Malaysia's Market for Imported Fish and Seafood -
A Guide for Canadian Exporters

February 2010

Abbreviated

Prepared for:
The High Commission of Canada in Singapore
&
Office of Southeast Asia Regional Agri-Food Trade Commissioner
Agriculture and Agri-Food Canada

Prepared by:
Stanton, Emms & Sia
80 Raffles Place, Level 36-01
UOB Plaza 1,
Singapore 048624
Tel: +65 6334 7030
Fax: +65 6223 2010
Email: emmsia@pacific.net.sg
Website: http://stantonemmsandsia.foodandbeverage.biz

This report contains market information collected by Stanton, Emms & Sia. The Government of Canada assumes no liability for the accuracy and reliability of the market information and intelligence provided herein. *For the complete report, Canadians are invited to contact Mr. John Nojey at the High Commission of Canada in Malaysia : john.nojey@international.gc.ca


1. Introduction

This guide for Canadian exporters is prepared by Stanton, Emms & Sia for the High Commission of Canada in Malaysia and the ASEAN Agri-Food Trade Commissioner, Agriculture and Agri-Food Canada. It covers the Malaysian markets for:

  • Imported lobster, frozen crab, scallop, oyster and exotic seafood, e.g. geoduck; and,
  • Selected fish types, where Canada has export capacity and capabilities, namely imported fresh salmon, smoked herring, frozen salmon and frozen mackerel.

It was researched in January and February 2010. It was prepared to provide Canada's ASEAN based Agrifood Team of Trade Commissioners and Canadian producers and exporters with an up-to-date understanding of the target market and opportunities in Malaysia for Canadian fish and seafood.

It should be noted that at the time of the research (February 2010), there was no detailed Malaysian data available on fish and seafood imports for the whole of 2009.


2. Market size, nature of supply and development trends

2.1 Overview of domestic and imported supplies

Malaysia produces about 1.5 million tonnes of fish and seafood per annum. 89% of production comes from marine and inland capture. Its aquaculture industry is small by Southeast Asian standards and only produces around 170,000 tonnes of products per annum.

Malaysia's market for imported fish and seafood is sizeable and represents about 18% of total fish and seafood consumption. Imports amounted to 329,000 tonnes valued at C$ 525 million in 2008 (see Chart below).

Malaysia's Imports of Fish and Seafood in 2008 – 329,000 Tonnes

Imports: Description of this image follows.
Description

Malaysia’s Imports of Fish and Seafood in 2008 – 329,000 Tonnes: Fish, fresh-chilled 48%, Fish, frozen 27%, Crustaceans 8%, Fish fillets and meat 7%, Fish, dried, salted, smoked 5%, Molluscs 5%

Source: Malaysian External Trade Statistics

Imports of fish and seafood vary with market pricing because buyers are generally price sensitive. This trait was a key reason why total imports declined in 2008. The landed costs in 2007/2008 were between 12% to 15% higher than in the preceding years (see trends in the Chart below).

Trends in Malaysian Imports of Fish and Seafood – 2004 to 2008 (All Products)

Trends: Description of this image follows.
Description

Trends in Malaysian Imports of Fish and Seafood – 2004 to 2008 (All Products): 374,717 (2004), 351,266 (2005), 383,586 (2006), 379,983 (2007), 329,000 (2008)

Source: Malaysian External Trade Statistics

Malaysia is importing fish and seafood from a large number of different supply countries and territories across the world. In 2008, its supply base involved 70 different countries/territories (see Chart below).

Main Origins of Malaysia's Fish and Seafood Imports in 2008 - C$ 525 Million

Imports: Description of this image follows.
Description

Main Origins of Malaysia’s Fish and Seafood Imports in 2008 - C$ 525 Million: China (19%), Thailand (18%), Vietnam (7%), Myanmar (Burma)(6%), India (5%), Pakistan (3%), Japan (3%), Norway (2%), Taiwan (2%), USA (2%), Bangladesh (1%), Others (13%), Indonesia (19%)

Source: Malaysian External Trade Statistics

As can be seen from the Chart above, the bulk of supplies are imported from Asian countries.

2.2 Review of markets for the specific products covered by the study

2.2.1 Overview

Malaysia's imports of the specific products covered by this study were valued at a total of C$ 67.1 million in 2008, up from C$ 63.2 million in 2004. The Table below provides an overview of the structure of demand according to the official trade data.

Overview of Trends in the Value of Imports of the Products Covered by this Study (C$ ‘000)
Product 2004 2005 2006 2007 2008
Lobster: Live, chilled 2,496 2,832 1,967 3,175 2,356
Lobster: Frozen 932 1,040 1,520 593 2,348
Crab, frozen 5,854 7,038 6,207 4,384 7,798
Scallop: Live, chilled 613 334 246 343 176
Scallop: Frozen, etc. 3,125 4,308 3,696 4,911 5,182
Oyster 459 345 805 911 1,057
Fresh salmon 3,635 5,222 7,082 6,304 8,532
Smoked herring - - - - N
Frozen salmon 795 944 855 591 1,015
Frozen mackerel 45,304 37,526 41,881 45,037 38,660
Total 63,213 59,589 64,259 66,249 67,124

N: Negligible.
Source: Malaysian external trade statistics (Official classifications)

The markets for some of Canada's major export categories in Malaysia are sizeable. On a very positive note, most of the market segments covered by this study have seen growth over the past 5 years, e.g. frozen lobster, frozen crab, frozen scallops, oysters and fresh salmon.

It should be noted that there is no specific trade data available on exotic seafood, such as Geoduck, which is covered in a following section of this report.

2.2.2 Lobster

Imported lobster has small niche style markets in Malaysia that have been developing an erratic manner over the past 5 years.

