Malaysia Business Guide

Malaysia Core Industries

Six main industry sectors in Malaysia:

† Source: Based on components and parts, Malaysian Industrial Development Authority, www.mida.gov.my
†† Source: Based on total ICT spend, Asian-Oceania Computing Industry Organisation, www.asocio.org
††† Source: Swiss Re, sigma, No. 5/2006, www.swissre.com
†††† Source: Based on sales value, Chemical Industries Council of Malaysia, 2004, www.cicm.org.my
††††† Source: World Federation of Direct Selling Association, International Statistics, www.wfdsa.org
†††††† Source: Based on total sales of retail food, Department of Primary Industries, www.dpi.vic.gov.au

A strong performance in each of these industries during 2004 and 2005 offers Australia potential opportunities, as companies operating in these sectors conduct incentive programs and corporate meetings in medium to long-haul international markets. Following is a snapshot of these sectors:

Automotive

As at 2005, there were four national automotive projects, ten assemblers and three composite body sports car manufacturers in Malaysia that manufacture/assemble a wide range of makes and models. There were also more than 350 component manufacturers, both local and foreign, to supply the needs of the automotive industry. Malaysia is the focal point for many international automotive manufacturers as it is still the largest passenger vehicle market in ASEAN.(2) The measures and efforts continually undertaken by Malaysian companies to improve the quality, reduce costs and ensure timely delivery of their products have further enhanced their competitiveness and the ability to further integrate into the automotive industry supply chain.(3)

Information Technology

Malaysia has around 7,000 ICT companies, of which, 200 are involved in Systems Integration (10-15 leading local SIs) and distribution (boxed software and hardware products).(4) A combination of thirteen Internet Services Providers and at least eight wireless Internet Service Providers will drive the majority of Malaysia’s growth in the IT industry.  The Government of Malaysia has, in 2005, taken steps to implement its National Broadband Plan (NBP).  The focal point of the NBP is to create a critical mass of broadband connections of 1.3 to 2.8 million, or a penetration rate of 5% by 2006 and 10% in 2008.(5)

Insurance

In 2005, the Malaysian insurance industry ranked 33rd in the world in terms of total premium volume. In terms of world market share for total premium volume Malaysia held 0.21%. Insurance made up 5.42% of Malaysia’s GDP in 2005 which was ranked 28th in the world.(6) The life insurance sector saw a moderate growth in 2005 as demand conditions had remained positive with the improving risk awareness and increasing affluence of the population. The level of insurance coverage continued to expand with market penetration, measured in terms of life policies in force to the total population, deepened further to 38.7 percent, higher than 2004's 37.9 percent.(7)

Pharmaceutical

Biotechnology has been identified by the Malaysian Government as a new engine of growth for the country.  Malaysia’s rich flora and fauna provides a potentially rich reservoir of natural resources for healthcare applications and biopharmaceutical production. In 2005, the government has pledged to provide a conducive “lab to market” concept to enable an environment that will nurture the growth of biotech in the country and it is expected to spend US$1 billion for the first 5 years to spearhead the development. Biotech’s contribution to GDP is expected to be approximately 2.5% by 2010, 4.0% by 2015 and 5.0% by 2020.  By 2020, it is estimated that 280,000 new jobs (direct and indirect) will be created.(8)

Direct Selling

There were 3 million sales people employed in the direct selling industry in 2004. (9) To ensure the practices of direct selling companies in Malaysia are ethical and that local companies and communities profit, companies intending to operate in Malaysia must adhere to certain regulations before a licence can be granted. (10)

Consumable

Tourism Australia is targeting consumable goods which are defined as resources whose availability is permanently changed by its usage, such as food, water, fuel, toiletries, and other items which a person consumes over a period of time (http://nexus.nasa.gov/ESP/Definitions.aspx). The following research data is on Fast Moving Consumer Goods, an example of a consumable good sector. (11)
 
With rising affluence and education levels, Malaysians, especially in urban areas, prefer to shop in modern retailers which offer them convenient shopping options. Modern retail outlets such as convenience stores and hypermarkets cover almost 30% of total Malaysian food sales. The remaining 70% of retail food sales are accounted for by traditional wet markets and small grocery shops in residential areas. The Malaysian food service sector is also a growing industry, and as at 2004 had estimated sales of US$4 billion. This sectors is made up mostly of small family owned businesses but it is also made up of full-service restaurants, hotels, and cafes.

(2) Source: Malaysian Industrial Development Authority, www.mida.gov.my
(3) Source: Malaysia Automotive, www.matrade.gov.my
(4) Source: Austrade, Industry & Country Info, www.austrade.gov.au
(5) Source: Market industry reports, 2005, www.strategis.ic.gc.ca
(6) Source: Swiss Re, sigma, No. 5/2006, www.swissre.com
(7) Source: “Malaysia's insurance industry reports positive growth in 2005”, People’s Daily Online, www.english.people.com.cn
(8) Source: Market research reports, 2005, www.strategis.ic.gc.ca
(9) Source: World Federation of Direct Selling Association, International Statistics, www.wfdsa.org
(10) Source: Licensing requirements in Malaysia, www.allmalaysia.info
(11) Source: Department of Primary Industries, International Market Fact Sheets, www.dpi.vic.gov.au

Last updated: October 2006

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