The last quarter of 2007 saw the services sector topping the economic growth chart, overtaking the manufacturing sector which has been the leading industry for the past few years.
The growth will be further stimulated by strong domestic consumption spending (yes, part of it is due to the salary increase in public sector – which resulted a new generation of spenders).
Also, it would be contributed with more arrival of tourists (the after effect of Visit Malaysia 2007) and stronger wholesale and retail trade. More growth is anticipated mainly contributed by the intermediate services group comprising finance and insurance, business services, transportation, real estate and communication sub sector.
For the past few years, manufacturing has always been at the forefront of the economic growth until it is taken over by the services. And unlike last year, the sector is unlikely to produce the same kind of growth this year, or even next year. However, it will still be one of the strongholds of the country’s economic. As a matter of fact, a number of leading manufacturing companies have indicated their intention (some expansion has began) to expand their manufacturing operation. For instance, Intel and Motorola. While Intel is adding its production and manufacturing capacity in Kulim, Motorola is set to pour RM350 million over the next 5 years to expand its plant in Bayan Lepas Industrial Zone.
Additionally, the increasing demand for electrical and electronic products, textiles & apparels and machinery & equipment will pave way to new plant set ups and expansion of facilities, which in turn will create more job opportunities.
3. Information Technology
While the growth trend of IT infrastructure set up and services is moving towards China and India, Malaysia is still a respectable location and remains a preferred avenue for IT operation. In fact, where shared service outsourcing (SSO) and IT call center is concerned, Malaysia tops the demand, mainly due to the diverse language skills the country can offer. Other multinational companies continue to invest their IT operation, that includes application and development, the latest being Hewlett Packard and Dell.
As of year 2007 ending, there are close to 1900 MSC status companies, of which more than 70% are owned by Malaysian. About 5% of the total amount, or to be exact, 92 are multinational companies. Between the first half of year 2007, a total of 147 companies were accorded the MSC status, and the number is estimated to provide job vacancies totaling close to 10,000 by their 3rd year of operation, and you can see Cyberjaya starting to get cramped. These MSC companies mostly involve in creative multimedia, application software, mobility, embedded software & hardware and internet-based businesses.
A string of major construction and infrastructure projects have been committed for the Malaysia 9th plan and that includes the widening of Penang Bridge, construction of 2nd Penang Bridge, Ipoh-Padang Besar double-tracking rail and extension of Ampang and Kelana Jaya light rail transit lines, to name a few. And oops, don’t forget the corridor developments in Johor – Iskandar Development Region (IDR), Northern Malaysia – North Corridor Economic Region (NCER), Eastern Peninsular – East Corridor Economic Region (ECER), Sabah – Sabah Development Corridor (SDC) and Sarawak – Sarawak Corridor of Renewable Energy (SCORE).
As in one of my previous posting, the ECER will be able to provide half a million jobs. Now, if 1 infrastructure project gives you half a million jobs, how many jobs you can have with say, 5 giant projects? Go figure. Also, as explained by the Ministry of Finance in the Malaysia Economic Report 2008, there are as many as 34,000 projects for building and maintenance of public infrastructure and small development projects in rural areas. Folks, that’s a lot of money (where has it gone?) and jobs we’re talking about. And we have not mentioned the infrastructure improvement projects for the education sector, where RM2.6 billion investment is at stake.
5. Banking & Finance
The banking industry showed a strong showing with strong capitalization and the declining of the non-performing loans. The Islamic Finance has become a niche of its own and is expanding at an unprecedented rate. The inception of Al-Rajhi Bank Malaysia in 2007 is another indication of yet more vibrant banking and finance activity. In the process Al-Rajhi became the first Saudi bank to be awarded full banking license by the Bank Negara Malaysa (BNM).
The growth of finance and insurance sector will be boosted by the increasing financing activity for consumer credit and business investment and introduction of new range of products and services for retirement savings, investment vehicles and insurance. Even the Bank Negara itself has been hiring for major positions to cater the growing trends of financial activity.
While the number of major players in telecommunication industry remains stagnant, the rate of business activity, the new technology & application development and the increasing competition will only boost the sector further. The cellular and broadband sector are very likely to undergo significant expansion and growth. The volume of SMSes are also expected to increase with major reality shows like Akademi Fantasia are set to commence their new seasons.
3G services will become more accessible and affordable too, possibly due to the imminent arrival of Wimax, which is rumored to be able to provide more quality connectivity at better price. Today you can have a 3G package integrated together with your Streamyx broadband services at RM109 per month. At the same time we hope all providers can continuously improve their quality of services and pricing. Top notch engineers and world class customer executives are therefore desperately needed here. And that means you.
7. Logistics and Supply Chain
Major logistic hubs and ports including Port Klang, Johor Port, Tanjung Pelepas, Kuantan, Penang, Bintulu and Kuching recorded strong operation growth in 2007, which is a testimony of the country’s ability to provide world class logistic and supply chain service. Both Port Klang and Port of Tanjung Pelepas (PTP) are ranked among the world’s top 20 ports. Companies operating in the free trade zone are mainly involved in logistics provision, distribution and warehousing, shipbuilding, repair and maintenance, manufacturing and oil and gas.
The growth of the logistics and supply chain need is parallel with the expansion of the manufacturing and retail sectors. With the increase of production capacity, or the opening of a new manufacturing facility, a higher demand of logistic and supply need will occur to cater for the growing sector.
8. FMCG & Retail
Major retailers in Malaysia are expected to continue to expand, add more outlets and branches, and provide more job opportunities and businesses to local people. Presently, there is a total of 60 hypermarket outlets operating in Malaysia, employing more than 16,000 people nationwide. Both numbers are expected to increase very soon.
9. Tourism & Hospitality
With the increasing number of tourists (which we hope will return to their countries again and not rooting somewhere close to your neighborhood), the demand for tour guides, guest officers, translators and other positions will be inevitably higher. Hotel rooms are filling up like nobody’s business and this is certainly a good year for those in the hotel owners and operators. More and more vacant positions will be available soon. In 2006, a total 492,000 jobs were provided by the tourism industry.
Additionally, Malaysia is also getting more popular as a destination for international exhibitions and events, stimulating growth in the MICE (Meetings, Incentives, Conventions and Exhibitions) segment. More than 2 million delegates entered the country in 2007, which represents about 10% of the overall tourism market share. With Malaysia My Second Home program (Funnily enough, the program was previously known as the Silver Hair program… if you know what I mean), there is also opportunity for you to make extra money by converting your abandoned chicken farm in your backyard into a 2-star home stay chalet. You will contribute to reduction in national unemployment rate by hiring your brother who just finished SPM as the General Manager.
10. Agriculture & Biotechnology
For decades, the agriculture industry has been one of the economic pillars of the country, playing its role as a catalyst for the development of remote and rural areas. Malaysia was the number one producer of palm oil ten years ago and is today still the number one producer. However, the trend is moving towards modernizing the sector and giving it a fresher look and this is where biotechnology can take us places. Biotechnology is the technological application that uses biological system, the living organism and its derivatives, and with the country’s easy access to agricultural resources, the move is just timely.
Biotechnology application will enable the waste resources of e.g. oil palm to be converted into renewable energy sources e.g. biomass and biofuel, and reduces the dependency of to the fossil based fuel. The price of the petrol fuel has been increasing without showing sign of slowing down, and with the ability to consume biofuel as an alternative, who cares if the price of petrol keeps on increasing? And who will win? That’s right, the people and the technology.