The Report: Malaysia 2016
Malaysia is enjoying uninterrupted momentum in attracting investment and trade flows destined for South-east Asia. As a leading trading nation it has the necessary infrastructure and determination to compete and partner with its ASEAN neighbors to create a more sustainable growth model.
Country Profile
Having undergone rapid development over the last half-century, Malaysia’s economy has progressed from relying on agricultural and primary commodities to being more broad-based and export-driven. Benefitting from long-term political stability, sound economic management and pragmatic leadership, the country possesses sound infrastructure, established health care and education systems, and an increasingly advanced and diversified economy. Its diversity may be one of its greatest assets: with a population that is both multi-ethnic and multilingual, it is well placed to succeed in an increasingly integrated global economy. This chapter contains a viewpoint from Prime Minister Najib Razak, and an interview with Former Prime Minister Mahathir Mohamad.
Explore chapterTrade & Investment
As a leading force in regional integration through the ASEAN trading block, Malaysia has managed to consolidate its position as the principle gateway to South-east Asia. Though smaller in terms of market size than its neighbours, it has consistently punched above its weight in attracting foreign direct investment dollars. Despite external headwinds in 2015 and the beginning of 2016, Malaysia has managed to grow its overall trade volumes in local currency by 1.2% in 2015, reaching a total of RM1.5trn ($371.3bn), equivalent to 127% of GDP. This chapter contains a viewpoint from US President Barack Obama, and interviews with Le Luong Minh, Secretary-General, ASEAN; Thongsing Thammavong, Former Prime Minister of Laos and 2016 ASEAN Chair; Cecilia Malmström, European Commissioner for Trade; and Dzulkifli Mahmud, CEO, Malaysia External Trade Development Corporation.
Explore chapterEconomy
Resource rich and export-oriented, Malaysia’s economy has endured another major test in resilience, with a global slump in commodities and China’s slowdown reducing revenues from the key sectors of energy, palm oil and manufacturing. In 2015 the local currency, the ringgit, saw its biggest sell-off since the 1997 Asian financial crisis. Yet economic data continued to suggest business as usual. With a flexible currency regime, ample liquidity in domestic banks and alternative sources of growth, the country was able to absorb the external shocks. This chapter contains interviews with Abdul Wahid Omar, Minister in the Prime Minister’s Department; Zakri Abdul Hamid, Science Advisor to the Prime Minister and Joint-Chairman, Malaysian Industry-Government Group for High Technology; Ahmad Tajussin Ali, Chairman, UEM Group and Construction Industry Development Board and Joint-Chairman, Malaysian Industry-Government Group for High Technology; and Saw Choo Boon, President, Federation of Malaysian Manufacturers, and Co-Chair, Special Task Force to Facilitate Business.
Explore chapterSabah
One of the largest of Malaysia’s 13 states, Sabah is banking on an economic development strategy that aims to make the most of its strategic position in the South China Sea, the beauty of its landscape and the riches of its natural environment. The plan centres on the Sabah Development Corridor (SDC), one of five economic development zones established throughout Malaysia and designed to encourage growth by targeting investment in key industries. In Sabah, the corridor covers the entire state and is focused on developing natural resources, especially hydrocarbons, and agriculture – predominantly palm oil, but also including food crops. Sabah is also looking to increase tourism, with Mount Kinabalu (South-east Asia’s tallest mountain), some of the world’s most stunning dive sites, and iconic wildlife, attracting visitors from across the globe. This chapter contains interviews with Musa Aman, Chief Minister, Sabah; Mohd Yaakub Johari, President and CEO, Sabah Economic Development and Investment Authority; Clarence Bongkos Malakun, Chairman, Institute for Development Studies Sabah; and Melvin Disimond, CEO, Kota Kinabalu Industrial Park.
Explore chapterJohor
Home to 3.6m people spread over 19,016 sq km, Malaysia’s most southerly state, Johor, has long played a key political and economic role in the country’s development. On the Strait of Malacca and sharing a border with Singapore, it has the country’s busiest trans-shipment hub and benefits from its position at the crossroads of some of the world’s most important trading routes. Over the past decade much development has focused on the Iskandar Malaysia project, one of five regional growth corridors currently under way in Malaysia, and the most successful in terms of investment committed. The state has improved key roads and other infrastructure as investors have pumped money into education, new industries, tourism and manufacturing. This chapter contains an interview with Ismail Ibrahim, Chief Executive, Iskandar Regional Development Authority.
Explore chapterBanking & IFS
Although funding conditions in Malaysia are tightening due to prudential considerations and heightened macroeconomic risks, the banking system as a whole remains profitable, liquid and well capitalised. The country’s 27 domestic and foreign banking institutions are amongst the most dynamic in the region, serving clients at home as well as the wider South-east Asia region. An early adopter of sharia-compliant financial systems, Malaysia is now reaping the benefits as it continues to consolidate its global lead in Islamic finance. In the 23 years since commercial banks were allowed to offer Islamic banking products, the sector has emerged as a formidable force in providing funding to the Malaysian economy and beyond, creating additional high value at home and abroad. This chapter contains interviews with Nor Shamsiah Mohd Yunus, Deputy Governor, Bank Negara Malaysia; Mahendra Gursahani, Managing Director and CEO, Standard Chartered Malaysia; and Jaseem Ahmed, Secretary-General, Islamic Financial Services Board.
