FOREIGN TRADE UNIVERSITY

---------***--------

GOING INTERNATIONAL ANALYSIS PROJECT

GROUP 4

TARGET MARKET: MALAYSIA

COMPANY: TUAN LOC COMMODITIES
PRODUCT: ROBUSTA AND ARABICA COFFEE BEANS

Họ và tên MSV
Trần Ngọc Phương 2114710058
Nguyễn Hoàng Anh 2114710004
Vũ Ngọc Ánh 2114710010
Lê Minh Thảo 2114710068
Hồ Anh Quân 2114710062
Mai Nhân Anh Quân 2111710049
Nguyễn Thị Phương Trà 2114710074
Trần Thị Thuỳ Linh 2114710036

Hanoi, March, 2024

Table of Contents
PART ONE: EXECUTIVE SUMMARY......................................................................................3
Company overview.....................................................................................................................3
PART TWO: FACTORS FOR ANALYSIS..................................................................................4
Section I: Country overview.......................................................................................................4
A. Factual Data......................................................................................................................4
B. Background......................................................................................................................5
Section II: Political and legal analysis........................................................................................5
A. Political ideology..............................................................................................................5
B. Political risk......................................................................................................................6
C. Legal system.....................................................................................................................7
D. International relations.......................................................................................................9
Section III. Economic Analysis..................................................................................................9
A. Economic system..............................................................................................................9
B. Economic development..................................................................................................10
C. Financial markets...........................................................................................................12
D. Infrastructural forces......................................................................................................13
Section IV: Market Potential....................................................................................................13
A. Identify basic appeal.......................................................................................................13
B. Measure market potential...............................................................................................14
C. Select the market or site.................................................................................................16
Figures.......................................................................................................................................20
Footnote and bibliography........................................................................................................24

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Table of Figures
Figure 1: Short term political risk index......................................................................................20
Figure 2: OPR Rate......................................................................................................................20
Figure 3: Gross Domestic Product...............................................................................................20
Figure 4: GDP per capita.............................................................................................................21
Figure 5: Human Development Index..........................................................................................21
Figure 6: Malaysia’s Life Expectancy.........................................................................................21
Figure 7: Inflation rate.................................................................................................................21
Figure 8: Exchange rate...............................................................................................................22
Figure 9: Quality of infrastructure – LPI.....................................................................................22
Figure 10: Market structure of coffee supply to Malaysia...........................................................22
Figure 11: Vietnam's companies export to Malaysia...................................................................22
Figure 12: Brazil Coffee Exports to Malaysia.............................................................................23
Figure 13: Colombia Coffee Exports to Malaysia.......................................................................23
Figure 14: Indonesia Coffee Exports to Malaysia.......................................................................23

PART ONE: EXECUTIVE SUMMARY

Company overview
Tuan Loc Commodities is a Vietnamese coffee production and distribution company. In September
2021, Tuan Loc Group acquired 100% of Tin Nghia Commodities from Tin Nghia Corporation (Timexco).
Following the acquisition, Tuan Loc Group renamed the company Tuan Loc Commodities and augmented the
company's charter capital by a factor of ten, to VND 400 billion (equivalent to approximately US$18 million).
Tuan Loc Commodities is the top three groups in Vietnam, focusing on the coffee business for over 30 years.
We can provide Arabica and Robusta from all over Vietnam; we own a few warehouses, farms, and two coffee
bean processing plant; Vietnam′s coffee beans are used in the commercial field, and the price is more
advantageous. The purpose of our company is to establish a leading agri-business in Vietnam by capitalizing on
the group's robust financial position and internal synergies, particularly between its agri-business and seaport

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divisions. Today, Tuan Loc Commodities is a solid counter-party and a reliable partner for the global coffee
industry. We plan to expand our market to Asia, we are considering Malaysia - the coffee importing country.
In Malaysia, coffee is a beloved beverage enjoyed in traditional kopi shops serving unique local brews.
However, the nation faces a unique situation: consumption far outstrips production. While Malaysia boasts
fertile land suitable for coffee cultivation, only a small portion is currently utilized. This means the country
relies heavily on imports, primarily from Indonesia, Vietnam, and South America, to quench its growing thirst
for coffee. This trend is expected to continue, driven by a population with increasingly refined palates.
Though having become the second largest coffee exporter in the whole world with immense fame not
only upon quantity but also quality, Vietnam is only the fourth biggest coffee provider in Malaysia (after
Colombia, Indonesia and Brazil). The very reason why Vietnamese coffee isn't as widely favored in Malaysia
compared to the global market lies within the difference in taste in coffee. Malaysians might have a preference
for different coffee profiles, particularly Liberica. Vietnamese coffee, is often strong and bold (due to Robusta
dominance), might not align with their taste compared to other origins. This common issue has relatively
become our very own case in which our main export product, if possible, will be Robusta and Arabica coffee
beans. However this is not entirely a drawback since import of coffee in Malaysia is still not so big. As a result,
new exporter in the market like us, can benefit from the foothold-free Vietnam’s biggest coffee exporter in
Malaysia and gain our own reputation in this potential market.
We have gone through every factor and realized that exporting our products to Malaysia now is
appropriate and we will continue considering the next step.

