TRADE IN TECHNOLOGY
7.2 TRADE IN MANUFACTURED GOODS
Increased participation in high tech export manufactures is considered an indicator of the state of science and technology of manufacturing firms in a country though it is often in the labour-intensive segments of these industries such as assembly and test that firms in Malaysia operate. The following OECD classifications on technological intensities are drawn:
High Technology manufactures:
• Aircraft and spacecraft
• Pharmaceuticals
• Office, accounting and computing machinery
• Radio, television and communications equipment
• Medical, precision and optical instruments
Medium-High Technology manufactures:
• Electrical machinery and apparatus
• Motor vehicles, trailers and semi-trailers
• Chemicals (excluding pharmaceuticals)
• Machinery and equipment
• Railroad and transport equipment 7.2.1 Manufactured Exports
Malaysia has traditionally dominated in low value added segments of high tech manufactured exports such as office, accounting and computing machinery, radio television and telecommunication equipment, and medical, precision and optical instruments. The period 2003-2004 saw some improvements in aircraft and spacecraft exports. This section examines the growth trends in high tech and medium-high tech manufactured exports, and their shares in overall exports.
In 2003-2004 radio, television and telecommunications equipment contributed most to high tech manufactured exports followed by office, accounting and computing machinery and medical, precision and optical instruments (Figure 7.1). All high tech sub-sectors experienced nominal growth over the period 2003-2004 except for pharmaceuticals which remained the same.
Motor vehicles, trailers and semi-trailers contributed most to medium-high tech manufacturing exports followed by electrical machinery and apparatus, chemicals, railroad and transport
equipment, and machinery and equipment in 2003-2004 (Figure 7.2). All the sub-sectors enjoyed nominal growth in the period 2003-2004.
The manufactured export structure of Malaysia is still dominated by high tech goods rising marginally in share from 55.9 to 56.1 percent in 2003-2004 (Figure 7.3). The contribution of medium-high tech manufactured goods was extremely small rising slightly from 1.4 to 1.6 percent in the same period.
Slight increase in share of high-tech and medium-high tech goods in Malaysia’s manufactured exports struc- ture in 2003-2004.
0.8 0.1
32.0
121.3
1.0 0.1 6.5
46.0
135.4
8.2 0
20 40 60 80 100 120 140 160
Aircraft and
Spacecraft Pharmaceuticals Office, accounting and computing
machinery
Radio, television telecommunicationsand
equipment
Medical, precision and optical instruments
2003 2004
Figure 7.1: High Tech Manufactured Exports, 2003-2004
Source: Department of Statistics Malaysia
RMBillion
Industry
100
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report101
100
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report101
Chapter 7
Chapter 7
TRADE IN TECHNOLOGY TRADE IN TECHNOLOGY7.1 INTRODUCTION
The previous chapter largely presented a rosy account about the state of innovation in the manufacturing sector, though the share of firms reporting a decrease in innovation expenditure rose strongly between 2002 and 2004. Given that firms learn and innovate throughout the technology trajectory the trade balance in especially royalties will show Malaysian firms’
closeness to the global technology frontier. Economies dominated by firms innovating at the technology frontier will show strong positive balances in royalty balance of payments. This chapter presents the state of technology trade of Malaysia focusing on merchandise trade, and on services. The issues addressed are the following:
• Composition and trends in merchandise trade by the OECD-defined technological categories of high tech, medium-high tech and others.
• Composition and trends in royalty payments, receipts and balance.
• Composition and trends in contracts and professional fee payments, receipts and balance.
• Composition and trends in construction and engineering fee payments, receipts and balance.
To retain comparative significance to the statistics used in the past this chapter uses the classifications defined in the previous reports.
