Structural complementarities, untapped potential in era of geoeconomic realignment

by Qarrem Kassim
Foreword by Datuk Prof Dr Mohd Faiz Abdullah

June 2026

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Executive summary

  • Malaysia’s push for economic diversification amid global geopolitical and trade uncertainty has increasingly extended to Central Asia. While often treated as a single region, the five Central Asian republics exhibit varying degrees of economic openness and external engagement. Nevertheless, a broader regional trend towards diversification of partnerships is increasingly evident, driven by a desire for wider engagement, agency and reduced dependence on major traditional trade partners. Despite existing cultural complementarities and ongoing diplomatic efforts, Malaysia-Central Asia trade and investment relations remain underdeveloped, accounting for 0.04% of the former’s total trade in 2024. This paper argues that structural complementarities, coupled with shifting geoeconomic conditions, present a strategic window for deeper engagement.

  • Malaysia’s trade with the region grew to RM1.14 billion in 2024, a 56% increase over five years but remains modest in scale and is highly skewed (94%) towards exports. Bilateral trade is dominated by Malaysian exports of electronics, palm oil, and agro-food processing, while overall imports from Central Asia are concentrated around minerals, raw materials and fertilisers, making the latter prone to supply and availability swings, limiting the potential to anchor trade relations in stable long-term bilateral trade arrangements.

  • Few private sector links between Malaysian and Central Asian firms mean that Malaysia’s comparative advantages remain underutilised in the region. Policy uncertainty, non-harmonised regional trade frameworks, logistical challenges and concerns over institutional independence are several factors that heighten trade and investment risks.

  • There may be strong potential for sectoral trade in electronics, vegetable oils and fats, fertilisers, copper, zinc and other industrial goods. Malaysia’s cooperation with the region can evolve from a market for electronics, palm oil and extractive mining towards joint value-added development through mineral processing, halal logistics and supporting the region’s development of digital services.

  • There is space for educational, vocational and technical training partnerships with private education providers, including joint university exchanges, positioning Malaysia as a key development partner in the region.

  • Establishing formalised G2G and B2B cooperation while securing mutual recognition on halal, food safety and customs regulations will greatly help economic engagement in the region and institutionalise business-to-business partnerships to promote diversified, long-term investment.

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