PART TWO: FACTORS FOR ANALYSIS

Section I: Country overview
A. Factual Data
1. Geographic location
Malaysia is a Southeast Asian nation uniquely separated by the East Sea into two land regions on the Malay
Peninsula and the island of Borneo, which boast both mainland and island territory. With the total coastline
length of about 4,809 kilometers, Malaysia has great potential in international trades.
2. Neighboring countries
Malaysia is bordered by:
● Land Borders: Thailand, Brunei, Indonesia
● Maritime Borders: Singapore, Vietnam, Philippines
3. Population

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 According to WorldoMeter, in 2022, the total population of Malaysia is 33,938,221. Which make up about
0.43% of the world's total population and 1.09% higher than that of 2021. This growth rate of birth can be
considered moderate when compared to the world with 1.7% in 2022.
4. Natural resources
Malaysia is rich in resources like minerals (tin, bauxite (aluminum ore), iron ore, copper, and gold), fossil
fuels, timber, agriculture resources (rubber, palm oil, cocoa, and rice).
5. Main industries and locations within country
Electrical and Electronics (E&E):
● Location: Penang, Selangor, Johor, and Melaka – all strategically located near ports for easy export.
Rubber and Palm Oil Processing:
● Location: Scattered throughout the country but major regions are Kedah, Perak, Selangor, and Johor.
Petroleum Production:
● Location: in the East Sea and off the coast of Sarawak in East Malaysia.
B. Background
1. Historical Development
Malaysia's story stretches back millennia. Early civilizations thrived on the peninsula, while powerful
kingdoms like Malacca rose and fell, controlling trade routes between East and West. European colonists, first
the Portuguese, then Dutch and British, arrived in the 16th century, leaving their mark on governance and
infrastructure. In 1957, Malaya gained independence, later merging with Singapore, Sabah, and Sarawak to
form modern Malaysia in 1963. Since then, the nation has shed its colonial past, embracing rapid economic
development and cultural diversity.
2. History of key industries
Malaysia's economic journey is intertwined with its key industries. Pre-colonial times saw flourishing tin
trade, while European influence spurred rubber plantations. Independence brought a focus on diversifying
beyond raw materials. The 1970s marked a shift towards manufacturing, particularly electronics, capitalizing on
strategic location and skilled labor. Today, Malaysia remains a major player in palm oil and rubber processing,
while high-tech manufacturing like semiconductors reigns supreme. This continuous transformation highlights
Malaysia's adaptability and its drive to be a prominent player in the global marketplace.

Section II: Political and legal analysis

A. Political ideology
1. Wide participation
Malaysia has established universal suffrage (age 21 and over) and regularly holds general elections at the
state and federal levels at intervals required by the constitution. Opposition parties can run in the country’s

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elections, and political posts are generally filled according to electoral outcomes. With opposition parties
winning the last general elections at the federal level in May 2018 for the first time since independence, general
multiparty elections are accepted as the means of filling political posts in Malaysia.
2. Democracy
Malaysia is a parliamentary democracy with a constitutional monarchy. The King is the head of state, and
power is divided among legislative, judiciary, and executive branches. The federation comprises nine states,
each with some autonomy, but the central government retains key powers. The constitution outlines the roles of
the King, state rulers, and the Council of Malay Rulers. Democracies like Malaysia often support private
business and may lower trade barriers, fostering a competitive environment for both local and foreign
companies..
3. Pace of progress if nation is undergoing political transition
Malaysia experienced a political shift with the fall of the Perikatan Nasional government in August 2021,
leading to the 15th general election in November 2022. This election was notable for forming the first coalition
government under Prime Minister Anwar Ibrahim, who aims to create a robust administration with a focus on
the economy and inclusivity regarding ethnicity, religion, and regional issues. Anwar’s leadership is seen as a
positive step towards addressing long-standing social and political challenges in Malaysia.

