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The Malaysian plastics industry is highly diversified, which translates into a demand for imports of plastic resins. This report outlines the growth of the industry, describes the current position of plastic resins imports from the U.S., and the competition U.S. imports face. A U.S. exporter will also gain some basic information about how to operate within the Malaysian plastics market.



The plastic resins and plastics manufacturing industry is one of the most dynamic and vibrant growth sectors within the Malaysian manufacturing sector. The Malaysian plastics industry has developed into a highly diversified sector producing an array of products including automotive components, electrical and electronics parts, components for the telecommunications industry, construction materials, housewares, packaging materials and toys. Exports of plastics products were valued at U.S. $1.83 billion in 2001 and the key markets are Singapore, Japan, Hong Kong, China, Thailand, the UK, the U.S. and Indonesia.
Prior to the development of the petrochemical industry in Malaysia, the majority of plastics resins were imported to meet the increasing market demand. However during the 1990s, the government of Malaysia began to develop the petrochemical industry in Malaysia using the large availability of natural gas resources found in the country. Through various attractive investment policies, incentives and infrastructure, Malaysia managed to draw investments from multinational corporations in Japan, the U.S., and Germany to build large resins production facilities in Malaysia.
Malaysia remains a net importer of plastic resins, despite the large production capacity of local producers. In 2002, the total market demand of plastic resins was estimated at 1.25 million metric tons (of which 60% consumed were polyethylene and polypropylene). Total local production was at around 1.4 million metric tons in 2002, of which more than 50% was exported. Thus, Malaysia imports approximately 513,000 metric tons, accounting for 43% of the total market demand. In 2002, the main import countries were Singapore, Japan, the U.S. and Thailand with market shares of 24%, 23%, 9% and 8% respectively. The main resins produced locally are commodity resins. Therefore, approximately 55% of plastic resins imports are engineering resins.
Imports of resins from the U.S. remained at 9% in 2001 and 2002. U.S. resins continue to face more severe competition from Singapore, Japan and other Asian countries such as Thailand and Korea. In recent years, Malaysia's import of plastic resins from Asian and ASEAN countries have increased dramatically due to highly competitive prices offered by these countries, in addition to the privilege of low tariff rates enjoyed when trading within the ASEAN region under the ASEAN Free Trade Area (AFTA) agreement. Nevertheless, engineering resins remain the best prospect sector for U.S. suppliers because they have gained a good reputation for product quality and advanced technology. 


In this report, plastic resins are broadly categorized as commodity resins and engineering resins. The commodity resins category includes polyethylene (PE), polypropylene (PP), polystyrene (PS), polyvinyl chloride (PVC), and acrylonitrile butadiene styrene (ABS). Other plastic resins are classified as engineering resins that demonstrate higher material strength.
The establishment of two PVC resins plants in the 1970s, with a total production capacity of 22,000 metric tons per year, marked Malaysia's first involvement with producing resins locally. Subsequently, two PS plants began operating in 1974 and 1984, each having a capacity of 6,000 metric tons per year. These initial small-scale projects contributed significantly to the development of downstream plastics processing activities, especially in providing a steady supply of feedstock materials to the local plastics processors, which helped ease the impact of uncertain international supplies.
As the result of a dramatic growth in the plastics manufacturing industry during the 1980s, the Malaysian government took a big step towards developing its plastic resins sector in the 1990s by implementing positive and flexible policies to draw foreign investments to the petrochemical industry. This industry has developed tremendously due to various. advantages including the availability of feedstock, good infrastructure and supporting industries, cost competitiveness, and a strategic location within ASEAN. The government's efforts yielded notable results which are evident in the host of plastic resins projects that were implemented in Malaysia during the period of 1990-2000. Today, the abundant local availability of plastic resins further supports the tremendous. growth of the plastics fabrication sector. Foreign multinational petrochemical giants which have established joint ventures in Malaysia include: BASF, BP, Eastman Chemical, GE Plastics, Idemitsu Petrochemical, Mitsui, DSM and Dow.
Prior to the 1990s, Malaysia imported most of the plastic resins that were not available locally in order to meet market demand. However, the import of plastic resins has reduced markedly ever since the development of the petrochemical industry in Malaysia. Despite this decrease, Malaysia remains a net importer of plastic resins. In 2002, Malaysia imported approximately 513,000 metric tons, accounting for 43% of the total market demand. In 2002, the main import countries were Singapore, Japan, the U.S. and Thailand, with market shares of 24%, 23%, 9% and 8% respectively. Approximately 55% of plastic resins imports are engineering resins.


