MINISTRY OF FINANCE

Economic Outlook
2024

[Link] n PREFACE [Link] 1 06/10/2023 6:51 PM

 Copyright Reserved

All rights reserved. No part of this publication may be reproduced,

stored in retrieval system or transmitted in any form or by any means
electronic, mechanical, photocopying, recording and/or otherwise
without prior permission of:

Under Secretary,
Fiscal and Economics Division,
Ministry of Finance Malaysia,
Level 9, Centre Block,
Kompleks Kementerian Kewangan,
No. 5, Persiaran Perdana,
Precint 2,
Federal Government Administrative Centre,
62592 Putrajaya.

Fax : 03-88823881
E-mail : fed@[Link]

The Economic Outlook is an annual publication released on the same

day as the Annual Budget.

The 2024 edition is released on 13 October 2023.

Sale copies are obtainable from:

[Link]

This publication is also available for download at:

[Link]

PRINTED BY
PERCETAKAN NASIONAL MALAYSIA BERHAD
KUALA LUMPUR, 2023
[Link]
email: cservice@[Link]
Tel.: 03-92366895 Fax: 03-92224773

[Link] n PREFACE [Link] 2 06/10/2023 6:51 PM

 PREFACE

MINISTER OF FINANCE
MALAYSIA

The global economy continues to traverse through an environment filled with challenges
since the COVID-19 pandemic. Deepened geopolitical tensions and persistent tightening
of monetary policies to address inflation, have increased the risk of a worldwide
slowdown. The circumstances are aggravated by uncertainties in major economies, mainly
impacting developing nations as well as weakening trade dynamism against a backdrop
of supply chain disruptions and ongoing trade tensions.

Malaysia is not immune from these global developments, given the degree of openness
in our economy and financial system. The diversified structure of the Malaysian economy
and our solid fundamentals built on the blood, sweat and tears of the rakyat over the
years have bolstered the economy’s resilience and positioned us on a steady growth
path. These positive factors, supported by firm policies and action plans anchored on the
framework of Ekonomi MADANI, as well as the continuous implementation of pragmatic
measures and initiatives laid by the Government, will keep our economy strong and
resilient.

While the external sector remains important, growth is increasingly driven by domestic
demand. The nation’s manageable inflation, favourable labour market conditions, healthy
foreign reserves, current account surplus and high national savings, robust financial
sector and well-developed capital market, continue to sustain the economic momentum.
Amid the global economic slowdown, the Malaysian economy recorded a growth of 4.2%
in the first half of 2023 and is expected to expand at approximately 4% in 2023.

The success in charting our economic growth and overcoming crises would not be
possible without the sacrifice and dedication of the rakyat. The Government remains
resolute to ensure all Malaysians are able to enjoy the fruits of the nation’s wealth and
prosperity through sustainable and inclusive growth. Recognising this, the framework of

ECONOMIC OUTLOOK 2024 iii

[Link] n PREFACE [Link] 3 06/10/2023 6:52 PM

 “Ekonomi MADANI: Memperkasa Rakyat” was formulated with the utmost priority to serve
the rakyat. The framework will serve as a foundation to the recently announced policies,
including the National Energy Transition Roadmap, the New Industrial Master Plan 2030
and the Mid-Term Review of the Twelfth Malaysia Plan. In this regard, the Government
has envisaged seven targets to be achieved by the country within the next ten years.
These initiatives are anticipated to drive the nation’s economy, with a projected growth
rate of 4% to 5% in 2024.

The wellbeing of the rakyat remains this Government’s utmost concern and priority. The
prosperity of the nation must benefit all segments of society. Thus, it is vital to ensure
that the economic pie distribution is fair and equitable, prioritising excellent healthcare
services and quality education for all Malaysians. In the context of employment and
wages, salaries must commensurate with workers’ productivity. In addition, providing
better social protection and public amenities, including transport, water and electricity
supply, as well as broadband services, will create more equitable opportunities to
improve the rakyat’s quality of life. An agile public service delivery supported by the
digitalisation agenda is imperative to drive economic transformation. The Government
will also focus on progressively enhancing Malaysia’s fiscal sustainability by mobilising
revenue as well as optimising expenditure to address leakages and wastages.

The year 2024 is envisaged to be a promising year for Malaysia. The execution of several
policies announced recently, including the implementation of projects under the Mid-
Term Review of the Twelfth Malaysia Plan, will solidify Malaysia’s efforts in becoming
Asia’s most dynamic economy in the near future. While we may encounter challenges
and structural changes, our resilience and capacity to innovate are formidable. It is a
collective mission for all Malaysians to unite in harmony, embrace changes and prioritise
sustainable growth strategies. Together, we shall chart a successful course ahead, that
reaps equitable benefits for all and secures a brighter future for our beloved nation.

ANWAR IBRAHIM
13 October 2023

iv ECONOMIC OUTLOOK 2024

[Link] n PREFACE [Link] 4 06/10/2023 6:52 PM

 TH E E CO N O M Y 2 0 2 4
in constant 2015 prices
(share to total in %)

Public
Investment1
Exports of 2.9%
Services
6.5%
Public
Consumption
7.8%

Private
Private Consumption
Investment1 38.2%
9.7%
DEMAND
RM2,656,097
MILLION

Exports
of Goods
34.9%

Mining Construction
3.7% 2.3%
Agriculture
3.8%
Imports
of Services
7.8%
Services
37.4%

Manufacturing SUPPLY
14.7% RM2,656,097
MILLION

Imports
of Goods
1
Includes change in stocks 30.3%
Source: Ministry of Finance, Malaysia

ECONOMIC OUTLOOK 2024 v

[Link] n PREFACE [Link] 5 06/10/2023 6:52 PM

[Link] n PREFACE [Link] 6 06/10/2023 6:52 PM
 MALAYSIA: KEY DATA AND FORECAST

AREA 2020
(square kilometres)
Federal
Malaysia Peninsular Malaysia Sarawak Sabah
Territory1
330,241 131,786 124,450 73,621 384

2022 10
2023 11
202412

POPULATION2 (million) 32.7 33.4 33.7

RM change RM change RM change
DOMESTIC PRODUCTION
million (%) million (%) million (%)
Gross Domestic Product
(constant 2015 prices)
1,510,939 8.7 1,569,247 ~ 4.017 1,645,078 4.0 – 5.0

Agriculture 99,073 0.1 99,620 0.6 100,770 1.2

Mining and quarrying 96,199 2.6 95,448 -0.8 98,030 2.7
Manufacturing 364,131 8.1 369,359 1.4 384,727 4.2
Construction 53,441 5.0 56,824 6.3 60,688 6.8
Services 881,310 10.9 930,125 5.5 981,990 5.6
Import duties 16,785 7.3 17,868 6.5 18,873 5.6
Gross Domestic Product (current prices) 1,791,358 15.7 1,850,102 ~ 3.517 1,974,027 6.0 – 7.0
Final consumption expenditure: Public 208,887 6.1 213,063 2.0 221,165 3.8
Private 1,031,759 14.9 1,111,748 7.8 1,204,270 8.3
Gross fixed capital formation: Public 3
72,330 7.7 79,856 10.4 88,271 10.5
Private 253,939 9.8 269,856 6.3 290,016 7.5
Changes in inventories and valuables 94,811 – 46,912 – 31,317 –
Exports of goods and services 1,378,452 26.0 1,272,424 -7.7 1,345,773 5.8
Imports of goods and services 1,248,820 27.2 1,143,757 -8.4 1,206,785 5.5
NATIONAL INCOME AND EXPENDITURE
Gross National Income (constant 2015 prices) 1,479,619 7.9 1,544,269 4.4 1,614,614 4.6
Gross National Income (current prices) 1,731,944 14.9 1,802,983 4.1 1,915,537 6.2
Gross National Savings (current prices) 476,178 18.3 458,596 -3.7 471,844 2.9
Per Capita Income (current prices, RM) 52,968 14.5 54,015 2.0 56,920 5.4
FEDERAL GOVERNMENT FINANCE 2022 2023 13
2024 14

Revenue 294,357 25.9 303,200 3.0 307,600 1.5

Operating expenditure 292,693 26.4 300,140 2.5 303,800 1.2

Current balance 1,664 3,060 3,800

Development expenditure (net) 70,167 10.9 96,300 37.2 89,200 -7.4

COVID-19 Fund 4
30,979 -17.9 – –
Overall balance -99,482 -93,240 -85,400
% of GDP -5.6 -5.0 -4.3

Domestic borrowings (net) 99,687 93,580 –

Offshore borrowings (net) -266 -300 –

Change in assets 5
61 -40 –

economic outlook 2024 vii

2. Key Data BI [Link] 7 05/10/2023 8:32 PM

 MALAYSIA: KEY DATA AND FORECAST (cont’d)

2022 2023 2024

RM % RM % RM %
million GDP million GDP million GDP
Federal Government Debt6 1,079,591 60.3 1,147,132 62.0 – –
Domestic debt 1,050,078 58.6 1,117,158 60.4 – –
Treasury bills 31,500 1.8 34,500 1.9 – –
Malaysian Government Investment Issues 471,300 26.3 512,800 27.7 – –
Malaysian Government Securities 538,178 30.0 564,358 30.5 – –
Government Housing Sukuk 9,100 0.5 5,500 0.3 – –
Offshore borrowings 29,513 1.7 29,974 1.6 – –
Market loans 25,543 1.5 26,298 1.4 – –
Project loans 3,970 0.2 3,676 0.2 – –
2022 10 202311 202412
BALANCE OF PAYMENTS (NET) RM million RM million RM million
Balance on current account 55,098 61,972 62,240
Goods 186,029 170,171 174,876
Services -56,397 -41,504 -35,888
Primary income -59,414 -47,119 -58,490
Secondary income -15,120 -19,575 -18,258
Balance on capital and financial accounts 11,902 – –
Net errors and omissions -13,641 – –
Overall balance 53,359 – –
RM change RM change RM change
EXTERNAL TRADE
million (%) million (%) million (%)
Gross exports
1,550,009 24.9 1,429,547 -7.8 1,501,859 5.1
of which:
Manufactured 1,304,668 22.1 1,235,167 -5.3 1,303,202 5.5
Agriculture 120,903 23.3 90,876 -24.8 92,405 1.7
Mining 117,346 68.2 95,609 -18.5 98,343 2.9
Gross imports
1,293,811 31.0 1,205,339 -6.8 1,264,533 4.9
of which:
Intermediate goods 706,551 29.5 636,558 -9.9 669,696 5.2
Capital goods 120,231 15.8 113,335 -5.7 119,079 5.1
Consumption goods 104,017 24.0 96,462 -7.3 100,388 4.1
Total trade 2,843,821 27.6 2,634,886 -7.3 2,766,393 5.0
Trade balance 256,198 1.0 224,208 -12.5 237,326 5.9
Index change Index change Index change
PRICES
(%) (%) (%)
Consumer Price Index (2010 = 100) 127.2 3.3 – 2.5 - 3.0 – 2.1 – 3.6
Producer Price Index: Local Production 120.8 7.8 – (2.5) – (0.5) 15
– 0.1 – 2.1
(2010 = 100)
Thousands change Thousands change Thousands change
LABOUR
(%) (%) (%)
Labour force 16,022.1 1.4 16,358.6 2.1 16,669.4 1.9
Unemployment 7
630.4 (3.9) 574.4 (3.5) 569.5 (3.4)

viii economic outlook 2024

2. Key Data BI [Link] 8 05/10/2023 8:32 PM

 MALAYSIA: KEY DATA AND FORECAST (cont’d)
2022 2023
End-July End-July
RM change RM change
FINANCIAL AND CAPITAL MARKETS
million (%) million (%)
Money supply
M1 602,157 9.3 594,211 -1.3
M2 2,214,012 5.4 2,291,248 3.5
M3 2,222,147 5.5 2,300,317 3.5
Banking system (including Islamic banks)
Fund8 2,234,007 3.9 2,313,168 3.5
Loans 1,835,565 5.5 1,897,756 3.4
Loan-to-fund ratio (%) 82.2 82.0
Interest rates (average rates, %) July July
3-month interbank 2.70 3.50
Commercial banks
Fixed deposits: 3-month 2.01 2.71
12-month 2.20 2.89
Savings deposit 0.69 0.96
Weighted base rate (BR) 2.92 3.67
Base lending rate (BLR) 5.97 6.68
Treasury bills (3-month) – –
Malaysian Government Securities 9

1-year 3.00 3.24

5-year 3.72 3.60
End-August End-August
RM change16 RM change16
Movement of ringgit
per unit of (%) per unit of (%)
Special Drawing Rights (SDR) 5.8386 1.4 6.1499 -5.1
US dollar 4.4845 -7.0 4.6385 -3.3
Euro 4.4834 9.8 5.0410 -11.1
100 Japanese yen 3.2359 17.4 3.1731 2.0
Bursa Malaysia
FBM KLCI 1,512.05 1,451.94
Market capitalisation (RM billion) 1,706.31 1,776.33
1
Includes the Federal Territory of Kuala Lumpur, Federal Territory of Putrajaya and Federal Territory of Labuan
2
Current Population Estimates based on the 2020 Population and Housing Census
3
Includes investment of public corporations
4
A specific trust fund established under Temporary Measures for Government Financing (Coronavirus Disease 2019 (COVID-19)) Act 2020 to finance economic
stimulus packages and recovery plans
5
(+) indicates drawdown of assets; (-) indicates accumulation of assets
6
For 2023, data is at end-August 2023
7
Figures in parentheses show the unemployment rate
8
Funds comprise deposits (exclude deposits accepted from banking institutions and Bank Negara Malaysia) and all debt instruments issued (including
subordinated debt, debt certificates/sukuk, commercial papers and structured notes)
9
Market indicative yield
10
Preliminary
11
Estimate
12
Forecast
13
Revised estimate
14
Budget estimate excluding Budget 2024 measures
15
Figures in parentheses indicates a negative value
16
Annual rate of appreciation (+) or depreciation (-) of the ringgit
17
Approximate
Note: Total may not add up due to rounding

economic outlook 2024 ix

2. Key Data BI [Link] 9 05/10/2023 8:32 PM

 CONTENTS
PREFACE iii

ACRONYMS AND ABBREVIATIONS xiv

CHAPTER 1 ECONOMIC MANAGEMENT AND PROSPECTS

Ekonomi MADANI: Towards a more Sustainable and 3
Prosperous Malaysia

Information Box 1.1 – Ekonomi MADANI: Memperkasa Rakyat 3

Outlook 9
Updates on the Budget 2023 11
Economic Management 16
Opportunities and Challenges 16
Feature Article 1.1 – Just Transitions for a Sustainable Future 18
Information Box 1.2 – Wages as a Source of Growth 25
Strategic Initiatives – Budget 2024 32
Information Box 1.3 – Mid-Term Review of the Twelfth Malaysia 33
Plan

Feature Article 1.2 – Towards Equitable Development Targeted 41

Social Assistance

Conclusion 50
References 51

CHAPTER 2 MACROECONOMIC OUTLOOK

Overview 59
Economy in 2023 60
Global Economy 60
Information Box 2.1 – ASEAN Taxonomy for Sustainable Finance: 61
Building a Sustainable ASEAN

x economic outlook 2024

Content [Link] 10 06/10/2023 4:57 PM

 Domestic Economy 66
Feature Article 2.1 – Towards an Investment-Driven Economy for 74
a Sustainable Growth in Malaysia
Feature Article 2.2 – Navigating High-Impact Economic Growth 87
through Direct Investment
Outlook for 2024 97
Global Outlook 97
Domestic Outlook 97
Conclusion 103
References 104

CHAPTER 3 MONETARY AND FINANCIAL DEVELOPMENTS

Overview 109
Monetary Developments 109
Performance of Ringgit 110
Banking Sector Performance 111
Capital Market Performance 114
Information Box 3.1 – Key Capital Market Measures 119
Islamic Banking and Capital Market Performance 120
Information Box 3.2 – An update: Bolstering Islamic Finance in 121
Malaysia

Conclusion 127
References 128

STATISTICAL TABLES 131

ORGANISATION OF THE MINISTRY OF FINANCE MALAYSIA 185

economic outlook 2024 xi

Content [Link] 11 06/10/2023 4:57 PM

 FIGURES

The Economy 2024

Figure 2.1. Global Gross Domestic Product, Trade and Inflation Growth 60

Figure 2.2. Selected Indicators for the Services Sector 67

Figure 2.3. Output of Manufacturing Sector 69

Figure 2.4. Savings-Investment Gap 73

Figure 2.5. Gross Domestic Product by Income Components 80

Figure 2.6. Top 10 Trading Partners 83

Figure 2.7. International Reserves 86

Figure 2.8. Consumer Price Index and Producer Price Index Trends 95

Figure 3.1. Overnight Policy Rate Level 109

Figure 3.2. Comparison of Interest Rates among Central Banks 110

Figure 3.3. Performance of Ringgit against Selected Currencies 111

Figure 3.4. Banking System: Impaired Loans and Net Impaired Loans Ratio 112

Figure 3.5. Malaysian Government Securities Indicative Yields 116

Figure 3.6. Share of Foreign Holdings in Total Malaysian Government Securities Outstanding 116

Figure 3.7. 5-Year Corporate Bond Yields 116

Figure 3.8. Performance of Bursa Malaysia 117

Figure 3.9. Performance of Selected Stock Markets 118

Figure 3.10. Global Sukuk Outstanding by Country 126

xii economic outlook 2024

Content [Link] 12 06/10/2023 4:57 PM

 TABLES

Table 2.1. Gross Domestic Product by Sector 66

Table 2.2. Services Sector Performance 66

Table 2.3. Manufacturing Indices by Export- and Domestic-Oriented Industries 70

Table 2.4. Value-Added in the Agriculture Sector 71

Table 2.5. Gross Domestic Product by Aggregate Demand 72

Table 2.6. Gross Domestic Product by Income in Selected Countries 81

Table 2.7. External Trade 82

Table 2.8. Gross Exports 82

Table 2.9. Exports of Manufactured Goods 83

Table 2.10. Gross Imports by End Use 84

Table 2.11. Current Account of the Balance of Payments 86

Table 2.12. Consumer Price Index 94

Table 2.13. Producer Price Index 94

Table 2.14. Labour Market Indicators 96

Table 2.15. Employed Persons by Sector 96

Table 3.1. Banking System: Loan Indicators 112

Table 3.2. Banking System: Loans Outstanding by Sector 113

Table 3.3. Funds Raised in the Capital Market 115

Table 3.4. New Issuance of Corporate Bonds by Sector 115

Table 3.5. Bursa Malaysia: Selected Indicators 118

Table 3.6. Islamic Banking: Key Indicators 120

economic outlook 2024 xiii

Content [Link] 13 06/10/2023 4:57 PM

 acronyms and abbreviations

ACRONYMS AND ABBREVIATIONS

ACMF ASEAN Capital Markets Forum CBAM Carbon Border Adjustment

Mechanism
AFC Asian Financial Crisis
CCA Consumer Credit Act
AIBIM Association of Islamic Banking
and Financial Institutions CCPT Climate Change and Principle-
Malaysia based Taxonomy