B. Political risk
1. Level of political risk
According to a report by Fitch Solutions, Malaysia's short-term political risk index score stood at 64.8 (out
of 100) in October 2022, which is near its lowest on record, reflecting elevated political uncertainty. Overall,
the political rate index of Malaysia is considered moderate among the world’s nations. Therefore, Malaysia can
be considered a “safe” business environment to export to regarding its political situation.
Figure 1: Short term political risk index
2. Sources of political risk (corruption, ethnic conflict, etc..)
 Political crisis
Between October 2021 and March 2022, Malaysia held two state elections amidst political tensions. The
UMNO leadership crisis in April 2022 further escalated the situation, leading to constitutional revisions and a
new general election. Political instability has increased Malaysia’s risk profile, potentially affecting economic
stability and market conditions. Such political turmoil can impact trade policies and diplomatic relations, which
may influence Vietnam’s coffee bean exports to Malaysia.
 Region and race

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 Malaysia is characterized by its diverse population with various ethnicities and religions. Any perceived
insensitivity or disregard for cultural and religious practices could lead to negative reactions and harm our brand
image. Political issues related to race and religion can sometimes lead to tensions or policy changes.
 Corruption
Malaysia’s score on Transparency International’s Corruption Perceptions Index has dropped from 53 in
2019 to 47 in 2022, indicating increased corruption concerns. This decline can negatively impact business
operations, potentially causing delays and increased costs in customs clearance, licensing, and distribution,
affecting the delivery of goods like coffee beans.
 National country’s security
Malaysia's security is challenged by potential extremist infiltration and its strategic location, which
exposes it to various transnational crimes. These security issues, along with political instability, can disrupt
supply chains and affect business operations, including the export quality of coffee beans.
3. How to adapt to the political risk
 Adaptation: We need to Incorporate risk into our business strategies
Tuan Loc Commodities is considering forming partnerships with local Malaysian companies to handle
procedures and issues in Malaysia. They plan to support local distribution and communication improvements
and purchase political risk insurance to safeguard against potential financial losses due to political events,
ensuring business continuity even in adverse situations.
 Information gathering: We need to stay informed and adapt
Tuan Loc Commodities plans to collaborate with political-risk service agencies, use local banks, and
stay informed about Malaysia-Vietnam trade agreements to manage risks effectively. The company aims to
maintain operational flexibility and build relationships with government agencies to navigate economic changes
and influence favorable policies for their industry.
 Influence local politics: We need to present our firm’s view on political matters
Tuan Loc Commodities will consider directing our scarce financial resources into wrong projects and
indirect export; creating an “uneven” playing field so that our products will be widely consumed in Malaysia.
Moreover, this strategy also makes it easier for our company in customs clearance.

C. Legal system
1. Common law
The legal system of Malaysia is primarily based on the common law legal system, a direct result of British
colonization from the early 19th century to the 1960s. The country practices a parliamentary democracy and has

6
a constitutional monarchy, similar to the United Kingdom. The government comprises three arms: the
Legislature, the Executive, and the Judiciary.
2. Similarities and differences of home and host nations’ legal systems

Vietnam Malaysia

Similarities - Significantly influenced by their historical ties with colonial powers, which have
shaped their current legal frameworks.
- Place a high importance on legislation as a source of law, and their courts are
subordinate to their respective legislatures.

Differences A socialist one, based on the civil law Primarily based on the common law legal system, a
system, with modifications from direct result of British colonization from the early
Marxist-Leninist ideology. 19th century to the 1960s.

The most important source of law in The supreme law of Malaysia is the Constitution of
Vietnam is legislation, and courts are Malaysia, which sets out the legal framework and
subordinate to the legislature. rights of Malaysian citizens.

Includes international treaties, which Practices a parliamentary democracy and has a

