Key Trade Partners of Malaysia

Malaysia, as one of the most open economies in Asia, requires the strategic selection of key trade partners to ensure sustainable trade-led economic growth. This study employs two alternative approaches—the global extraction method (GEM), which is Malaysia-centric and measures Malaysia’s vulnerability to the removal of specific partners, and the Intercountry Trade Impact Index (ITII), which is system-wide and captures partners’ global significance through their interdependencies and economic weight—to analyse and rank Malaysia’s trade partners, comparing these results with actual trade performance data. The analysis utilises the 2020 OECD Inter-country Input-Output tables, aggregated to reflect Malaysia’s trade relationships. Results from the GEM highlight the Association of Southeast Asian Nations (ASEAN), South Korea, New Zealand, Australia and Japan as key trade partners. Alternatively, the ITII approach identifies major partners, including China, New Zealand, the United States, Other Europe and the rest of the world. An integrated ranking across all methods, including trade volume considerations, consistently positions ASEAN, Japan, China, South Korea and New Zealand as Malaysia’s top-five trade partners, offering a comprehensive and balanced strategy for re-evaluating Malaysia’s trade policies. JEL Codes: C67, F13, F14, F23, F63