AiF Academy in Factory CCUS carbon capture, utilisation and

storage
AIRM ASEAN Insurance Regulators
Meeting CE compensation of employees

AKPK Credit Counselling and Debt CET1 Common Equity Tier 1 Capital
Management Agency
CMGP Capital Market Graduate
ALMPs Active Labour Market Policies Programme

ALR average lending rate CMP3 Capital Market Masterplan 3

AMS ASEAN Member States COVID-19 Coronavirus Disease of 2019

ASEAN Association of Southeast Asian CPI Consumer Price Index

Nations
CPO crude palm oil
ASEAN-5 Association of Southest Asian
Nations - 5 CPTPP Comprehensive and Progressive
Agreement for Trans-Pacific
ASEAN ASEAN Taxonomy for Partnership
Taxonomy Sustainable Finance
CSAA Centralised Shariah Advisory
ATB ASEAN Taxonomy Board Authorities

B40 bottom 40% of household CSR Central Spine Road

income group
CSR corporate social responsibility
BCX Bursa Carbon Exchange
DDI domestic direct investment
BM-i Bursa Malaysia-i
DE development expenditure
BNM Bank Negara Malaysia
DFIs development financial
bps basis points institutions

BPM6 Balance of Payments and DIA direct investment abroad

International Investment
Position Manual Sixth Edition DITO Digital Insurer and Takaful
Operators
BR1M Bantuan Rakyat 1 Malaysia
DNSH Do no significant harm
BSAS Bursa Suq Al-Sila’
DSR debt service ratio
BSN Bank Simpanan Nasional
DTN National Energy Policy
CBA Central Bank Malaysia Act 2009
E&E electrical and electronic

xiv economic outlook 2024

Acronyms & Abbreviations (BI) [Link] 14 05/10/2023 8:07 PM

 acronyms and abbreviations

ECF equity crowdfunding GNS gross national savings

ECRL East Coast Rail Link GOS gross operating surplus

Ekuinas Ekuiti Nasional Berhad GovTech Government Technology

EMDEs emerging market and GPA Government Procurement Act

developing economies
HDI Human Development Index
Energy Electricity, gas, steam, and air
conditioning supply HGHV high growth high value

e-PATH New E-Payment Platform i-MILIKI Keluarga Malaysia Home

Ownership Initiative
EPF Employees Provident Fund
IA Investment account
ESG environmental, social and
governance ICD Islamic Corporation for the
Development of Private Sector
ETFs Exchange-traded Funds
ICM Islamic Capital Market
EU European Union
ICT Information and
EUDR EU Deforestationfree Communication Technology
Regulation
IFMC Islamic Financial Market
EV electric vehicles Subcommittee

FBM KLCI FTSE Bursa Malaysia Kuala IFSA Islamic Financial Services Act
Lumpur Composite Index 2013

FDI foreign direct investment IFSB Islamic Financial Services Board

Fed United States Federal Reserve IILM International Islamic Liquidity

Management Corporation
FES Foreign Exempt Scheme
IKHSAN Inisiatif Operator Perkhidmatan
FF Foundation Framework
ILMIA Institute for Labour Market
FRA Fiscal Responsibility Act Information and Analysis

FSBP Financial Sector Blueprint ILO International Labour

2022 – 2026 Organization

FTAs free trade agreements IMD International Institute for

Management Development
GCI Global Connectedness Index
INSAN Inisiatif Usahawan Makanan
GDP gross domestic product
INTAN Inisiatif Usahawan Tani
GFCF Gross fixed capital formation
IPOs Initial Public Offerings
GLCs government-linked companies
IPR Inisiatif Pendapatan Rakyat
GLICs government-linked investment
companies ISIC International Standard
Industrial Classification
GNI gross national income
Khazanah Khazanah Nasional Berhad

economic outlook 2024 xv

Acronyms & Abbreviations (BI) [Link] 15 05/10/2023 8:07 PM

 acronyms and abbreviations

KRI Khazanah Research Institute NACP National Anti-Corruption Plan

LCR Liquidity Coverage Ratio NACSA National Cyber Security Agency

LCTF Low Carbon Transition Facility NADMA National Disaster Management

Agency
LNG liquefied natural gas
NETR National Energy Transition
M&E machinery and other Roadmap
equipment
NGOs non-governmental
M40 middle 40% of household organisations
income group
NIA National Investment Aspiration
MATRADE Malaysia External Trade
Development Corporation NIMP 2030 New Industrial Master Plan
2030
MEF Malaysian Employers
Federation NIP New Investment Policy

MGII Malaysian Government NSNP National Safety Net Programme

Investment Issues
NSRC National Scam Response Centre
MGS Malaysian Government
Securities OE operating expenditure

MHTC Malaysia Healthcare Travel OECD Organisation for Economic

Council Cooperation and Development

MIDA Malaysian Investment OIC Organisation of Islamic

Development Authority Cooperation

MIFC Malaysia International Islamic OPEC+ The Organization of the

Financial Centre Petroleum Exporting Countries
and its allies
MLC MIFC Leadership Council
OPR Overnight Policy Rate
MoC Management of Change
P2P Peer-to-peer financing
MoU Memorandum of
Understanding PADU Pangkalan Data Utama

MOHR Ministry of Human Resources PEKA B40 Peduli Kesihatan Scheme

MPC Monetary Policy Committee PGG Principles of Good Governance

MSMEs micro, small, and medium Platform Centralised Sustainability

enterprises Platform

MTR of the Mid-Term Review of the Twelfth PPI Producer Price Index
Twelfth Plan Malaysia Plan
PPR Program Perumahan Rakyat
MyCIF Malaysian Co-Investment Fund
PS Plus Standard
MyICE Malaysian Incentive Community
Empowerment R&D research and development

MyWI Malaysian Well-being Index R&D&C&I research, development,

commercialisation and
innovation

xvi economic outlook 2024

Acronyms & Abbreviations (BI) [Link] 16 05/10/2023 8:07 PM

 acronyms and abbreviations

RCEP Regional Comprehensive SSL self-sufficiency level

Economic Partnership
SSR self-sufficiency ratio
RE renewable energy
STAR Special Task Force on Agency
REITs Real Estate Investment Trusts Reform

RM Ringgit Malaysia STR Sumbangan Tunai Rahmah

RWA risk-weighted asset SVB Silicon Valley Bank

SARa Rahmah Basic Contribution TIV total industry volume

SC Securities Commission Malaysia TSC Technical Screening Criteria

SDGs Sustainable Development Goals Twelfth Plan Twelfth Malaysia Plan,

2021 – 2025
SJKP Syarikat Jaminan Kredit
Perumahan UEFA Euro 2024 UEFA European Football
2024 Championship
SJPP Syarikat Jaminan Pembiayaan
Perniagaan UK United Kingdom

SESSS Self-Employment Social Security US United States

Scheme
USD US Dollar
SLC ASEAN Senior Level Committee
on Financial Integration VBI value-based Intermediation

SLDN National Dual Training System VBIAF Value-based Intermediation

Financing and Investment
SMEs small and medium enterprises Impact Assessment Framework

SOCSO Social Security Organisation WC-CMD Working Committee on Capital

Market Development
SPS Skim Pekerjaan Sendiri
WCY World Competitiveness
SRI Sustainable and Responsible Yearbook
Investment

economic outlook 2024 xvii

Acronyms & Abbreviations (BI) [Link] 17 05/10/2023 8:07 PM

Acronyms & Abbreviations (BI) [Link] 18 05/10/2023 8:07 PM
 cha p t e r 1

Economic
Management and
Prospects

03 e konom i m a da n i: towa r ds
a mor e sus ta i n a ble a nd
pros pe rous m a l ays i a
Information Box 1.1 ­– Ekonomi MADANI:
Memperkasa Rakyat

09 outlook

11 update s on the budge t 2023

16 econom ic m a n age me nt
opportun i t i e s a nd ch a lle nge s
Feature Article 1.1 ­– Just Transitions for a
Sustainable Future

Information Box 1.2 ­– Wages as a Source of

Growth

32 s tr ategic i n i t i at i v e s –
budge t 202 4
Information Box 1.3 ­– Mid-Term Review of the
Twelfth Malaysia Plan

Feature Article 1.2 ­– Towards Equitable

Development: Targeted Social Assistance

50 conclus ion

51 r e fe r e nce s

Chapter [Link] 1 06/10/2023 7:39 PM

Chapter [Link] 2 06/10/2023 7:39 PM
 chapter 1 economic management and prospects

chapter 1

Economic Management and Prospects

Ekonomi MADANI: framework lays the foundation for Malaysia to

ascend on its development trajectory and to
Towards a more regain the nation’s status as an Asian Tiger.

Sustainable and At its core, the framework concentrates

Prosperous Malaysia on leveraging Malaysia’s innate strengths
to enhance the national competitiveness.
The Government has unveiled the Ekonomi Simultaneously, it places a profound emphasis
MADANI: Memperkasa Rakyat framework on fiscal sustainability measures, good
with the vision of ‘Building a Better Malaysia governance practices, and efficacious service
Together’. Harnessing the untapped potentials delivery. Furthermore, this framework is
to achieve collective goals under this responsive to the current challenges faced by
framework is a shared national aspiration. This the rakyat, particularly the escalating cost of
comprehensive policy framework represents living, while addressing pertinent structural
the unwavering commitment to ensure a issues related to wages and productivity.
sustainable and prosperous nation. The

information box 1.1

Ekonomi MADANI: Memperkasa Rakyat

Introduction

The Ekonomi MADANI: Memperkasa Rakyat framework was launched by YAB Dato’ Seri Anwar
Ibrahim on 27 July 2023. This framework focuses on two main objectives, namely restructuring the
economy and improving the quality of life of all Malaysians. The overarching goal of the framework
is to build a better and sustainable Malaysia. The framework is envisaged to be implemented
through the whole-of-nation approach which requires the mobilisation of resources and collective
efforts from various stakeholders including the government, private sector, government-linked
companies (GLCs), non-governmental organisations (NGOs) and rakyat as a whole.

In the pursuit of this framework, the Government emphasises on enhancing two main thrusts,
namely, “Raising the Ceiling” to strengthen the economy and grow the wealth of the nation; and
secondly “Raising the Floor” to ensure quality and equitable benefits for all as shown in Figure
1.1.1. The framework consists of both short- and medium-term measures to drive the achievement
of these two thrusts. The framework will serve as a foundation and complement recently
announced policies, including the National Energy Transition Roadmap (NETR), the New Industrial
Master Plan 2030 (NIMP 2030) and the Mid-Term Review of the Twelfth Malaysia Plan (MTR of the
Twelfth Plan).

economic outlook 2024 3

Chapter [Link] 3 06/10/2023 7:39 PM

 chapter 1 ECONOMIC MANAGEMENT AND PROSPECTS

FIGURE 1.1.1. Ekonomi MADANI Framework

EKONOMI MADANI : MEMPERKASA RAKYAT

Building a Better Malaysia Together

Raise the Ceiling Raise the Floor

Leading Asian Economy To succeed requires an Quality & Just Life for All
all-of-Malaysia approach
(Rakyat, Government
& Industry)

In the spirit of unity

Good governance
(rooting out corruption)

Agile &
collaborative public
delivery system

Malaysia Anchored on MADANI Values

[Sustainability, Prosperity, Innovation, Respect, Trust and Care & Compassion]
Ensuring ethical underpinnings in pursuit of progress, institutional reform and societal cohesion

Source: Prime Minister's Office of Malaysia

Envisioned Targets

The framework is a holistic approach designed to address various challenges and concerns. The
short-term measures aim to address pressing issues that directly affect both the rakyat and the
economy, while the medium-term measures focus on raising the country’s performance in various
aspects.

Short-Term Targets

The framework sets short-term targets for the improvement of various ongoing initiatives to
address pressing issues affecting the rakyat and businesses. These efforts include:

i. Accelerating the implementation of projects, particularly those aimed at upgrading

dilapidated schools and clinics. Various efforts have been undertaken, such as increasing
allocations, simplifying procurement procedures, and delegating powers to the
implementing authorities to expedite the execution of the projects; and

ii. Eradicating hardcore poor through the roll-out of Inisiatif Pendapatan Rakyat to provide
opportunities to increase and diversify income that enables financial independence and
resilience. The Payung RAHMAH Concept has also been introduced to ease the financial
burden of the rakyat and continues to be strengthened in addressing the cost of living
challenges.

Medium-Term Targets

On a larger scale, the Ekonomi MADANI framework outlines the country’s economic direction with
medium-term targets to raise the performance of the country in various aspects. The framework
sets seven key performance indicators to be achieved by Malaysia within a period of 10 years, as
shown in Figure 1.1.2.

4 economic outlooK 2024

Chapter [Link] 4 06/10/2023 7:39 PM

 chapter 1 ECONOMIC MANAGEMENT AND PROSPECTS

FIGURE 1.1.2. Seven Key Performance Indicators

1 2 3 4

Top 12 in global Top 25 on the Human Increase labour share

Top 30 largest economy of income to 45%
competitiveness Development Index

5 6 7

Improve Malaysia’s position in the Increase female labour

Towards fiscal sustainability,
Corruption Perception Index to force participation
targeting deficit of 3%, or better
Top 25 rate to 60%

Source: Prime Minister’s Office of Malaysia

Main Thrusts

The thrusts are structured to achieve the targets to build a better Malaysia, which is supported by
Focus 1: Malaysia - Leading Asian Economy and Focus 2: Elevating Quality of Life for The Rakyat.

Focus 1: Malaysia - Leading Asian Economy

To position Malaysia as a leader in the Asian economy, the economic structure requires a
transformation from a labour-oriented to an innovation-led economy driven by highly productive
and internationally competitive firms. This effort will involve the revitalisation of the industrial
sector, more efficient resource allocation and distribution of goods and services, to drive towards
vibrant economic growth supported by more sustainable fiscal policy. In achieving this, the main
initiatives are as follows:

i. A Regional (ASEAN) Agenda

For Malaysia to achieve an annual GDP growth between 5.5% to 6%, the country needs to
foster greater economic integration with the neighbouring countries; nurture more highly
competitive local companies to penetrate the ASEAN market; and facilitate trading activities,
especially in facing the global supply chain issues. Furthermore, the country needs to
increase its global competitiveness; focus on higher value-added activities or economic
sophistication; and strengthen outcome-based tax incentives that support companies with
high-impact activities.

ii. Malaysia as an Investment Destination

In promoting Malaysia as a prime investment destination, efforts need to be intensified in

upgrading the industrial areas with more resilient and sustainable infrastructure. Likewise,
greater emphasis must be placed on strengthening the investment promotion agencies
and reviewing investment incentives to generate high-paying jobs and fully utilise local
resources.

economic outlooK 2024 5

Chapter [Link] 5 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

iii. Internationalising Local Start-ups and Small and Medium Enterprises (SMEs)

The GLCs are encouraged to continuously drive domestic direct investment (DDI) and support
the development of local vendors in strategic sectors such as E&E, the digital economy and
aerospace. This effort will push more start-ups and Bumiputera SMEs to venture into new
growth areas. In addition, the Government also aspires to boost export growth as well as
spawn more successful local unicorns and public-listed companies, among others, through
the enhancement of the R&D&C&I ecosystem. In this respect, a conducive financing
ecosystem and dynamic financial market will be needed to support these efforts.

iv. Leader of the Global Islamic Economy

As Malaysia solidifies its position as the leader of the global Islamic economy, the
comprehensive financial ecosystem will be modernised, centering on the Maqasid Shariah1
principles. In line with the Ekonomi MADANI framework, the Government will collaborate
with Islamic financial industry players to offer more digitalised, innovative and diversified
Islamic financial instruments by leveraging Islamic social finance such as zakat, waqf and
sadaqah. A sustainable and effective Islamic finance that encompasses the halal and tayyib2
principles will be aligned with the growing global environmental, social and governance
(ESG) funds.

v. Micro Entrepreneurs and the Informal Sector

The development of micro-enterprises and the informal sector are essential to encourage
wider participation of entrepreneurs while adding value to the economy. However, access
to financing remains crucial to ensure the success of micro, small and medium enterprises
(MSMEs) as well as the informal sector, particularly in the adoption of digitalisation and
other emerging trends. Therefore, microfinance institutions and established start-ups will
be the game changers to encourage both MSMEs and the informal sector to innovate
through alternative financing such as equity crowdfunding (ECF).

vi. Green Growth for Climate Resilience

In the country’s endeavour towards achieving net-zero aspiration by as early as 2050,

low-carbon and climate-resilient elements will be emphasised in Malaysia’s development
planning to shape a more efficient and sustainable economic landscape. Under the NETR,
the Government aims to accelerate the energy transition to ensure a continuous and
sustainable supply of clean energy for all. This aspiration will include increasing renewable
energy generation capacity, installation of solar panels on government buildings, as well
as renewable energy trading policy through the electricity market system. The Government
will also continue to spearhead efforts to pioneer the hydrogen economy and carbon
capture, utilisation and storage (CCUS) while continuously providing incentives specifically
to encourage such new green growth activities.

1
Maqasid Shariah refers objective of Shariah to the preservation of religion, life, intellect, lineage and wealth (property).
2
Tayyib refers to wholesome, pure, healthy and safe.

6 economic outlook 2024

Chapter [Link] 6 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

vii. Land Use and Food Security

Malaysia will reassess the approach towards land use to balance between developmental,
agricultural and conservation needs. This is crucial in ensuring the optimisation of the
land to address food security while conserving biodiversity assets. In this endeavour, the
Government will further improve the self-sufficiency ratio (SSR) and enhance food security
by optimising the use of existing agricultural land through technology adoption, improving
irrigation infrastructure as well as providing financing facilities, particularly for modern
agricultural technology applications. In addition, the creation of nature-based solutions
through conservation and reforestation efforts will be intensified to improve environmental
integrity.

