This research study is focus on the impact of Malaysia bilateral trade and exchange

rate on the Gross Domestic Product (GDP). We are going to identify and study how the
trading and the exchange rate affect the GDP. Trading consists of import and export of
Malaysia. Every firms will need to comply the import and export rules which is known as the
Customs Act 1967 when they doing these two trades.
Gross Domestic Product (GDP) is an indicator of the economic growth. Gross
domestic product (GDP) is the monetary, market value of all final goods and services
produced in a country over a period of time which mostly is a year. GDP has become a
standard for the country to measure the health and size of a particular country.
According to Yusoff (2005), Malaysia is an open economy which depend much on the
bilateral trade that consists of import and export to help in the development of economy.
Exporting can help the country to generate higher sales. Globalization has expanding the
products usage to other country. This mean that the demand of the goods is not only in
domestic level but also international level.
The connection between the exchange rate and economic growth is definitely an
important subject from either a positive which is descriptive or a normative which policy
prescription perspective (Ito, Isard & Symansky, 1999). The exchange rate for every country
will always change in either appreciate or depreciate. Nowadays, the world market Due to
globalization, exchange rate play an important role in international trade. Exchange rate
forecasting is highly needed to make sure success international trade. We had selected real
exchange rate instead of nominal exchange rate. This is because the nominal exchange rate
exclude the inflation effect. Real exchange rate able to measure the real purchasing power
parity. Therefore, real exchange rate is more appropriate and suitable to be used in this
research.