Since plastic resins are the "raw materials" used to make plastics products, the total production of plastics products is a good barometer to monitor the trend of resins consumption in Malaysia.
The Malaysian plastics industry growth rate increased moderately from 0.5% in 2001 to 5% in 2002 and it contributed to 2.5% of Malaysia's GDP. The moderate increase was largely due to a strong performance by domestic-oriented sectors such as the automotive and construction sectors. Exports of plastic products manufactured in Malaysia continue to register a growth of 6%.
Malaysia exports of plastics products enjoyed a strong growth of more than 20% in the past five years before slowing down in 2001. Total export of plastics products in 2002 reached U.S. $1 billion, an increase of 6% compared to 2001. The only product that enjoyed steady export growth over the last five years is plastics bags. The main exported plastics items are extruded plates, sheets and films (29.8%), followed by other plastics articles (26.5%) and bags (23.3%).
The Malaysian export sector is expected to face greater challenges with the realization of the AFTA agreement and the accession of China into the World Trade Organization (WTO). Nevertheless, AFTA will also bring business opportunities with the enlarged ASEAN market. With the abolishment or reduction of import duties, more multinational companies (MNCs) will be able to implement regional sourcing policies, which would enable Malaysian producers to supply to the MNCs in the neighboring ASEAN countries. In addition, the recently announced 10+3 cooperation between China, Japan, Korea and the ASEAN countries, is likely to create more opportunities for the Malaysian exporters. However, Malaysian exporters would have to enhance their capabilities to produce high quality products at competitive prices in order to compete successfully in these markets.
According to the Malaysian Plastics Manufacturers Association (MPMA), total resins consumption amounted to 1.2 million metric tons in 2001, of which 60% were polyolefins (PE &PP). In 2002, total resins consumption was estimated to be at 1.25 million metric tons. A breakdown of resins consumption in 2002: PE (46%), PP (19%), PS (15%), PVC (9%), ABS (7%), and others (4%).
Imported resins totaled 570,000 metric tons (about 10% were re-exported), indicating that the use of imported resins is still high. Local production of resins increased to 1.4 million metric tons, and more than 50% were exported.
The biggest segment of the plastics industry is the packaging sector, which represents 35% of total production. Components manufactured for the electrical and electronics sector followed next with 28% of total production followed by housewares (12%), automotive (9%), construction (8%), and agriculture (3%).
Malaysia consumed 20% of the 6.36 million tons of plastic resins used by the ASEAN countries in 2002. It is the third largest consumer of plastic resins after Thailand and Indonesia.


Total Imports, Exports and Local Production of Plastic Resins

(U.S. Dollars Millions)


2001 (actual)

2002 (actual)

2003 (estimated)

Total Market Size




Total Local Production




Total Exports




Total Imports




Imports from the U.S.




Exchange rate




Source: Malaysia Department of Statistics, Malaysia Plastics Manufacturers Association
(Estimated: projected growth for total market size, total local production, total exports, total imports, imports from the U.S. are 10%, 18%, 10%, 3% respectively)
The above statistics include the following Harmonized System (HS) codes:
HS Code Description
3901      Polymers of ethylene (PE)
3902      Polymers of propylene (PP)
3903      Polymers of styrene (PS)
3904      Polymers of vinyl chloride (PVC)
3905      Polymers of vinyl acetate (PVAC)
3906      Acrylic polymers
3907      Polyacetals (POM)
3908      Polyamides (PA)
3909      Amino resins, phenolic resins and polyurethanes
3910      Silicones
3911      Petroleum resins
2002 Import Market Share (Percent for U.S. and Major Competitors): Singapore (24%), Japan (23%), U.S. (9%), and Thailand (8%).
The total import of plastics resins into Malaysia in 2002 was around U.S. $1,311 million (source: Malaysia Statistic Dept.), an increase of 10% over 2001. The U.S. maintained a 9% share of imports in 2002, giving it the third largest market share. The main competitor is Singapore and Japan with market shares of 24% and 23% in 2002 respectively.
Besides Singapore and Japan, Malaysia imports resins from Thailand, Taiwan, Korea and Germany.


