October 27, 2003

 

 

Malaysia Dairy and Products Annual 2003

 

Executive Summary

 

Malaysia relies heavily on imports for its dairy needs. The local dairy industry does not produce sufficient quantities of fresh fluid milk to satisfy Malaysia's fresh milk needs. Fresh fluid milk is substituted with reconstituted fluid milk and other milk products. Ingredients such as skimmed milk powder, whole milk powder and whey needed to produce condensed milk and other milk products are imported mainly from Australia and New Zealand.

 

Production

 

In recent years, despite the various attempts by the GOM, as well as the private sector, to expand the dairy industry, it has remained small.  Major factors limiting its development include low lactation and reproduction performance, the hostile tropical weather condition, high cost for quality feed and lack of trained personnel for farm management.  Investment in the dairy industry is still considered to be a risky business and the prospect for future growth is not bright at all.  Milk production is expected to show insignificant growth in the near future.

 

Competition

 

Malaysia remains heavily dependent on dairy imports, such as powdered milk for its dairy product industry and finished products such as cheese and butter. In 2002, Malaysia imported about 53,315 metric tons of nonfat dry milk. In this category, New Zealand led with 23,813 tons, followed by Australia with 22,681 tons. Imports from US of nonfat dry milk and increased more than 100% in terms of quantity. However, the volume is still insignificant compared to imports from New Zealand and Australia in the same period. Imports of whole milk powder amounted to 70,899 tons, of which about 39,088 tons supplied were by New Zealand, followed by Australia with 18, 416 tons.

 

The major dairy items produced in Malaysia are powdered milk (full cream, skimmed and infant formula), sweetened condensed milk, evaporated milk, liquid milk and milk drinks (fresh, ultrahigh temperature, pasteurized and homogenized), yogurt and ice cream.  The milk products are locally produced by reconstituting and blending of imported milk powder (skim and whole), whey and other ingredients. Most infant formula is imported and packed locally except for a local brand, Nestle's Lactogen, which is manufactured in Malaysia.

 

The industry is willing to import dairy ingredients from any source as long as the price is competitive and the quality is good.

The market for finished dairy products for consumers is relatively small and is very brand-loyal. There are few prospects for imports and sales of U.S. branded milk products directly to consumers. It is also very costly to build the name of a new brand, particularly with the established competition. U.S. products are likely to be significantly more expensive due to freight costs.

 

Policy

 

No duty is imposed on imports of nonfat dry milk, whole milk powder and dried whey. Butter attracts 2% duty and sales tax of 5%. Duties incurred for cheese (grated cheese, processed cheese and blue-veined) are between 5-10% with sales tax of 5%. An import license issued by the Department of Veterinary Services and Ministry of International Trade and Industry is also necessary for consignments of dairy products entering into Malaysia.

 

 

Source: USDA