KUALA LUMPUR, Sept 15 — Malaysia has been trading with Israel quietly in a  “blossoming” relationship over the years despite lacking diplomatic ties, the Times of Israel reported, citing data from Israel’s statistics bureau.

The paper said official data published by the Israeli Central Bureau of Statistics  “tells of a booming, but very discreet, trade relationship that is blossoming between the two countries”, with trade reaching US$1.529 billion (RM4.8 billion) for 2013 or almost double that of 2012.

“Every shipment is duly recorded in Israel’s foreign trade statistics but studiously ignored by Malaysia. In addition to the officially recorded movement of goods, there is a heavy current of trade flowing beneath the surface, making it hard to calculate the value,” the report said.


According to the report, a large amount of the trade boom between the two countries can be traced to Kiryat Gat south of Israel, where global giant Intel has a plant churning out computer chips which are then exported to a second assembly plant in Malaysia.

Trade relations between Israel and “hostile” Muslim countries like Malaysia and Indonesia have been ongoing for decades through third party players like Singapore and Turkey, which explains why trade records leading to Israel are nowhere to be found in their official data, the report added.

For Malaysia and Indonesia, Singapore is often the middle-man for trade, the paper said.


“Israel’s embassy there says that most trade is done this way, and in the case of Indonesia, with the embassy’s assistance, “ it added.

Including deals done through a third country, the estimated value of trade between Israel and Indonesia ran as high as high as US$250 million last year, ten-times the US$24.9 million of direct trade detailed in official figures, it said.

“Israel does a lot of trade with many countries that we do not have formal diplomatic relations with and we are more than happy with this,” the report quoted foreign ministry spokesman Paul Hirschson as saying.

“It is no secret that we have periodically engaged in dialogue with these countries. We would like nothing more than to establish diplomatic relations and representative offices”.

Hirschson was also quoted as saying that trade relations with Malaysia is “pleasantly surprising”.

Like most Muslim countries, Malaysia has no diplomatic ties with Israel.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed had said that Putrajaya has no control over Malaysian goods that end up in Israel.

He added that it is common international practice for multinational companies that invest and operate in Malaysia to do the same in many other countries, including Israel, as part of their global supply and value chain.