Domestic Production
Below are brief descriptions of plastic resins producers in Malaysia:

BASF (M) Sdn Bhd

BASF (Malaysia) Sdn Bhd was incorporated in 1989 as a wholly owned subsidiary of BASF of Germany. It began trading operations in 1990, and the company set up its first manufacturing plant in 1992. The plant, located at Pasir Gudang, Johor, produced expandable polystyrene (EPS) better known as Styropor ®. It has a production capacity of approximately 75,000 metric tons annually.

Eastman Chemicals (M) Sdn Bhd

Eastman Chemicals is a copolyester plastics plant located in Gebeng. It produces approximately 30,000 metric tons per year. Copolyester plastics are U.S.ed in electronic and medical equipment, appliance parts and heavy-gauge sheet.
Industrial Resins (M) Bhd

Mitsui, Tosoh Corp and Land & General set up a joint-venture company called Industrial Resin (M) Sdn Bhd. Industrial Resin originally produced 28,000 metric tons per year of polyvinyl chloride (PVC) in Johor. This plant has subsequently expanded to a production capacity of 150,000 metric tons per year.
Malayan Electro-Chemical Industry Co. Sdn Bhd (MECI)

MECI was established in 1973. It is a Malaysian-Japanese joint-venture company that produces 50,000 metric tons per year PVC resin and 14,400 metric tons per year of PVC compound.
Petlin Malaysia Sdn Bhd

Petlin, a joint venture of Petronas Malaysia, Polyfin of South Africa, and DSM of the Netherlands, has a plant in Kerteh with a production capacity of 255,000 metric tons per year of low-density polyethylene (LDPE). It is the largest single-train LDPE plant in the world.
Petrochemicals (M) Sdn Bhd

Petrochemicals (M) Sdn Bhd is the first polystyrene (PS) producer in ASEAN. Established in 1972 as a subsidiary of Idemitsu Petrochemical Co. Ltd of Japan, it produces 140,000 metric tons per year of polystyrene (PS).

Polyethylene Malaysia Sdn Bhd

Petronas, together with BP Chemicals and Idemitsu Petrochemical Co., established Polyethylene Malaysia Sdn Bhd in 1995, with a capacity to produce 200,000 metric tons per year of polyethylene (PE).
Polypropylene (M) Sdn Bhd

Polypropylene (M) Sdn Bhd is a wholly owned subsidiary of Petronas. It has a capacity to produce 80,000 metric tons per year of polypropylene (PP).

Titan PP Polymers (M) Sdn Bhd

The Titan Group is a joint venture between the Chao family of Taiwan and PNB Equity Resource Corp Sdn Bhd (PERC), a wholly-owned subsidiary of Permodalan Nasional Bhd. Titan PP Polymers (M) Sdn Bhd was incorporated in 1986 to produce homopolymer and copolymer polypropylene resins. Tital PP Polymers owns and operates two PP plants, which have a combined production capacity of 370,000 metric tons per year.

Titan Polyethylene (M) Sdn Bhd

Titan Polyethylene (Malaysia) Sdn Bhd was incorporated in 1988. Titan Polyethylene Malaysia is primarily involved in the production of all three types of PE resins (LDPE, LLDPE, HDPE and mLLDPE). It has a production capacity of 530,000 metric tons per year.

Toray Plastics (M) Sdn Bhd

Toray Plastics (M) Sdn Bhd is the only Japanese acrylonitrile butadiene styrene (ABS) manufacturer that has an ABS polymerization plant operating outside Japan. Toray Plastics (Malaysia) Sdn. Bhd. offers to the worldwide market the same product quality as its parent plant in Japan. It has a capacity of 170,000 metric tons per year of ABS production.