become a source of law after being constitutional monarchy, similar to the United
ratified by the National Assembly. Kingdom.
3. National enforcement of property rights
● Trademarks: Malaysia adheres to the Trade Marks Act 2019 and the Trademark Regulations 2019,
providing protection for distinctive signs, logos, and symbols used to identify goods and services.
● Copyrights: The Copyright Act 1987 safeguards literary, artistic, and musical works, ensuring creators’
rights.
There are also other enforcements to enforcing Intellectual Property Rights in Malaysia:
● Civil enforcement: Rights holders can initiate civil lawsuits to seek remedies such as injunctions,
damages, and the destruction of infringing goods.
● Criminal enforcement: is available for specific IP violations, such as copyright infringement and
trademark counterfeiting, which are overseen by the Royal Malaysian Police and other law enforcement
agencies in Malaysia.
Malaysia's IPR impact on Tuan Loc Commodities' export: Unauthorized replication risks legal
repercussions, trade sanctions. Malaysia's strong IPR framework protects trademarks, copyrights, mitigating IP-
related risks. Affiliation with WTO, adherence to TRIPs benefits global trade, notably benefiting Vietnam.
4. Presence of product safety and liability laws
Malaysia's robust product safety and liability laws, such as the Consumer Protection Act 1999, set high
standards for safety and hold manufacturers accountable. For our company to export to Malaysia, strict
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adherence to these regulations is vital to meet safety standards, gain consumer trust, and avoid legal issues.
However, the varied legal application may pose challenges in terms of cost and time for exporting activities.
5. Level and focus of taxation
In 2022, Malaysia's taxation system features a progressive income tax for individuals (0% to 30%) and a flat
corporate tax (24% for resident companies). Notably, a Digital Service Tax (6%) on foreign digital services and
the reintroduced Goods and Services Tax (6%) apply. Importantly, coffee has a 0% import duty, providing a
cost advantage for exporting Vietnamese Robusta and Arabica coffee beans to Malaysia. Understanding and
complying with these tax structures are crucial for our company, ensuring competitiveness in the market and
potential profitability, considering production, transportation, and other associated expenses.
D. International relations
1. General relations with other countries
Malaysia has significant trade ties with China and the USA. Its relationship with China is marked by
economic partnerships and cultural exchanges, though concerns persist over territorial disputes and human
rights. The USA is a longstanding "Comprehensive Partner," collaborating on trade, investment, security, and
cultural exchange since Malaysia's independence. Vietnam aligns with Malaysia in the South China Sea
disputes, potentially allowing for increased trade opportunities with Malaysia amid concerns affecting China-
Malaysia relations.
2. Multilateral agreements with other nations
Malaysia has a comprehensive trade framework, boasting seven bilateral FTAs, nine regional FTAs, and
membership in regional blocs like ASEAN, APEC, and TPP. Trade with Vietnam benefits from regional FTAs
within ASEAN. The longstanding relationship and agreements between Malaysia and Vietnam have facilitated
easier and more cost-effective trading. Malaysia's open market policies and historical ties with Vietnam offer
favorable conditions for our exporting coffee, allowing for reduced trade barriers. We need to stay informed
about multilateral agreements, seek guidance, and ensure compliance with regulations are essential for our
Vietnamese coffee company seeking to export to Malaysia.

Section III. Economic Analysis

A. Economic system
1. Mixed economy system
Malaysia has a mixed economic system which includes a variety of private freedom, combined with
centralized economic planning and government regulation.
Tuan Loc Commodities can benefit in the Malaysian market from shared economic systems, regulations,
and existing agreements. Familiarity with business practices strengthens relationships. Pro-growth policies offer

8
opportunities, but potential barriers like tariffs and regulations demand careful navigation and collaboration
with local partners. Aligning with government policies is crucial for successful entry into the Malaysian market.
2. Fiscal and monetary policies
Monetary policy and fiscal policy refer to the two most widely recognized tools used to influence a
nation's economic activity.
● In term of fiscal policies
Taxes and government spending are the two basic instruments used in fiscal policy. The Malaysian
government has proposed an expansionary fiscal policy with Budget 2023 having a total allocation of
RM373.3bil as compared to RM385.3bil in 2022. This was done with the aim of balancing the interest rate with
sustaining economic growth under the assumption of a more challenging year ahead, due to weaker global
economic prospects amid political tensions and fiscal limitations.
Malaysia is also one of the lowest tax revenue collectors in Southeast Asia at around 11.8 percent of gross
domestic product (GDP). Exporting to Malaysia offers opportunities due to the country's economic growth and
rising coffee consumption. However, government subsidies for local producers may create challenges,
potentially limiting Tuan Loc Commodities' ability to compete on pricing and enter the market effectively.
Strategic considerations are essential for navigating these dynamics.
● In term of monetary policies
In Malaysia, the responsibility for formulating and implementing monetary policy is entrusted to Bank
Negara Malaysia (BNM) as the nation’s central bank, and one of the principal objects of BNM is to promote
monetary stability conducive to the sustainable growth of the Malaysian economy.
Until 2022, the Malaysian Ringgit had not been fully internationalized. If the shifting happened, it could
influence the costs and revenue associated with our coffee bean exports.
The Monetary Policy Committee (MPC) of BNM sets monetary policy by changing the Overnight Policy
Rate (OPR). The OPR is BNM’s policy interest rate that influences, among others, banks’ lending and financing
rates, as well as deposit rates. Higher OPR in Malaysia strengthens the exchange rate, benefiting our business. It
reduces local demand for bank loans but offers a competitive advantage for exporting countries. However, if
Malaysian banks raise lending rates, our business may face increased costs for financing.
Figure 2: OPR Rate
B. Economic development
1. GDP and GDP per capita
The Gross Domestic Product (GDP) in Malaysia was worth 407.03 billion US dollars in 2022, according to
official data from the World Bank; and this number is expected to reach 426.57 USD Billion by the end of
2024, according to Trading Economics global macro models and analysts expectations.

