Malaysia’s target is a 6% annual growth in line with the Economic Transformation Program (ETP).ETP aims to boost both private consumption and investments
Malaysia shows strong trade performance despite the slow US economic recovery, Eurozone debt crisis uncertainties and supply chain disruptions from Japan’s tsunami and Thailand’s floods.
- Stable. A resilient macroeconomic environment and a sound financial sector. - Market-oriented. An efficient goods market and large export earner. - Well connected. World class infrastructure comprising excellent transport connectivity and advanced communications infrastructure. - Cost effective. Affordable costs of living and doing business. - Business friendly. Attractive governmental support through government policies and tax incentives.
Reference: Market cap. US$BN (20-1-12)Citigroup 86Bank of America 71Apple 560ExxonMobil 381Microsoft 248GE 203
With increased competition from low cost producers such as the People’s Republic of China, India and Vietnam, Malaysia is no longer competitive in the area of low-end manufacturing. To raise the economy up the value chain, the Government will continue to intensify its efforts in identifying and attracting investments in new growth areas and emerging technologies, high value-added industries, high technology and capital intensive industries and research and development (R&D) activities in line with the Government’s efforts to become a high income nation by 2020.
US MNCs in Malaysia are setting their sights on going regional and increasingly look at Malaysia as a hub for regional activities. Reflective of this new trend, AMCHAM board members now have additional responsibilities in this region and are entirely based in Malaysia.
American MalaysianChamber of Commerce August, 2012 www.amcham.com.my @amchammalaysia
Malaysia In NumbersMalaysia Facts and Figures (2012)Population 29 MillionGDP (US$ bln) 237.8GDP per capita (US$ bln) 8.4GDP growth (%) 4.8 (est)Market Cap (US$ bln) 411Credit rating A (Standard & Poor’s) A3 (Moody’s)Unemployment rate (%) 3.3Big Mac index (US$) 2.34
‘Center to ASEAN’Malaysia:• 3rd largest economy in ASEAN• A trade hub with geostrategic nexus• U.S. 4th largest trading partner, China # 1• 2nd largest U.S. export market in ASEAN• U.S. key investor (US$16 Bln FDI, 2010)• Negotiating Trans-Pacific Partnership free trade agreement
Country Overview Strengths Weaknesses • Major world source for electronics • Sustainability of the national and computer parts subsidization program on capping the prices of basic consumer goods • Government offering attractive tax breaks and concessions to foreign companies • Relative insulation from global energy price shocks being • One of the world’s largest eroded- to be net importer of crude producers of rubber, palm oil in few years time oil, pepper and tropical hardwoods Opportunities Threat • Reforms and changes with the • Malaysia is at risk of losing out to (ETP) and (GTP) China, Vietnam, & Indonesia in the race for foreign investment • Private sector-led growth • Government’s fiscal deficits could • Free trade agreement strain country’s finances negotiations with the EU as well as the Trans-Pacific Partnership
Economic Snapshot Moving up the value chain from a manufacturing to a services economy GDP by sector GDP Value and Growth (2003 – 2013)*GDP at current price Services subsectors: • Wholesale and retail • Financial services • Government services • Real estate and construction Source: Bank Negara Malaysia
Trade OverviewExport and Import• Malaysia shows strong trade performance despite Economic uncertainties and supply chain disruptions.• Malaysia is a leading exporter of electrical appliances, electronic parts and components, palm oil and natural gas.• The major category of imports includes electronics and electrical goods, chemicals and chemical products, machinery, appliances and parts. Source: Malaysia in Focus, PwC 2012
Business and Investment LandscapeAn OverviewThe World Bank’s Ease of DoingBusiness Report says Malaysia isthe 18th most competitive nationout of 183 economies it surveyed.The AT Kearney 2012 FDIConfidence Index ranks Malaysiaamong the top 10 FDI destinationsin the world.Malaysia is relatively disaster-freeand nestled at the heart of ASEAN.Malaysia is:• Market oriented• Cost effective• Business friendly