Vinyl Chloride Malaysia

Vinyl Chloride Malaysia, a 60:40 joint venture between Petronas Malaysia and Mitsui of Japan, has commenced production at its 150,000 metric tons per year PVC plant in Kerteh. This plant cost about U.S. $26 million and aims to make Vinyl Chloride Malaysia a major supplier of vinyl chloride monomer and PVC in Southeast Asia. 70-80% of PVC produced will be sold to the domestic market.
Summary list of plastic resins producers in Malaysia:
Company Polymers

Capacity (metric tonne/yr)

BASF (M) Sdn Bhd


Eastman Chemicals (M) Sdn Bhd


Industrial Resins (M) Bhd


Malayan Electro-Chemical Industry Co. Sdn Bhd


Petlin (M) Sdn Bhd


Petrochemicals (M) Sdn Bhd


Polyethylene (M) Sdn Bhd


Polypropylene (M) Sdn Bhd


Titan PP Polymers (M) Sdn Bhd


Titan Polyethylene (M) Sdn Bhd


Toray Plastics (M) Sdn Bhd


Vinyl Chloride (M) Sdn Bhd


3rd Country Imports

In 2002, 24% of imported resins came from Singapore and 23% came from Japan. According to industry sources, virtually half the imports from Singapore are resins made in Japan with the remainder produced by Singapore resin manufacturers. Traditionally, Japan exports large quantities of resins to Singapore, which act as a base for distribution to trading companies in the region. Singapore is the largest supplier of polyethylene (34%), polystyrene (26%), and polyacetals (28%).
Meanwhile, Japan's success in maintaining its significant market share is largely due to strong support from the Japanese manufacturing facilities that are operating in Malaysia. Japanese electronics and electrical companies (such as Matsushita, Mitsubishi, and Sony) sourced a majority of their resins from Japanese producers. Furthermore, the Japanese government and private sectors worked together closely to promote technology transfer to Malaysia. For the Japanese, this is a key factor in gaining good reputations and an effective way of building closer trade ties. For example, the Japan Overseas Development Corporation (JODC) and the Malaysian Plastics Manufacturers Association (MPMA) recently organized a joint technical seminar to share Japanese expertise in plastics manufacturing. These types of technical exchanges are highly valued by the local industries. As an added benefit, the Japanese use these opportunities to market their products.
U.S. Market Position

Imports of plastic resins from the U.S. ranked at number three, following Singapore and Japan. Malaysia imported plastic resins worth U.S. $119 million from the U.S. in 2002, showing a slight increase of 3% compared to 2001. Main resins imported from the U.S. were: polyacetals (HS 3907) (U.S. $51.3 million), polyethylene (HS 3901) (U.S. $16 million), amino resins, phenolic resins and polyurethanes (HS 3909) (U.S. $12.5 million), acrylic polymers (HS 3906) (U.S. $8.3 million), and silicones (HS 3910) (U.S. $8 million).
The U.S. market share of 9% remains low compared to Singapore (24%) and Japan (23%). This is a result of the competitive prices offered by countries in this region, which have enjoyed the benefit of lower import tariffs (implemented under the AFTA agreement). Large U.S. plastic resins manufacturers have begun setting up joint venture manufacturing facilities in Malaysia as a way of countering the effects of the low import market share.
Despite the high domestic production of plastic resins (the majority of which are commodity plastic resins), Malaysia is still required to import engineering plastic resins to meet its domestic needs. Approximately 55% of total imports of plastic resins are engineering resins. Therefore the engineering resins sector is a niche market in which the U.S. has a strong position within Malaysia. Engineering resins are mainly used to produce high-end products such as automotive parts, electrical and electronics parts, and telecommunications components.