7.2 TRADE IN MANUFACTURED GOODS
Increased participation in high tech export manufactures is considered an indicator of the state of science and technology of manufacturing firms in a country though it is often in the labour-intensive segments of these industries such as assembly and test that firms in Malaysia operate. The following OECD classifications on technological intensities are drawn:
High Technology manufactures:
• Aircraft and spacecraft
• Pharmaceuticals
• Office, accounting and computing machinery
• Radio, television and communications equipment
• Medical, precision and optical instruments
Medium-High Technology manufactures:
• Electrical machinery and apparatus
• Motor vehicles, trailers and semi-trailers
• Chemicals (excluding pharmaceuticals)
• Machinery and equipment
• Railroad and transport equipment 7.2.1 Manufactured Exports
Malaysia has traditionally dominated in low value added segments of high tech manufactured exports such as office, accounting and computing machinery, radio television and telecommunication equipment, and medical, precision and optical instruments. The period 2003-2004 saw some improvements in aircraft and spacecraft exports. This section examines the growth trends in high tech and medium-high tech manufactured exports, and their shares in overall exports.
In 2003-2004 radio, television and telecommunications equipment contributed most to high tech manufactured exports followed by office, accounting and computing machinery and medical, precision and optical instruments (Figure 7.1). All high tech sub-sectors experienced nominal growth over the period 2003-2004 except for pharmaceuticals which remained the same.
Motor vehicles, trailers and semi-trailers contributed most to medium-high tech manufacturing exports followed by electrical machinery and apparatus, chemicals, railroad and transport
equipment, and machinery and equipment in 2003-2004 (Figure 7.2). All the sub-sectors enjoyed nominal growth in the period 2003-2004.
The manufactured export structure of Malaysia is still dominated by high tech goods rising marginally in share from 55.9 to 56.1 percent in 2003-2004 (Figure 7.3). The contribution of medium-high tech manufactured goods was extremely small rising slightly from 1.4 to 1.6 percent in the same period.
Slight increase in share of high-tech and medium-high tech goods in Malaysia’s manufactured exports struc- ture in 2003-2004.
0.8 0.1
32.0
121.3
1.0 0.1 6.5
46.0
135.4
8.2 0
20 40 60 80 100 120 140 160
Aircraft and
Spacecraft Pharmaceuticals Office, accounting and computing
machinery
Radio, television telecommunicationsand
equipment
Medical, precision and optical instruments
2003 2004
Figure 7.1: High Tech Manufactured Exports, 2003-2004
Source: Department of Statistics Malaysia
RMBillion
Industry
102
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report103
102
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report103
Chapter 7
Chapter 7
TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYSource: Department of Statistics Malaysia 0.9
1.2
0.6 0.5
1.3
1.9
0.8 0.8
0.5
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0
Electrical machinery and
apparatus
Motor vehicles, trailers and semi-
trailers
Chemicals excluding pharmaceuticals
Railroad and transport equipment
Machinery and equipment 0.8
2003 2004
Figure 7.2: Medium -High Tech Manufactured Exports, 2003-2004
RMBillion
Industry
Source: Department of Statistics Malaysia
55.9 1.4
42.7
56.1 42.4
2004
2003
1.6
Medium-High Tech Other Manufacture
High Tech Figure 7.3: Structure of Manufactured Exports, 2003-2004
7.2.2 Manufactured Imports
This section presents data on high and medium-high tech manufactured imports. Like exports, imports of high and medium-high tech imports rose in the period 2003-2004.
Imports of high tech manufactured goods was dominated by radio, television and telecommunications equipment followed by medical, precision and optimal instruments, office, accounting an computing machinery, aircraft and spacecraft and pharmaceuticals(Figure 7.4). All high tech manufactured imports enjoyed nominal growth in 2003-2004.
Motor vehicles, trailers and semi-trailers was the prime medium-high tech manufacturing import in 2003-2004 followed by machinery and equipment, chemicals (excluding pharmaceuticals), railroad and transport equipment and electrical machinery and apparatus. (Figure 7.5). All medium-high tech manufactured imports also experienced nominal growth in 2003-2004.
High tech goods accounted for over half of manufactured imports with the share falling from 53.7 to 51.0 percent in 2003-2004 (Figure 7.6). The share of medium-high tech imports rose from 4.2 to 4.4 percent over the same period.
Share of high-tech goods in manufactured imports declined, while that of medium-high tech goods rose slightly in 2003-2004.