Total imports of live, fresh/chilled and frozen lobster amounted to 237 tonnes valued at C$ 4.7 million in 2008. The equivalent figure in 2004 was 273 tonnes valued at C$ 3.4 million in 2004 (see Table below).

Malaysian Imports of Lobster – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Live and fresh/chilled 90 95 69 91 78
% change - 5.6% (27.4%) 31.9% (14.3%)
Frozen 183 71 81 66 159
% change - (61.2%) 14.1% (18.5%) 140.9%

Source: Malaysian external trade statistics

Imported lobster interacts with local products in the market, which dominate supplies to this niche. According to the Malaysian government, local lobster production amounts to between 900 and 1,000 tonnes per annum. The local lobster supply has been in gradual decline for more than 5 years. Imports currently supply about 15% of consumption.

Although lobster has a premium product market, Malaysian buyers are price sensitive. This means that the lowest cost and best quality product generally holds the highest share of this market (see Table below).

Malaysia's Imports of Live and Fresh/Chilled lobster: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
Thailand - - - - 25,100 34.4
Australia 42,027 14.1 49,186 17.3 43,857 11.1
New Zealand 46,108 15.9 51,411 21.6 51,789 13.4
Indonesia - - - N 9,206 6.0
All imports 28,695 100.0 34,824 100.0 30,097 100.0
Tonnes   69   91   78

N: Negligible imports.
Source: Derived from Official External Trade Statistics

The market for frozen lobster is principally a commodity trading market in which Malaysian buyers are seeking the lowest cost - best quality lobster for use by the food service industry, in particular the mid-range seafood restaurants that exist in the cities all across Malaysia. This price sensitivity makes this segment rather unstable. Buyers shop around and do change suppliers on a periodic basis, which impacts on the trade patterns with different supply countries.

Malaysia's Imports of Frozen Lobster: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
India 19,936 10.2 11,873 14.3 16,015 27.1
Indonesia - N 1,498 21.1 7,690 24.4
Myanmar (Burma) 13,619 13.7 12,515 36.9 9,247 22.3
Canada 28,463 5.2 - N 22,398 10.7
New Zealand 44,020 10.0 - - 34,844 3.7
Australia 36,772 13.8 - N 43,865 3.5
South Africa - - 5,522 20.3    
Singapore 4,424 38.6 - N - N
All imports 18,648 100.0 8,934 100.0 14,761 100.0
Tonnes   81   66   159

N: Negligible imports.
Source: Derived from Official External Trade Statistics

Lobster is rarely available in Malaysian supermarkets or hypermarkets. This situation exists because it is a "big ticket" item that only the wealthiest Malaysians will buy. Consequently, the product is only available in limited quantities in the highest end supermarkets. Although popular with consumers, lobster is generally a food service menu item today.

Lobster, Sample of Retail Pricing in Malaysia
Product Brand and Country Package Size RM C$
Lobster, frozen Unbranded, Myanmar (Burma) origin Per Kilogram 96.00 30.00

Source: Supermarkets (January 2010)

It should be noted that some of the mainstream retailers carry imitation lobster tails (a surimi-based product), which are retailed at RM 34.50 (C$ 10.65) per kilogram.

2.2.3 Crab, frozen

Malaysia's imports of frozen crab amounted to 2,203 tonnes valued at C$ 7.8 million in 2008, up in a highly erratic manner from 1,957 tonnes valued at C$ 5.9 million in 2004.

Malaysian Imports of Frozen Crab – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Total 1,957 2,079 1,924 1,442 2,203
% change - 6.2% (7.5%) (25.1%) 52.8%

Source: Malaysian external trade statistics

Imported frozen crabs interact in the market with locally produced crab and imports of live and fresh chilled crabs. This interaction is mainly underpinned by price. The wholesale price of frozen crabs is between 50% and 75% of that of an unfrozen product. If the price of unfrozen crabs increases significantly then this can bring about some level of increased demand for frozen crabs.

Local crab production is reported at around 12,000 tonnes per annum by the Malaysian government. Imports of live and fresh/chilled crabs amounted to 2,213 tonnes valued at C$ 2.4 million in 2008. Based on this, frozen imported crabs account for around 13% of consumption.

Crab is mainly a mass market item in Malaysia. Consequently, the market for imported frozen crab is price sensitive. This trait has also caused Malaysian buyers to focus on Developing World supply countries that have the most competitively priced frozen crabs. Premium crab from the Developed World has a minuscule share of the market, i.e. less than 3% of imports today (see Table below).

Malaysia's Imports of Frozen Crabs: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
Myanmar (Burma) 2,151 40.4 1,973 48.0 2,141 40.1
Indonesia 2,332 14.5 2,450 9.4 3,605 20.6
Bangladesh 5,115 1.0 4,981 1.1 6,477 8.1
Thailand 2,918 6.1 3,171 5.5 3,224 5.7
Bahrain - - - - 2,819 5.6
United Arab Emirates - - - - 2,714 4.7
Vietnam 5,650 19.8 4,877 23.7 7,820 4.0
Pakistan 2,089 3.0 2,088 3.8 3,420 3.8
China 2,292 12.8 4,779 5.0 2,430 1.1
All imports 3,226 100.0 3,041 100.0 3,539 100.0
Tonnes   1,924   1,442   2,203

N: Negligible imports.
Source: Derived from Official External Trade Statistics

Crabs are quite common in Malaysia's middle to upper income group supermarkets and hypermarkets. While this is the case, the bulk of demand comes from the food service industry, especially the mid-range to premium seafood restaurants that are well distributed in urban areas across the country.