Explore chapterCapital Markets
Amidst a mixed earnings performance around the world in 2015, Malaysia’s capital market posted modest growth over the course of the year. The sector grew by 2.1% in 2015, according to the Securities Commission Malaysia, the capital market regulator, to reach RM2.82trn ($698bn) by the end of the year, which was 2.5 times the size of the economy. Bursa Malaysia, the nation’s stock exchange, accounted for roughly 60% of this total, with a year-end market capitalisation of RM1.7trn ($420.8bn), while outstanding debt issuances made up the remaining RM1.12trn ($277.2bn). This follows on from half a decade of steady growth in the total value of Malaysia’s capital market. In recent years the country has emerged as a substantial player in a number of areas including fund management, sharia-compliant finance and debt issuance. This chapter contains interviews with Foo Su Yin, CEO, RAM Ratings; and Shahril Ridzuan, CEO, Employees Provident Fund.
Explore chapterInsurance
Malaysia’s insurance and takaful, or Islamic insurance, sector has recorded consistent growth in recent years. In 2015 total assets of both combined expanded by 5.6% to RM264bn ($65.3bn). Within the life insurance and family takaful sector, the growth of takaful contributions has been notable, accounting for almost 18% of new premiums and contributions. Insurance and takaful provide an important avenue for the public to save and invest, as well as a form of risk protection for events such as death, disability and retirement. The target penetration rate for insurance and family takaful policies is 75%. As of 2015 the penetration rate was 54.9%, while in 2014 it stood at 55.5%. This chapter contains an interview with Yen Saw, CEO, Tokio Marine Insurans.
Explore chapterEnergy
With oil prices depressed and global economic activity slowing, these are undoubtedly challenging times for oil and gas companies, producers and countries worldwide, and Malaysia is no exception. Yet despite the downsides, these are also key times for the development of new resources and strategies in the sector, with Malaysia at the forefront of many renewable energy trends. Even as it makes a major contribution to global oil and gas production, the country is leading the way in biofuels and biomass, solar energy and hydroelectric power. It is also a key player in the regional energy network, a system being rapidly enhanced by the arrival of the ASEAN Economic Community. This chapter contains an interview with Mohd Yazid Ja’afar, CEO, Johor Petroleum Development Corporation.
Explore chapterInnovation
A series of economic reforms launched in 2010 support Malaysia’s goal of lifting itself out of the middle-income trap and into the ranks of high-income economies by 2020. As part of the Economic Transformation Plan (ETP), the government established the Agensi Inovasi Malaysia (Malaysian Innovation Agency, AIM) to lead policies and strategies related to innovation. Additionally, innovation and research and development have been identified as crucial to success in five of the 12 National Key Economic Areas targeted for transformation, including hydrocarbons and palm oil, as part of a strategy to move from labour-intensive to knowledge-based industries. Over the past few years, policymakers have sought to make the country more conducive to innovators and risk-takers. The 11th Malaysia Plan, which lays out the country’s economic path through to 2020, describes innovation as one of its game-changers. This chapter contains an interview with Mark Rozario, CEO, Malaysian Innovation Agency.
Explore chapterTransport
The 11th Malaysia Plan lays out the government’s latest five-year development strategy, covering the period 2016-20. It is also the final five-year plan leading up to Wawasan 2020, the year by which the government’s vision to make Malaysia a high-income, knowledge-based economy is meant to be realised. For this pivotal period, the plan lays out initiatives for the transport sector including construction of a seamless transport system and facilitating enhanced mobility of people. The latter involves ensuring that 40% of transport in the Greater Kuala Lumpur-Klang Valley region is composed of public options. In the other state capitals the target is 20%. This chapter contains interviews with Ruben Emir Gnanalingam, CEO, Westports Holdings; and Mohd Azharuddin, CEO, Land Public Transport Commission.
Explore chapterConstruction & Real Estate
Over the years, large-scale public and private projects have dominated the activities of the Malaysian construction sector, driven by governmental and investor efforts to implement successive five-year plans aimed at becoming a developed nation. The 11th Malaysia Plan (11MP), covering 2016-20, focuses on transforming the construction sector, among other economic areas. Detailed under four main strategies, its goals for the sector include the continuation of a separate Construction Industry Transformation Programme, covering the same five-year period, which is meant to help the sector meet market demand and propel the industry into the international arena. Although 2016 is forecast to be a flat year for the real estate sector, there are excellent deals to be had for forward-looking investors and those able to invest without a bank loan. This chapter contains an interview with Mohamad Salim, Group Managing Director, Malaysia Resources Corporation.