Source: Department of Statistics Malaysia
2.2 0.3 5.0
117.4
4.7 0.4 8.4 6.1
130.4
9.0 0
20 40 60 80 100 120 140
Aircraft and
Spacecraft Pharmaceuticals Office, accounting and
computing machinery
Radio, television telecommunicationsand
equipment
Medical, precision and
optical instruments
2003 2004
Figure 7.4: High Tech Manufactured Imports, 2003-2004
RMBillion
Industry
102
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report103
102
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report103
Chapter 7
Chapter 7
TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYSource: Department of Statistics Malaysia 0.9
1.2
0.6 0.5
1.3
1.9
0.8 0.8
0.5
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0
Electrical machinery and
apparatus
Motor vehicles, trailers and semi-
trailers
Chemicals excluding pharmaceuticals
Railroad and transport equipment
Machinery and equipment 0.8
2003 2004
Figure 7.2: Medium -High Tech Manufactured Exports, 2003-2004
RMBillion
Industry
Source: Department of Statistics Malaysia
55.9 1.4
42.7
56.1 42.4
2004
2003
1.6
Medium-High Tech Other Manufacture
High Tech Figure 7.3: Structure of Manufactured Exports, 2003-2004
7.2.2 Manufactured Imports
This section presents data on high and medium-high tech manufactured imports. Like exports, imports of high and medium-high tech imports rose in the period 2003-2004.
Imports of high tech manufactured goods was dominated by radio, television and telecommunications equipment followed by medical, precision and optimal instruments, office, accounting an computing machinery, aircraft and spacecraft and pharmaceuticals(Figure 7.4). All high tech manufactured imports enjoyed nominal growth in 2003-2004.
Motor vehicles, trailers and semi-trailers was the prime medium-high tech manufacturing import in 2003-2004 followed by machinery and equipment, chemicals (excluding pharmaceuticals), railroad and transport equipment and electrical machinery and apparatus. (Figure 7.5). All medium-high tech manufactured imports also experienced nominal growth in 2003-2004.
High tech goods accounted for over half of manufactured imports with the share falling from 53.7 to 51.0 percent in 2003-2004 (Figure 7.6). The share of medium-high tech imports rose from 4.2 to 4.4 percent over the same period.
Share of high-tech goods in manufactured imports declined, while that of medium-high tech goods rose slightly in 2003-2004.
Source: Department of Statistics Malaysia
2.2 0.3 5.0
117.4
4.7 0.4 8.4 6.1
130.4
9.0 0
20 40 60 80 100 120 140
Aircraft and
Spacecraft Pharmaceuticals Office, accounting and
computing machinery
Radio, television telecommunicationsand
equipment
Medical, precision and
optical instruments
2003 2004
Figure 7.4: High Tech Manufactured Imports, 2003-2004
RMBillion
Industry
104
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report105
104
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report105
Chapter 7
Chapter 7
TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYSource: Department of Statistics Malaysia
2003 2004
7.0
1.1
0.6
1.2 0.6
9.0
1.3 0.9
1.5
0 1 2 3 4 5 6 7 8 9 10
Electrical machinery and
apparatus
Motor vehicles, trailers and semi-
trailers
Chemicals excluding pharmaceuticals
Railroad and transport equipment
Machinery and equipment 0.4
Industry
Figure 7.5: Medium -High Tech Manufactured Imports, 2003-2004
RMBillion
Industry
Source: Department of Statistics Malaysia
Medium-High Tech Other Manufacture
High Tech 53.7
4.2 42.1
51.0
4.4 44.5
2004
2003
Figure 7.6: Structure of Manufactured Imports, 2003-2004
7.2.3 Manufacturing Trade Balance
Whilst the trade balance (derived by deducting imports from exports) of the key high tech exports was positive that of the key medium-high tech industries was negative in the period 2003-2004. Unlike large economies with strong domestic demand, manufactured trade in Malaysia has been characterized by few domestic linkages.
Office, accounting and computing machinery enjoyed the highest positive trade balance among the high tech manufacturing industries with the nominal surplus growing significantly from 2003 to 2004 (Figure 7.7). Radio, television and telecommunications equipment recorded the second highest trade balance with the nominal surplus also growing strongly in 2003- 2004. However, the trade balance of aircraft and spacecraft and pharmaceuticals was not only negative but the nominal balance got worse in 2003-2004. Medical, precision and optical instruments recorded a negative trade balance in 2004 from a positive balance in 2003.