Business LandscapeLeading CorporationsTop 4 sectors based on Market cap. local MNCs1. Banking2. Telecommunications3. Oil and Gas4. Retail Source: Malaysia in Focus, PwC
Investment LandscapeFDI Growth• Malaysia achieved a foreign direct investment (FDI) inflow growth of 12.3% to US$ 10.8 Bln in 2011• Malaysia is the top 5 preferred investment destinations in Asia.• FDI inflow per category • Manufacturing (50%) • Services (27%) • Mining (22%) Source: Malaysia investment performance, MIDA
Investment LandscapeInvestment Overview• In 2011, total investments approved in the Malaysian economy amounted to US$49 Bln.• This constitutes investments approved in the manufacturing, services and primary sectors.• The services sector is expected to assume a greater role in driving economic growth during this decade.• FDI inflow important for Malaysia’s economy Source: Malaysia investment performance, MIDA
Investment LandscapeApproved Investments Manufacturing Sector (FDI + DDI)• E&E industry dominates investment inflow• Malaysia sees increased competition from low cost producers; China, India and Vietnam.• Moving up the value chain with more R&D and into high value added industries such as Solar Source: Malaysia investment performance, MIDA
Investment LandscapeU.S. E&E Investments• Total E&E investments from U.S. in E&E Investments by Country the Malaysian economy amounted to (Total US$ 36.5 Bln) US$12 Bln. Korea,Rep. Others 4% 7%• U.S. investments shift from labor Taiwan intensive to High-end Automation, 6% Design & Development, Shared USA Services & OHQs Netherlands 35% 8%• D&D Expenditure = RM1.68 Bln Singapore 5x increase in expenditure from 2001 8% to 2011 Japan• D&D Engineers = 5.6k; Germany 23% 2x increase in from 2007 to 2011 9%• This year, 8 E&E companies celebrate 40 years establishment in Malaysia. Source: MAEI Annual Survey 2011;
Investment LandscapeApproved Investments Services Sector (FDI + DDI)• Investments in services sector recovering to pre-crisis levels.• Real estate makes up the largest services sub-sector for approved foreign and domestic investments.• US MNCs in Malaysia are setting their sights on going regional and increasingly look at Malaysia as a hub for regional activities. Source: Malaysia investment performance, MIDA
Investment LandscapeEstablished OHQs in Malaysia by World Leading MNCs (1/2) Source: Malaysia investment performance, MIDA
Investment LandscapeEstablished OHQs in Malaysia by World Leading MNCs (2/2) Source: Malaysia investment performance, MIDA
Economic Transformation ProgramFocused Approach to Economic Growth12 National Key Economic Areas 6 Strategic Reform Initiatives +12 NKEAs 6 SRIs• Oil, gas & energy Enablers to achieve competitiveness:• Palm oil & rubber • Government’s facilitative role in• Financial services business• Wholesale & retail trade • Public finance reform• Communications content & • Human capital developmentinfrastructure • International standards &• Tourism liberalization• Business services • Public service delivery• Health services • Narrowing disparities• Electronics & electrical •Education• Agriculture Source: ETP Annual• Greater KL
New Economic ModelFocused Approach to Economic Growth• Targeted GNI growth of 6% per annum to US$ 15.000 per capita in 2020• Achieving a High-Income, High- Value, Fully Developed Economy that enables: • GDP Growth High • Quality Jobs Growth income • Career Opportunities • Ability to Fund Ideas NE M• Join the ranks of the high- Inclusiveness Sustainability income economies with an inclusive and sustainable growth process.
References and Key Contacts Organization Website PricewaterhouseCoopers www.pwc.com/my (PwC) Malaysia U.S. Embassy Kuala Lumpur malaysia.usembassy.gov/ Ministry of International Trade www.miti.gov.my and Industry Malaysia Performance management & www.pemandu.gov.my Delivery Unit (PEMANDU) InvestKL www.investkl.gov.my Economic Planning Unit www.epu.gov.my Malaysian Investment www.mida.gov.my Development Authority Malaysian External Trade www.matrade.gov.my Development Corporation
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