KUCHING: To meet the government’s social and economic goals of
transforming Malaysia into a stable and inclusive high-income nation by
2020, gross national income (GNI) will need to register annual growth of
at least six per cent until 2020. This would entail lifting GNI per capita from the 2009 level of
US$7,650 to over US$15,400, and if it is to be reached, the industrial
and services sectors will need to make major contributions.
According
to Oxford Business Group (OBG) in its ‘The Report: Malaysia 2012’, the
government has rolled out numerous policy plans representing strategic
shifts, such as Vision 2020, the 10th Malaysia Plan (10MP) and the
Economic Transformation Programme (ETP), which call for increased
investment and productivity, and a retooling of sector activities.
“Envisioned as a road map towards reconfiguring the economy to resemble more developed nations, this new paradigm calls for a shift away from the traditional low-cost, low-value manufacturing activities towards value-added industries,” it highlighted in the report.
“Sectors such as biotechnology and renewable energy technology are coming into their own, while established industries, such as vehicle manufacturing, are moving up the value chain toward greener and more advanced electric and hybrid vehicles.” OBG noted that Malaysia’s resilient manufacturing sector continued to show signs of a resurgence in the wake of the global economic downturn, which had a cooling effect on production across the world.
“Since dropping 9.3 per cent in 2009, in constant prices the industry’s value grew 11.4 per cent in 2010, followed by a 4.5 per cent rise in 2011, according to Malaysia’s Department of Statistics (DoS),” it said.
“Excluding processed palm oil and other oil-based products, gross exports of manufactured goods continued a trend of year-on-year (y-o-y) growth, increasing from a total of US$157 billion in 2010 to US$162 billion in 2011.”
Meanwhile, the electronics and electrical (E&E) sector continued to lead all industrial exports in value with US$84 billion in 2011, despite supply disruptions in Thailand and Japan, which contributed to a drop from the US$87.5 billion registered the previous year.
The chemical and chemical products sector was the next-largest contributor, with US$15.4 billion exported in 2011, followed by petroleum products (US$11.8 billion) and metal goods (US$10 billion).
“Along with a number of other metrics, such as employment, contribution to GDP, value of exports and others, the amount of investment dollars funnelled into each sector is a commonly used indicator to determine whether or not government development programmes, such as the 10MP and the ETP, are effective and on-track,” OBG believed.
“By this measure, Malaysia has done considerably better in 2011 than it did in 2010, attracting 846 approved manufacturing projects worth a combined US$18.1 billion, compared to US$15.2 billion spread over 910 projects the previous year, according to the Malaysian Investment Development Authority (Mida).
“Some 61 per cent of the 2011 total came from foreign investments, which the government attributed to greater interest from abroad in high-growth areas such as value-added, emerging technology and knowledge-intensive industries.”
Of the new projects approved, OBG noted that the E&E sector accounted for the lion’s share with 34 per cent (US$3.6 billion) of all investments, followed by basic metals with 22 per cent (US$2.4 billion), chemicals with 11 per cent (US$1.4 billion) and food at eight per cent (US$870 million).
Despite this quantifiable success, the firm said using only investment figures as a yardstick has its drawbacks.
“Nine of the 12 National Key Economic Areas (NKEAs), for instance, relate to the services sector, making investment more difficult to quantify,”OBG said as an example.
“Largely devoid of substantial capital expenditure on equipment and land, investments in services do not necessarily show up in immediate tangible value but nevertheless contribute to GDP through knowledge- and service- based terms.
“The 10MP, which runs from 2011 through to 2015, has set an annual growth rate target for the services sector of 7.2 per cent up until 2015, which would increase its contribution to GDP to some 61 per cent by that year.
“The combined total of new investments required to reach this is estimated at US$14.4 billion – less than the overall value of investments in manufacturing for 2011 alone.”
“Envisioned as a road map towards reconfiguring the economy to resemble more developed nations, this new paradigm calls for a shift away from the traditional low-cost, low-value manufacturing activities towards value-added industries,” it highlighted in the report.
“Sectors such as biotechnology and renewable energy technology are coming into their own, while established industries, such as vehicle manufacturing, are moving up the value chain toward greener and more advanced electric and hybrid vehicles.” OBG noted that Malaysia’s resilient manufacturing sector continued to show signs of a resurgence in the wake of the global economic downturn, which had a cooling effect on production across the world.
“Since dropping 9.3 per cent in 2009, in constant prices the industry’s value grew 11.4 per cent in 2010, followed by a 4.5 per cent rise in 2011, according to Malaysia’s Department of Statistics (DoS),” it said.
“Excluding processed palm oil and other oil-based products, gross exports of manufactured goods continued a trend of year-on-year (y-o-y) growth, increasing from a total of US$157 billion in 2010 to US$162 billion in 2011.”
Meanwhile, the electronics and electrical (E&E) sector continued to lead all industrial exports in value with US$84 billion in 2011, despite supply disruptions in Thailand and Japan, which contributed to a drop from the US$87.5 billion registered the previous year.
The chemical and chemical products sector was the next-largest contributor, with US$15.4 billion exported in 2011, followed by petroleum products (US$11.8 billion) and metal goods (US$10 billion).
“Along with a number of other metrics, such as employment, contribution to GDP, value of exports and others, the amount of investment dollars funnelled into each sector is a commonly used indicator to determine whether or not government development programmes, such as the 10MP and the ETP, are effective and on-track,” OBG believed.
“By this measure, Malaysia has done considerably better in 2011 than it did in 2010, attracting 846 approved manufacturing projects worth a combined US$18.1 billion, compared to US$15.2 billion spread over 910 projects the previous year, according to the Malaysian Investment Development Authority (Mida).
“Some 61 per cent of the 2011 total came from foreign investments, which the government attributed to greater interest from abroad in high-growth areas such as value-added, emerging technology and knowledge-intensive industries.”
Of the new projects approved, OBG noted that the E&E sector accounted for the lion’s share with 34 per cent (US$3.6 billion) of all investments, followed by basic metals with 22 per cent (US$2.4 billion), chemicals with 11 per cent (US$1.4 billion) and food at eight per cent (US$870 million).
Despite this quantifiable success, the firm said using only investment figures as a yardstick has its drawbacks.
“Nine of the 12 National Key Economic Areas (NKEAs), for instance, relate to the services sector, making investment more difficult to quantify,”OBG said as an example.
“Largely devoid of substantial capital expenditure on equipment and land, investments in services do not necessarily show up in immediate tangible value but nevertheless contribute to GDP through knowledge- and service- based terms.
“The 10MP, which runs from 2011 through to 2015, has set an annual growth rate target for the services sector of 7.2 per cent up until 2015, which would increase its contribution to GDP to some 61 per cent by that year.
“The combined total of new investments required to reach this is estimated at US$14.4 billion – less than the overall value of investments in manufacturing for 2011 alone.”
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