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Figure 3: Gross Domestic Product
The Gross Domestic Product per capita in Malaysia was last recorded at 28383.62 US dollars in 2022,
when adjusted by purchasing power parity (PPP). It is equivalent to 160 percent of the world's average.
Figure 4: GDP per capita

2. Level of black market activity

Malaysia’s shadow economy is estimated to be as large as 30.2 percent of the country’s gross domestic
product. However, this figure is comparatively low compared to the global rate. According to Transparency
International, Malaysia ranks 61st out of 180 countries on the 2022 Corruption Perception Index (CPI).
Therefore, our export activities to Malaysia may encounter some difficulties and challenges, but the overall
risk is relatively low due to the limited prevalence of black market activity in Malaysia.
● Competition from cheaper smuggled goods: In Malaysia, the black market involves the smuggling of
items that are 70% to 80% more affordable than their legally imported counterparts.
● Regulatory challenges: The Malaysian government has implemented measures to counter black market
activities, leading to more stringent regulations and enforcement actions.
In conclusion, it is important for Tuan Loc Commodities to conduct business in a legal and transparent
channel. This will help build trust, maintain product quality, and contribute to the growth of the coffee trade
between Vietnam and Malaysia.

3. Level of human development

The Malaysia Human Development Index (HDI) in 2022 showed that the index score increased by 1.2% to
0.816 as compared to 0.806 in 2021. With this score, Malaysia ranks 62 out of 191 countries and Malaysia is in
the Very High Human Development category of countries.
Figure 5: Human Development Index
Malaysia’s Life Expectancy ranks 4 out of 11 countries in Southeast Asia and 80 out of 191 countries in the
world.
Figure 6: Malaysia’s Life Expectancy
Malaysia's improved quality of life and high purchasing power create opportunities for our high-quality
Vietnamese coffee beans in the market. Positive economic outlook and collaborative exchanges enhance
exporting advantages. Continuous improvement in coffee bean quality is key for success in markets like
Malaysia.

4. Country classification
According to World Economic Situation and Prospects (WESP) 2022, Malaysia is classified as a developing
country, based on its level of economic development and structural characteristics. As a developing country,

10
Malaysia is one of the most open economies in the world. It becomes easier for our company to export coffee
beans to Malaysia with fewer trade barriers and more policies to promote import of goods.

5. Macroeconomic indicators
● Inflation:
Inflation rate in Malaysia started rising again in 2020 from -1.14% to 3.38% in 2022 (Macrotrend, Statista).
This results in the fall of purchasing power in 2022 and by 2023, with the economist's calculation, the inflation
rate will have fallen to 2.86%, according to Statista. This fall shows that the total price of the average basket is
dropping; consumers might be benefiting from this but not quite the firms, especially those who export into
Malaysia.
Figure 7: Inflation rate
Exporting to Malaysia brings opportunities like increased purchasing power and improved price
competitiveness due to declining inflation. However, it poses challenges such as shifting demand and exchange
rate fluctuations, requiring a strategic approach to pricing and product diversity.
● Unemployment rate:
In 2022, Malaysia's unemployment rate averaged 3.73%, signifying a tight labor market compared to
historical trends. There is a downward trend in the figure compared to that of 2021 (4.05%). One of the most
negative impacts that importing can bring to a nation is the increase of unemployment rate.
The decline in unemployment rate contributes strongly to the growth of GDP and purchasing power within a
nation. As a result, an increase in the total income of the entire society occurs which leads to the upward trend
of demand for our coffee beans – normal goods.

C. Financial markets
1. Exchange rates with key currencies and recent trends
The currency in Malaysia is the Malaysian ringgit (MYR). This currency has been officially put into
circulation in Malaysia since 1975. According to the statistics of BNW, exchange rates on 31 November 2022
are:
1 USD = 4.5075 MYR (US dollar to MYR)
In 2022, the Ringgit exchange rate experienced a period of continuous depreciation compared to the USD.
This consequence is the result of the US Federal Reserve sharply increasing the policy interest rate by 425 basis
points to the target range of 4.25-4.50% to address inflation.
Figure 8: Exchange rate
This fluctuation can impact our business both positively and negatively. Rising import costs may affect
local purchasing power negatively. However, a depreciated Ringgit can make our coffee beans more

11
competitively priced in Malaysia, potentially increasing demand and market share. Flexibility in adjusting
pricing based on exchange rates is crucial to maintaining stability and attracting price-sensitive consumers.

2. Presence of currency controls/restrictions

The Exchange Control Act established in 1953 governs foreign exchange control in Malaysia, with the
Governor of BNM acting as the controller and regulator. The Act aims to enhance the economy's
competitiveness by creating a supportive environment for trade, business, and investment activities.
Exporting to Malaysia becomes easier with supportive control laws facilitating commercial activities.
Government support for business operations will likely boost exchanges with foreign countries, streamlining
financial procedures for Tuan Loc Commodities. However, increased competition from other countries in the
same industry necessitates a focus on enhancing our product quality and implementing smart policies for greater
competitiveness.