Crabs, Sample of Retail Pricing in Malaysia
Product Brand and Country Package Size RM C$
Flower crab, fresh/chilled No brand, product origin not stated. Per Kilogram 19.90 6.15
Crab claw meat, frozen No brand, product origin not stated. 240 gm 18.99 5.85
Flower crab meat, frozen No brand, product origin not stated. 500 gm 10.88 3.40

Source: Supermarkets (January 2010)

2.2.4 Scallops

Total imports of live, fresh/chilled and frozen scallops amounted to 686 tonnes valued at C$ 4.9 million in 2008. The equivalent figure in 2004 was 700 tonnes valued at C$ 3 million in 2004 (see Table below).

Malaysian Imports of Scallops – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Live and fresh/chilled 198 157 102 58 23
% change - (20.7%) (35.0%) (43.1%) (60.3%)
Frozen, etc. 502 447 591 703 663
% change - (10.9%) 32.2 18.9 (5.7%)

Source: Malaysian external trade statistics

According to the government, Malaysia does not produce any scallops to compete with imported scallops. Imports comprise live, fresh/chilled, frozen and dried products.

The market for live and fresh/chilled scallops is price sensitive and imports have collapsed over the past 5 years because of higher export market pricing and Malaysian buyer negative reaction to it.

Demand for scallops is quite strong amongst the ethnic Chinese population, although the bulk of this demand is mass urban market, rather than premium, in nature. This is one reason why importers are seeking to import lower cost scallops from neighbouring ASEAN countries.

Malaysia's Imports of Live and Fresh/Chilled Scallops: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
USA 20,679 1.0 18,700 1.9 8,899 42.6
Thailand - - - - 584 28.5
United Kingdom - N - N 6,901 13.5
Japan - - - N 18,458 10.3
Vietnam 1,726 96.0 1,542 28.3 - -
Indonesia - - 1,995 28.4 - -
New Zealand - - 3,041 17.5    
All imports 2,415 100.0 5,931 100.0 8,899 100.0
Tonnes   102   58   23

N: Negligible imports.
Source: Derived from Official External Trade Statistics

Whole scallops have their main demand in Chinese and other Asian restaurants, e.g. Japanese outlets. They are also readily available in the middle and upper income group supermarkets where the ethnic Chinese shop for frozen fish and seafood. Examples of some of the products that are available in retailers are provided in the Table below.

Scallops, Sample of Retail Pricing in Malaysia
Product Brand and Country Package Size RM C$
Sea scallops, frozen Atlantic Capes, USA 454 gm 36.88 11.40
Scallops, frozen Atlantis, U.S. origin product 200 gm 20.88 6.45
Half shell scallop, frozen Unbranded, origin not stated 500 gm 8.99 2.80

Source: Supermarkets (January 2010)

2.2.5 Oysters

Malaysia's imports of oysters amounted to 575 tonnes valued at C$ 1.1 million in 2008, up from 139 tonnes valued at C$ 0.5 million in 2004. The growth in volumes imported is substantial.

Malaysian Imports of Oysters – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Total 139 121 517 364 575
% change - (12.9%) 327.3% (29.6%) 57.9%

Source: Malaysian external trade statistics

According to the government, about 10% of all oysters that are imported to Malaysia are imported in a traditional Asian (Chinese-origin) dried form. A further 50% of imports are frozen products. 40% of imports comprise higher grade live oysters.

Imports of Live and Fresh Oysters to Malaysia – 2004 to 2008 (In Tonnes)

Oysters: Description of this image follows.
Description

Imports of Live and Fresh Oysters to Malaysia – 2004 to 2008 (In Tonnes): Republic of Korea: 33 (2004), 45 (2005), 125 (2006), 146 (2007), 200 (2008), USA: 0 (2004), 3 (2005), 25 (2006), 14 (2007), 119 (2008), Chile: 10 (2004), 10 (2005), 46 (2006), 68 (2007), 24 (2008), Japan: 13 (2004), 11 (2005), 7 (2006), 10 (2007), 12 (2008), New Zealand: 22 (2004), 4 (2005), 0 (2006), 6 (2007), 0 (2008), Australia: 0 (2004), 3 (2005), 25 (2006), 14 (2007), 119 (2008), France: 0 (2004), 0 (2005), 0.3 (2006), 0 (2007), 0.2 (2008), Canada: 24 (2004), 0 (2005), 0 (2006), 0 (2007), 0 (2008)

Source: Malaysian External Trade Statistics

Trade sources comment that the oyster market in Malaysia is price sensitive. The market is dominated by the lowest cost appropriate quality products from the Asia Pacific region.

Imported live and frozen oysters interact with local products in the market. According to the Malaysian government, local oyster production is increasing and currently amounts to around 900 tonnes per annum. The local oyster supply has been gradually increasing for more than 5 years. Live and frozen imports currently supply about 33% of consumption.

Oysters have their main markets in high end restaurants, especially those in 4 and 5 star hotels where they have sizeable demand for use in seafood buffets and in western food outlets. They also have demand in some premium western food restaurants that operate outside hotels.

Oysters are rarely, if ever, available from retailers. None were noted in market observations conducted in key supermarkets and hypermarkets in January 2010.

2.2.6 Fresh/chilled salmon

Malaysia's imports of fresh/chilled salmon amounted to 953 tonnes valued at C$ 8.5 million in 2008, up from 685 tonnes valued at C$ 3.6 million in 2004.

Malaysian Imports of Fresh/Chilled Salmon – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Total 685 671 953 722 953
% change - (2.0%) 29.6% (24.2%) 32.0%

Source: Malaysian external trade statistics

Trade sources comment that the erratic nature of fresh salmon imports indicates that demand is still immature, although on a positive note, it is growing. Imports grew in 2008, a year in which total imports of fish and seafood entered decline.

