Malaysia Serves as a Gateway for South African Fruit Into South East Asia

South African Fruit Exports to Malaysia Increase in 2021

South Africa has established itself as a fruit-supplying nation to Malaysia based on quality produce at competitive prices. South African fruit exports to Malaysia increased from 18% of total bilateral imports in 2020 to 30% of total imports in 2021. Manganese remains South Africa’s top export to Malaysia in 2021 followed by citrus in the second position, apples, pears, and quinces in third position, with grapes moving up to the fourth position. South African citrus (oranges, lemons, grapefruit, and soft citrus) exports to Malaysia reached USD 48.88 million in 2021, an increase of 40.51% YoY. Apple, pear, and quince exports reached USD 39.72 million in 2021 which is an increase of 16.21% compared to last year. Grape exports almost doubled with an increase of 97.78% YoY to USD 20,19 million in 2021. 

Figure 1: South African Fruit Exports to Malaysia 2017-2021

Source: TradeMap

South African oranges are very popular in Malaysia, as are Granny Smith apples with grapes growing in popularity in 2021. Malaysia has a large Muslim population which stimulates orders for grapes especially for Ramadan, while its Chinese population stimulates fruit imports for Chinese festivals such as Chinese New Year and the Chinese moon festival. South African fruit have price, quality, and seasonal advantages that Malaysian importers find attractive despite increasing competition from Egypt and Australia. There are no import duties on citrus, and only a 4.5% duty on other categories which adds to the price competitiveness of South African fruit.

Malaysia is a net food importer sourcing primarily from China, Australia, India and Brazil with some imports travelling a long way at high freight rates. According to the Freightos Global Freight Index container prices have increased by more than 400% in W1 June 2022 compared to pre pandemic levels. Malaysia has realised that supply chain disruptions, high freight rates, and rising food prices may place the nation at risk if it sources the bulk of its food from only a handful of countries. South Africa can provide food at the same or better quality and at competitive prices which adds to the diversification of Malaysian food imports and helps distribute risk.

New Port Will Avoid Straits of Malacca and Reduce Transit Time

There are various factors that make Malaysia a golden opportunity for South African fruit exports including few phytosanitary restrictions into Malaysia and Singapore. Also, a new port development in Malaysia’s Perlis State could take days off the transit route and lower freight costs for South African fresh produce not only into Malaysia, but also the rest of the Far East. South Africa’s fruit to the Far East traverses through the Straits of Malacca, along with 40% of the world’s cargo, but the waterway is predicted to reach full capacity in the coming years.

Construction has started on the Mutiara Perlis inland port with associated food hub and cold chain (2 million square foot of refrigerated warehouses in the first phase) at Pedang Besar in Malaysia’s state of Persil. The first phase of the port is expected to be completed by the end of 2023 and operational in early 2024. The development will provide major advantages to South African exporters, not only to supply into Malaysia but also as a hub to tranship into Thailand, Laos, Cambodia, Vietnam, Indonesia, Taiwan and, critically, into China. It is estimated that offloading and transhipping at Perlis could shave off between seven to ten days in transit time to Qingdao, China, and result in significant savings in fuel and freight costs. There is excellent rail connectivity from Perlis to Thailand from where fruit can reach Kunming in southern China in two days by rail. The greater Mekong region can also be accessed from this point. The construction of the Mutiara Perlis port could result in more South African fruit destined for Asian markets once complete.