D. Infrastructural forces
1. Transportation (logistics)
Transportation (logistics) is an important infrastructural force of Malaysia, as it affects the movement of
goods and people within and across the country. Malaysia has a well-developed transportation network that
consists of roads, railways, ports and airports. Our company has chosen to export products through two
ways: port and airport.
Malaysia has about 20 major ports, of which seven are federal ports and 13 are state ports. It is the most
common mode of transportation for exporting goods from Vietnam to Malaysia. Malaysia has about 40
airports, of which five are international airports and 35 are domestic airports. It is the fastest mode of
transportation for exporting goods from Vietnam to Malaysia.
Efficient ports and airports in a well-developed transportation network can save our company time and
money, enhancing customer satisfaction. Despite potential challenges like outdated ship technology and port
limitations, comprehensive insurance for goods can help us to minimize risks during transportation.
2. Communications (internet connections/speed, mobile phone)
In Malaysia, the state of communications infrastructure, including internet connections and mobile phone
services, plays a crucial role in shaping the business landscape and impacting international trade. In Malaysia,
robust communications infrastructure, with a 94% internet penetration rate and 89% mobile internet access,
significantly influences the business landscape and international trade.
Leveraging Malaysia's strong online presence, Tuan Loc Commodities can strategically use platforms like
Instagram and Facebook to reach the target audience effectively. This approach streamlines supply chain

12
management, enhances marketing efforts, and fosters real-time communication with local partners,
strengthening market presence in the Malaysian coffee industry.

Section IV: Market Potential

A. Identify basic appeal
1. Suitability of climate
Malaysia's tropical climate is not ideal for growing high-quality coffee beans. In addition, Malaysia does not
have high enough altitude to grow high-quality arabica beans, which are more susceptible to diseases and have
lower yields in lower altitudes. While Vietnam, a major producer of both robusta and arabica beans, can provide
Malaysia with a wider range and quality of coffee products by exporting coffee to Malaysia. This can help our
company reach more potential customers in Malaysia.
2. Absolute product bans
Malaysia does not have any absolute product bans for coffee. However, Malaysia still has some import
regulations and requirements that coffee importers need to comply with such as import permits, import duties
and taxes,... As a result, if we comprehend the demands of the Malaysian market, coffee is a secure option for
export.
3. Access to financing
Malaysia has a well-developed financial sector that offers various trade financing options for importers,
such as banker's acceptance and trust receipt, which can help importers obtain credit, reduce risks, and manage
cash flow. Additionally, Malaysia has initiatives and programs that support the coffee industry, such as the
Coffee Industry Development Fund and the Malaysia Coffee Association. Tariff incentives from Free Trade
Agreements such as EVFTA and CPTPP. The tax on coffee, the main product of Vietnam exported to this
market, is 0%, helping to make Vietnamese coffee more competitively priced than before making Vietnamese
coffee more competitively priced than before. Therefore, Tuan Loc's Commodities can benefit from the
financial assistance and incentives available in Malaysia.
B. Measure market potential
1. Measure current level of imports of your product category
According to [Link], Malaysia imported $303M worth of coffee in 2022, making it the 27th largest
importer of coffee in the world, and coffee was the 162nd. The main providers of coffee to Malaysiainclude:
Colombia, Indonesia, Brazil , Vietnam , and Ethiopia. According to the figures, Vietnamese coffee takes a
relatively high stand in the coffee market of Malaysia. Though the export growth of coffee from Vietnam to
Malaysia has dropped slightly in recent two years, the growth rate of coffee import in Malaysia is still
increasing which indicates a potential of promotion in Vietnam export into Malaysia in the future.
2. Measure current level of sales
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 The coffee market in Malaysia is growing steadily, with revenue amounting to US$221.4 million in 2022
and projected to grow at a CAGR of 3.98% from 2022 to 2028. The ready-to-drink (RTD) coffee market in
Malaysia is also growing rapidly, with revenue amounting to US$185.9 million in 2022 and projected to grow
at a CAGR of 12.47% from 2022 to 2027. This indicates that there is a high demand for coffee in Malaysia,
both in traditional and newer, more convenient forms.
3. Calculate market potential indicator
● Market size:
Malaysia’s current population is 33,938,221
Evaluation: 3 out of 100
● Market Growth Rate:
Total GDP: 407.03 billion USD - GDP growth rate: 8.65%
Evaluation: 52 out of 100
● Market Intensity:
Total household consumption: [Link] USD - Household Consumption Growth Rate: 11.2%
Evaluation: 39 out of 100
● Import of coffee:
Level of import: reached 77 tons - worth $177.59M - Import growth: MYR9.06M (9.04%)
Evaluation : 76 out of 100
Based on Global Edge's market potential index, Malaysia scores a 27, indicating moderate potential for
businesses. This ranking suggests a confluence of positive and negative factors influencing market
attractiveness. On the positive side, Malaysia has a growing middle class with increasing disposable income,
making it an attractive consumer base. Its strategic location in Southeast Asia also makes it a regional trade hub,
providing access to a wider market. Furthermore, the government's focus on developing infrastructure and
attracting foreign investment creates a business-friendly environment. However, bureaucracy and corruption
can hinder market entry and expansion for some companies, and Political stability, though generally good, can
be influenced by regional tensions.
A deeper analysis is necessary to understand industry-specific regulations, identify potential partners, and
navigate cultural nuances. Despite the moderate overall ranking, Malaysia shows promise in sectors such as e-
commerce, halal products, and tourism.
4. Quality of infrastructure
Figure 9: Quality of infrastructure – LPI
According to the World Bank, Malaysia has a well-developed infrastructure that supports the trade and
transport of coffee, with a logistics performance index (LPI) score of 3.6 out of 5, ranking 35th out of 160