Focus 2: Elevating Quality of Life for the Rakyat

Recognising the need to raise the standard of living for all Malaysians, the Ekonomi MADANI
framework will emphasise on building a more equitable and prosperous society with a fair
distribution of wealth. This aspiration will be achieved through the following strategies:

i. Job Opportunities with Meaningful Wages

In achieving a more balanced economic sharing, the Government will improve policies to
increase wage growth, which includes reviewing the minimum wage and relevant laws
to warrant a better working environment as well as exploring the implementation of a
progressive wage model. These measures aim to increase the share of compensation
of employees to 45% of GDP to be at par with developed countries. Furthermore,
the Government will implement multi-tiered levy to reduce the dependency on low-
skilled foreign workers while encouraging automation.

ii. Equal Opportunity

Malaysia will continue efforts to reduce inequality across gender, race and background
to ensure inclusive growth. Priority is given to hardcore poor and marginalised groups
by giving more assistance and equitable opportunities for education. Efforts will also be
continued to intensify entrepreneurial training and strengthen financing programmes for
specific groups, especially women and youth. Besides, a region-specific industrial policy
will foster the niche areas within states to narrow regional development gaps. The world-
class infrastructure in major cities will be further enhanced to increase urban liveability and
sustainability as well as boost attractiveness as an investment hub. Legal and regulatory
aspects as well as support programmes will be improved to increase women’s participation
in the labour market by strengthening the Care-Economy initiatives such as affordable
childcare centres.

iii. Social Protection for All

The comprehensive social protection system will be enhanced through three broad areas,
namely social insurance, social assistance and labour market intervention to safeguard the
rakyat from unforeseen circumstances. These initiatives include gradually expanding the
coverage of the Employees Provident Fund (EPF) and Social Security Organisation (SOCSO)

economic outlook 2024 7

Chapter [Link] 7 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

to the informal sector as well as enhancing cash assistance programmes and the Rahmah
programme to provide a higher social protection floor. In addition to building retirement
resilience, the Government also continues to intensify the labour market by raising wages
through upskilling and reskilling programmes.

iv. Healthcare Service Reforms

The Government remains committed to improving the rakyat’s overall wellbeing by providing
universal access to quality healthcare services. In this respect, a whole-of-society primary
healthcare approach will be adopted to create a more sustainable, resilient, and quality
healthcare system. The rakyat will be further inculcated to embrace a self-reliant transition
from the treatment of diseases to the disease prevention concept, in order to improve,
protect and maintain their health. In this regard, the Government will commit to 5% of
healthcare expenditure to GDP as stipulated in the Health White Paper.

v. Educational and Human Resource Reforms

Various efforts have been made to provide comprehensive education facilities and a
conducive learning environment which is accessible to all. These efforts include expediting
the implementation of school projects, improving conditions of dilapidated schools as well
as broadening internet access through the JENDELA project. Furthermore, tertiary education
and lifelong learning programmes, including TVET, will be reviewed to be more demand-
driven in producing future-proof talent required by the industries.

vi. Infrastructure and Public Transportation

The Government will take immediate action to optimise all existing assets related to rural
roads and urban public transportation systems to reduce traffic congestion, increase
connectivity and enhance mobility. The management of land public transport will be
consolidated to increase cost-effectiveness and improve last-mile connectivity. In addition,
the air connectivity network as well as land transport infrastructure in major cities will also
be improved.

vii. Basic Amenities

The Government remains steadfast in offering world-class universal basic infrastructure for
the rakyat including access to the continual supply of quality water, electricity and internet.
In addition, flood mitigation projects will be expedited to ensure local communities are
cushioned from the severe impact of floods or any disruptions to access basic amenities.

viii. Affordable Housing for All Malaysians

The National Housing Policy (2018 – 2025) is formulated to ensure the adequacy of the
housing supply, and fostering safe, healthy and harmonious living environment. In realising
this policy, an action plan is being developed to ensure more meaningful parameters are
set to strike a balance between median house prices and median income level. In addition,
the provision of public housing will also be improved while the rental market will be
revitalised to meet the demand. The Government will also facilitate the buyers to secure
home financing by providing up to 120% credit guarantee under the Syarikat Jaminan Kredit
Perumahan Berhad (SJKP).

8 economic outlook 2024

Chapter [Link] 8 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Good Governance to Restore Confidence

Good governance and efficient public service delivery form the foundation to gain the trust of
all stakeholders to support and undertake collective action towards the required transformation.
Structural and institutional reforms of the Parliament, media and public services will strengthen
governance and institutional capacities. An agile public service delivery supported by the
digitalisation agenda is imperative to drive economic transformation while adapting to the evolving
global realities.

The Government will also focus on progressively enhancing Malaysia’s fiscal sustainability by
implementing various revenue and expenditure strategies. A more sustainable, efficient and
targeted subsidy mechanism is pertinent to address leakages and wastages.

Conclusion

The Ekonomi MADANI framework is envisioned to propel Malaysia’s economic development. The
framework, which is anchored on “Raising the Ceiling” and “Raising the Floor”, aims to enhance
the nation’s economic prosperity and promote greater inclusivity in wealth distribution, thereby
improving the living standards of the rakyat. This whole-of-nation approach is expected to uphold
the spirit of unity and good governance, supported by an agile and collaborative delivery system to
drive overall economic growth. Ultimately, the successful implementation of the Ekonomi MADANI
framework will revive Malaysia as Asia’s most important economic axis, restoring the nation’s
dignity and glory.

Outlook world trade growth is also expected to

moderate to 2% in 2023 amid prolonged
geopolitical tensions and to record 3.7% in
Global Economy 2024.

As the world endures constant changes with The evolving global landscape is poised to
varying paces of growth across the globe, exert a significant influence on businesses
the global economy is anticipated to exhibit of all sizes and affect the standard of living.
moderate growth after experiencing a period In addition, escalating supply chain security
of economic downturn. The growth pace is concerns could prompt the imposition of
projected to persist across most regions in trade and investment restrictions, potentially
the upcoming years. Lingering uncertainties impacting the growth prospects of others.
have prompted the IMF1 to project the global While the global challenges stemming from
growth outlook to 3% in 2023 and 2024 (2022: the crisis still persist, it offers countries the
3.5%). Nevertheless, it remains constrained opportunity to foster growth and innovation
due to heightened downside risks, particularly through the formulation of effective strategies
tightening of monetary policies to ease aimed at achieving more sustainable and
inflationary pressures, hence, impeding a robust growth.
robust global economic recovery. Meanwhile,

1
Refers to World Economic Outlook report published in July 2023.

economic outlook 2024 9

Chapter [Link] 9 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Domestic Economy On the supply side, services and manufacturing

sectors continue to be the primary engines
of growth in 2023. The services sector
Despite escalating uncertainties in the global
performance is driven by tourism subsectors,
landscape, Malaysia's economy remains
resulted from higher tourist arrivals and
resilient. The GDP is forecast to expand by
improved consumer spending. However, the
approximately 4% in 2023 and between 4% and
manufacturing sector is expected to register
5% in 2024. The Government acknowledged the
a modest growth amid sluggish external
World Bank's forecast that Malaysia's growth
demand. Likewise, agriculture sector is
will be 4.3% in 2024, which is slightly higher
projected to expand moderately contributed
than its initial estimate. This is in line with
by the oil palm, other agriculture and
Malaysia’s 2024 growth projection, which will
livestock subsectors, while the mining sector
be achieved through robust domestic demand,
is anticipated to decline due to lower external
effectively offsetting the challenges posed by
demand for liquefied natural gas (LNG). On the
the moderate global growth, supported by
other hand, the construction sector is expected
the implementation of measures in the new
to record better performance supported by
National Energy Transition Roadmap (NETR),
the acceleration of ongoing infrastructure and
New Industrial Master Plan 2030 (NIMP 2030),
utilities projects.
and the Mid-Term Review of the Twelfth
Malaysia Plan (MTR of the Twelfth Plan).
In 2024, the wholesale and retail trade
subsector will remain as the key contributor
Furthermore, Malaysia’s domestic demand in
to the services sector, underpinned by the
2023 continues to be buoyed by expansion in
expansion in retail segment through digital
consumption and investment spending. This
transactions. In addition, the domestic-oriented
is also supported by favourable labour market
industries are backed by higher output in high
condition and easing inflationary pressures as
growth high value (HGHV) industries which
well as vibrant tourism activities. The surge of
will drive the manufacturing sector, in tandem
private investment is attributed to the multi-
with the implementation of initiatives under
year execution of infrastructure ventures and
the NETR, NIMP 2030 and MTR of the Twelfth
sustained capital investments in the services
Plan as well as Chemical Industry Roadmap
and manufacturing sectors. The robust activity
2030. Agriculture sector remains steady partly
in private sector expenditure is expected to
attributed by expected increase in oil palm
offset the effects of moderate public spending
production and crude palm oil (CPO) prices.
in 2023.
The mining sector is forecast to recover mainly
contributed by the new gas field projects such
In 2024, private sector expenditure remains
as Gansar, Jerun and Kasawari. Meanwhile,
as the main contributor in driving economic
the construction sector continues to grow
activities owing to stronger domestic demand.
supported by growth in all subsectors, partly
In addition, Government initiatives to support
by the increasing demand in renewable and
household spending through cash transfers
clean energy as well as decarbonisation, in line
to targeted groups and the growing social
with the green economy agenda.
commerce trend are expected to boost private
consumption. Meanwhile, private investment
In 2023, exports have contracted in tandem
is poised to accelerate further driven by
with the global economic and trade slowdown,
improved business environment in consonance
primarily influenced by China’s slower-than-
with positive response towards Government’s
anticipated economic growth and moderate
strategies and measures in attracting high-tech
commodity prices. In contrast, the current
and high-value investments via the NETR and
account surplus is expected to expand,
NIMP 2030.

10 economic outlook 2024

Chapter [Link] 10 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

driven by a narrowing deficit in the services total allocation has been utilised, with RM166.7
and primary income accounts. However, the billion spent for OE, while the remaining was
outlook for 2024 indicates a gradual upswing, for DE.
attributed to improved global trade and
prospects in the commodity sector. Pillar 1: Inclusive and
Sustainable Economic
Monetary and Financial
Growth
Developments
Towards achieving an inclusive and sustainable
The current monetary policy stance remains economic growth, a series of measures
accommodative and supportive of the economy have been laid to focus on sustainable fiscal
in tandem with the assessment of the inflation conditions, rakyat’s wellbeing, effective
and growth prospects. The financial sector disaster risk management, and high-impact
is envisaged to remain resilient and stable, investments. Under the fiscal legislative
driven by a robust banking system which reform, the enactment of the Public Finance
continues to support financial intermediation and Fiscal Responsibility Act (FRA) this year will
activities, benefitting from positive growth enhance the credibility of fiscal policy conduct
projections and an improving labour market. towards achieving long-term public finance
Simultaneously, the capital market remains sustainability and macroeconomic stability.
vibrant in fostering Malaysia’s prosperity, This act serves as a robust fiscal management
inclusivity, and sustainability by leveraging framework, with an emphasis on good
thought leadership, intensifying innovation, governance, accountability, and transparency in
and diversifying the market’s range of managing public finance.
products to remain competitive. Going forward,
the Malaysia's Capital Market Masterplan Comprehensive measures were implemented
2021 – 2025 and Financial Sector Blueprint to support businesses and the needs of the
2022 – 2026 will continue to serve as rakyat, with a special focus on micro, small,
invaluable guiding documents, setting forth the and medium enterprises (MSMEs) that were
visions and strategies for the development of badly affected by the pandemic. As of July
the capital market and financial sector. 2023, Bank Simpanan Nasional (BSN) extended
a financing facility amounting to RM145.3
million, benefitting 4,747 entrepreneurs,
Updates on the Budget including hawkers. Furthermore, through
the TEKUN Nasional financing schemes,
2023 a substantial 80% of RM263.9 million
was disbursed to empower 16,960 young
In line with the forward-looking vision under entrepreneurs, primarily for the acquisition of
the Malaysia MADANI concept, the formulation assets and working capital. Additionally, small
of Budget 2023 was premised on the three and medium enterprises (SMEs) could tap into
pillars, namely inclusive and sustainable a RM9.7 billion financing facility provided by
economic growth, institutional reform and BNM, along with a maximum guarantee facility
good governance, as well as combatting of 90% from Syarikat Jaminan Pembiayaan
inequality through social justice. In pursuit Perniagaan (SJPP) for a total loan up to RM20
of this vision, a substantial total allocation of billion. As at end-July 2023, a total amount
RM386.3 billion has been allocated in Budget of RM5.7 billion was successfully guaranteed,
2023, with RM289.3 billion designated for directly benefitting over 7,000 SMEs. These
operating expenditure (OE) and RM97 billion comprehensive measures signify continuous
specifically channelled towards development efforts towards fortifying the economic
expenditure (DE). As of July 2023, 49% of the backbone of the nation.

economic outlook 2024 11

Chapter [Link] 11 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

In bolstering the nation’s responsiveness waqf land in Penang, with a projected gross
to natural disasters and calamities, the development value exceeding RM1 billion. This
Government is committed to enhancing investment underscores the Government’s
disaster risk reduction, management, and dedication to unlocking the untapped potential
preparedness through a multifaceted approach of the Islamic economy and promoting
of programmes and incentives. In pursuit of sustainable development through innovative
long-term flood mitigation goals, the year 2023 and prudent financial strategies.
witnessed the initiation of various projects
centred on flood management strategies, Pillar 2: Institutional
dual-purpose flood mitigation reservoirs,
and integrated river basin management
Reforms and Good
endeavours in Johor, Selangor, and Kelantan. Governance to Restore
Simultaneously, approximately RM1.5 billion Confidence
was allocated to National Disaster Management
Agency (NADMA), the armed forces, Fire and In a concerted effort to bolster the long-term
Rescue Department, as well as RELA to elevate sustainability of the nation and strengthen
the country’s rescue teams’ disaster response. public confidence, solid institutional reforms
Additionally, a total of RM1.6 million was and commitments to good governance are vital
channelled through the Malaysian Incentive to elevate the efficiency and effectiveness of
Community Empowerment (MyICE) programme, the public service delivery. The Budget 2023
in collaboration with relevant NGOs aimed has outlined a comprehensive set of measures
at empowering 159 communities, as the first on accelerating public infrastructure project
line of defence against natural disasters. implementation, empowering public-private
These concerted efforts underscore a resolute partnership, prioritising the digital agenda as
commitment to safeguard lives and livelihoods well as strengthening the role of government-
during times of crisis. linked companies (GLCs) and agencies. These
strategic measures are envisioned to shape
Moreover, the Government has proactively a dynamic and resilient foundation for the
promoted sustainability within the business nation’s growth trajectory, demonstrating
community by supporting sustainable a strong commitment to transparency and
technology start-ups, facilitating the adoption accountability in the pursuit of economic
of low carbon practices by SMEs, and progress.
fostering the growth of sustainable green
economy. Notably, the Low Carbon Transition In expediting the execution of public
Facility (LCTF) initiated by BNM has proven infrastructure projects, significant
to be instrumental in aiding local SMEs improvements have been instituted to
undertaking sustainable start-up ventures enhance the transparency of government
and implementing environmentally conscious procurement, including simplification of
practices. As of July 2023, 144 applications procedures and processes, particularly for
have been approved amounting to RM273.3 smaller projects by introducing flexibility and
million. exceptions to Treasury Instruction 182. The
initiative empowers ministries and agencies
Furthermore, recognising the potential of the at the state and district levels in Sabah and
Islamic economy, the Government is committed Sarawak, through the technical departments
to leveraging its strengths by exploring to implement projects with a threshold value
innovative financial instruments including of up to RM50 million. Meanwhile, RM2.6
development of underutilised registered waqf billion has been disbursed as of August 2023
lands. In this regard, a substantial allocation of to rehabilitate dilapidated schools and clinics,
RM200 million has been dedicated to develop maintain and upgrade federal roads, enhance

12 economic outlook 2024

Chapter [Link] 12 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

and construct new rural roads, and install As Malaysia gears up for higher tourists
street lights in high-risk areas. These projects arrival, the Government is intensifying efforts
underscore the Government’s unwavering to fortify the tourism sector in conjunction
commitment to uplifting critical public with the Visit Malaysia promoting campaign.
infrastructure, thus bolstering community A notable allocation of RM65 million has been
wellbeing and augmenting nationwide directed towards programmes and activities
development. centred around promoting culture and heritage
as well as enriching the tourist experience.
The Budget 2023 places a significant focus on Additionally, pivotal infrastructure projects
human capital, particularly the development are underway to mitigate traffic congestion in
of TVET graduates with skillset tailored to popular tourist destinations. These initiatives
industry demands through collaboration encompass the construction and enhancement
of 50 companies primarily GLCs with TVET of roads in high-traffic areas like Cameron
institutions. These institutions include Highlands and Melaka. Moreover, strategic
community colleges, industrial training and projects include the development of new roads
national youth skills institutes. As of July 2023, and bridges to connect Port Dickson and
10 Management of Change (MoC) agreements Sepang, as well as the enhancement of the
have been signed that outline the agreed North-South Expressway, with an initial focus
scopes of collaboration, covering transfer on Johor for Phase 1. These infrastructure
of knowledge, sharing of equipment, and improvements underline the Government’s
development of curriculum. Furthermore, in dedication to providing a seamless and
order to bolster industrial cooperation, RM17 enjoyable experience for tourists, improving
million has been spent for the National Dual accessibility and connectivity across the
Training System (SLDN), benefitting over nation’s vibrant tourist spots.
8,000 trainees. Concurrently, as at end-July
2023, RM2.6 million has been spent under the In advancing the national digitalisation agenda,
Academy in Factory (AiF) programme to train RM199 million has been channelled through
20,000 trainees on the jobs. These programmes the JENDELA initiative to boost internet
reflect the Government’s dedication to penetration, aiming for full 4G coverage across
enhancing the skillset and employability of all populated areas in Malaysia. Additionally,
TVET graduates, contributing to a dynamic an expansion of fibre broadband accessibility
and skilled workforce that are crucial for the is projected to reach 9 million premises by
nation’s progress. 2025. As of December 2022, 4G coverage has
reached an impressive 96.9% of populated
In the effort to encourage youth to enhance areas, benefitting approximately 7.7 million
skills and promote higher wages in the private premises with access to fibre broadband.
sector, RM55.3 million has been allocated for a In the course of this initiative, Phase 2
partnership programme with industry players of JENDELA will concentrate on reaching
aiming to employ 17,000 TVET graduates. More the remaining rural and remote areas,
than 6,500 TVET graduates have benefitted ensuring inclusivity in the digital landscape.
since its launch in May 2023. Furthermore, Furthermore, by the end of 2022, the rollout
the Government remains dedicated to creating of the 5G network has reached 47.1% of
meaningful employment opportunities for total populated areas, surpassing the initial
vulnerable groups, such as gig workers, target of 37.9%. This progress underscores
school leavers and unemployed graduates. As the Government’s dedication in providing
of July 2023, over 760,000 participants were widespread, high-quality digital connectivity to
enrolled in upskilling and reskilling training propel Malaysia into a technologically advanced
programmes, with funding from the Human future, fostering innovation and catalysing
Resource Development Fund amounting to economic growth.
RM900.8 million.

economic outlook 2024 13

Chapter [Link] 13 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

The Government has taken significant

Pillar 3: Combatting
measures to bolster the role of the National
Cyber Security Agency (NACSA) as the agency Inequality Through Social
is tasked to spearhead efforts in enhancing Justice
the country’s legal framework and coordinating
initiatives to combat cyber security threats The Budget 2023 is focused towards pursuing
effectively. An allocation of RM10 million was institutional reforms and advocating social
dedicated to the development of the National justice. Key initiatives are aimed at eradicating
Scam Response Centre (NSRC), which is hardcore poverty, mitigating the effects of the
scheduled to be fully operational by the end rising cost of living, fostering harmony and
of 2023. For the period from October 2022 unity within society, and ensuring the provision
to June 2023, the NSRC managed to address of high-quality basic amenities for all. Towards
more than 15,500 online fraudulent activities. these, the Inisiatif Pendapatan Rakyat (IPR)
Additionally, in strengthening the security programme is introduced to eradicate hardcore
of customers’ online banking experiences, poverty and raise the income of the poor and
BNM has mandated a “kill switch” policy for vulnerable families. A sum of RM750 million
all banking institutions. This strategic policy has been allocated for this initiative through
has been successfully implemented by several three sub-programmes, namely Inisiatif
banks, reinforcing the security measures and Usahawan Tani (INTAN), Inisiatif Usahawan
raising customers’ confidence in online banking Makanan (INSAN) and Inisiatif Operator
transactions. These multipronged strategies Perkhidmatan (IKHSAN). As of July 2023, all
underline the Government’s commitment in initiatives have been implemented with a total
fortifying cyber security and preserving the disbursement of RM82 million that benefitted
integrity of the nation’s digital landscape. more than 3,000 recipients.