Explore chapterIndustry & Retail
Crucial to Malaysia’s economic development is the continued transformation of its industrial base into one predicated on high value-added products and driven by innovation, automation and increased productivity. Such a shift is important to ensure the country is well-placed to compete in an increasingly competitive and open global market, a trend exemplified by the commencement of the ASEAN Economic Community in 2015 and the signing of the Trans-Pacific Partnership agreement in February 2016. While hypermarkets, convenience stores, and traditional markets and stores all jostle for position in the country’s cities, towns and villages, online retail is also developing apace. Despite short-term challenges, the sector continues to offer great potential, as more innovative retail experiences and the rollout of modern shopping centres continue to characterise the market. This chapter contains interviews with Mohd Yusoff Sulaiman, President and CEO, Malaysian Industry-Government Group for High Technology; and Gary Brown, CEO, 7-Eleven Malaysia.
Explore chapterTelecoms & IT
Many of Malaysia’s Vision 2020 goals to develop into a high-income knowledge economy hinge on its ability to leverage the IT sector strategically and effectively. As in developed countries, the country’s IT backbone undergirds and acts as the foundation for the potential of a wide swathe of other sectors, from services and industry to tourism and banking. Although the sector is steadily achieving its Vision 2020 goals, it is faced with doing so in a demanding environment. The past two years have been somewhat trying times for the country’s telecoms companies, which have had to adapt to changing economic, market and regulatory conditions. However, there is light at the end of the tunnel as the sector appears to be preparing for a more stable period, and ongoing work on coverage, capacity expansion, modernisation and infrastructure-sharing agreements are beginning to yield benefits for providers and consumers alike. This chapter contains interviews with Zam Isa, Group CEO, Telekom Malaysia; and Wong Heang Tuck, CEO, U Mobile.
Explore chapterEducation
Malaysia’s ongoing commitment to education is evident in the amount it invests in the sector each year, usually at least 20% of the annual budget for all levels of learning, according to the World Bank. The result has been a sustained improvement in access to education, with close to universal enrolment at the primary and secondary level. Shifting the curriculum away from rote learning and closing the gap between rural and urban schools are key aims of ongoing education reforms, which also envisage more private sector involvement. This chapter contains a round table with Helen Bartlett, President and Chief Executive, Monash University; Wahid Bin Omar, Vice-Chancellor and President, Universiti Teknologi Malaysia; Mohd bin Amin Jalaludin, President/Vice-Chancellor, University of Malaya; and Christine Ennew, CEO and Provost, University of Nottingham Malaysia Campus; and an interview with Tunku ‘Abidin Muhriz, Founding President, Institute for Democracy and Economic Affairs.
Explore chapterHealth
In the nearly 60 years since its independence, Malaysia has made enormous strides in health care, creating an internationally lauded public health system that delivers quality care to a large proportion of the public at extremely generous rates. This is complemented by a growing private sector, which provides quality care – often in specialist areas – to those Malaysians and foreigners who can afford it. In February 2015 Prime Minister Najib Razak could boast that public medical fees were the lowest in the world, with the government currently subsidising health care costs at a rate of about 98%. But as Malaysians live longer and lifestyles change, the prevalence of diseases such as diabetes and cancer has increased, putting pressure on health care funding. This chapter contains a dialogue with Amiruddin Abdul Satar, Managing Director, KJP Healthcare; and Ahmad Shahizam Bin Mohd Shariff, CEO, Pantai Group.
Explore chapterTourism
Malaysia has long traded on its alluring mix of nature, tropical beaches, vibrant culture and modern cities to bring in tourists from the region and further afield – the collage of attractions summed up in its long-running “Malaysia, Truly Asia” advertising campaign. But as its neighbours refine their offerings, the country is facing increased competition for foreign visitors and their spending, even as it sets itself ambitious targets for the future. The government has identified tourism as a key growth area under its plan to transform Malaysia into a high-income nation by 2020. To do so, the sector is turning to new markets – China, India and the Middle East – and diversifying its products. This chapter contains an interview with Tunku Ahmad Burhanuddin, Group Managing Director and CEO, Themed Attractions Resorts & Hotels.
Explore chapterAgriculture & Plantations
As the world’s second-largest palm oil producer after Indonesia and a leading producer of natural rubber, Malaysia today also boasts increasingly sophisticated fruit and vegetable, rice, livestock and fisheries sectors. These building blocks are set to undergo some important changes in the years ahead, as the country seeks to implement the 11th Malaysia Plan (11MP). Under 11MP there is a strong focus on green, sustainable growth, coupled with increasing mechanisation, boosting human resources and enhancing technological and scientific inputs and outputs. This chapter contains an interview with Pang Teck Wai, CEO, Palm Oil Industrial Cluster Sabah.
Explore chapterLegal Framework
This chapter gives an overview of Malaysia’s legal framework, focusing on key areas that include the Trans-Pacific Partnership, tariff agreements, reforms affecting the entry of foreign firms, and legislation to expand Islamic finance. This chapter contains viewpoints from Philip Teoh, Partner, Azmi & Associates; and Ahmad Lutfi Abdull Mutalip, Partner, Azmi & Associates.
Explore chapterThe Guide
This chapter contains a selection of leading hotels and resorts, contact details of ministries, associations and services, tips for business travellers, and a feature piece on the Danum Valley.
Explore chapterTable of Contents
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