14
countries in 2022. Malaysia also has a digital infrastructure that offers various trade financing options and
incentives for importers, such as the Coffee Industry Development Fund, the Coffee Industry Development
Plan, and the Malaysia Coffee Association. These data suggest that the coffee import market in Malaysia is
supported by strong infrastructure and government initiatives, which can benefit the coffee import of a
company.
C. Select the market or site
1. Field trips
We have decided to conduct a field trip to Malaysia due to the following reasons:
- Conduct a survey of commercial infrastructure
- Conduct a survey of purchasing trends and tastes of local people
- Make connections and build communication with local businesses
2. Competitor analysis
a) Number of competitors
When it comes to exporting coffee beans to Malaysia, Tuan Loc’s Commodities faces 3 main groups of
competitors: multinational corporations, local coffee roasters and Vietnamese coffee bean companies.
○ Multinational corporations: Colombia, Indonesia, Brazil, Vietnam, and Ethiopia
○ Local coffee roasters: Boncafe, The Coffee Bean & Tea Leaf, Nestlé Farms, Sabah Tea Garden,
Old Town Berhad, Chek Hup, OldTown White Coffee, My Liberica,...
○ Vietnamese coffee beans companies: Helena Coffee Vietnam, Trung Nguyen Legend, Intimex
Group, Bon Mua Oregon, and Simexco.
In order to succeed in this market, our company must understand the industry's landscape and build
suitable strategies that allow us to stand out from the crowd.
b) Market shares of each competitor
Vietnam has become the biggest coffee supplier to Malaysia, with Malaysia importing 36.14 thousand
tons of coffee worth 61 million USD from Vietnam in the first 9 months of 2021. This represents an increase of
8% in volume and 11.7% in value compared to the same period in 2020.
Figure 10: Market structure of coffee supply to Malaysia
For local businesses in Malaysia: Oldtown Berhad is a major player in the coffee market with over 200
outlets across the country, while The Coffee Bean & Tea Leaf and Boncafe have a smaller presence with around
50 outlets each. Sabah Tea Garden is a smaller business with a limited presence in the country.
Vietnam Companies: Vietnam's coffee export industry generates billions of dollars in turnover. In the
2013/14 crop year, the country exported 1.66 million tons of coffee, earning a turnover of 3.4 billion USD,
which was an increase of 17.2% in volume but only 12.5% in turnover. The Vietnam Coffee and CaCao

15
Association released a list of the 100 largest coffee exporters in Vietnam by turnover, with Intimex Group Joint
Stock Company, Tin Nghia Corporation Limited, and Louis Dreyfus Company Limited being the top three.
Figure 11: Vietnam's companies export to Malaysia
c) Appeal of competitors to segments or mass market

Key Strengths Weaknesses

Competitors

Brazil - Infrastructure: well-established infrastructure -Geography: Brazil is geographically

for exporting coffee, which could make far from Malaysia, which could make
transportation and logistics easier and more transportation more challenging and
efficient. costly.
- Position: largest coffee producer in the world so - Tension: There may be cultural and
it has a lot of experience and expertise in growing political tensions between Brazil and
and processing coffee beans. Malaysia that could impact trade
=> This country has a great reputation in the relations.
world. - Quality: Brazilian coffee's reputation
- Feature of coffee beans: Brazilian Arabica has been tied to one saying: “Quantity
coffee beans are small, oval, dark in color and over Quality”
contain many natural nutrients, creating a -Due to extreme weather factors, the
characteristic aroma and mild bitter taste. High- harvest of Arabica coffee beans from
quality Brazilian coffee is actually much more the world's largest coffee producer,
fruity than it used to be. Brazil, will be much lower than
- Weather condition: Brazil is located on the previous years.
coffee belt. In particular, Brazilian Arabica coffee
is grown on the famous land of Brazil, where the
altitude and ideal climate contribute to the high
quality and freshness of the product.