Salmon is an exotic niche fish in Malaysia because it has no local equivalent. Its demand is underpinned by good economic growth, higher incomes amongst a growing middle income group and solid performance by the tourism sector. Its growth has also been pushed by the marketing and distribution strategies of exporters, e.g. Norwegian salmon suppliers, and their importer-distributor partners in Malaysia.

Norway dominates the market for fresh/chilled salmon because of its exporters' strategy of promoting and servicing the market for this product. Even Tasmanian and Chilean salmon is supported in this manner because most of the salmon entering Malaysia is supplied by large salmon specialists, some of which have production bases in both Norway and Chile.

While there is some level of price sensitivity in this market, price is not the most important factor because the product has uniqueness, is sourced from a few locations around the world, is branded on a generic basis, and has become well known to Malaysia consumers and food service users.

Malaysia's Imports of Fresh/Chilled Salmon:
Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
Norway 9,637 59.6 8,911 87.8 9,198 72.6
Australia 10,381 0.3 7,524 9.0 9,514 12.8
Chile 5,567 3.7 2,449 0.2 4,370 7.7
Canada - - - - 11,976 2.3
Germany - - - - 5,692 2.0
United Kingdom - - - N 13,901 1.1
New Zealand 9,994 0.9 10,997 1.2 11,887 0.8
All imports 7,430 100.0 8,727 100.0 8,957 100.0
Tonnes   953   722   953

N: Negligible imports.
Source: Derived from Official External Trade Statistics

Fresh/chilled salmon is available in many supermarkets. It is expensive, when compared to most other types of fish in the Malaysian retail channels (see Table below).

Fresh/Chilled Salmon, Sample of Retail Pricing in Malaysia
Product Brand and Country Package Size RM C$
Atlantic salmon, steak Unbranded, origin not stated Per Kilogram 39.99 12.40
Atlantic salmon, fillet Unbranded, Norway origin Per Kilogram 69.90 21.60

Source: Supermarkets (January 2010)

2.2.7 Smoked herring

Malaysia has not yet developed any form of market for smoked herring. Over the past 10 years, imports have been rare and erratic.

Imports in 2008 amounted to 0.5 tonne valued at about C$ 4,000. This situation exists because foreign exporters and local importers have never made a concerted effort to market any smoked fish, except salmon, in a differentiated manner to Malaysia.

Smoked fish is not part of the Malaysian food culture. Smoked salmon has niche demand involving the high end food service industry (mainly hotels) and expatriate shoppers.

2.2.8 Frozen salmon

Malaysia's imports of frozen salmon amounted to 275 tonnes valued at C$ 1 million in 2008, down substantially from 521 tonnes valued at C$ 0.8 million in 2004.

Malaysian Imports of Frozen Salmon – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Total 521 312 189 200 275
% change - (8.2%) (5.3%) 0.5% 3.4%

Source: Malaysian external trade statistics

As mentioned earlier, salmon has no local equivalent fish being produced in Malaysia. Consequently, its market is dependent on imports, and its market development is dependent on the activities of foreign exporters and their local importers.

Between 0.5% and 1.5% of frozen salmon imports over the past 5 years have involved Pacific Salmon. The bulk of imports are Atlantic Salmon (90% to 95%), which has been subjected to a lot of marketing activity over the past 10 years or so.

Trade sources comment that Malaysia's market for frozen salmon is price sensitive, largely because of the impact of the weak Ringgit (local currency) on market entry price of non-indigenous food products. The product is highly commoditised in Malaysia.

Many middle income Malaysians have already adopted salmon into their dining-out culture, but they will not consume products that are too expensive for their budget.

This demand trait results in a situation where importers search the world for the most competitively priced product, which leads to the fragmented supply profile highlighted in the Table below.

Malaysia's Imports of Frozen Salmon: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
New Zealand - N - N 2,540 40.6
China 3,011 14.6 1,709 58.0 1,471 30.6
Chile 6,479 24.9 6,095 1.5 6,014 13.4
Norway - - 5,735 13.0 6,168 4.8
Denmark 6,454 11.1 - - 10,223 3.2
Germany - - 9,168 11.8 - -
Netherlands 3,475 43.5 - - - -
All imports 4,634 100.0 3,317 100.0 3,694 100.0
Tonnes   172   174   257

N: Negligible imports.
Source: Derived from Official External Trade Statistics

Malaysian food importers have very close links to China, and so it is not unexpected that Chinese packed frozen salmon products are involved in the market.

The bulk of frozen salmon imported to Malaysia (about 90%) is used by the sushi chains, supermarkets that carry sushi and mid-range Japanese and Western restaurants. Some product is used to produce frozen prepared salmon items for sale through retail channels.

2.2.9 Frozen mackerel

Malaysia's imports of frozen mackerel amounted to 26,604 tonnes valued at C$ 38.7 million in 2008, down in an erratic manner from 33,934 tonnes valued at C$ 45.3 million in 2004.

Malaysian Imports of Frozen Mackerel – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Total 33,934 27,678 33,028 36,930 26,604
% change - (18.4%) 19.3% 11.8% (28.0%)

Source: Malaysian external trade statistics

Trade sources comment that mackerel is a staple food and a commodity food ingredient in Malaysia. Its market is price sensitive and the volumes imported rise and fall in line with market prices. This information ties in with the situation reported in the official trade data (see Table below).