The Government is committed to fuel Furthermore, the Government has pledged to

innovation within start-up companies and continue implementing a range of initiatives
bolster the local enterprise ecosystem. The in the form of cash assistance and in-kind
government-linked investment companies transfers to assist the vulnerable households.
(GLICs) and GLCs have emerged as pivotal As of July 2023, RM10.4 billion of cash
players with significant venture capital assistance has been transferred to 15.9
investments. Khazanah, through Dana million recipients from the hardcore poor
Impak has allocated RM1 billion, earmarked families, B40 households, youth and students
to support local start-up companies, in higher education institutions. This includes
demonstrating a clear commitment to Sumbangan Tunai Rahmah (STR), Rahmah
nurturing innovation and entrepreneurship. Basic Contribution (SARa) and eBeliaRahmah
Simultaneously, Ekuiti Nasional Berhad initiatives. In addition, to ease the financial
(Ekuinas) has diligently managed the Dana strain on the M40 group, the income tax rate
Asas, amounting to RM100 million to for resident individuals is reduced by 2% for
accelerate companies’ growth and enhance the chargeable income range of RM35,000
Bumiputera equity. Furthermore, an additional to RM100,000. Meanwhile, the Government
RM40 million is offered to MSMEs through also introduced the Payung Rahmah initiative
the Malaysian Co-Investment Fund (MyCIF) by to alleviate the rising cost of living. This
the Securities Commission (SC) in the form of includes the Rahmah Menu, engaging over
equity crowdfunding (ECF) and Peer-to-Peer 15,000 eateries to provide affordable complete
Financing (P2P). These combined initiatives meals at RM5 as well as the Rahmah Sales
underscore a comprehensive approach by the Programme, with an allocation of RM100
Government and relevant bodies to actively million, offering essential goods at up to 30%
promote a thriving start-up ecosystem, lower prices than the local market.
propelling innovation and economic growth in
Malaysia.

14 economic outlook 2024

Chapter [Link] 14 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

The Community Drumming Programme Additionally, the Peduli Kesihatan Scheme

continues to enable rural and remote area (PEKA B40) allocates RM80 million to offer
residents especially in Sabah and Sarawak to extensive healthcare support. The scheme
purchase seven essential items at government- encompasses health screenings and incentives
set reduced prices. These items namely coarse for completing cancer treatments, and
refined white sugar, cooking oil, wheat flour, transportation support to the public health
rice, liquefied petroleum gas, RON95 petrol, facilities. As at end-July 2023, more than
and diesel. On top of the subsidies provided RM50 million has been disbursed for these
to these items, the Government absorbs the programmes. Furthermore, tax relief threshold
transportation and distribution costs to ensure on medical expenses has been increased from
the price remains affordable for the residents. RM8,000 to RM10,000 for the 2023 assessment
In 2023, this programme was given an year. The relief was extended to cover the cost
additional allocation of RM25 million compared of rehabilitation treatment for children with
to RM200 million in the previous year, with learning disabilities such as Down Syndrome,
the scope expanded to 25 new zones including Autism, and Specific Learning Disabilities.
Paloh and Passin in Sarawak, Pasir Raja in
Terengganu, and Kuala Krai in Kelantan. In the effort to bolster the agriculture sector
and address the food security concern, RM1
Amid the harsh impact of the pandemic, the billion is provided under the BNM’s Agrofood
social protection system is enhanced to include Financing Scheme. As of July 2023, RM266.7
self-employed individuals with social insurance million has been disbursed to 372 recipients.
coverage under the Self-Employment Social Moreover, to further augment agricultural
Security Scheme (SESSS). Under this initiative, production, the Government has earmarked
the Government provided RM100 million to RM40 million to collaborate with several state
incentivise self-employed contributors, covering governments to implement agro-food projects
80% of the contributions for Skim Pekerjaan and support technology adoption. In addition,
Sendiri (SPS) Padanan Caruman and 100% in order to assist paddy farmers in enhancing
for SPS MADANI. As at end-July 2023, RM38.6 productivity, various subsidies and incentives
million has been disbursed, benefitting more totalling RM1.6 billion have been provided
than 180,000 recipients. In addition, the including seeds, fertilisers and prices.
Government continues to provide various
social programmes which include for disabled In pursuing the development of Sabah and
workers, non-working disabled individuals, Sarawak, a total of RM6.5 billion and RM5.6
indigenous communities, SME women billion, respectively were assigned under the
entrepreneurs, senior citizens, and private care development allocation for 2023. Efforts are
institutions for senior citizens, children and underway to accelerate the construction of
persons with disabilities operated by NGOs public infrastructure projects in Sabah and
with an allocation of about RM2 billion. As of Sarawak including the Sabah Pan-Borneo
July 2023, a sum of RM1.1 billion has been Highway and Sarawak-Sabah Link Road.
disbursed to these groups. Moreover, public amenities in Sabah and
Sarawak particularly in rural area have also
In providing accessible healthcare, the MADANI been improved with the expansion of road and
Medical Scheme was introduced in June street lighting; improving water and electricity
2023 with an allocation of RM100 million. supply as well as increasing of healthcare
This initiative facilitates acute primary care facilities and schools. As of July 2023, a total
treatment for the B40 at private clinics and of RM1.9 billion and RM2.2 billion has been
at the same time reduces congestion at the spent on development in Sabah and Sarawak,
emergency department in public hospitals. respectively.

economic outlook 2024 15

Chapter [Link] 15 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Economic Management growth. Thus, a more sustainable fiscal

position enables the Government to respond to
changes in economic conditions and provide a
Having effectively managed the most severe
buffer to the economy and the rakyat against
impacts of the COVID-19 pandemic, Malaysia’s
adverse shocks.
economy is now confronted with persistent
uncertainties stemming from prolonged Quality Investment
geopolitical tensions, global inflationary
pressures, monetary policy tightening and Creating a desirable investment ecosystem
the increasingly adverse effects of climate necessitates comprehensive policies to
change. In response to these multifaceted attract capital, stimulate innovation, and
challenges, the Government’s efforts are generate well-compensated employment.
anchored towards prudent fiscal management, Enhancing the nation’s capacity to harness
quality investment, digital economy and quality investments particularly through R&D
food security. Similarly, the Government is can nurture innovation and bolster trade
determined to rebuild investor confidence by activities. Additionally, it is important for the
undertaking institutional reforms, focusing on nation to adapt to the dynamics of the global
transitioning to green economy, promoting economic and geopolitical shifts to enhance
practices of good governance, streamlining competitiveness as well as attract and sustain
public service delivery, and advocating wage top-tier investments.
growth. Efforts are also undertaken to protect
the most vulnerable groups in the society by In 2023, Malaysia’s ranking in the World
actively addressing the challenges posed by Competitiveness Yearbook (WCY) by the
the rising cost of living, striving for balanced International Institute for Management
regional development, expanding the social Development (IMD), improved to 27th
protection system, and upgrading the quality from 32nd in 2022. Key strengths include
of infrastructure. cost competitiveness in terms of prices,
robust infrastructure, and favourable tax
Opportunities and policies. However, specific challenges
pertaining to the need for a future-ready
Challenges talent pool, investment-friendly ecosystem
and comprehensive regulatory reforms
Sustainable Economic Growth at both national and sub-national levels
have to be addressed to enhance the ease
Fiscal Sustainability of doing business. This involves foreign
direct investment (FDI) and domestic direct
Long-term fiscal sustainability is important investment (DDI) that will elevate human
for the Government to continue supporting capital quality, promote R&D, and drive
inclusive and sustainable economic growth. digitalisation initiatives. As the world moves
The ongoing effort to improve fiscal position towards sustainability and decarbonisation,
will focus on improving revenue mobilisation, progress in the field of sustainable, low carbon
eliminating spending leakages and wastages, and resilient investment have now become
managing debt effectively and increasing another focus area.
investor confidence in the long term. The
upcoming FRA will further enhance and In addition to attracting investments from
strengthen the governance and fiscal discipline larger corporations, it is crucial to provide
in managing the nation’s finances. While the ample business and investment opportunities
economy is showing recovery momentum, to MSMEs, which currently constitute
external challenges, such as the global approximately 97.4% of total establishments
economic slowdown and persistent geopolitical and contribute more than 38% to the GDP.
tensions are expected to pose risk to the fiscal Given the substantial role and potential to
position, trade, investment, and economic fortify the local economy, nurturing MSMEs

16 economic outlook 2024

Chapter [Link] 16 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

through high value-added activities and high- instance, domestic rice production declined
tech investments are essential. Encouraging by 6.6% in 2022, with a concurrent increase
closer linkages with both foreign and domestic in the imports of rice by 4.8%. This situation
investors will further bolster the growth and was exacerbated by a decrease in the self-
sustainability of MSMEs, ultimately enhancing sufficiency ratio (SSR) of rice to 62.6% in 2022
the overall economic landscape. (2021: 65.2%). Additionally, the reduction in
land designated for agriculture, particularly for
Digital Economy paddy cultivation, further aggravated the food
security and self-sufficiency challenges. Climate
Digital economy is an important enabler to change, characterised by irregular weather
drive Malaysia towards equitable, inclusive, patterns, amplifies the threats to crop yields
and sustainable growth. As envisaged in the and livestock production. To address these
MTR of the Twelfth Plan, the digital economy multifaceted issues, the measures outlined
is expected to contribute at least 25.5% to the in MTR of the Twelfth Plan emphasise on
overall GDP by 2025 and position Malaysia as the adoption of a comprehensive and timely
the regional leader by 2030. These targets will strategy to address food security. These
be supported by high internet penetration rate strategies also include enhancing agricultural
which currently recorded at 96.9% and faster practices, optimising sustainable land use,
internet connection with the average speed of adopting climate-resilient strategies as well
more than 110 Mbps. In addition, a significant as harnessing technological advancements to
leap towards technological advancement in the secure a stable and self-sufficient food supply
public sector has also been achieved through for the nation.
the digitalisation of Federal Government online
services. Institutional Reforms
However, challenges related to the digital Transition to Green Economy
divide persist due to limited broadband
coverage and internet connectivity in Malaysia’s transition to a green economy
underserved areas. Thus, it is crucial to presents a host of intricate challenges due
bridge inequalities in the utilisation of digital to its heavy reliance on fossil fuels, which
product and service across different societal exposes the nation to economic vulnerabilities
segments by facilitating wider access to as global demand shifts towards renewable
financing for businesses and intensifying energy sources. To navigate this transition
digital skills. Furthermore, there is a need effectively, it is imperative for the country
to address regulatory concerns, especially to diversify its energy sources and invest in
regarding personal data protection and cyber sustainable infrastructure, while ensuring a
security as a result of the current fragmented just transition for carbon-intensive industries
regulatory framework, which may impede the and MSMEs. Additionally, as a mega-biodiverse
development of the digital economy. In this nation bestowed with rich ecosystems,
regard, a comprehensive solution to address Malaysia faces the critical task of managing its
these concerns is essential in ensuring an land use effectively and sustainably preserving
inclusive digital transformation for the country, its natural heritage. Achieving a green
thus harnessing the potential of the digital economy in Malaysia requires determined
economy to achieve a sustainable nation. efforts to overcome these formidable hurdles.
Success hinges on a strategic approach
Food Security that harmonises economic development
with environmental stewardship and social
The agro-food subsector remains pivotal in inclusivity, necessitating comprehensive
ensuring food security to support domestic policies, greater public awareness, and robust
consumption. Despite the strides made international collaborations in forging a
in producing food, Malaysia is still relying sustainable future for the nation.
on imports to meet domestic needs. For

economic outlook 2024 17

Chapter [Link] 17 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

feature article 1.1

Just Transitions for a Sustainable Future

Introduction

Amid the pressing need globally to combat climate change and its widespread repercussions, the
concept of “Just Transitions” has emerged as a key guiding principle for nations to facilitate the
move towards a sustainable future. According to the United Nations, developing countries may
require a greater focus on adaptation and resilience-building given higher rates of poverty and
informality, greater vulnerability to shocks and greater reliance on agriculture and tourism, and
in some cases fossil fuels. Addressing investment and technology gaps within the constraints of
developing countries´ macroeconomic realities will be imperative. However, achieving a just and
effective transition will require an even greater emphasis on social transformation and safety
nets. This emphasis will be enshrined in a framework that leaves and pushes no one behind, and
works through and across value chains to uphold human and labour rights. Furthermore, a greater
understanding of the transnational impacts of Just Transition is essential, including the impacts on
trade.

This concept underscores the essential interplay surrounding nation building, climate mitigation
and adaptation as well as social justice. In the case of Malaysia, a nation blessed with social
unity and wellbeing, ecological diversity and abundance as well as progressive economic and
technological advancements, the concept of Just Transitions forge a pathway towards a sustainable
future that leaves no one behind. Overall, the intricacies of Just Transitions emphasises the
imperatives of harmonising climate action and social equity guided by its core principles. The
transformative approach will address the impending challenges by reviewing policies and enhancing
governance while capitalising emerging opportunities.

Understanding the Need for a Just Transition

The climatic events and geopolitical shifts have been forcing nations to respond diversely in order
to manage resource availability and avoid falling into a recession. The threats of global warming
continue to increase, thus adversely affecting the world’s climatic systems. This has led to the
world experiencing extreme weather conditions which have contributed towards the increase of
natural disaster incidents and severity, health risk, shortage of food and water supply as well as
rising inflation. Global energy usage is increasing exponentially, and so are its prices. The ongoing
Russia-Ukraine conflict continues to disrupt the flow of basic resources and supply chains globally.
Human migration is increasing as many have to flee from the said challenges in search of a better
living. In addition, the world is still recovering from the recent global pandemic, with many still
on alert. Thus, energy, water, food and border security continuously become major concerns for
nations as they move towards decarbonisation, resilient growth, and sustainable development.

As the world reacts to these challenges, unilateral actions are being undertaken, translating
into increasing economic pressures globally. The European Union (EU) has just implemented
new trade regulations, the Carbon Border Adjustment Mechanism (CBAM) and EU Deforestation-
free Regulation (EUDR), which will affect many products and businesses coming into the EU.

18 economic outlook 2024

Chapter [Link] 18 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Other countries are also looking into introducing similar regulations which further highlight the
need for readiness by Malaysian industries to prepare for climate transition. Many multinational
corporations’ headquarters are bound by the home-country environmental, social and governance
(ESG) laws and regulations, obligating compliance across the entire value chain. International
investors are also increasingly looking to support strong ESG portfolios.

Due to these emerging trends, many nations are pushing to promote sustainable and ethical
governance in policies and implementations. Delays in responding to these global developments
will see nations be left behind and would incur significant economic costs. Therefore, an enabling
environment is needed to expedite the shift from a fossil fuel-driven economy to one propelled by
cleaner energy in a manner that fosters inclusive and enduring economic growth.

Scientific evidence unequivocally attributes the lion’s share of historical responsibility to the
developed world. While each country assumes a role in tackling climate change, developed
countries are better equipped to aid global efforts aimed at mitigating climate change and
adapting to its ramifications. Recent economic crises due to the COVID-19 pandemic and
geopolitical tensions, accentuate the urgency for developed nations to support their less-developed
counterparts in these endeavours. Such support is crucial in ensuring an equitable transition across
countries, a principle stipulated under the Paris Agreement1, which acknowledges the diverse
responsibilities and capabilities concerning this shared challenge.

Malaysia’s Perspective: Challenges and Opportunities

The impacts of climate change are no longer abstract and are vividly real, particularly for
vulnerable communities across the world, including Malaysia. Rising sea levels, intensified
monsoons, and erratic weather patterns disrupt livelihoods and degrade local ecosystems. In
2022, the nation was hit with severe floods, storms and landslides. Within this year, we are seeing
temperatures soar, and as a result, energy and water use have also increased. These ramifications
disproportionately burden those with limited resources and information access, which could result
in socio-economic inequalities. Consequently, the imperative to address climate change converges
with the urgency to ensure that the transition towards sustainability does not exacerbate these
disparities.

Although it is vital to transition to a sustainable future, there are economic and social challenges
that need to be addressed. Malaysia’s just transition approach involves maximising the social and
economic opportunities of climate action while minimising its impact and delicately managing any
challenges. At its core, this concept champions social justice and wellbeing by ensuring all levels
of the rakyat are supported through various policies and actions. In the effort of decarbonisation,
there is a dire need to ensure a just transition for all by integrating the elements of climate
mitigation and adaptation as well as resilience management. As Malaysia aspires to align its
development with environmentally responsible practices, it must also account for the potential
impacts on employment, communities, technological advancement and economic stability.

1
The Paris Agreement is an international treaty under the UNFCCC adopted in 2015 that aims to combat climate change by limiting global warming to well below
2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius while promoting climate resilience and
cooperation among nations.

economic outlook 2024 19

Chapter [Link] 19 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Equally pivotal are environmental justice and equity, especially in balancing the complexity of
reducing environmental impacts with mitigating adverse environmental consequences on society.
The demand for energy, water and food further accentuates the significance of having a just
transition. Vulnerable communities are often the most susceptible to disruptions of these vital
resources. Deliberate planning and collective endeavours are pivotal in building resilience to benefit
all segments of society, while ensuring continuous availability of these resources.

