Malaysia's mineral, building material exports to Japan may rise

KUALA LUMPUR, Wednesday 16 March 2011 (Bernama) -- Malaysia stands to benefit from Japan's need to replace lost nuclear energy capacity and reconstruction efforts due to the recent earthquake and tsunami.

In a research note today, ECM Libra said assuming complete substitution of the 11,964 megawatts in all 14 reactors lost with Liquefied Natural Gas (LNG) thermal plants, Japanese petroleum and LNG import demand for 2011 could rise a further 4.3% and 5.2% respectively from 2010 levels.

It said, mineral fuels, a major Malaysian export item, stands to benefit from Japan's need to replace lost nuclear energy capacity.

According to ECM Libra, Malaysia is also in a good position to take advantage of the looming demand for building materials like timber and steel unleashed by reconstruction efforts.

It noted the destruction of wealth in Japan will probably weigh on purse strings, cutting the amount of disposable income and the propensity to spend on vacations.

"However, Japan accounts for only 1.7% of total tourist arrivals to Malaysia and thus, the impact on the tourism sector is likely to be minimal," it added.

However, over a longer horizon, ECM Libra said the need to redirect funds internally for Japanese to fund reconstruction activities may limit the flow of foreign direct investment (FDI) to other countries including Malaysia, which is mainly in the manufacturing sector.

MySinchew 2011.03.16