Malaysia: Reawakening the High Trade Economy Post-Pandemic
Since 2010, Malaysia has gained a reputation as one of the most economically welcoming markets globally.
Maintaining a stable trade to GDP ratio of over 130%, the country's highly active trade traffic has become incremental to its development growth.
Today, 40% of Malaysian employment is export-related, specifically in electrical appliances and tech components.
The country was initially reliant on its agriculture and commodities sectors. Yet, over the years, Malaysia has succeeded in diversifying its economy to the manufacturing and service sectors, providing a wide range of employment opportunities while hand-in-hand facilitating the creation of quality talent pools.
While there still exists a vast income disparity relative to its neighboring countries, the government plans to implement more targeted measures to boost the poor and vulnerable to increase the quality of their livelihood.
During the COVID-19 pandemic, officials have wired liquid cash transfers to accommodate the weakened economy.
Severe Impact of COVID-19
The COVID-19 outbreak impacts not only the poor and vulnerable but also the country's macroeconomic condition.
The low global demand and disrupted supply chains have massively severed the country's export-reliant income.
As a result, Malaysia experienced a 5.6% contraction at the end of 2020, touching the lowest position since the Asian Financial Crisis.
However, the economy expects to jump back by 6% in 2021 due to the strict COVID-19 restriction policies alongside nationwide vaccination rollout and the government's attempts to stabilize the business environment.
The recovery pace would align with the global rebound in demand, narrowing the country's account surplus and returning inflation to a standard rate as consumer behavior strengthens.
Malaysian’s Expansionary Budget
The government has expanded its 2021 budget to accommodate fiscal stimulus equivalent to RM 322.5 billion, or 20.6% of the GDP.
In addition, the budget includes investment incentive packages to attract foreign investments, specifically in technology, to support other struggling industries.
Other measures consist of wage subsidies and income tax cuts to trigger economic activities, both domestic and international.
Following the COVID-19 peak cases in January, the country has started to ease the social and health restriction, further reopening public activities.
However, even as the economy recovers, the uncertainties regarding global demands and consumer strength keep the country alert for any upcoming risks heading its way.
Market Research Malaysia assists industry players in identifying sustainable growth strategies within Malaysia's multitude of industries, providing a grip of understanding the opportunities and potentials beyond the surface level.
Our engagements usually range from market entry strategies, competitive benchmarking, channel model identification, market assessments, M&A, and partner due diligence--without limiting one from the other.
With substantial experience in market research, we help our clients enter and thrive in the dynamic Malaysian market by leveraging an in-depth understanding of the market's characteristics, allowing us to provide a one-of-a-kind perspective and insights that are essential to your needs.