Technological advancements and innovations will offer some relief to these challenges. Clean
energy technologies, sustainable agricultural practices, and circular economy ecosystems carve
a path towards an economically viable future while mitigating environmental repercussions.
Opportunities for economic expansion and sustainable development are flourishing. Green jobs,
investments in renewable energy, and judicious urban planning hold the potential to usher in
economic prosperity while curbing carbon emissions and enhancing societal wellbeing. Hence,
greening the economy will improve the ability to increase energy efficiency and reduce waste
as well as manage natural resources sustainably, while generating quality green jobs that will
contribute to poverty eradication and social inclusion.

Malaysia’s Just Transition Journey

The journey towards a just transition draws strength from both global and local frameworks.
International accords, most notably the Paris Agreement, set the stage for a united climate action.
As a signatory, Malaysia has pledged to curtail carbon emissions and bolster resilience. These
global commitments lay the groundwork upon which national and regional policies, supportive of a
just transition, are constructed to undertake the multifaceted approaches in various fields.

As a fast growing, progressive and innovative nation, Malaysia has always been at the forefront of
sustainability. At the national level, the Twelfth Malaysia Plan, 2021 – 2025 (Twelfth Plan) delineates
a trajectory towards sustainable development, inclusive growth, and environmental safeguarding.
This comprehensive policy framework incorporates the principles of a just transition by recognising
the interdependence of economic, social, and environmental objectives. Every industry in all sectors
across the value chains has a role to play in advancing a just transition. While a just transition is
relevant for all sectors, the approach is unique to local circumstances and business activities.

In realising these endeavours, a collaborative effort involving many different ministries and
agencies is pivotal in coordinating and implementing these initiatives. Malaysia will expedite the
assimilation of sustainable practices by fostering collaborations between the federal and state
governments including local authorities, as well as between the public and private sectors, with
the participation of civil societies. With Malaysia’s growing economy and population, coupled with
increasing temperatures in the region, the energy sector will assume the most pivotal role in
ensuring this just transition.

i. Charting Malaysia’s Energy Future

The energy sector emerges as the epicenter of transformative shifts. Energy consumption is vital
to economic growth, yet the historical global reliance on fossil fuels has forged the current state
of climate change. The National Energy Policy 2022-2040 (DTN) and National Energy Transition

20 economic outlook 2024

Chapter [Link] 20 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Roadmap (NETR) as well as various policies and economic instruments collectively propel Malaysia
towards attaining its long-term renewable energy (RE) objectives, primarily through harnessing
solar, hydro and biofuels. These policies will also encourage the usage of rooftop solar and large-
scale solar farms, coupled with investments in battery storage systems and the growing hydrogen
economy.

In Malaysia’s efforts to ensure the fruits of economic growth are distributed equitably across
regions and communities, special attention must be directed towards key industries poised to be
adversely affected. Existing energy sector policies, like the DTN and NETR, highlights measures
to sustain the oil and gas sector while reducing reliance on coal. This energy transitional process
necessitates the need to support the sector’s shift towards a lower-carbon growth model while
concurrently minimising workforce implications through comprehensive and continuous upskilling
and reskilling programmes within the energy industry ecosystem. However, it needs to be reminded
that the impacts will extend beyond the oil and gas sector. Thus, it is imperative to prepare other
industries for the impending low-carbon transition.

ii. Strengthening Malaysia’s Business Ecosystem

As countries worldwide embark on decarbonisation amid a highly interconnected world,

international pressures favouring robust climate action are beginning to influence Malaysia’s
domestic industries. The CBAM is an example of a unilateral regulatory instrument that will
potentially impact Malaysia’s trade balance by levying a carbon tax on EU-selected imports. Apart
from the EU, several countries are already considering similar regulations, which would impose
greater threats to Malaysia’s exports.

Measures must be accelerated to strengthen Malaysia’s industries and businesses to proactively

prepare for the CBAM and other similar regulations, such as the EUDR, imposed by trading
partners. These measures are outlined in the New Industrial Masterplan 2030 (NIMP 2030),
targeted at advancing local economic complexity, encouraging innovation, enabling supply chain
security, embracing technology and digital transformation as well as focusing on sustainable
practices and green initiatives. Adhering to robust ESG principles and facilitating investments
in the low-carbon economy will drive industries to curtail their carbon footprint, particularly in
carbon-intensive sectors. This transition encourages job creation conducive to the decarbonisation
of diverse industrial activities and supply chains, encompassing mainly energy, transportation,
construction, and agriculture sectors.

iii. Conducive and Green Labour Market

Central to the success of a just transition are principles of fair labour policies and practices as
well as quality work. However, sustainability policies and regulations may impose additional
burden to the established industries and potentially displace jobs. As sectors evolve and industries
transform, safeguarding the rights and wellbeing of workers becomes paramount. Integrating the
needs of workers and industries into any transition planning will mitigate the uncertainties and
facilitate a smoother pathway. This action encompasses the importance of investing in education,
training and skill enhancement opportunities to prepare workers for the growing green industries,
hence empowering them to flourish in a dynamic landscape. These workers would benefit from
repurposing current expertise into cleaner energy options like solar or hydrogen, thus ensuring a
continuity of their careers and livelihoods.

economic outlook 2024 21

Chapter [Link] 21 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

iv. A Robust Carbon Accounting Ecosystem

With the emerging pressures of international carbon regulations as well as increasing local
disclosure requirements, there is a need to establish a robust and comprehensive carbon
accounting ecosystem2 to support domestic industries and businesses. In both situations, local
businesses are required to calculate and report carbon emissions associated with the production
process. This ecosystem provides businesses, regardless of scale, with the tools to evaluate and
accurately report their greenhouse gas emissions which will promote greater accountability as
businesses champion decarbonisation targets. The ecosystem requires concerted efforts from both
the public and private sectors to boost businesses in this endeavour. Simultaneously, this exercise
amplifies the supply and demand for domestically generated carbon offset and carbon credit
activities, channeling additional funds towards low-carbon initiatives, encompassing energy sector
decarbonisation as well as investments in nature-based solutions and conservation.

v. The Crucial Role of the Financial Sector

The financial sector emerges as a pivotal catalyst in facilitating the transition. Initiatives
spearheaded by Bank Negara Malaysia (BNM), the Securities Commission and Bursa Malaysia has
rolled out the Climate Change and Principle-based Taxonomy (CCPT), Sustainable and Responsible
Investment (SRI) guidelines and disclosures that mitigate financial risks intertwined with climate
change and sustainability. Concurrently, Malaysia’s role as the leader in Islamic finance will further
strengthen the nation’s financing capabilities which amplifies support for sustainability and a just
transition, especially through the country’s complete and comprehensive Islamic finance ecosystem,
anchored by the strategy to mainstream value-based finance. The Value-based Intermediation
(VBI) initiative, SDG-aligned financing as well as the Value Based Intermediation Financing and
Investment Impact Assessment Framework (VBIAF) Sectoral Guides, have been introduced to
integrate ESG risk considerations in financing and investment decisions. This is supported by
diverse market players, continuously working towards innovative financial instruments to deploy
different forms of capital to support sustainability.

Today, Malaysia’s Islamic financial institutions continue to deliver positive impact to the economy
and society via value-based finance for productive purposes such as pioneering green and
sustainable sukuk, waqf and musharakah mutanaqisah home financing3 as well as greening
value chain finance programmes to assist SMEs in implementing impactful, long-term changes
in greening their operations. BNM has also deployed blended finance and non-debt funding
facilities to improve business saviness and financial resilience of SMEs to elevate their contribution
to sustainable economic growth. Through a greater understanding of Maqasid Shariah, Islamic
finance can be fortified to balance between the social and environmental needs with economic
development.

2
includes carbon calculators, verifiers, standards and guidelines, auditors, registry, etc.
3
A musyarakah may be entered into by two or more parties on a particular asset or venture which allows one of the partners to gradually acquire the shareholding of
the other partner through an agreed redemption method during the tenure of the musyarakah contract. Such arrangement is commonly referred to as musharakah
mutanaqisah (diminishing partnership).

22 economic outlook 2024

Chapter [Link] 22 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

vi. Societal Engagement: The All-Inclusive Approach

Malaysia’s just transition journey will effectively address climate change through a holistic societal
approach, entailing the active involvement of the rakyat. In turn, the Government through
collaborative efforts with relevant stakeholders will ensure the needs of the rakyat are fulfilled
amid the transition to low-carbon. Initiating awareness campaigns about climate change and its
repercussions constitute the preliminary stride towards integrating the urgency for action within
the public consciousness. On top of that, strengthening the social safety net with enhanced
safeguards for the low- and middle-income categories can mitigate the financial and economic
risks associated with climate change and the low-carbon transition. This will therefore protect these
groups from economic shocks and inflationary pressures that may materialise in the future. The
introduction of carbon pricing instruments, complemented by the rationalisation of subsidies will
generate funding that will be redirected towards strengthening the nation’s energy, food and water
security, hence bolstering Malaysians’ livelihoods.

vii. Pioneering a Regional Just Transition

With Malaysia’s strong foundation in economic growth, sustainability, Islamic financing and nature-
based solutions, Malaysia possesses the potential to play a leadership role within the region as
a climate pioneer. As fellow ASEAN nations embark on their individual low-carbon transitions,
collaborative efforts in emissions reduction, renewable energy proliferation, and economic
instruments can set the stage for regional climate endeavours. Further to the development of a
standardised ASEAN-level climate taxonomy, the discourse on the establishment of a universally
applicable carbon pricing mechanism will also galvanize the region’s climate action efforts while
preparing for the coming challenges.

Conclusion

Within the realm of climate action and equitable development, in line with the Ekonomi MADANI
framework, a just transition approach will guide Malaysia moving forward. This approach holds
the promise of harmonising these issues as the nation grapples with the entwined challenges of
achieving a high-income nation status while managing its natural heritage as well as safeguarding
the rakyat. It becomes imperative for individuals, governments, corporations and civil societies to
unite in shaping Malaysia’s development trajectory.

The urgency of the climate crisis demands resolute action, and a just transition provides a
framework for action that traverses borders and sectors. It demands a collective commitment
from local communities to global platforms, encapsulating a future where social fairness and
environmental sustainability intertwine seamlessly. Guided by the principles of Just Transition and
the Ekonomi MADANI framework, Malaysia charts a development trajectory leading to a sustainable
future that is comprehensive and environmentally conscious, through the equilibrium between
economic growth, climate mitigation and adaptation as well as social justice.

economic outlook 2024 23

Chapter [Link] 23 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Good Governance while necessitating a plan for reskilling of

the current workforce. Aligned with the
Good governance is crucial to instil confidence Government’s vision to rebuild a dynamic civil
and trust among stakeholders, which reflects service, governance standards for leadership
effective government administration. The and decision-making need to be refined.
WCY IMD 2023 report identifies areas that Therefore, providing ample training and
require improvement, particularly in enhancing career growth opportunities is imperative for
government legislation related to businesses maintaining a competent workforce.
and societal frameworks. Thus, there is a need
to enhance civil society and citizen involvement Wages
in policymaking. In addition, the Principles of
Good Governance (PGG) for GLICs provides a Malaysia has seen a significant economic
framework that guides baseline governance growth and achieved upper middle-income
and sustainability practices. This guideline economy status over the last 30 years.
represents an initiative aimed at elevating However, the growth has yet to be translated
corporate governance, with a particular into equitable income distribution for workers.
emphasis on ESG considerations. Compensation of employees (CE) has remained
low, reflecting a persistent structure of a
Public Service Delivery low-wage labour market. Currently, CE hovers
around 35% to GDP, compared to 40% targeted
In ensuring public service delivery is efficient by 2025. The mean wage growth of 4.3%2,
and effective, efforts have been focused on only resulted in an average annual increment
raising service quality through investments in of RM106 for workers. This modest increment
human capital development and digitalisation. is not sufficient to support households,
The achievement of these objectives demands particularly the low-income earners to achieve
a comprehensive approach, which requires a decent standard of living. The issue of low
improved governance, reduced bureaucracy, wages has led to limited local workforce
increased transparency, heightened engagement in lower occupation categories,
accountability, enhanced capacity building, increasing dependence on low-skilled foreign
and a steadfast commitment in meeting the workers and hampering labour productivity.
needs of the rakyat. In order to gear the Addressing the low-wage concern is crucial
transformation process towards digitalisation, for Malaysia to unlock the full potential of its
the public sector must be agile and keep human capital and achieve balanced economic
abreast to this trend. This will require a more growth, which will benefit all segments of
strategic human capital recruitment process society and promote inclusive development.

2
Refers to wage growth for Malaysian citizens only during the period from 2010 to 2021.

24 economic outlook 2024

Chapter [Link] 24 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

information box 1.2

Wages as a Source of Growth

In collaboration with Khazanah Research Institute (KRI)

Introduction

As Malaysia aspires to become a high-income nation, various measures have been undertaken
to accelerate the shift to high technology and knowledge-intensive economy. The initiatives have
borne fruits as evidenced by the encouraging economic growth trend recorded over the past few
decades. Nonetheless, the absolute benefit of the growth has yet to be translated into fair income
distribution, including the need to address the longstanding low labour income issues.

Malaysians are finding it increasingly difficult to cope with the rising costs due to structural wage
stagnation, thereby placing an added burden on the Government to provide subsidies and cash
transfers to alleviate pressures on the rakyat. The introduction of the minimum wage in 2013 was a
significant progressive step, but more needs to be done if the Ekonomi MADANI framework’s target
of raising compensation of employees to 45% of GDP is to be realised.

Distribution of wages in Malaysia – wage growth and inequality from 2010 to 2019

A study by Khazanah Research Institute (KRI) in 2023 on wage growth from 2010 to 2019 produced
three key findings. First, the Malaysian labour market is dependent on policy interventions such as
the minimum wage to ensure equitable and inclusive wage growth. The study also finds that wage
growth is suppressed and broadly regressive without policy measures. Figure 1.2.1 highlights the
impact of the minimum wage on low wage earners by comparing wage growth rates across wage
deciles between the years in which the minimum wage was introduced or increased (MW periods),

FIGURE 1.2.1. Percentage Change in Real Monthly Individual Wage Growth by Wage Decile,
2010 – 2019
% change
12

10

8
Without the MW, wage
growth is broadly regressive

0
1 2 3 4 5 6 7 8 9 10
WAGE DECILE
MW
NON-MW

Source: Khazanah Research Institute and Department of Statistics, Malaysia

economic outlook 2024 25

Chapter [Link] 25 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

and the years before or without an increase in the minimum wage (non-MW periods). The analysis
indicates that wage growth for the bottom 30% of wage earners was dependent on the minimum
wage implementation. Without the Government’s directive to employers, the wage level would have
remained suppressed.

Second, the effects of the minimum wage are limited to the lowest wage earners, with the middle
wage earners experiencing the lowest growth during the period, as depicted in Figure 1.2.2. In
ringgit terms, the wage growth of the middle wage earners is even lower than the growth of the
lowest 30% wage earner group, as shown in Figure 1.2.3.

FIGURE 1.2.2. Percentage Change in Real Monthly FIGURE 1.2.3. Absolute (RM) Change in Real Monthly
Individual Wage Growth by Decile, Individual Wage by Decile,
2010 – 2019 2010 – 2019

% change
Change (RM)
65 300
Progressive
60
250
55

50 200

45
Regressive 150
40 ‘Squeezed’
Middle
35 100

30
50
25

20 0
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
WAGE DECILE WAGE DECILE

MW
WAGE GROWTH RATE NON - MW

Source: Khazanah Research Institute and Department of Statistics, Source: Khazanah Research Institute and Department of Statistics,
Malaysia Malaysia

Third, wage stagnation1 is found to be a central feature of the Malaysian labour market despite
the effects of minimum wage. The bottom 50% of workers only experienced an increase of the real
monthly wage by approximately RM500 during the 2010 – 2019 period, which translates to a rough
increase of RM56 per year, as illustrated in Figure 1.2.4.

These findings provide a basis to comprehend the vulnerability of Malaysian households when
confronted with the rising costs, as their wage increments have arguably been insufficient to
provide a buffer against future shocks.

1
The definition of wage stagnation varies by context but is most commonly defined as a situation whereby wage growth is slower or barely keeping pace with the
rate of inflation or cost of living.

26 economic outlook 2024

Chapter [Link] 26 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

FIGURE 1.2.4. Absolute (RM) Change in Real Monthly Individual Wage by Decile,
2010 – 2019

Change (RM)
2,500

2,000

1,500

Annual real wage increases of

1,000 only ~RM56 for the bottom 50%

500

0
1 2 3 4 5 6 7 8 9 10
WAGE DECILE
REAL WAGE

Source: Khazanah Research Institute and Department of Statistics, Malaysia

Low starting salaries among graduates

An individual’s starting wage plays an important role in determining their overall wage trajectory
(Guvenen et. al., 2019), and fresh graduates in Malaysia faced stagnant wage outcomes over the
past decade (Rahim, M.A.R.A. and Suhaimi, S.A., 2022). Over 70% of working graduates earned
below RM2,000 per month, and concerningly, the percentage of those earning between RM1,000
and RM2,000 has increased from 43.7% in 2010 to 54.6% in 2020, as depicted in Figure 1.2.5.

Similarly, between 2019 and 2020, there was a decline in graduates earning above RM2,000 by
2.3%, while those earning below the minimum wage grew from 48.8% to 51.1%, as shown in Table
1.2.1. The scenario suggests that majority of tertiary-educated graduates entered the job market
at below the living wage2 as stipulated by Belanjawanku 2022/2023. With a relatively lower starting
wage, the graduates could consequently suffer low increments and may take a longer time to
reach a sufficient level.

The labour market’s inability to pay the fresh graduates adequately, is nested within a larger
structural challenge of job creation. The employment share of labour-intensive traditional services,
such as wholesale and retail trade; accommodation, food and beverages; as well as administrative
and support service activities, has grown over the past two decades (Tumin, S.A., 2021; Rahman,
A.A. and Schmillen, 2020). The concentration of new jobs in these sectors has resulted in elevated
skills-related underemployment3 rates among graduates, whereby the rate has increased from
24.5% in 2017 to 33.9% in 2021 (DOSM, 2022a).

