KUALA LUMPUR: The Malaysian logistics industry is expected to grow by 10.3% to RM129.93 billion in 2012 against an estimated RM117.8bil last year, on strong government support for logistics-related development and growth fuelled by foreign investments.

Malaysia's strategic location and focus on improving supply chain efficiency were also key growth drivers, said Frost & Sullivan vice-president, transportation & logistics practice, Asia-Pacific and country head for Malaysia, Gopal R..

“Growth of the country's external trade signifies growth of the transportation and logistics industry especially for import and export forwarding, air freight and ocean freight-related businesses,” said Gopal, adding that external trade for Malaysia was expected to increase 5.9% year-on-year to RM1.32 trillion in 2012..

Foreign direct investments surged to RM21.3bil in the first half of 2011 compared with RM12.1bil in the corresponding period in 2010, reflecting the growing confidence in the wake of Government initiatives to stimulate economic growth..

“The introduction of several initiatives such as the Government Transformation Programme and the Economic Transformation Programme provided a conducive business environment for the logistics market,” he said..

Malaysia's major trading partners are Asian countries which are expected to experience stable economic growth..

“However, the share of trade with Japan and Thailand is expected to shrink due to supply chain disruptions and production slowdown following disasters in the respective countries,” Gopal said..

The country's key trading commodities are electrical and electronic products, chemicals, palm oil, machinery, appliances and parts..

The Malaysian logistics industry is forecast to grow at a compounded annual growth rate (CAGR) of 11.6% to reach RM203.71bil in 2016. In terms of volumes, Gopal forecast Malaysia's total cargo volumes to increase 10.1% to 545.13mil tonnes in 2012 compared with 495.29 million tonnes in 2011..

“Sea-freight is the most favoured mode of transport for cargoes in Malaysia, (comprising) more than 90% of total freight traffic in 2011,” he said. Gopal said total cargo volume by sea was expected to grow 10.1% to 538 million tonnes in 2012..

Cargo volume by rail is expected to increase to 6.2 million tonnes in 2012 compared with 5.9 million tonnes in 2011. Gopal predicted cargo volume by air to grow 3.9% to 925,000 tonnes this year buoyed by steady growth in the economy and external trade..