Thailand and Malaysia Target US$30 Billion Trade by 2027 with Cross-Border Ties

KUALA LUMPUR: Thailand and Malaysia are setting an ambitious target of achieving US$30 billion (approximately RM134.22 billion) in bilateral trade by 2027. This milestone reflects their commitment to deepening economic cooperation, enhancing cross-border trade, and fortifying partnerships in key sectors such as halal goods and rubber production. The collaboration is a significant step toward fostering regional integration and prosperity within ASEAN.

Key Developments from High-Level Meetings

The recent visit of Thai Prime Minister Paetongtarn Shinawatra to Malaysia, at the invitation of Malaysia’s Prime Minister Datuk Seri Anwar Ibrahim, marked a turning point in bilateral relations. From December 15 to 16, the high-level discussions catalyzed renewed economic collaboration and strategic planning for shared growth.

Thailand’s ambassador to Malaysia, Lada Phumas, highlighted the importance of greater cross-border trade promotion and facilitation. “To achieve this target, both nations have agreed to jointly promote halal goods and services, engage in research and development of halal products, and collaborate on creating a sustainable rubber supply chain,” she noted.

Driving Growth in Key Sectors

1. Halal Industry Expansion

The halal sector remains a cornerstone of the economic partnership between Thailand and Malaysia. Both countries have pledged to enhance R&D initiatives, support joint export activities, and expand their share in the global halal market. With the halal economy projected to reach US$4.96 trillion globally by 2030, these efforts could position both nations as significant players in this rapidly growing industry.

Joint initiatives include:

• Developing innovative halal products: Expanding offerings to meet evolving consumer preferences.

• Enhancing halal certification processes: Streamlining certification to boost trust and export opportunities.

• Supporting SMEs in the halal sector: Facilitating access to funding and international markets.

• Promoting halal tourism: Encouraging Muslim-friendly travel initiatives that complement the halal product sector.

The halal market’s integration into travel, food services, and e-commerce underscores its vast potential. Thailand and Malaysia’s collaborative efforts are expected to enhance bilateral trade and amplify their roles as global leaders in this lucrative industry.

2. Rubber Industry Collaboration

As two of the world’s leading rubber producers, Malaysia and Thailand have committed to fostering a sustainable rubber trade. This includes advancing R&D in eco-friendly practices and ensuring the industry meets rising global demand for ethically sourced materials. The signing of a Memorandum of Understanding (MOU) on rubber industry cooperation further underscores this commitment.

Key focus areas include:

• Sustainability initiatives: Addressing environmental concerns in rubber production.

• Supply chain optimization: Ensuring efficiency and resilience in global trade.

• Market diversification: Expanding exports to emerging markets in Asia, Europe, and the Americas.

• Innovation in rubber-based products: Encouraging the development of high-value applications in healthcare, automotive, and industrial sectors.

The rubber sector’s progress is expected to significantly contribute to meeting the US$30 billion trade milestone while supporting sustainable economic development goals.

Infrastructure Projects Enhancing Connectivity

Cross-border connectivity is vital to achieving the US$30 billion trade goal. Infrastructure improvements play a pivotal role in facilitating the seamless movement of goods and people between the two nations. Two major projects are currently underway:

• Second Bridge Connecting Rantau Panjang and Su-Ngai Kolok: This bridge aims to improve trade and transport efficiency between Kelantan, Malaysia, and Narathiwat, Thailand. Upon completion, it will significantly enhance logistical capabilities.

• Road Alignment Linking ICQS Bukit Kayu Hitam and CIQ Sadao: Scheduled for completion by 2025, this project is expected to streamline the cross-border flow of goods and passengers, bolstering trade and tourism activities. The Bukit Kayu Hitam-CIQ Sadao checkpoint already accounts for approximately 33% of Thailand’s border trade volume.

Additionally, discussions are ongoing to finalize MOUs for cross-border transport of goods and passengers, further strengthening regional integration.

• Rail Connectivity: Both countries are exploring joint railway projects to enhance cargo and passenger movement, which could significantly boost regional logistics capabilities.