2
The Belanjawanku 2022/2023 report by Employees Provident Fund (EPF) estimated at RM2,600 for a single adult car owner residing in Klang Valley in 2022 – 2023.
3
Skills-related underemployment is defined as those with tertiary education but working in semi-skilled or low-skilled occupations.

economic outlook 2024 27

Chapter [Link] 27 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

FIGURE 1.2.5. Percentage of Working Graduates table 1.2.1. Percentage of Working graduates
by Monthly Income Range, by Monthly Income,
2010 - 2020 2019-2020

% of working graduates
100 income ranGe 2019 2020

Less than RM1,500 48.8 51.1

80
43.7 54.6
RM1,500 - RM2,000 20.0 20.0
60

More than RM2,000 31.2 28.9

40
28.7 Total 100.0 100.0
16.5
20
Source: Khazanah Research Institute and Ministry of Higher Education,
Malaysia

0
2011

2015
2012

2013

2019
2017
2010

2016

2018

2020
2014

> RM5000
RM3001 - RM5000
RM2001 - RM3000
RM1001 - RM2000
< RM1000

Source: Khazanah Research Institute and Ministry of Higher Education,

Malaysia

Consequences of low wages

While structural challenges are a source of the wage conundrum, dismal wage levels are
themselves at the root of trends that feed back into Malaysia’s structural problems. Two prominent
trends that are linked to the lack of well-paying employment are brain drain and the increasing
levels of non-standard employment such as gig work. Brain drain, though not rare from a global
perspective, severely inhibits the economic and social potential of developing countries (Gibson and
McKenzie, 2010).

Based on a study by the World Bank in 2010, about 54% of Malaysia’s brain drain, were in
Singapore. Meanwhile, a report by the Institute for Labour Market Information and Analysis (ILMIA),
Ministry of Human Resources (MOHR) in 2019 reported that Malaysians who work in Singapore
consist of two groups; those who live in Malaysia but work in Singapore (commuters) and those
who live and work in Singapore (residents). Among the commuters, 58% of them worked in semi-
skilled occupations and 10% in low-skilled occupations. On the other hand, 58% of the residents
were typically tertiary-educated and primarily worked in skilled occupations which are managers,
professionals, and associate technicians.

Higher salary is the predominant motivator in pulling Malaysians to work in Singapore. Findings
from interview sessions conducted by ILMIA highlight that Malaysians were offered higher salaries
and compensation for the same job. Meanwhile, the MEF Salary Survey for 2022 shows that a
manager in the manufacturing industry receive a basic monthly salary of RM10,304, while a
similar role in Singapore offers SGD7,532, which is equivalent to RM24,6954. Likewise, a clerk in
the administration and support services would earn a monthly wage of RM2,065 as compared to

4
Referring to exchange rate of SGD1 = RM3.2787 as of 29 December 2022.

28 economic outlook 2024

Chapter [Link] 28 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

SGD2,000 in Singapore, while the accommodation and food and beverages subsector paying nearly
five times more in Singapore (Malaysian Employers Federation, 2023; Ministry of Manpower, 2023;
DOSM, 2022b). The wage discrepancies between Malaysia and Singapore is applicable to a wide
range of occupations and industries.

On another aspect, Malaysians working in Singapore had been able to save a sizable share of
their earnings with 51.1% of commuters managed to save around 1% - 10% of their monthly
salaries, while nearly 60% of residents have been saving more than 10% (Figure 1.2.6). Meanwhile
in Malaysia, Bank Negara Malaysia in 2023 reported that only 36% of Malaysian households would
be able to sustain expenses for the next three to six months in the event of a loss of income. As a
rule of thumb, Belanjawanku report has suggested the use of a 45/35/20 rule whereby 45% of an
individual’s budget should be allocated for necessities, 35% to commitments and 20% to savings.
Stagnant wages make it increasingly difficult for individuals and households to save and cope with
rising costs.

FIGURE 1.2.6. Percentage of Savings of Monthly Wage by Residents and Commuters,

2018

% of respondents
100

80

35.0
60

40
27.6
51.1
20 15.5
5.8 16.1
22.4
10.2 7.7 8.6
0
No savings 0% 1%-10% 11%-20% 21%-30% More than 30%

% OF SAVINGS OF MONTHLY WAGE

RESIDE
COMMUTE

Source: Institute of Labour Market Information and Analysis and Ministry of Human Resources, Malaysia

Another consequence of the wage issue is the increasing number of SPM leavers opting for gig
work such as p-hailing or e-hailing5 services, instead of continuing their education or developing
core skills and capabilities in a career track. An estimated 26% of employed persons were involved
in gig work in 2020 (Azahar, S., 2020), and preliminary estimates indicate that the gig sector can
provide a monthly income that is competitive compared to the starting salaries of fresh graduates
(Goh and Omar, 2019). Other contributing factors include the unavailability of job opportunities
as well as the belief that furthering their studies does not guarantee quality jobs (Mutalib, H.,
2022). However, the precarious nature of gig work poses a significant risk in the long term. The
lack of regulatory oversight in ensuring decent work standards, and difficulties in extending
social assistance to gig workers renders many of them ‘invisible’ and remain outside the formal
system (Hamid, H.A. and Sazali, N.T., 2020). Furthermore, the expansion of gig work may not yield
favourable returns to the economy if it translates to an increasing share of the workforce foregoing
long-term investments in skills and capabilities.

5
P-hailing refers to food, drink, and parcel delivery by motorcycle. E-hailing is defined as a transport service offered by private vehicles through an online application.

economic outlook 2024 29

Chapter [Link] 29 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Positive spillovers from higher wages

The issue of low wages in Malaysia is normally linked to the economy’s productivity challenges,
with the implied argument that employers should wait for productivity to rise before increasing
the wages. This approach ignores the fact that providing higher wages is part of the solution to
productivity challenge. If Malaysia aims to escape the low-wage, low-profit, and low-productivity
trap, a cheap labour model of business and economic growth must be counteracted through a
concerted effort to raise wages.

Rising wages have been part of the economic and industrial transitions of Asia’s highly advanced
economies (Wade, 2004) and nations need to embrace a vision of wage growth as being a source,
rather than just a consequence, of economic growth. According to a study by KRI in 2019 on the
consumption patterns of Malaysian households, it is found that only the top 30% of households
demonstrated spending patterns that were reflective of “middle-class6” aspirations, which is an
indication that raising the wages of Malaysia’s low- and middle-income earners holds the potential
to increase the size of the domestic market and benefit local businesses. In 2022, The Centre
for Future Labour Market Studies (EU-ERA) modelled the effects of higher wages on Malaysia’s
domestic economy through a Computable General Equilibrium7 model and found that wage growth
could have positive effects on other macroeconomic indicators as illustrated in Table 1.2.2.

table 1.2.2. EU-ERA’s Simulation of the Economic Impact of Higher Wages

3% 4% 5% increaSe in total WaGe

+5.6% +6.0% +6.5% GDP (current price)

+4.2% +4.8% +5.4% Labour productivity

-2.2% -2.4% -2.5% Income inequality (Gini index)

Source: The Centre for Future Labour Market Studies (EU-ERA) and Ministry of Finance, Malaysia

Conclusion

Policy interventions are required to improve wage outcomes. Evidence-based analysis has indicated
that the minimum wage is a crucial intervention in the labour market to raise wages of the low-
income workers and reduce wage inequality. The primary lesson of the minimum wage is that
progressive, consultative and decisive measures are required to improve the equitability and
inclusiveness of the economy. Therefore, the focus of current policy efforts needs to ensure
significant improvements in the median wage level in the coming years. If the minimum wage is
effective in raising wages at the lower end of the distribution, then additional measures should be
targeted towards the middle wage earners.

Such effort will require close collaboration between the Government, employers and labour unions
to ensure sustainability and effectiveness. The Ekonomi MADANI framework stresses the need for a
whole-of-nation approach with a focus on empowering the rakyat in the hopes of ‘Building a Better
Malaysia Together’. Therefore, employers and businesses, in particular, need to embrace wage
growth as a source of business and economic transformation.

6
Middle-class is defined as households that are able to maintain or invest further in their upward mobility as well as protect themselves from risky scenarios.
7
Simulation results are derived based on CGE model. It produces a projection of economic, sosial and environmental indicators up to 2030. The model assumes that
increases in wage rates induce additional consumption by households, therefore resulting in additional output and profit for firms.

30 economic outlook 2024

Chapter [Link] 30 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Combatting Inequality have hampered coordination efficiency. The

situation is further aggravated by the differing
Cost of Living objectives and monitoring methods used by
these agencies, resulting in fragmentation and
The Government is dedicated to alleviate overlapping of programmes as well as higher
the burdens of the rakyat, particularly the implementation costs. Furthermore, numerous
vulnerable groups amid rising cost of living. databases hinder data integration and system
According to the Asian Development Bank, interoperability, thereby undermining effective
the surge in the cost is forcing a significant targeting mechanisms. These problems have
portion of the population into economic led to inclusion and exclusion errors, causing
hardship, necessitating concerted efforts resource leakages and reducing assistance
to enable the less fortunate to survive in efficiency and coverage. In this respect,
the environment of elevated prices and the COVID-19 pandemic has inadvertently
economic uncertainties. The cost of living pushed the need for a comprehensive social
significantly impacts the affordability of protection system without undermining fiscal
Malaysian households, especially those in the sustainability. The establishment of the system,
urban areas, as many have tight financial along with the harmonisation of the objectives
commitments including loans. Addressing this and mechanisms among the responsible
issue is essential in ensuring financial stability agencies will enhance efficiency, reduce costs,
and a decent quality of life for the rakyat. as well as provide better coverage and support
for those in need.
Balanced Regional Development
Quality Infrastructure
Balancing regional development is essential
for Malaysia to achieve equitable growth Quality infrastructure provides the foundation
across states and regions. Despite of the for economic activities, essentially by
Government's efforts in the past, disparities increasing connectivity and accessibility of
continued to persist, evidenced by regional amenities and services to the rakyat. While
inequalities, low urban resilience, obstacles a majority of the rakyat enjoy convenient
to rural development, and underutilisation access to basic amenities such as clean
of opportunities in sub-regional cooperation. water, electricity, internet connectivity, and
Such imbalances lead to issues including transportation networks, disparities persist
rural-urban migration, increased living costs, due to varying development levels across
income inequality, and urban poverty. To the country. For instance, while most states
achieve a balanced regional development, have access to clean water, yet certain states
a comprehensive strategy is needed, such as Kelantan, Sabah, and Sarawak still
encompassing targeted investments in require more coverage. Therefore, bridging
underdeveloped regions, improved connectivity, these accessibility gaps is essential to ensure
support for local industries, and the creation of equitable development and enhance the quality
employment opportunities. of life for all Malaysians. Meanwhile, investing
in high-quality infrastructure, particularly public
Social Protection System transportation system can stimulate economic
activities and attract investors to create job
The presence of various government opportunities, while delivering improved public
agencies that look into social protection services.
and the absence of an overarching policy

economic outlook 2024 31

Chapter [Link] 31 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Strategic Initiatives – complexity, digitalisation, green growth and

inclusive growth across the nation. Initiatives
Budget 2024 will also be undertaken to strengthen Malaysia
as an internationally competitive investment
Ekonomi MADANI serves as the foundational destination and to enhance ease of doing
framework towards building a better Malaysia business. Greater empowerment of SMEs
together by re-establishing Malaysia as a will be emphasised through facilitating SME
leading economy in Asia and ensure a high financing, competitiveness, human capital
quality and just life for the rakyat. The upskilling and export orientation. Malaysia
ambitions of Ekonomi MADANI have been will also aim to energise innovation in Islamic
subsequently reflected and elaborated in policy economy, particularly in Islamic Finance and
documents, namely the NETR, NIMP 2030 and halal products. In addition, the transformation
MTR of the Twelfth Plan. Likewise, the Budget of the economy will need to be supported
2024 is geared towards articulating immediate by greater efforts to strengthening economic
initiatives and reforms for implementation sustainability and security, particularly in food
in 2024, as initial steps towards realising the and energy.
aspirations of Ekonomi MADANI.
Encapsulating Ekonomi MADANI’s aims to
In line with Ekonomi MADANI, the Budget “raise the floor”, the Budget 2024 sets out
2024 has three focus areas, namely delivering initiatives to elevate the rakyat’s quality of life
reforms to enhance governance and public in concomitance with “raising the ceiling” of
delivery system; transforming the economy Malaysia’s economic potential. A higher quality
and businesses, in addition to elevating the of life encompasses the creation of meaningful
wellbeing of the rakyat. jobs with decent wages, inclusivity and equal
opportunity, universal access to education and
Looking ahead towards 2024, Malaysia faces healthcare, world-class basic utilities, and a
the challenge of both a less robust global more comprehensive social safety net for all
economic outlook combined with Malaysia’s Malaysians. This includes ensuring the lower
fiscal constraints. Beginning 2024, fiscal income groups continue to be assisted with
reforms are necessary to provide the fiscal the challenges of cost of living, in conjunction
room to support economic growth and with the transition towards targeted subsidies.
restructuring while also attending to the needs
of the rakyat. Towards this, the Government This holistic restructuring of Malaysia’s
has committed to the FRA, continues its economy as envisioned in the Ekonomi
commitment to gradually reduce the fiscal MADANI framework requires a whole-of-
deficit and rationalise subsidies to be more nation approach. The Government’s approach
targeted. Institutional reform will also be will aspire to build greater partnerships
undertaken towards greater governance and with the industries and the rakyat towards
enhancing the effectiveness of public delivery realising Ekonomi MADANI. At the same time,
and implementation of Government initiatives. collaborations will also be forged with state
governments and NGOs to meet national
The transformation of the economy envisioned development needs.
under the Budget 2024 aims to initiate
reforms to kickstart the implementation of The Budget 2024 therefore marks the start
the NETR, NIMP 2030 and MTR of the Twelfth of Malaysia’s journey to rebuild a sustainable,
Plan. Towards this, incentives and funding inclusive, and buoyant economy as envisioned
will be provided to promote greater economic in the Ekonomi MADANI framework.

32 economic outlook 2024

Chapter [Link] 32 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

information box 1.3

Mid-Term Review of the Twelfth Malaysia Plan

In collaboration with the Ministry of Economy

Introduction

The Twelfth Malaysia Plan, 2021 – 2025 (the Twelfth Plan), is a medium-term plan with the objective
of achieving ‘A Prosperous, Inclusive, Sustainable Malaysia’. Since its implementation, Malaysia has
registered commendable socioeconomic development, particularly in spurring economic recovery
post-pandemic COVID-19 despite experiencing several global and domestic challenges. Nevertheless,
continuous effort needs to be intensified to ensure the targeted outcomes of the Twelfth Plan
are achieved. Thus, a review of targets, policies and strategies of the Twelfth Plan is imperative in
ensuring Malaysia remains on the right growth trajectory.

The Mid-Term Review of the Twelfth Malaysia Plan (MTR of the Twelfth Plan) encompasses revised
policies and strategies in line with the ‘Ekonomi MADANI: Memperkasa Rakyat’ (Ekonomi MADANI)
framework to regain honour and dignity of the rakyat as well as transform Malaysia into a
prosperous and high-income nation. Under the theme ‘Sustainable, Prosperous and High-income
Nation’, the MTR of the Twelfth Plan introduces a total of 17 Big Bolds as strategic initiatives that
serve as the main catalysts in accelerating efforts to reform the socioeconomic development in line
with the Malaysia MADANI aspiration. The MTR of the Twelfth Plan is set to be the foundational
document to steer and elevate the nation’s development status as well as empower the rakyat.

Progress of the Twelfth Malaysia Plan

Various measures have been implemented to propel Malaysia towards a more robust growth
trajectory, yielding achievements across various key indicators. Among notable accomplishments
include a 4.2% increase in GDP during the first half of 2023; a commendable labour market
productivity growth of 3.7% annually during 2021 and 2022; a reduction in the unemployment
rate to 3.5% in Q2 2023; and a decline in the inflation rate to 2% in August 2023, the lowest
since September 2021. Furthermore, the gross national income (GNI) per capita rose significantly,
reaching RM52,968 (USD12,035) in 2022 compared with RM42,838 (USD10,191) in 2020. Malaysia
also ranked favourably in Human Development Index (HDI) 2022, standing at 62 out of 191
countries, while the Malaysian Well-being Index (MyWI) indicator recorded an annual increase
of 1.3% in 2021. Additionally, the average monthly household income saw an encouraging
improvement, reaching RM8,479 in 2022 from RM7,901 in 2019. These achievements demonstrate
positive economic growth and development trends in Malaysia.

Framework of The Mid-Term Review

The central tenets of Malaysia MADANI’s aspiration, coupled with the strategic framework of
Ekonomi MADANI serve as the foundational pillars of the MTR of the Twelfth Plan that would
eventually lead to a better quality of life for the rakyat. The overarching theme of the MTR of the
Twelfth Plan is underpinned by the key enabler, which is enhancing efficiency of public service
delivery with three main focus areas, namely strengthening sustainability, building a prosperous
society and achieving high-income nation. The 17 Big Bolds will catalyse the socioeconomic
development in the remaining period of 2023 – 2025 through a set of main strategies and
initiatives1 across the three main focus areas as highlighted in Figure 1.3.1.

1
There are 71 key strategies and initiatives discussed in the main document of the MTR of the Twelfth Plan.

economic outlook 2024 33

Chapter [Link] 33 06/10/2023 7:39 PM

 chapter 1 ECONOMIC MANAGEMENT AND PROSPECTS

FIGURE 1.3.1. Framework of the Mid-Term Review of the Twelfth Malaysia Plan
Aspiration Ekonomi MADANI: Memperkasa Rakyat
Under the new
framework,
Theme Sustainable, Prosperous, High-Income Nation

17 ‘Big Bolds’ Enhancing efficiency of 1.

1 Governance and institutional framework
Key enabler
have been public service delivery 2.
2 Legislation related to corruption
outlined
1 2 3
to catalyse
development
across the key
enabler and 3 Strengthening Building prosperous Achieving high- income
focus areas sustainability society nation
moving forward 1.
3 Fiscal sustainability 1.
6 Encultration of 1.
11 Digital and technology
Focus areas and financial systems MADANI society based HGHV industries
2.
4 HGHV Industry based 2.
7 Social protection 2.
12 High value E&E HGHV
on energy transition reforms industry
3.
5 Targeted subsidies 3.
8 Housing for the rakyat 3.
13 Agriculture and
4.
9 Strengthening Agro-based HGHV
healthcare services industry
5.
10 Strengthening national 4.
14 Rare earth HGHV
security and defence industry
5.
15 Empowering MSMEs
and social enterprises
6.
16 Streamlining the public
transport network
7.
17 Future-ready talent

Source: Ministry of Economy, Malaysia

Way Forward

Macroeconomic Prospect

Looking ahead to the remaining period of the Twelfth Plan, the economy is poised to grow ranging
from 5% to 5.5% annually, driven primarily by domestic demand, with a notable contribution
from private sector spending. In addition, there will be concentrated efforts to enhance labour
productivity that is projected to increase by 3.8% annually. This anticipated improvement in the
labour market is instrumental in achieving the targeted share of compensation of employees (CE)
set at 40% of GDP by 2025. Furthermore, the GNI per capita is anticipated to reach RM61,000
(USD14,250) by 2025 while inflation rates are expected to remain within the range of 2.8% to 3.8%.