Evidence of Price Sensitivity in Malaysia's Market for Imported Frozen Mackerel
  2004 2005 2006 2007 2008
Average price per tonne imported C$ 1,335 C$ 1,356 C$ 1,268 C$ 1,220 C$ 1,453
% change in pricing - + 1.0% ( 6.5%) ( 3.8%) + 19.0%
Tonnes imported 33,934 27,678 33,028 36,930 26,604
% change in imports - (18.4%) 19.3% 11.8% (28.0%)

Source: Derived from Malaysian external trade statistics

This category includes a range of different fishes that are officially defined as mackerel. These are sourced from warm waters (tropical species) and cool waters (temperate species):

  • the tropical species are indigenous staples in the Malaysian household diet. Such fish are also used in the local food service industry; and
  • the cool water species are rarely used by households, and are industrial ingredients/inputs.

The Table below provides an overview of the structure of imports of the different groups of species.

Imports of Frozen Warm Water and Cool Water Mackerel – 2004 to 2008 (Tonnes)
Species 2004 2005 2006 2007 2008
Warm water 19,000 18,000 22,000 20,000 14,000
Cool water 7,000 4,000 2,000 7,000 6,000
China supplies * 8,000 6,000 9,000 10,000 7,000

*: China supplies Malaysia with warm water and cold water species of fish and seafood.
Source: Estimates based on Malaysian external trade statistics

The point about price sensitivity, mentioned earlier, is also highlighted by the data in the Table below on market shares and average CNF prices per tonne.

Malaysia's Imports of Frozen Cool Water Mackerel (Including China Supplies): Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
China 1,297 80.2 1,496 59.2 1,811 55.0
Japan 1,080 12.1 925 16.2 1,138 26.3
South Korea 1,595 1.9 1,267 19.9 1,354 17.1
Germany 1,471 0.2 978 2.1 - -
Chile 1,615 2.2 1,598 0.8 - -
Netherlands 2,283 1.2 - - - -
All imports 1,302 100.0 1,363 100.0 1,556 100.0
Tonnes   11,015   16,686   13,003

Source: Derived from Official External Trade Statistics

Some frozen mackerel is carried by Malaysia's supermarkets and hypermarkets, especially those in areas where Japanese expatriate families reside and shop. A sample of the products and their prices are provided in the Table below.

Frozen Mackerel, Sample of Retail Pricing in Malaysia
Product Brand and Country Package Size RM C$
Mackerel fillet, frozen Atlantis, Norway origin product 350 gm 11.90 3.70
Whole mackerel No brand and no origin stated Per kilogram 18.90 5.85

Source: Supermarkets (January 2010)

2.2.10 Exotic seafood

Malaysia has demand for a range of exotic cool water seafood species. These products include mussel species that are not indigenous to Malaysia, sea cucumber (which has traditional demand from the ethnic Chinese) and highly exotic products, such as abalone, geoduck and other clams. These products are imported in live, fresh/chilled, frozen and dried forms. They are niche items with small markets today (see tables below).

Imports of Live or Fresh/Chilled Exotic Seafood (Various Types) to Malaysia - 2004 to 2008 - Tonnes
Species 2004 2005 2006 2007 2008
Weight landed 1 0.5 8 12 13
Imports of Live or Fresh/Chilled Exotic Seafood (Various Types) to Malaysia - 2004 to 2008 - C$ ‘000 (continued)
Species 2004 2005 2006 2007 2008
Total value 11 3 74 104 193

Based on CIF data as translated in C$ at average annual rate of exchange.
Source: Estimates based on Malaysian external trade statistics (not Mussels)

Imports of Live or Fresh/Chilled Mussels to Malaysia - 2004 to 2008 - Tonnes
Species 2004 2005 2006 2007 2008
Weight landed - - - - 3
Imports of Live or Fresh/Chilled Mussels to Malaysia - 2004 to 2008
- C$ ‘000 (continued)
Species 2004 2005 2006 2007 2008
Total value - - - - 17

Source: Estimates based on Malaysian external trade statistics

There is very little information on the import of most exotic seafood items because most are reported in a broad based "others" category in Malaysia's trade data reporting system. While this is the case, the reality of the situation is that all have niche markets in high end restaurants, in particular Chinese restaurants. They also have a seasonal demand trend, with the highest volumes being consumed at Chinese New Year (January or February of each year).

It should also be noted that Malaysia has a very broad based mass market demand for local shellfish, which underpins demand for mussels, which are very popular. As noted in the Table above, the live or fresh/chilled mussel market is very small and underdeveloped. Discussions with trade sources indicate that this apparent lack of demand has more to do with shelf life, distribution and convenience issues than with actual consumer demand traits and trends.

The reality is that Malaysia has a sizeable and growing market for imported frozen mussels. Imports were valued at C$ 2.7 million in 2008, up from C$ 1.1 million in 2004.

Malaysian Imports of Frozen Mussels – 2004 to 2008 (Tonnes)
  2004 2005 2006 2007 2008
Total 424 457 598 888 962
% change - 7.0 30.0 48.5 8.0

Source: Malaysian external trade statistics

According to the government, Malaysia's mussel production is much larger than imports at around 5,000 tonnes per annum. Imports have, however, been growing because local mussel production is in decline. In 2004, Malaysia produced about 8,000 tonnes of mussels.

This situation has led to an increasing number of countries being involved in Malaysia's frozen mussel market. In 2008, exporters from 16 countries were involved, up from 10 countries in 2004. This situation has developed because of the activities of Malaysia's price sensitive importers searching the world for the lowest cost and best quality frozen mussels to fill the shortfall in local supplies.

The Table below provides an overview of the market shares and average prices per tonne of the leading supply countries in the period from 2004 to 2008.

