Table of Contents
Insight Into Emerging Markets
Malaysia is striving to become to a developed nation by 2020, and in line with this, the Economic Transformation Programme (ETP), launched in 2010, aims to help Malaysia attain the status of a high-income nation by 2020. The ETP is expected to attract investments worth $444 billion during 2010–2020. Despite the anticipated negative effects of weak external demand in 2013, robust domestic demand and rising investments are expected to support growth in 2013. Rubber, electronics, healthcare, and oil and gas, are expected to receive prioritized government support until 2020, as these industries have been included as National Key Economic Areas (NKEAs) in Malaysia’s ETP.
Political Policy & Trends
•The head of state is the King who is elected every five years, and the head of government is the Prime Minster who is appointed from the House of Representatives.
•The present ruling party is the Barisan Nasional which extended its rule to X years following the March 2013 elections.
•Malaysia is part of the ongoing Trans Pacific Partnership negotiations involving eleven other countries.
•Malaysia is working towards enhancing defense ties with China, transport ties with Singapore, and stronger economic and security ties with Japan. Relations with its immediate neighbor, Indonesia, remain tense due to issues concerning territory and migrant workers.
•In 2012, robust domestic demand, which supported growth, was sustained by low interest rates. Given the possible influence of weak external factors in 2013, interest rates are expected to be held constant in order to aid growth.
•Malaysia is striving to become a developed nation by 2020, and the Economic Transformation Plan (ETP), launched in 2010, aims to transform Malaysia into a high-income nation by then. The plan targets to increase per capita income by attracting $X billion in investment and generating X million new jobs. X national key economic areas (NKEAs), with high income multiplier effects, have been identified for the same.
•Due to persistent fiscal deficits in the past, the fiscal policy will focus on reducing the deficit from X% of GDP in 2012 to X% by 2015.
•In order to reign in more revenue, fuel subsidy was cut by X cents per liter in September 2013. A goods and services tax is also expected to be implemented by 2015.
•In the face of weak external demand, monetary policy is expected to focus on maintaining robust domestic demand by keeping the low interest rate unchanged.
•To deal with rising household debts, the Central Bank introduced a cap on the repayment period for loans in July 2013.
Investment and Competitiveness
•Malaysia is striving to attract more high value-added investment as it transitions to a developed country by 2020.
•Malaysia recorded the third largest foreign direct inflows in the Association of Southeast Asian Nations (ASEAN) in 2012.
•Malaysia has a strong working age population (X– years) which is good for the economy. In 2012, the working age population accounted forX% of the total population.
•The fertility rate has been on a decline in Malaysia, whereas life expectancy has been increasing. As a result, the ageing population (above X years) is expected to rise in the next five years.
•The Malaysian legal system is based on the English legal system. In addition, there are Syariah courts that deal exclusively with matters concerning the Islamic law.
•A minimum monthly wage of $X was enforced on January 1, 2013. However some big firms have been given time until the end of the year to comply.
•The Financial Services Act was introduced in June 2013 consolidating four previous acts and broadening the scope and powers of the Central Bank.
•The manufacturing sector contributed to % of Malaysia’s gross domestic product (GDP) in 2012.
•As Malaysia endeavors to become a developed nation by 2020, it will strive to attract more high-value added investments into the sector in the next five years.
•The rubber and electronics industry have been included among Malaysia’s NKEAs, as a result of which, these industries will receive prioritized government support.
•The healthcare sector has been included as an NKEA, and the target for the sector is to generate $X billion and create X new jobs by 2020.
•Malaysia has become a well-known destination for medical tourism.
•Increasingly, private investment is being encouraged by the government, especially, in manufacturing of pharmaceuticals and medical devices.
•Oil, gas, and energy have been included as NKEAs in Malaysia’s ETP.
•With maturing oil and gas reserves, intense exploration activities are being undertaken to boost output.
•Renewable energy was not given much importance in the past. However, with depleting oil and gas reserves, higher targets have been set with respect to renewables. A system of feed-in tariffs was introduced in 2011, allowing electricity, produced from renewable sources, to be sold at a fixed premium price to energy utilities.
Information and Communication Technology (ICT)
•The Digital Malaysia Plan has been drawn up for the period 2011–2020 to increase the contribution of the information and communication technology (ICT) sector from X% in 2010 to X% by 2020. X new jobs are also expected to be generated.
•4G licenses were awarded to eight companies in 2012, and three of these companies rolled out their services in the first half of 2013.
•With respect to information technology, a majority of the spending is on hardware, followed by IT services and software.
•Malaysia has two national car projects, Proton and Perodua. Perodua saw the largest vehicle sales in 2012.
•It is very expensive to own a vehicle in Malaysia because of high excise duties ranging between X%– %. The government has stated that these duties are very critical to its revenue and are not expected to be decreased immediately.
•With the aim of increasing the country’s energy efficiency, increased production and sale of hybrid and electric vehicles is being encouraged.
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