South Korean companies need to diversify their Southeast Asian exports and investments into Malaysia in a departure from their focus on Vietnam, a report said Monday.

"Malaysia has been drawing attention as a promising destination for exports and investment as well as a supply source as the United States has opened the possibility of imposing tariffs on Vietnamese goods through a foreign exchange investigation," said the report from the Korea International Trade Association (KITA). 

The report comes as South Korean companies have focused on Vietnam as part of their efforts to tap into the rapidly growing Southeast Asian market.

Last year, Vietnam accounted for nearly 51 percent of South Korean exports to the Association of Southeast Asian Nations (ASEAN) and took up some 47 percent of Seoul's overseas direct investment in the region.

Malaysia has been posting robust economic growth in recent years, with its gross domestic product (GDP) forecast to expand 7.8 percent in 2021, the highest among the 10 ASEAN members.

In addition, the country ranks 12th in the World Bank global business environment index among 190 nations across the globe, and its per-capita GDP hovers about $10,000.

Malaysia's imports of luxury goods grew at an annual average of 9.1 percent between 2010 and 2019, with the ratio of consumer goods to total imports exceeding 10 percent.

Electric goods, electronic products and semiconductors took up nearly 38 percent of Malaysia's intermediate products imports, but South Korean products' share fell to 4.7 percent last year from 8.7 percent in 2010, according to the report.

"It will be favorable for South Korean companies to make forays into the highly attractive Malaysian market in the form of consumer goods exports and investment in the service industry," Cho Eui-yun, a KITA researcher who authored the report, said. (Yonhap)