End users of plastic resins in Malaysia are the downstream plastics manufacturers. A majority of Malaysian plastics manufacturers are small to medium scale family-owned enterprises. According to the Malaysian Plastics Manufacturers Association (MPMA), there are about 1300 plastics manufacturers, which registered a total turnover of U.S. $2.3 billion in 2002.
In general, the Malaysian downstream plastics industry can be classified according to the market segments of their products. There are basically seven sectors: packaging, electrical & electronics, housewares, automotive, construction, agriculture, and others. Summarized below are the four largest sectors.
1) Packaging sector - The packaging sector remains the largest market for the plastics industry. The total production of films, bags, rigid containers, and bottles (valued at U.S. $1 billion), contributed to 35% of the total production of plastics products. In 2001, the total export of plastic bags and films increased by about 11% (from U.S. $204 million to U.S. $228 million). However for the first half of 2002, the total export of plastics bags and films declined by 4% (from U.S. $211 million to U.S. $203 million). The main reason for the poor performance in the export market is due to strong competition from China and other lower cost countries. Domestic demand for bags, films, and rigid packaging materials remained unchanged due to the weaker economy. It is anticipated that the domestic demand for film and bags will increase marginally by about 3% with improved consumer spending as the Malaysian economy recovers.
2) Electrical and electronics sector - The electrical and electronics sector is the second largest market, which comprises approximately 28% of total plastics production. A sharp decline in this sector was the result of a marked reduction in the production of television sets. Total production of television sets declined by 9%, from 10.6 million units in 2000 to 9.6 million units in 2001, causing a decline in the demand for plastics parts and components. Relocations of several multinational companies to other lower cost countries and weaker overseas demand were the two main reasons for the decline in television set production. However production of television sets increased by 10.4%, to 10.5 million units by 2002. In addition, the production of air-conditioner units increased by 10.5%, from 1.9 million units to 2.1 million units. A rebound in the electronics sector will also improve the market demand for plastics.
3) Housewares sector - The total export of plastic housewares increased strongly by 20% in 2001 (from U.S. $45.5 million to U.S. $55 million). However exports for the first half of 2002 showed a 20% decline, as exporters faced stiff competition from lower-cost producing countries. Similarly, the domestic market for plastic housewares have to compete with the cheaper products imported from the neighboring ASEAN countries; because the import duties for all plastic products have been reduced to 5% since 2000, under the Common Effective Preferential Tariff (CEPT) agreement. According to MPMA the outlook for this sub-sector remained pessimistic for 2002 and 2003, with an estimated decline of 10% for 2002. (For more information on CEPT, please refer to market access segment of this report.)
4) Automotive sector - The continued strong growth in the domestic production of passenger cars and commercial vehicles by Proton and Perodua has helped increase the market demand for plastic auto parts and components in Malaysia. Proton is expected to complete its new production facility in Tanjung Malim, Perak by the end of 2003, with a total capacity of 500,000 units per annum. Meanwhile, Perodua is set to increase its capacity from 150,000 to 200,000 units by 2004.

The engineering resins market is the best prospect for U.S. resins producers. There are several reasons to support this observation. First, prices of engineering resins are less volatile compared to commodity resins, and profit margins are more attractive for engineering resins. Hence, traders who have stocks in engineering resins face less risk. Second, once a purchasing decision is made on a certain engineering resin, the end users are unlikely to switch to a different material. Third, engineering resins are mainly used by higher-end market segment such as automotive, electrical and electronics, telecommunications, and office equipment manufacturers. These groups of end users are usually the better pay masters. Credit terms offered to them are between thirty to sixty days, as opposed to six months granted to the lower-level end users of commodity resins, mainly the family-operated plastics manufacturers.

Import Climate
Within the Government of Malaysia, the Ministry of International Trade and Industry (MITI) is primarily responsible for the formulation and implementation of trade regulations and policies. Information about licensing and tariffs is available from the Customs Department. Malaysia follows the Harmonized Tariff System (HTS) for the classification of goods.
Since the petrochemical industry in Malaysia was in its infancy stage during the early 1990s, the government of Malaysia implemented both tariff and non-tariff barriers to protect the interests of the domestic plastic resins industry. In December 1993, tariffs were increased for a five-year period from its original 2% to 30% for non-ASEAN countries, and from 1% to 15% for ASEAN countries on plastic resins. In 1994, when tariff protection alone did not provide the amount of protection desired, the government of Malaysia instituted quantitative import restrictions through a licensing system for commodity plastic resins (i.e. PE and PP) to give protection to the domestic industry for a five-year period. Effective January 1, 2003, import duties on PE, PP and PVC resins from ASEAN countries were reduced to 5%, while it remained at 30% for resins imported from non-ASEAN countries.
[Background: The ASEAN Free Trade Area (AFTA) is a collective effort taken by ASEAN member countries to reduce/eliminate tariffs on intra-ASEAN trade in the goods sector. The target is to achieve tariffs between zero to 5 percent in 2003 for the six original member countries (Malaysia, Singapore, Indonesia, Brunei, Philippines and Thailand), Vietnam by 2006, Lao PDR and Myanmar by 2008, and Cambodia by 2010; and to eliminate quantitative restrictions and other non-tariff barriers. The reduction/elimination of tariffs is undertaken through the Common Effective Preferential Tariff (CEPT) Scheme.]
Distribution Channels/Business Practices
In Malaysia, both commodity and engineering resins are mainly sold through trading companies. However, some end users that consume enormous. quantities of resins purchase directly from the resins producers. There are many trading companies in Malaysia, resulting in a highly competitive environment for the distributors of resins.
A number of large trading companies have Japanese partners and these trading companies usually supply resins to Japanese electrical and electronic manufacturers. Distribution channels to the electrical and electronics sector, which is mainly dominated by the Japanese manufacturers, are firmly established. It is essential to have Japanese contacts in order to supply to this market segment. Material specifications are determined by their headquarters, which are based in Japan, and almost all of their R&D centers are located in Japan.
U.S. resins that enjoy a good reputation in Malaysia have a competitive edge in terms of quality. The best way to enter the Malaysian market for U.S. exporters of plastic resins is to engage established trading houses that will not only supply resins to the manufacturers but are also capable of providing technical support and consultancy to the end users. It is vital to be able to advise and respond to market demand promptly, which makes in-country technical support crucial.
Trade Publications

