in payments
The prime source of improvement in the
services account came from construction and engineering.
The receipts received from this account grew significantly faster than the payments in 2003-2004.
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TRADE IN TECHNOLOGY TRADE IN TECHNOLOGY-4000 -3000 -2000 -1000 0 1000 2000 3000 4000
1999 2000 2001 2002 2003 2004
Payments Receipts Balance 1660.6 1976.8
2379.4
1916.3
3037.3 3368.3
48.2 58.4 68.5 63.5 78.0 192.9
-1612.4
-1918.4
-2310.9
-1852.8
-2959.3
-3175.4
Source: Bank Negara Malaysia
Figure 7.10: Total Royalty Payments, Receipts and Balance, Malaysia
RMMillion
Year
Payments Receipts Balance Source: Bank Negara Malaysia
3005.6 3703.7 4127.9 3869.6 4092.2 4693.4
-6000 -4000 -2000 0 2000 4000 6000 8000 10000 12000
1999 2000 2001 2002 2003 2004
-1035.1 -727.8 -595.3
-1520.4
-5093.9 -4695.0
4040.7 4431.5 4723.2 5390.0
9186.1 9388.4
Figure 7.11: Total Contracts and Professional Fee Payments, Receipts and Balance, Malaysia
RMMillion
Year
Payments Receipts Balance
Source: Bank Negara Malaysia -6000
-4000 -2000 0 2000 4000 6000 8000
1999 2000 2001 2002 2003 2004
6838.9
5893.7
4013.0
3378.9
5225.4
4713.0
2395.2
2027.3 1912.2 2109.2 2405.0
3263.8
-4443.7
-3866.4
-2100.8
-1269.7
-2820.4
-1449.2
Figure 7.12: Construction and Engineering Payments , Receipts and Balance, Malaysia
RMMillion
Year
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TRADE IN TECHNOLOGY TRADE IN TECHNOLOGY-4000 -3000 -2000 -1000 0 1000 2000 3000 4000
1999 2000 2001 2002 2003 2004
Payments Receipts Balance 1660.6 1976.8
2379.4
1916.3
3037.3 3368.3
48.2 58.4 68.5 63.5 78.0 192.9
-1612.4
-1918.4
-2310.9
-1852.8
-2959.3
-3175.4
Source: Bank Negara Malaysia
Figure 7.10: Total Royalty Payments, Receipts and Balance, Malaysia
RMMillion
Year
Payments Receipts Balance Source: Bank Negara Malaysia
3005.6 3703.7 4127.9 3869.6 4092.2 4693.4
-6000 -4000 -2000 0 2000 4000 6000 8000 10000 12000
1999 2000 2001 2002 2003 2004
-1035.1 -727.8 -595.3
-1520.4
-5093.9 -4695.0
4040.7 4431.5 4723.2 5390.0
9186.1 9388.4
Figure 7.11: Total Contracts and Professional Fee Payments, Receipts and Balance, Malaysia
RMMillion
Year
Payments Receipts Balance
Source: Bank Negara Malaysia -6000
-4000 -2000 0 2000 4000 6000 8000
1999 2000 2001 2002 2003 2004
6838.9
5893.7
4013.0
3378.9
5225.4
4713.0
2395.2
2027.3 1912.2 2109.2 2405.0
3263.8
-4443.7
-3866.4
-2100.8
-1269.7
-2820.4
-1449.2
Figure 7.12: Construction and Engineering Payments , Receipts and Balance, Malaysia
RMMillion
Year
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TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYPayments
RMMillion
Receipts Balance 10000
15000 20000
1999 2000 2001 2002 2003 2004
Year 12540.2 12302.0
11115.6 10685.2
17448.8 17469.7
5449.0 5789.4 6108.6 6042.3 6575.2
8150.1
-7091.2 -6512.6
-5007.0 -4642.9
-10873.6 -9319.6 -5000
0
-10000 -15000
Figure 7.13: Total Payments, Receipts and Balance in Trade in Services, Malaysia
Source: Bank Negara Malaysia
0 10 20 30 40 50 60
1999 2000 2001 2002 2003 2004
Percent(%)
Royalties Contract & Professional Fee Construction & Engineering Fee 32.2
36.0
42.5
50.4 52.6 53.7
54.5
47.9
36.1
31.6 29.9
27.0
13.2
16.1
21.4 17.9 17.4 19.3
Year Figure 7.14: Composition of Payments in Services Trade, Malaysia
Source: Bank Negara Malaysia
Royalties Contract & Professional Fee Construction & Engineering Fee
Source: Bank Negara Malaysia 0
10 20 30 40 50 60 70 80
1999 2000 2001 2002 2003 2004
55.2
64.0 67.6
64.0 62.2
57.6
44.0
35.0
31.3
34.9 36.6
40.0
0.9 1.0 1.1 1.1 1.2 2.4
Figure 7.15: Composition of Receipts in Services Trade, Malaysia
Percent(%)
Year