Recognizing the potential of the digital economy, Thailand and Malaysia aim to leverage an existing MOU between Thailand’s Digital Economy Promotion Agency and Malaysia’s Digital Economy Corporation. Initiatives include:

1. Encouraging technology startups: Providing resources and a conducive environment for innovation.

2. Facilitating knowledge exchange: Sharing best practices and technological advancements.

3. Promoting digital trade: Building a robust framework for e-commerce and digital services.

4. Collaborating on 5G technology: Accelerating the adoption of next-generation connectivity to drive economic growth.

The ASEAN digital economy is projected to exceed US$300 billion by 2025, offering immense opportunities for both nations to capitalize on emerging trends such as fintech, AI, and blockchain technology. Enhanced digital cooperation is also expected to boost small and medium-sized enterprises (SMEs), which form the backbone of both economies.

Private Sector Involvement

Ambassador Lada emphasized the private sector’s critical role in achieving the trade target. She encouraged Thai and Malaysian businesses to engage through:

• Trade fairs and exhibitions: Showcasing innovations and building international partnerships.

• Business dialogues: Facilitating communication between industries to address challenges and identify opportunities.

• Joint ventures in key industries: Strengthening collaboration in sectors such as manufacturing, agriculture, and services.

In addition to trade initiatives, private-sector investments in sustainable development projects, such as renewable energy and green technologies, are expected to play a vital role in achieving the long-term economic vision of both nations.

Enhancing Security

Political and security collaboration also featured prominently in discussions. Both nations are working together to combat transnational crimes such as:

1. Human trafficking: Strengthening border controls and enhancing victim support mechanisms.

2. Drug smuggling: Coordinating law enforcement efforts to dismantle criminal networks.

3. Cybercrime and online scams: Developing advanced cybersecurity measures.

Efforts to foster peace in Thailand’s Southern Border Provinces (SBPs) were also praised. The Joint Comprehensive Plan towards Peace (JCPP) highlights mutual trust and aims to create a roadmap for lasting stability in the region. This includes:

• Promoting deradicalization programs: Sharing best practices in community engagement.

• Intelligence sharing: Enhancing cooperation between security agencies to address emerging threats.

• Cross-border training programs: Strengthening law enforcement capabilities to tackle modern security challenges.

Cultural Exchange

Tourism collaboration under the “6 Countries, 1 Destination” initiative has been identified as a strategic priority. This initiative focuses on:

1. Easing border crossings: Simplifying visa processes and improving travel infrastructure.

2. Coordinating promotional campaigns: Highlighting cultural and natural attractions in both countries.

3. Strengthening travel connectivity: Expanding air and land transport links.

Cultural exchanges also play a vital role in fostering mutual understanding. Projects such as the ASEAN Heritage Train aim to celebrate shared heritage and promote people-to-people connections. Additionally, culinary and arts festivals are being planned to showcase the rich traditions of both nations.

• Medical Tourism: Leveraging expertise in healthcare to attract patients from across ASEAN and beyond.

• Eco-Tourism Initiatives: Encouraging sustainable travel practices to preserve natural resources while boosting tourism revenue.

The bilateral relationship between Thailand and Malaysia is entering a new phase of collaboration and growth. By prioritizing strategic sectors, enhancing infrastructure, and fostering innovation, the two nations are well-positioned to achieve the US$30 billion trade milestone by 2027. This ambitious vision reflects their shared commitment to economic prosperity, regional integration, and sustainable development within ASEAN.

Key takeaways for stakeholders include:

1. Businesses: Seize opportunities in the growing halal and digital economies.

2. Policymakers: Strengthen frameworks to support cross-border trade and investment.

3. Communities: Engage in cultural and economic exchanges to build lasting partnerships.

With a comprehensive approach to economic collaboration and shared aspirations, Thailand and Malaysia are not just aiming for a trade target but are setting a benchmark for regional cooperation in Southeast Asia. The continued commitment to innovation, sustainability, and shared prosperity ensures that this partnership will have a lasting impact on the region’s future.