Malaysia's Imports of Frozen Mussels: Review of Landed Cost Per Tonne and Market Share – 2006 to 2008
  C$ Per Tonne (2006) % Market Share (2006) C$ Per Tonne (2007) % Market Share (2007) C$ Per Tonne (2008) % Market Share (2008)
New Zealand 3,811 46.7 3,636 53.8 4,784 43.0
China 1,632 5.2 802 4.8 716 27.2
South Korea 1,090 13.0 1,072 11.7 1,166 9.8
Indonesia 1,741 14.7 1,328 15.8 1,789 5.3
Taiwan - - 633 1.3 636 3.6
Pakistan - - - - 1,141 3.5
Viet Nam 2,595 7.4 2,423 2.1 3,015 2.4
All imports 2,970 100.0 2,596 100.0 2,790 100.0
Tonnes   598   888   962

Source: Derived from Official External Trade Statistics

Frozen mussels have the bulk of their demand in the food service industry. Trade sources comment that this market is segmented between price and quality driven demand. High end outlets are very important users of higher quality mussels. This is a key reason why New Zealand has a solid market share, as highlighted in the Table above. New Zealand is a brand-driven player in the market and promotes its products on a B2B (business-to-business) basis.

There are also products available in middle and upper income group supermarkets and hypermarkets (see Table below).

Mussels, Sample of Retail Pricing in Malaysia
Product Brand and Country Package Size RM C$
Mussels, frozen Atlantis, New Zealand origin product 200 gm 9.90 3.05
Mussel meat, frozen Unbranded, New Zealand origin 200 gm 13.99 4.30
Mussel meat, frozen Unbranded, New Zealand origin 350 gm 9.90 3.05

Source: Supermarkets (January 2010)


3. The distribution channels for imported fish and seafood

Malaysia's traditional fish and seafood (wet) markets are still the main channel for fish and seafood in Malaysia today. These channels are highly localised and fragmented. Very few, if any, imported fish and seafood products are sold through these markets. Malaysian housewives prefer to buy their fish and seafood from these markets principally because the products are fresh and perceived as good value-for-money.

The modern retailers, e.g. the hypermarkets, are competing with these markets by developing in-store versions of a wet market aimed at attracting the middle income group and younger shoppers away from the traditional markets. Most of the hypermarket operators believe that this strategy is now working and that their sales of fresh fish and seafood have been increasing for around 5 years, with a consequent reduction in share being seen by the wet markets.

Imported fish and seafood from Canada and its competitors are:

  • Used by the food service sector, which includes:
    • 3 to 5 star hotels;

Malaysia's 4 and 5 star hotels are a very fragmented industry subsector with demand points spread all over the country, and not just in Kuala Lumpur, the capital city.

Malaysia currently has about 200 hotels that are rated as 4 or 5 star operations. It is the leading tourist destination in the ASEAN region with about 22 million visitors per annum. Thailand is ASEAN's second most popular tourism destination with around 15 million visitors per annum. This sub-sector has a demand for quite a wide range of different fish and seafood products.

  • Chinese restaurants;
  • chains of Western full service food outlets, e.g. The Manhattan Fish Market (uses Norwegian salmon), and fusion outlets, i.e. café cum casual restaurant chains, e.g. Fig & Olive, Secret Recipe, etc;
  • single site western food outlets; and,
  • the sushi chains and restaurants, e.g. the Sushi King chain (more than 60 outlets operating on a nationwide basis) and Jusco, the leading middle to upper income group department store and supermarket chain operator with 23 operations located in cities and towns all over Malaysia.

The fast food chains also use a limited number of imported cool water fish-based products in their menu items, e.g. fish burger patties and cutlets; and

  • sold through the higher end supermarkets and hypermarkets run by Jusco and Cold Storage.

Trade sources comment that more than 90% of all fish and seafood imported from North America, Europe, Australia and New Zealand is used by Malaysia's food service industry, in particular the higher end sectors in the industry.


4. The Malaysian fish and seafood processing industry

The fish and seafood products industry is a major sub-sector in Malaysia's food processing industry. It comprises a processing sector and an aquaculture sector. It is a very important demand base for frozen fish for canning, frozen fish fillets, and fish and seafood meat for further processing.

The fish processing industry is largely export-oriented and encompasses the processing of prawns, canning of fish, and the production of surimi products.

Most aquaculture farms in Malaysia are involved in prawn farming and processing, and largely operate with an export market target. Some companies have moved into the production of higher value-added products, including breaded and battered products.

The past 5 years have seen the industry's exports grow to about 276,000 tonnes up from about 226,000 tonnes. Exports were valued at C$ 775 million in 2008 (see Chart below).

Trends in Malaysian Exports of Fish and Seafood – 2004 to 2008 (In Tonnes)

Trends: Description of this image follows.
Description

Trends in Malaysian Exports of Fish and Seafood – 2004 to 2008 (In Tonnes): 225,727 (2004), 234,287 (2005), 220,300 (2006), 262,235 (2007), 275,566 (2008)

Source: Malaysian External Trade Statistics

Provisional trade data for 2009 indicates that exports in 2009 declined to about C$ 630 million. According to trade sources, this resulted from a decline in demand for products from the Japanese market, which fell into recession after the onset of the global economic crisis.

Over 75% of exports are:

  • crustaceans;
  • molluscs; and,
  • processed fish in canned and frozen products (see Chart below).

Profile of Malaysia's Fish and Seafood Exports in 2008 – C$ 775 Million

Profile: Description of this image follows.
Description

Profile of Malaysia’s Fish and Seafood Exports in 2008 – C$ 775 Million – 775 millions $ CAN: Crustaceans 51%, Molluscs 15%, Prepared fish 10%, Frozen whole fish 8%, Prepared seafood 5%, Fresh/chilled fish 5%, Fish fillets and meat 5%, Poisson fumé séché et salé 1%

Source: Malaysian External Trade Statistics

The fish and seafood processors generally source their frozen fish and fish meat directly from overseas suppliers. Malaysian buyers "shop around" for their requirements because these products are traded as commodities on the world market. As a result, their overseas suppliers may vary from year to year, depending on the prevailing market price and terms of offer from such suppliers.