Two popular journals widely distributed in Malaysia are Modern Plastics and Plastics and Rubber Asia. U.S. companies interested in entering the Malaysian market should consider advertising their products and services in these publications. Additionally, U.S. companies are encouraged to publish technical write-ups about their products, especially if the products are new in the market, in order to educate potential buyers on new technologies. This has proven to be an effective marketing tool for many European companies in this region.
Exports to Malaysia may be financed through letters of credit issued to importers by banks in Malaysia. Finance is readily available on the domestic market to Malaysian importers. Although limited capital controls were imposed in September 1998, Malaysia's current account remains fully convertible. In addition, importers and exporters have sufficient access to foreign exchange to carry on their business transactions. The Malaysian Ringgit (RM) cannot be sent or received from abroad, thus. payments for imports and exports must be sent and received in foreign currency (except those of Serbia, Montenegro and Israel). While the capital controls complicate the activities of portfolio investors, foreign direct investment capital remains freely convertible.
In addition to the Malaysian banking sector, the U.S. Export-Import Bank (EXIMBANK) can provide support. EXIMBANK can provide:

  • Direct or intermediary loans

  • Loan guarantees to enable a foreign buyer to secure private credit

  • Loan guarantees to a private creditor to provide working capital to an exporter

  • Insurance policies for exporters to eliminate both political and commercial risk of repayment by foreign purchasers

Export financing is also available through the U.S. Small Business Administration (SBA), which can provide:
  • Regular business loans

  • Revolving export line of credit

  • Joint guarantees with EXIMBANK

  • Investment Company financing

  • Long-term asset financing

  • International trade loans to compete, export, and develop export markets

Larger projects with high U.S. export value may qualify for a grant from the Trade Development Agency (TDA) for a feasibility study.
Dispute Settlement
Malaysia is a signatory to the UN-sponsored Convention on the Settlement of Investment Disputes. The domestic legal system is open and accessible. Past cases of foreign investment disputes, which have been rare, have generally been handled satisfactorily by existing dispute settlement mechanisms. Additionally, many firms choose to include mandatory arbitration clauses in their contracts.
Should local administrative and judicial facilities fail to satisfy claimants, the dispute is submitted to the International Center for Settlement of Investment Disputes (ICSID) under the aegis of the United Nations. The government has also set up the Kuala Lumpur Regional Center for Arbitration under the auspices of the Asian-African Legal Consultative Committee to offer international arbitration, mediation, and conciliation for trade disputes.


The upcoming ASEANPLAS, a leading event for the plastics and rubber industry in this region, will be held in Singapore in 2005. The last ASEANPLAS was held in March 2002 at the Singapore Expo. Exact dates of ASEANPLAS 2005 will be announced in the future. ASEANPLAS is organized by Messe Dusseldorf Asia, the Singapore subsidiary of Messe Dusselforf in Germany, who is the organizer of the largest plastics show in the world, K. For more information on ASEANPLAS, please visit

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