On the supply side of the economy, the services and manufacturing sectors will continue to serve
as the principal sources of growth. Additionally, it is anticipated that robust growth in the civil
engineering and residential building subsectors will play a pivotal role in supporting the recovery
of the construction sector for the remaining period of the Twelfth Plan.

Enhancing Efficiency of Public Service Delivery

The Government will focus on enhancing value-based governance by improving accountability and
transparency as well as strengthening and acculturating integrity in public service. These strategies
will be supported by two Big Bolds, namely Governance and Institutional Framework as well as
Legislation related to Corruption.

Digital transformation will be further accelerated by improving end-to-end online services and
boosting data sharing arrangements, in line with the whole-of-nation approach. The modernisation
of the public service will be continued through the Government Technology (GovTech) initiative. In

34 economic outlooK 2024

Chapter [Link] 34 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

addition, Pangkalan Data Utama (PADU) will be developed as a data repository to support accurate
and transparent distribution of targeted subsidies and assistances in addressing socioeconomic
issues at individual household level, under the Big Bold Targeted Subsidies.

Institutional and business framework will continue to be strengthened by reviewing structure and
function of ministries and agencies as well as enhancing ease of doing business. Further to this,
the Government will prioritise on improving the effectiveness and efficiency of budget and project
management for better service delivery through the Big Bold Fiscal Sustainability and Financial
System.

Main Focus Areas

Three main focus areas outlined in the MTR of the Twelfth Plan are strengthening sustainability,
building a prosperous society and achieving high-income nation.

Strengthening Sustainability

The MTR of the Twelfth Plan maintains a steadfast focus on bolstering sustainability through
several key objectives encompassing the promotion of economic growth; the enhancement of
fiscal sustainability; and the acceleration of the transition towards an economy that is resilient
and future-ready. In accelerating the effort to drive economic growth, focus will be given on five
high-potential sectors, namely renewable energy; technology and digital; E&E; agriculture and
agro-based as well as rare earth industries. Furthermore, fiscal sustainability will be strengthened
by reinforcing fiscal governance, broadening the revenue base, recalibrating subsidies, improving
budget management, and enhancing the management of debt and liabilities.

In advancing sustainability, energy transition has become a significant avenue for Malaysia to
unlock the green growth potential. This transition includes a transformation towards a high
growth high value (HGHV) industry, with a particular emphasis on Energy Transition as one of
the prominent initiatives to address the challenges of climate change and other environmental
challenges. Furthermore, an efficient natural resource management will be further optimised with
a priority on conserving natural ecosystems and strengthening water management practices to
prevent the exploitation and loss of resources, thus ensuring maximum returns to the economy.
Additionally, there will be a concentrated drive to expedite the implementation of SDGs and
encourage the adoption of ESG practices. This will comprise policies and regulatory frameworks as
well as support services to encourage businesses to adopt sustainable business practices.

Building a Prosperous Society

The efforts to build an inclusive and more resilient society will continue to be pursued during the
remaining period of the Twelfth Plan. Meanwhile, in addressing and preventing poverty, efforts
will be intensified towards increasing income and improving standard of living. The Government is
determined to narrow the income disparity while addressing the regional development imbalance.

Big Bold Social Protection Reform aims to improve efficiency and effectiveness in assisting the poor
and vulnerable. This reform, which is currently being studied will be implemented holistically at the
Federal and state levels. The MTR of the Twelfth Plan also outlines strategies in maintaining peace
and stability that include safeguarding national sovereignty as well as intensifying efforts in crime
prevention and rehabilitation. These strategies will be supported through the implementation of
the Big Bold Strengthening National Security and Defence.

economic outlook 2024 35

Chapter [Link] 35 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Moreover, another Big Bold is on Strengthening Healthcare Services that will be implemented
to enhance the wellbeing of the rakyat. Leasing of medical equipment will be introduced as a
measure to ensure availability of the best state-of-the-art medical equipment to the rakyat. In
addition to this, increasing the supply of and improving access to quality and affordable housing
will be emphasised. Big Bold Housing for the Rakyat will be implemented by shifting the focus
from ownership to shelter.

Achieving High-income Nation

A comprehensive set of measures will be implemented to fortify Malaysia’s economic resilience

towards attaining a high-income nation status. These measures will focus on bolstering the
resilience of sectoral and strategic industries; enhancing competitiveness to foster sustainable
growth; optimising the effectiveness of financial support mechanisms; and formulating strategic
plans for industrial estates and food production areas. Additionally, steps will be taken to reduce
barriers that hinder the scalability of micro, small and medium enterprises (MSMEs) by integrating
them into domestic and global supply chains and fostering accelerated productivity growth among
MSMEs.

Furthermore, the growth of Digital- and Technology-Based HGHV Industries will be prioritised,
supported by the formulation of digitally inclusive policies and the development of a conducive
infrastructure. Similar emphasis will also be placed on building resilient transport and logistics
infrastructure. Moreover, a holistic development approach for the non-radioactive rare earth
industry will be implemented, aligning it with the Big Bold Rare Earths HGHV Industry initiative,
to maximise the industry’s economic contribution. Concurrently, initiatives will be enhanced to
promote technology adoption, digitalisation, talent acquisition, value chain augmentation, and
governance enhancement, all geared towards driving competitiveness and ensuring sustainable
growth.

As a strategy to expedite economic growth, several key enablers such as talent development,
technology, research, development, commercialisation and innovation (R&D&C&I), digitalisation,
and transport and logistics infrastructure will be fortified. Within this strategy, a progressive wage
model will be introduced to stimulate wage growth and address the issue of CE as a share of
GDP. An action plan will also be devised to ensure that the percentage of foreign workers does
not exceed 15% of the total workforce. Ultimately, in ensuring a more holistic development, there
will be concentrated efforts to promote regional balance and inclusivity. These efforts will include
initiatives aimed at enhancing regional economic potential, accelerating sustainable urban and rural
development, and optimising opportunities arising from subregional cooperation.

Conclusion

The MTR of the Twelfth Plan highlights the progress for 2021 – 2022, outlines issues and
challenges that need to be addressed as well as paves the way for 2023 – 2025 towards a
sustainable, prosperous and high-income nation. During the review period, economic growth was
commendable amid the challenging environment. The implementation of all development initiatives
needs to be accelerated in ensuring domestic and global challenges are managed effectively. The
successful implementation of the 17 Big Bolds is imperative in driving the efforts towards attaining
the set targets, in line with the ‘Ekonomi MADANI: Memperkasa Rakyat’ framework.

36 economic outlook 2024

Chapter [Link] 36 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Focus 1: Restructuring the foster prosperity through sustainable economic

Economy to Boost Growth growth to position the country towards a
thriving future globally.
The Budget 2024 builds the foundation for a
sustainable development agenda that aligns Harnessing its strategic positioning in the
with the NETR, NIMP 2030, and MTR of the dynamic Southeast Asian region, Malaysia
Twelfth Plan, as guided by the Ekonomi maintains a steadfast commitment and stands
MADANI framework. These policies, specifically ready to benefit from the expanding trade
the NIMP 2030, will support the Government’s prospects within ASEAN to emerge as the
efforts to reform the industries by nurturing key regional industrial hub. Therefore, the
higher economic complexity and aggressively Government remains committed to boost both
embracing technological innovation and DDI and FDI to uphold Malaysia’s status as the
product sophistication. In this regard, focus preferred investment destination. The strategy
will be given to HGHV industries and several includes streamlining the investment promotion
sectors such as aerospace, E&E, chemicals, agencies, simplifying administrative procedures,
pharmaceuticals, and clean energy to propel and revising relevant laws and regulations to
Malaysia towards technological advancements create a more investor-friendly environment.
and competitiveness. Additionally, the Government will formulate and
refine industrial and investment policies tailored
A favourable business environment is to regional needs and developmental stages
imperative to foster a more interconnected in reducing development gaps and economic
and vibrant domestic economy. These will be disparities.
achieved by leveraging robust infrastructure, a
large talent pool, abundant natural resources, Special attention will be given to attract
as well as vast technological adoption, investments in emerging sectors such as
digitalisation and innovation. Acknowledging E&E, digital economy, and aerospace, with
the contributions of MSMEs to the economy, GLICs and GLCs driving the development
a diverse array of programmes and projects of local vendors and DDI. In addition, the
is poised for implementation to bolster the implementation of outcome-driven tax
competitiveness. However, limited access to incentives will catalyse businesses towards
financing and shortage of skilled workers impactful ventures and generate high-income
persist as major impediments to business employment opportunities. The Government
expansion. Thus, the Government remains has also embarked on several measures to
committed to offer financing facilities and promote Malaysia as the preferred investment
talent development programmes, which will be destination, which include the establishment of
key components of the Budget 2024. special financial zones in Johor and the Klang
Valley to attract global investors and knowledge
As Malaysia aims to rank among the top workers. This effort encompasses the upgrading
30 economies in the world within the next of existing industrial infrastructure to adopt
decade, the nation must possess the traits of eco-friendly practices while simultaneously
advanced and high-income economies that are intensifying human capital development
characterised by innovation-led and knowledge- to meet investors’ demand. Collectively,
intensive economic activities, advanced this comprehensive ecosystem sets a solid
technology, robust infrastructure, and skilled benchmark to boost investor confidence, which
workforce. By prioritising these strategic in turn, will propel sustainable growth and
imperatives, Malaysia is poised to boost its solidify Malaysia’s position as a key player in the
competitiveness, amplify productivity, and regional and global economy.

economic outlook 2024 37

Chapter [Link] 37 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Smart Industry, often referred to as Malaysia takes pride in its leading role among
Industry4WRD, is reshaping the landscape Asian economies in the pursuit of green
of manufacturing, distribution, and product growth and climate resilience. Remarkable
innovation. The combination of digitalisation advancements were made in the adoption of
and mechanisation within smart industries sustainable practices across various sectors,
holds immense potential and bodes well encompassing substantial investments in
with the nation’s vision of ascending to a renewable energy, the implementation
high-income and knowledge-driven economy. of energy-efficient measures, extensive
Various initiatives are in place to expedite reforestation initiatives, and the promotion of
digital adoption and automation. The eco-friendly urban planning. The Government
Government continues to support policies is also committed in advancing the
that promote manufacturing transformation, commercialisation of green hydrogen, in view
advance economic complexity and of its potential as a competitive clean energy
technological adoption, as well as prioritise solution for Malaysia which aligns with the
economic security and inclusivity to ensure a net-zero aspirations. In line with the long-term
digitally vibrant and sustainable nation. These commitment to environmental sustainability,
strategic endeavours are poised to propel the Budget 2024 will continue to encourage
Malaysia forward, bolstering the nation’s businesses to embrace ESG principles, aiming
competitiveness on the global stage while at increasing the competitiveness to meet
preserving our commitment to sustainability the global standards. These initiatives entail
and inclusivity. the establishment of pertinent policies and
regulatory frameworks, as well as substantial
In line with the commitment to technological funding directed towards promoting green
advancement and innovation, the Government growth and low-carbon transition. In addition,
will cultivate a conducive and enabling the provision of relevant data and reports is
environment aimed at encouraging industries crucial in assessing and accounting the carbon
to adopt cutting-edge technologies and emission level in accordance with international
innovative business models. This encompasses best practices. These concerted green efforts
a multifaceted approach, which promotes underscore the determination to champion
investment in R&D, enhances digital sustainability agenda, positioning Malaysia as
infrastructure, and streamlines cyber the frontier among the developing countries.
security laws to ensure the security of smart
industries. Moreover, educational and training As aspired by the Ekonomi MADANI framework,
programmes will be transformed to equip efforts will be directed towards asserting
the workforce with the necessary digital skills Malaysia’s position as the leader in driving
and provide robust support mechanisms for innovations for the global Islamic economy. At
businesses, particularly the SMEs. Likewise, present, the global halal market is estimated to
the regulatory framework will continuously reach a staggering USD7.7 trillion by 2025. This
be reviewed to stay abreast with the rapid creates a golden opportunity for Malaysia to
technological changes, while fostering secure a more substantial share of the global
collaboration among regulators, research halal market by enhancing the competitiveness
institutions and industry players to stimulate of domestic halal industry. The strategy
seamless integration of new technologies encompasses a comprehensive array of
across jurisdictions. halalan toyyiban activities and Islamic financial

38 economic outlook 2024

Chapter [Link] 38 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

innovation, pursuant to the Maqasid Shariah Focus 2: Raising the Rakyat’s

principles. Thus, emphasis will be placed on Standard of Living through Social
streamlining the halal certification process, Justice
providing financial support mechanisms
to boost innovation and productivity, and In improving the wellbeing of the rakyat,
intensifying marketing strategies to penetrate the Government remains steadfast in its
both local and international markets. As commitment to fortify and target social
Malaysia enjoys a mature Islamic finance assistance programmes, particularly for the
ecosystem with dynamic players, innovative vulnerable groups. This entails enhancing
Shariah-compliant products and comprehensive existing initiatives such as cash transfers, in-
enabling environment, efforts will be geared kind assistance, subsidies as well as income
towards utilising the value-based finance protection and retirement programmes.
to support the halal industry. This strategic Furthermore, social insurance programmes will
cluster will not only bolster Malaysia’s global undergo enhancements to expand coverage,
leadership in Islamic finance and halal guaranteeing that Malaysians accumulate
industries, but also reinforce its prominence of sufficient retirement savings. Efforts will also
the halal ecosystem. be continued to strengthen labour market
interventions through retraining programmes,
Optimal land use is central in safeguarding hence safeguarding employment prospects
food security in Malaysia, which will influence for workers amid adverse circumstances. The
production levels that contribute towards overarching goal is to maintain an inclusive
the sustainability of food supply. Given the and equitable social protection system that
significant impact of food prices amid the shields the rakyat from the burdens of
rising cost of living, the Government is rising living costs and unforeseen hardships.
committed to promote a higher SSR across These measures reflect the Government’s
a broader spectrum of food items. The commitment to deliver social protection more
initiatives include optimising the use of efficiently and cohesively, ensuring cost-
existing plantations, expanding food crop effectiveness while minimising fragmentation
areas, and diversifying land use by repurposing and the likelihood of inclusion and exclusion
idle land into productive farmland for food errors.
crops. Furthermore, the Government aims
to bolster the resilience of the agro-food Despite the formalisation of many informal
sector through the adoption of agricultural sector participants during the COVID-19
technology, with a specific focus on enhancing pandemic, the Government is committed to
smallholder productivity. Thus, the Government enhance the wellbeing of informal sector
will continue to provide financial support in workers particularly in the context of social
incentivising farmers and investors to engage insurance and protection. To achieve this goal,
in food crop cultivation and adopting modern the Government will promote greater coverage
agricultural technology applications. These of self-employed individuals, including gig
measures will reduce Malaysia’s dependence on workers in the informal sector, contributing
food imports and minimise reliance on migrant to the Self-Employment Social Security Act
labour, bolstering self-reliance and reinforcing 2017 [Act 789] and retirement schemes. This
food security for the nation. step will ensure these workers have a robust
safety net and protection during unforeseen
circumstances.

economic outlook 2024 39

Chapter [Link] 39 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Additionally, to promote ease of doing teaching and learning delivery system will be
business, regulations related to business reformed to ensure learners gain knowledge
and licensing approvals will be enhanced to and skills that are aligned with employment
encourage and streamline the formal sector needs. Furthermore, adequate funding will
business registrations and employment be provided to ensure continuous access to
processes. This comprehensive approach aims quality education. Basic education will be
to strengthen social security and promote a strengthened to improve child development
thriving formal sector for the benefit of all from the early stage. School facilities and
stakeholders. infrastructure will be upgraded, particularly in
dilapidated schools. Internet connectivity will
The Government remains committed to also be improved to facilitate online learning.
provide equal opportunities for all segments Likewise, tertiary programme curriculum
of society, irrespective of gender, race, or will be tailored to be more demand-driven
income group. Recognising the importance through strategic collaborations with industry
of enhancing skills among specific groups, a players, ensuring graduates are industry-ready.
particular focus will be given to women and Additionally, lifelong learning programmes
youth to bolster the employability and income will be enhanced, providing upskilling and
prospects. Measures will be undertaken to retraining initiatives to keep the workforce
provide a more conducive working environment up-to-date with the rapidly evolving market
to further support women participation in demands, nurturing a highly skilled and
economic activities and encourage mothers adaptable workforce.
to return to work. This includes simplifying
registration processes, establishing additional Increasing healthcare quality continues to
childcare facilities at workplace, and reinforcing be a priority, focusing on rendering quality
flexible working arrangements. Furthermore, healthcare services. Hence, facilities and
employment rules and regulations will be equipment will be upgraded as well as
reviewed to protect and increase the wellbeing ensuring an adequate number of healthcare
of women employees. In line with this effort, professionals, particularly those in the rural
the Government aims to streamline workplace areas, to create a conducive healthcare
facilities and infrastructure to be more environment. Meanwhile, care services will also
inclusive, sensitive to disabilities, and gender- be enhanced as Malaysia is moving towards an
responsive. Additionally, efforts will continue to ageing nation. The healthcare programmes for
be focused on the Bumiputera Empowerment the elderly will be strengthened and healthcare
Agenda while providing sufficient support services will be digitalised. Additionally, early
to all ethnicities to promote the rakyat’s detection initiatives and efficient responses
upward mobility. These holistic measures to infectious disease outbreaks will be
reflect Malaysia’s commitment in fostering a continued with the establishment of the
society where every individual can thrive and National Disease Control Centre. Mental and
contribute to the nation’s prosperity. emotional wellbeing awareness programmes
will be sustained, and the community-
Education and training are central in building based healthcare system will be empowered,
workforce readiness. Hence, the Government ultimately improving the overall quality of life
is committed to ensure universal access to for Malaysians.
high-quality education and training. The

40 economic outlook 2024

Chapter [Link] 40 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

feature article 1.2

Towards Equitable Development: Targeted Social Assistance

Introduction

The aftermath of the COVID-19 pandemic has had a profound impact on the population, posing
greater challenges to the recovery journey. This is especially true for individuals and families in
poor and vulnerable households, as emphasised in the Malaysia Economic Monitor by the World
Bank in February 2023. Several studies highlighted that pre-existing issues particularly on cost of
living, low savings rate and low wages that were evident even before the pandemic, have been
further exacerbated. Consequently, these factors continue to impede the progress of household
recovery efforts. Higher prices posed challenges to households with varying degrees of severity
among different income groups. Lower-income households allocate a larger portion or 23.1%
of their monthly expenditure to food, in contrast to middle-income (17.1%) and higher-income
households (11.2%) (DOSM, 2022). This discrepancy implies that when inflation primarily affects
prices of food items, it will disproportionately affect the lower-income households making them
more susceptible to the pressure of cost of living (BNM, 2018).