5. Key demand characteristics and marketing mix factors for fish and seafood

Malaysia has very strong demand for fish and seafood. It has the third highest per-capita consumption of fish and seafood in Asia, after Japan and Hong Kong SAR. It has one of the most sophisticated demand bases for fish and seafood in Southeast Asia.

The latest estimate on Malaysian consumption per capita available from the FAO is 55.4 kilograms per annum. In comparison, the Japan and Hong Kong's figures were 63.2 kilograms and 62.1 kilograms, respectively. Canada consumption figure is reported at 24 kilograms per capita by the FAO, or less than half of that of Malaysia's.

This situation exists because fish and seafood is very well entrenched in the Malaysian diet at all levels in society, i.e. local income to high income and amongst all ethnic groups.

The reality of the market is that it is highly segmented on the basis of different products. Demand ranges from low-end, low-priced segments through to high-end, premium-priced segments. Local products and known tropical species generally dominate consumption.


6. Import tariffs and regulations

Malaysia has one of the most liberalised fish and seafood markets in Southeast Asia. Most fish and seafood products are zero rated at the level of import duty. A small number of exceptions exist in the following categories:

  • smoked, dried and salted fish:
    • all smoked fish, including salmon, herring, cod – 7% or 8% MFN tariff applied; and,
    • dried fish and salted fish – 7% MFN tariff applied.
  • crustaceans:
    • all types of crustaceans in airtight containers – 8% MFN tariff applied; and,
  • molluscs:
    • Octopus – 20% MFN tariff applied on all products, except frozen products which are 0%.

These tariffs are in place as part of efforts to protect some local industries.

Malaysia has a fairly straightforward regulatory system for imported fish and seafood. The key features of the system are as follows:

  • compliance with the Malaysian food laws and regulations, which are amongst the most sophisticated in Southeast Asia.
  • an import licence is required for all fish and seafood. Such licences are issued by the Fisheries Development Authority of Malaysia. These licences are an administrative control procedure and not a trade barrier;
  • the Ministry of Health, Malaysia, requires that a health certificate accompany all imports of fish and seafood.

This certificate comprises an international recognised declaration or statement by the official food health agency of the exporting country confirming that the consignment of fish or seafood is safe for human consumption.

In addition to this, for shrimps and prawns; crab and crab products; whether in shell or not, live, fresh, chilled, frozen, dried salted or in brine, cooked by steaming or by boiling in water, there is also a requirement for an additional declaration or statement that the consignment is free from Chloramphenicol;

  • all imported foodstuffs are subject to random checking, testing and sampling at the port of entry. No delays in Customs will normally occur, if all documentation is present and in order, at the time of customs clearance;
  • Malaysia has many specific packaging and labelling requirements for retail packed products. Labelling of imported food must be labelled in either English or Bahasa Malaysia (the local national language); and,
  • nutritional labelling may also have to be considered by the exporter because it is mandatory for a number of imported retail-packed foods, including canned fish and seafood.

7. Key suppliers and their market shares

7.1 Overview of the involvement of Canada and its main competitors

Canada and the countries that compete on a direct or indirect basis with it supply around 14% of the total value of Malaysia's fish and seafood imports (see Chart below).

Imports from Canada and Its Direct or Indirect Competitors to Malaysia in 2008 – C$ 73.2 Million

Imports: Description of this image follows.
Description

Imports from Canada and Its Direct or Indirect Competitors to Malaysia in 2008 – C$ 73.2 Million: Norway (16%), USA (13%), Australia (9%), South Korea (9%), New Zealand (6%), Chile (6%), Uruguay (5%), France (4%), Canada (4%), Others (9%), Japan (19%)

Source: Malaysian External Trade Statistics

China is not included in the above Table because it is principally a commodity exporter that competes on price. If its products are in a Canadian target segment they tend to act as a spoiler in the market, until such time as there is a negative reaction from buyers to inconsistent quality.

As can be seen Canada is the 9th largest player in the market for cool water fish and seafood imported from both Developed World and Developing World supply countries.

7.2 Overview of the involvement of Canada

The bulk of Canadian exports in 2009 were frozen sardines for use by the fish canning industry. Other products with sizeable export activity include live lobsters (see Chart below).

Canada's Exports of Fish and Seafood to Malaysia in 2009 – C$ 4.9 Million

Exports: Description of this image follows.
Description

Canada’s Exports of Fish and Seafood to Malaysia in 2009 – C$ 4.9 Million: Sardines, frozen (82%), Live lobsters (15%), Clams, frozen (2%), Oysters, in all forms (1%), Others (Negligible)

Source: Agriculture & Agri-Food Canada Data Release

The data on Canadian exports indicates that the only products with consistent export patterns, i.e. suggesting a longer term export strategy, are live lobsters, scallops and clams, although exports of scallops collapsed in 2009.

The other segments in which Canadian exporters are involved appear to be driven more by commodity and/or spot type trading, including frozen sardines, the leading exported product in 2009.

7.3 Review of the market shares of Canada's main competitors in the markets covered by this study

Canada only has a leading position in one of the markets covered by this study, namely live lobster (see Table below).