Electrical machinery and apparatus recorded the only positive trade balance among the medium-high tech manufactured goods in 2003-2004 (Figure 7.8). The nominal surplus of this industry also rose in 2003-2004. However, the trade balance of all other medium-high tech manufacturing industries was negative with the nominal values worsening in 2003-2004.
A key feature to note here is that Malaysia is still strongly dependent on automobile imports as the trade deficit involving the motor vehicles, trailers and semi-trailer industry was high and worsened nominally from -RM5.7 billion in 2003 to -RM7.5 billion in 2004.
Positive trade balance achieved by high tech goods while medium-high tech goods recorded negative and worsening balance during 2003-2004
Source: Department of Statistics Malaysia
-1.4 -0.2
27.1
3.9
0.4 -3.7
-0.2
37.6
5.1
-0.8 -10
-5 0 5 10 15 20 25 30 35 40
Aircraft and
Spacecraft Pharmaceuticals Office, accounting and computing
machinery
Radio, television telecommunicationsand
equipment
Medical, precision and optical instruments
2003 2004
Figure 7.7: High Tech Manufacturing Trade Balance, 2003-2004
RMBillion
Industry
104
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report105
104
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report105
Chapter 7
Chapter 7
TRADE IN TECHNOLOGY TRADE IN TECHNOLOGYSource: Department of Statistics Malaysia
2003 2004
7.0
1.1
0.6
1.2 0.6
9.0
1.3 0.9
1.5
0 1 2 3 4 5 6 7 8 9 10
Electrical machinery and
apparatus
Motor vehicles, trailers and semi-
trailers
Chemicals excluding pharmaceuticals
Railroad and transport equipment
Machinery and equipment 0.4
Industry
Figure 7.5: Medium -High Tech Manufactured Imports, 2003-2004
RMBillion
Industry
Source: Department of Statistics Malaysia
Medium-High Tech Other Manufacture
High Tech 53.7
4.2 42.1
51.0
4.4 44.5
2004
2003
Figure 7.6: Structure of Manufactured Imports, 2003-2004
7.2.3 Manufacturing Trade Balance
Whilst the trade balance (derived by deducting imports from exports) of the key high tech exports was positive that of the key medium-high tech industries was negative in the period 2003-2004. Unlike large economies with strong domestic demand, manufactured trade in Malaysia has been characterized by few domestic linkages.
Office, accounting and computing machinery enjoyed the highest positive trade balance among the high tech manufacturing industries with the nominal surplus growing significantly from 2003 to 2004 (Figure 7.7). Radio, television and telecommunications equipment recorded the second highest trade balance with the nominal surplus also growing strongly in 2003- 2004. However, the trade balance of aircraft and spacecraft and pharmaceuticals was not only negative but the nominal balance got worse in 2003-2004. Medical, precision and optical instruments recorded a negative trade balance in 2004 from a positive balance in 2003.
Electrical machinery and apparatus recorded the only positive trade balance among the medium-high tech manufactured goods in 2003-2004 (Figure 7.8). The nominal surplus of this industry also rose in 2003-2004. However, the trade balance of all other medium-high tech manufacturing industries was negative with the nominal values worsening in 2003-2004.
A key feature to note here is that Malaysia is still strongly dependent on automobile imports as the trade deficit involving the motor vehicles, trailers and semi-trailer industry was high and worsened nominally from -RM5.7 billion in 2003 to -RM7.5 billion in 2004.
Positive trade balance achieved by high tech goods while medium-high tech goods recorded negative and worsening balance during 2003-2004
Source: Department of Statistics Malaysia
-1.4 -0.2
27.1
3.9
0.4 -3.7
-0.2
37.6
5.1
-0.8 -10
-5 0 5 10 15 20 25 30 35 40
Aircraft and
Spacecraft Pharmaceuticals Office, accounting and computing
machinery
Radio, television telecommunicationsand
equipment
Medical, precision and optical instruments
2003 2004
Figure 7.7: High Tech Manufacturing Trade Balance, 2003-2004
RMBillion
Industry
106
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report107
106
Malaysian Science and Technology Indicators 2006 Report Malaysian Science and Technology Indicators 2006 Report107
Chapter 7
Chapter 7
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