Export trends and determinants of Malaysia’s wood pellets

Abstract

Malaysia seeks to strengthen its position in the global wood pellet market but remains behind regional leaders such as Vietnam (USD 800 million exports in 2022 vs. Malaysia’s USD 126 million). This study analyzes determinants of Malaysia’s wood pellet exports from 2012–2023 using OLS models and a 12-year dataset. Key variables include macroeconomic factors (GDP, exchange rate, inflation), market factors (pellet price), production factors (labor), and forest resource endowment, which includes harvested roundwood volume and total forest area, integrated within the Heckscher-Ohlin framework. Export growth is assessed using CAGR and AAGR. Results show GDP and harvested roundwood volume positively influence exports, while higher pellet prices, inflation, and expanding forest area correlate negatively. Despite COVID-19 disruptions, exports grew steadily, with a quarterly CAGR of 37.2% and AAGR of 6%. The study introduces a novel approach by incorporating natural resource endowment into trade theory, offering new insights into resource-driven competitiveness in forest product exports.