Canada's Key Competitors in 2008
Product Market Size (Tonnes) Leading Players Market Leader Leading Players No 2 Leading Players No 3
Live and fresh/chilled lobster 78 Thailand (34%)   Australia (11%)
Frozen lobster 159 India (27%) Indonesia (24%) Myanmar (22%)
Frozen crab 2,203 Myanmar (40%) Indonesia (21%) Bangladesh (8%)
Scallops, live and fresh/chilled 23 USA (43%) Thailand (29%) UK (14%)
Oysters, not dried 358 South Korea (55%) USA (33%) Chile (6%)
Fresh salmon 953 Norway (73%) Australia (13%) Chile (8%)
Frozen salmon 257 New Zealand (41%) China (31%) Chile (13%)
Frozen cool water mackerel 13,003 China (55%) Japan (26%) South Korea (17%)
Frozen mussels 962 New Zealand (43%) China (27%) South Korea (10%)

Source: Derived from Malaysian External Trade Statistics

It should be noted that Canada was the 4th player in the:

  • frozen lobster market with a share of 11% in 2008; and,
  • fresh/chilled salmon market with a share of 2% in 2008.

As can be seen from the Table above, some of the markets have more of a commodity price orientation than a premium product orientation, i.e. frozen lobster and frozen crab. The supply of product to these markets is dominated by Asian developing world suppliers.

Trade sources comment that:

  • Norway views Malaysia as a very important market for its fresh/chilled salmon. Its strategy includes a range of marketing activities at both B2B (business-to-business) and, occasionally, at B2C (business-to-consumer) level that are designed to sustain its market leadership in salmon into the long term.
  • The USA (Alaska in particular) has been marketing its products in Malaysia for more than 5 years under a strategy that has been targeting development of Malaysian demand for its specialty fish and seafood products, e.g. scallops and oysters.
  • New Zealand's exporters are focused on maintaining their market leadership in the market for imported mussels through a high quality distribution channel and B2B promotions. Its positioning is premium, in a market where all other products are commodities and cannot be differentiated like the New Zealand product.

All three countries have been active in marketing campaigns in the restaurant sector on a periodic basis over the past 5 years. Their products are very well known at a B2B level and some, e.g. Norwegian salmon and New Zealand mussels, are equally well known to their target end consumers in the Malaysian retail market today. This situation, and the quality of these products, has established important demand-pull for these products in a market where price sensitivity has tended to commoditise competing products.

Trade sources comment that the strategies of Norway and New Zealand are tied very closely to the establishment of loyal importer-distributors that work hard for their principals in developing the Malaysian market. These importers are strategic partners in market development, and not just mere importers and traders.


8. Future best prospects and opportunities for Canada, based on current Canadian capacities and penetration

8.1 Malaysia's future development and its impact on demand for fish and seafood

Malaysia (Population; 27.5 million persons) is one of the more advanced economies in ASEAN. It also has the broadest based consumer market in the region. Unlike in its more populated neighbours, e.g. Indonesia and Vietnam, it has a nationwide market, rather than one that is focused more on the capital city and other big urban areas.

Today, Malaysia's GDP per capita, as measured on a PPP basis by the World Bank, is about US$ 13,500. Its GDP, as measured on a nominal basis was around US$ 7,100 in 2008. It is the third wealthiest country in ASEAN, after Singapore and Brunei Darussalam.

About 60% of its population is now in its middle and upper income group, which provide Malaysia with a sophisticated demand base. In addition to this affluent population, its fish and seafood market is also bolstered by demand from over 20 million tourists and business visitors per annum. Malaysia's population is growing and is expected to reach around 30 million persons by 2015.

Although it suffered a recession in 2009 (downturn of about 1.9%, based on provisional data), its economy had been growing at rates in excess of 4% per annum since 2003. Its economic growth is not solely reliant on exports, as in the other high population countries of ASEAN. Its domestic consumer market is a key player in the economy. Economic growth generally takes place in an environment of low retail price inflation.

Analysts are now forecasting annual growth rates of between 5% and 5.5% for the period 2010 to 2012, with the main risk being external, i.e. the strength of the global economic recovery. While there is an element of political turmoil in Malaysia today, most analysts view this as part of Malaysia's political maturity development process, rather than a problem similar to that taking place in neighbouring Thailand.

The 2010 economic growth forecast is around 5.5% because of the strength in demand for exported products and a rebound in local consumer confidence and spending.

These forecasts are positive for future demand for imported fish and seafood from Malaysia's two broad markets for these products, namely:

  • The large commodity market for fish and seafood; and
  • The smaller market for differentiated fish and seafood products.

As Canada can supply products to both of these markets, these forecasts are also positive for the development of new export opportunities in Malaysia over the next 3 to 5 years.

It was difficult to obtain any forecasts on future growth in specific segments at the time of the study, i.e. February 2010, mainly because there was still some uncertainty over the state of improvement in the global economy, Malaysia's export performance, and also the future value of the Ringgit (local currency).

There is a general belief that demand for fish and seafood will continue to grow in future on the back of demand from a growing population, the tourism industry and the fish and seafood processing industry. The buoyancy of demand will depend on the state of economic growth, and also the production output of the local fishery industry.

For example, economic growth at around 5% per annum could drive demand for imported fish and seafood at rates of between 6% and 8% per annum. Economic growth in excess of 5% per annum will likely fuel indulgent dining out and spending that will see a larger boost in demand for products such as:

  • fresh/chilled salmon and other non-indigenous specialty fish;
  • lobsters and crabs; and,
  • other products such as oysters, scallops, mussels and exotic seafood.

In addition to the above, fish and seafood have very few barriers to import, unlike meat and poultry, where the halal situation with these products seems to be getting more and more complex as Malaysia's halal requirements evolve and become more sophisticated.

Fish and seafood do not fall into the halal area of the market, unless they are processed products that contain other ingredients, inputs and additives.