Oldtown - Types: Oldtown Berhad offers a wide range of -Limited focus on single-origin or
Berhad coffee bean types, including single-origin beans specialty coffee beans.
and blends.
- Position: Oldtown Berhad is a well-established - Competition: The coffee industry is
brand in Malaysia and has a strong presence in the highly competitive, and Oldtown
local market. Berhad faces competition from both
- Feature of coffee beans: Oldtown Berhad local and international coffee brands.
produces high-quality coffee beans. The company
uses a unique blend of Arabica and Robusta beans
to create a rich, full-bodied flavor that is both
smooth and satisfying.

Intimex - Position: Intimex Company is one of Vietnam's - International partner: Intimex

Group leading coffee exporters. Group is heavily dependent on a few

16
 - Quality: Intimex Group has a strong network of markets, so any changes in the demand
suppliers and buyers. The company has a strict or regulations in these markets can have
quality control process in place to ensure that the a significant impact on the company's
coffee beans meet the international standards and revenue.
customer requirements. - Capacity: The company's production
- Types: Intimex Group offers a wide range of capacity is limited
coffee products, including roasted coffee, instant - The price of coffee beans is highly
coffee, and green coffee beans,..Intimex Group volatile
owns 11 export coffee processing factories with a - Competition: The coffee industry is
total capacity of 570,000 tons/year. highly competitive
Our company is a coffee exporter with a strong financial base and an extensive network of coffee assets,
including upcountry mills and warehouses near sea-ports. We prioritize quality by selecting firm, shiny coffee
beans that meet high standards before exporting to foreign countries, particularly Malaysia. We also have a
team of experts with experience in growing and analyzing coffee beans, and using analytics and the latest
technologies in our operations.
d) Customer loyalty to competitors
Customer loyalty to coffee exporters from Vietnam to Malaysia is influenced by factors such as quality,
price, variety, availability, and reputation. According to the Observatory of Economic Complexity, Vietnam's
main competitors in exporting coffee to Malaysia are Brazil, Colombia, and Indonesia.

Figure 12: Brazil Coffee Exports to Malaysia

Figure 13: Colombia Coffee Exports to Malaysia

Figure 14: Indonesia Coffee Exports to Malaysia

According to these charts from Trading Economics, it can be seen Malaysian customer loyalty to
Colombian coffee has increased over the past decade, driven by a substantial rise in exports. Established
Malaysian brands like Nestlé Farms, Old Town Berhad, and Chek Hup enjoy strong recognition and positive
reputations, fostering trust and familiarity. Vietnamese coffee exporters, such as Trung Nguyen Legend and
Intimex Group, possess competitive advantages. Our business needs to enhance product quality, branding,
distribution, and marketing strategies. To boost loyalty and competitiveness, our focus should be on maintaining
high-quality standards, clearly defining unique selling propositions with competitive pricing, fostering strong
customer relationships, and developing culturally resonant marketing campaigns.
e) Threat from substitute products:

17
Substitute Analysis Comparison
products

Tea - Market Dynamics: - Different Experience:

Rich tea-drinking culture, and various While tea and coffee share similarities in terms
prevalent local and international tea brands of caffeine content, the flavor profiles and
- Consumer Preferences: cultural experiences are distinct.
Malaysian consumers often choose tea for its - Target Audience:
diverse flavors, such as Teh Tarik and popular Vietnamese coffee exporters can target
imported teas. consumers looking for a different taste
- Cultural Influence: experience or position their coffee as a
Tea is deeply embedded in Malaysian culture, complement to tea in various social settings.
and social rituals often revolve around tea
consumption.

Herbal - Wellness Trend: - Unique Characteristics:

Infusions Consumers opt for herbal infusions due to Coffee's distinct taste, aroma, and cultural
their perceived health benefits and natural significance provide a unique selling
ingredients. proposition.
- Flavor Varieties: - Premium Positioning:
Specialty beverages often offer unique flavor Vietnamese coffee can be positioned as a
profiles and ingredients, appealing to premium, high-quality option, emphasizing its
adventurous consumers. natural attributes and authenticity.

18
 Figures

Figure 1: Short term political risk index

Figure 2: OPR Rate

Figure 3: Gross Domestic Product

19
 Figure 4: GDP per capita

Figure 5: Human Development Index

Figure 6: Malaysia’s Life Expectancy

Figure 7: Inflation rate

20
 Figure 8: Exchange rate

Figure 9: Quality of infrastructure – LPI

Figure 10: Market structure of coffee supply to Malaysia

Figure 11: Vietnam's companies export to Malaysia

21
 Figure 12: Brazil Coffee Exports to Malaysia

Figure 13: Colombia Coffee Exports to Malaysia

Figure 14: Indonesia Coffee Exports to Malaysia

22
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