The cost of living has also contributed to the low savings rate further influencing the ability
of households to withstand economic shocks. A survey conducted in 2022 revealed that 63%
of respondents can only survive three months (RinggitPlus, 2022) or less with their savings,
compared with 53% in 2019 (RinggitPlus, 2019). This suggests that the number of respondents
with dire emergency savings has increased. When it comes to retirement savings, a substantial
51.5% (equivalent to 6.7 million) of Employees Provident Fund (EPF) members under the age of 55
presently maintain remarkably low savings, amounting to less than RM10,000 (BNM, 2023). This
situation points to a further decline in the sufficiency of retirement savings since the pandemic.
Prior to the pandemic, it was noted that 70% of EPF members below the age of 54 have less than
RM50,000 in savings, with the bottom 20% averaging a mere RM6,909 – a level of concern that was
already noteworthy as EPF members at the age of 55 are required to have basic savings of at least
RM240,000 (EPF, 2019).

Further to this, wages in Malaysia remain low and sticky. The Department of Statistics Malaysia
(DOSM) through Employee Wages Statistics (Formal Sector) Report revealed that in the first quarter
2023, 35% of workers earn less than RM2,000 a month. The report also showed that the median
wage does not increase much across age groups, with those below 20 years old earning a median
wage of RM1,500 a month and reaching RM3,500 between ages 45 and 49.

The confluence of issues above can pose an economic shock to vulnerable individuals and be
detrimental for their overall wellbeing. To cushion these effects, social protection is needed to act
as an economic stabiliser to safeguard the wellbeing of the rakyat. This paper will provide insights
into the relationship between cash transfer-based social assistance and household resilience as
an avenue to strengthen the social protection system. The following sections will share potential
policy intervention to improve the wellbeing of the rakyat. By reviewing Malaysia’s social assistance
framework and drawing from global best practices, the Government will provide a potential
roadmap for the development and implementation of a more targeted, comprehensive and
sustainable social assistance policy.

economic outlook 2024 41

Chapter [Link] 41 06/10/2023 7:39 PM

 chapter 1 ECONOMIC MANAGEMENT AND PROSPECTS

What is social protection?

The International Labour Organization (ILO) defines social protection as the set of public measures
that a society provides for its members to protect them against economic and social distress. The
definition often varies from one country to another due to diverse range of initiatives falling under
the umbrella of social protection. To make a distinction, the social protection system in Malaysia
consists of three broad areas, namely social assistance, social insurance and labour market
intervention as highlighted in Figure 1.2.1.

FIGURE 1.2.1. Malaysia’s Social Protection Framework

SOCIAL PROTECTION

LABOUR MARKET
SOCIAL ASSISTANCE SOCIAL INSURANCE
INTERVENTION

Cash Transfers Employees Provident Fund Upskiling and

(EPF) Contribution Reskilling

In-kind Transfers Social Security Organisation Wage Subsidies

(SOCSO) Contribution

Subsidies Government Pensions

Source: Ministry of Finance, Malaysia

Social assistance is designed to transfer resources to the right segments of the population
(either cash transfer or in-kind transfer) which can be universal, categorical or income-tested.
Social assistance also consists of subsidies offered by the Government such as fuel and food
subsidies. Social insurance falls within the realms of EPF and Social Security Organisation (SOCSO)
contributions in which employees and employers make on a regular basis as well as Government
pensions. On the other hand, labour market intervention are policies that facilitate full or
productive employment through Active Labour Market Policies (ALMPs), labour exchanges and
market demands. This includes upskilling and reskilling programmes as well as wage subsidies that
encourage labour mobility.

These three components combined make up the social protection framework. If conducted
in tandem with each other, the positive externalities are wide ranging which include poverty
reduction, economic stability, human capital development and social mobility, among others.

42 economic outlooK 2024

Chapter [Link] 42 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

When designing a robust social protection framework, governments must ensure long-term
sustainability and continuity. Countries capable of formulating universal social protection rely
on governments with substantial and sustainable income-generation capacity. For countries with
limited fiscal space, the policy design must be balanced accordingly. The comparison of existing
social protection modalities across countries as shown in Table 1.2.1.

table 1.2.1. Comparison of Social Protection Modalities

continental/ meDiterranean/
moDel norDic anGlo-Saxon
biSmarcKian South

Country Northern Europe and The United Kingdom, Germany, Austria, Algeria, Egypt, Jordan,
the North Atlantic the United States, Switzerland and Czech Lebanon, Libya,
includes Denmark, Canada, New Zealand, Republic Morocco, Palestine,
Finland, Iceland, Australia and Ireland Syria and Tunisia
Norway and Sweden

Poverty Rate Low Low Medium High

Taxation Rate High Medium Medium/High Low

Key Features Comprehensive Combination of Some social assistance Mostly catered by

assistance6 coverage targeted assistance programmes but family unit welfare
funded by the and comprehensive heavily supported system however the
governments assistance with social insurance government does have
and labour market cash assistance for the
intervention elderly

Main Funding Solely government Combination Dependency on social Government, private

of government insurance sector and informal
and citizens (family transfers)
(social insurance
programmes)

Advantages Thorough and Comprehensive given Favours the working Catered more towards
progressive the low taxation rates group in particular the elderly

Disadvantages Implementation Can lead to lack of May cause dependency Does not factor in
may be difficult for financing in the long on social insurance other vulnerable
developing countries term groups beyond old age

Source: Popova et al. (2013)

Although Malaysia’s current approach mirrors the Anglo-Saxon model, its coverage is more limited
compared to what the model offers. This highlights the need for a review of the social protection
policy and in particular Malaysia’s social assistance (cash transfer) programmes.

The State of Social Assistance in Malaysia

An analysis of Malaysia’s social assistance programmes has demonstrated several gaps that
stem from two issues. First is due to the fragmented nature of social assistance programmes
involving 167 schemes that are currently being implemented by 17 ministries and agencies. This
fragmentation has led to overlapping programmes causing both inclusion and exclusion errors.
According to a survey conducted in 2018 by UNICEF, it was found that 35% of families that received
financial aid were not eligible (inclusion error) and more concerning, 34% of households did not
receive financial aid despite being eligible (exclusion error) (UNICEF, 2018).

economic outlook 2024 43

Chapter [Link] 43 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Second, Malaysia’s social assistance programmes do not have legal commitments nor backed by
strong financial resources resulting the programmes to be less sustainable in the long term. Apart
from Sumbangan Tunai Rahmah (STR), most of the social assistance programmes are only targeted
at the hardcore poor who are considered eligible based on the poverty line index. This may lead to
some vulnerable households in the B40 groups being left behind.

For the year 2023, a total of RM63.8 billion (approximately 3% of GDP) is allocated for subsidies
and social assistance. Almost 60% of the total allocation will be utilised for broad-based fuel and
electricity subsidies, while the remaining is meant for social assistance mainly in the form of STR
as well as assistance programmes for welfare and education. Although spending on subsidies and
social assistance increases every year, its share to GDP for the period 2020 to 2022 is small, with
an average of 2.2%. This figure is significantly smaller compared to OECD nations which typically
spend 10% of GDP in 2022 (OECD, 2022) on cash benefits only.

The gaps in Malaysia’s cash transfer-social assistance programme has also been highlighted in
international indices such as the ILO’s World Social Protection Report 2020 – 2022 (ILO, 2021)
and Asian Development Banks’ Social Protection Indicator (ADB, 2019). Malaysia received a social
assistance score of 2.11 which lags significantly behind its ASEAN peers such as Singapore (100),
Thailand (54.3), Viet Nam (24.6), The Philippines (22.4), and Indonesia (16.5). This score suggest
that Malaysia has a coverage issue where certain segments of the vulnerable groups do not have
adequate support in terms of cash transfer programmes.

Cash Transfers Still Remain Effective

Despite the current gaps in Malaysia’s cash transfer programme, the effectiveness cannot be
overlooked. A study conducted in 2017 on Malaysia’s cash’s transfer programme (ISIS, 2017) found
that the Bantuan Rakyat 1 Malaysia (BR1M) has benefitted millions of recipients a year, helping
to alleviate inequality by increasing the disposable income of B40 household groups and spurring
local economic multipliers. Based on international standards, the scale of successful programme
has generally been about 4% to 30% of household expenditure. While the amount of BR1M barely
reaches the low end of the scale, it is more than enough to solidify its position in Malaysia’s policy
toolkit.

Globally, cash transfers continue to be an instrumental component of social assistance. Selected

best practices are highlighted in the Table 1.2.2 which have been showcased by the World Bank,
ILO, OECD and UNICEF as successful cash transfer programmes.

There are some key findings that can be observed based on the above programmes. Most
importantly, social assistance have positive spillover effects beyond economic stability. Looking
at the cases of Brazil and Mexico, the cash transfer programmes not only provided monetary
support to low-income families, but its conditionality factor played a crucial role in enhancing
years of education and health among children. The Australian and Kenyan experience highlights
that categorical cash transfers can assist the most vulnerable groups throughout their life cycle

1
Proportion of vulnerable persons receiving benefits: ratio of social assistance cash benefits recipients to the total number of vulnerable persons.

44 economic outlook 2024

Chapter [Link] 44 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

table 1.2.2. Global Best Practices

nation auStralia mexico braZil thailanD KenYa

Name of Income Support Prospera Bolsa Familia Thailand’s Child National Safety Net
Programme Programme Support Grant Programme (NSNP)

Target Group Elderly, people with Children Children Children Hardcore poor,
disability, children children, people with
and caregivers disability and elderly

Innovative Categorical Conditionality Conditionality on Shift to universal Categorical targeting

Approach targeting the most based on school school attendance targeting the most vulnerable
vulnerable groups attendance and and vaccination groups of the
of the population doctor check ups population

Impact Solidified the Additional 12 Inequality has Thailand is at Cash transfers have
government’s months of been cut by 17% an inflection positive impacts
commitment to schooling and in just five years point where the without creating
build a strong decline of 11.8 and the poverty government can dependency.
social security percentage points rate has fallen afford universal Beneficiary
safety net that in the incidence of from 42.7% to child allowance households are
protects vulnerable anaemia among 28.8% due to the birth less likely to be
Australians children under rate decline. extremely poor as
age two they use the aid for
Opportunity cost
food and health
for nurturing
expenditure
children

Cost of
Programme 8.2 0.4 0.4 0.2 0.3
(% of GDP)

Source: World Bank, ILO, OECD and UNICEF (2013, 2014, 2022)

where beneficiaries were shown to spend the aid on necessities such as food and health. Thailand’s
child allowance is a recent example of universality as they provide cash transfers for all children
regardless of income to protect the future generation. The decision by Thailand’s Government
is supported by a growing body of evidence which found that cash transfers for children, even
relatively small amounts, can improve child health, nutrition and development (National Library of
Medicine, 2019).

Improving Malaysia’s Cash Transfer Programme

Malaysia has made significant progress in its developmental journey since 1957. With the onset
of the New Economic Policy followed by the National Development Policy, National Vision Policy,
Malaysia’s Shared Prosperity Vision of 2030 and most recently Malaysia MADANI, the country
continues to make headways in achieving its goal of becoming a high-income and inclusive
economy.

As the country develops and transitions, the social assistance programme should also evolve
to reflect the development path of Malaysia. Such plans and efforts for more effective social
assistance are highlighted in the Twelfth Malaysian Plan and are also aligned with the Sustainable
Development Goals (SDGs). Specifically, they will contribute to achieving the target of SDG1 (no
poverty), and SDG10 (reduced inequalities).

economic outlook 2024 45

Chapter [Link] 45 06/10/2023 7:39 PM

 chapter 1 ECONOMIC MANAGEMENT AND PROSPECTS

Malaysia’s current cash transfer programme is focused more on charity-based models which can
leave certain segments of the population without adequate coverage. For instance, although
Malaysia provides child and elderly allowances, it only targets the hardcore poor population as
shown in Figure 1.2.2.

FIGURE 1.2.2. Current Coverage of Cash Assistance Programmes by Household Income Excluding STR

HARDCORE
B40 M40 T20
POOR

Children

Pregnant
Women

People with
Disability

Elderly

Source: Ministry of Women, Family and Community Development, Malaysia

It is imperative for Malaysia to transition from narrowly-targeted and stigmatising approaches to

a more comprehensive developmental programme. In other words, instead of explicitly targeting
poverty, focus will be given on addressing underlying vulnerabilities. In this regard, risks associated
with the life cycle such as: childhood, maternity and old-age; coupled with the risks of disability
can be targeted with a more holistic cash transfer programme. The shift into this developmental
model can help reduce exclusion errors associated with poverty targeting whilst allowing for
administrative simplicity and efficiency. The developmental model can also improve social contracts2
as the Government can uphold its responsibility to safeguard the wellbeing and security of citizens
since anyone can become vulnerable at any point of their life.

Moving forward, a potential developmental model comprised of a combination of income-tested as

well as categorical base programmes can be an optimal solution in addressing vulnerable groups.
An example of such a model is shown in Table 1.2.3.

2
Building trust between Government and citizens. Social contract in a country impacts the design of social protection programmes and the awareness process.

46 economic outlooK 2024

Chapter [Link] 46 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

table 1.2.3. Example of Monthly Cash Transfer Programmes

propoSeD proGramme tarGet Group conDitionalitY

income-teSteD

Households earning less than

Hardcore Poor Allowance
RM1,198 a month (hardcore poor)
Must submit a tax file and be verified
by IRB
Low Income Allowance All B40 households

cateGorical

Programme allowed to continue the

All children below 6 and those enrolled
Child Allowance following year based on vaccination
in public schools only
and school enrolment.

Old Person Allowance All elderly people aged 65 and above None

Maternity Allowance All pregnant women None

People with Disability Allowance Those registered under JKM None

Source: Ministry of Finance, Malaysia

Transforming Social Assistance Delivery to Ensure No One is Left Behind

It is crucial for the Government to relook, reform and redesign the delivery of social assistance,
particularly cash transfers to ensure inclusive and equitable protection. This includes introducing
an overarching act to oversee social protection as a whole for social assistance, social insurance
and labour market intervention. Without this act, accountability of social assistance programmes
in particular, will continue to remain ambiguous and thus impacting effective implementation,
including cash transfer programmes.

The implementation of cash transfer programmes can be centralised under a single existing agency
to address fragmentation issues, reduce implementation costs and standardise eligibility criteria
for income-tested aid. The proposed agency can also act as the primary access point to social
assistance services where potential beneficiaries can apply via a simplified application process.

To ensure successful implementation, an autonomous data management approach is needed to

automate, consolidate and integrate all data management tasks, which can reduce inadvertent
errors. This necessitates the establishment of data classification framework to safeguard privacy
within data sharing arrangements as well as to ensure data integrity and adherence to standard
data formats.

Most importantly, in achieving inclusive and equitable protection for all, the key determinants are
commitment, consistency and political will to conduct a rationalisation exercise. The Government
is cognisant that rationalising subsidies in total at this juncture may have an adverse impact

economic outlook 2024 47

Chapter [Link] 47 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

on citizens by elevating their cost of living. However, to remain fiscally responsible, a staggered
process should be adopted via a two-pronged approach by first reviewing and consolidating
existing cash transfer programmes followed by subsidy rationalisation and widen the revenue base.

Conclusion

The shift to the developmental cash transfer programme will ensure support and assistance to
vulnerable individuals and families according to their life cycles and household circumstances in
line with the spirit of the Ekonomi MADANI framework. The programme will also provide a broad
and long-term approach as compared to the existing programmes that primarily focus on meeting
immediate basic needs. In addition, the programme can have a significant impact on social
mobility, reducing income inequality, and fostering overall economic development. To begin this
endeavour, we will require the commitment and consistency of a unified Malaysia to advocate for
better social assistance. For without commitment, we will never start and without consistency we
will never finish.

The Government is dedicated in ensuring Government is committed to the development

that every segment of society benefits from of sustainable, integrated, safe, reliable
the nation’s economic prosperity, irrespective and affordable transportation and logistics
of gender, ethnicity, socio-economic status, infrastructure. These robust infrastructures
or geographical location. Currently, there not only facilitate seamless mobility but also
exists a disparity between the market price of promote clean, convenient, and efficient
houses and what is affordable by the rakyat. modes of transport and adaptive to climate
To enhance access to affordable housing, the change. In addition, availability of world
Government will streamline and accelerate the class infrastructure such as airports, ports,
development of affordable housing in strategic highways and railways further reinforce
locations, including for Program Rumah Mesra Malaysia’s attractiveness as a preferred
Rakyat, Residensi Wilayah, and Program investment destination. Thus, it is imperative
Perumahan Rakyat (PPR). Moreover, the that the quality of transportation and logistics
progressive initiative will be continued under infrastructure is elevated, as it lays the
the National Housing Policy (2018 – 2025), foundation for long-term economic growth and
which outlines specific parameters related to the wellbeing of the rakyat.
housing supply, particularly affordable housing.
Hence, strategic collaborations with financial In line with the commitment to create a
institutions will be strengthened to offer more liveable environment, the provision
attractive, flexible, and innovative financing of basic amenities will be prioritised, aimed
schemes. In addition, a review of existing at providing high-quality, gender-sensitive,
housing financing programmes is required, disability-friendly, and elderly-supportive
ensuring sustainable housing solutions for infrastructure. This includes ensuring access
low and middle-income households to attain to treated clean water and energy supply,
affordable homes. particularly in rural areas of Kelantan,
Sabah and Sarawak. To guarantee the safety
As Malaysia strives to attain high-income and security of the public infrastructure,
status, the efficiency of the transportation regular maintenance and upgrading will be
and logistics sectors is paramount to achieve undertaken. Additionally, efforts to expand
increased productivity and growth through affordable internet access will be pursued.
enhanced connectivity. Therefore, the

48 economic outlook 2024

Chapter [Link] 48 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Efforts also will be intensified to attract high- Nations’ Convention on the Rights of the
quality investments that generate well-paying Child. Meanwhile, to bolster access to legal aid
jobs. Strategies to expedite the automation services, particularly in rural areas of Sabah
and adoption of advanced technologies in and Sarawak, effort will be undertaken to
production processes will be strengthened raise the understanding of the rakyat on the
to boost productivity. Meanwhile, the review country’s legal and judicial institutions.
of the minimum wage is expected to uplift
Recognising the vital role of social protection
the livelihoods of low-paid workers, reflecting
in bolstering community resilience, the
continuous commitment towards higher and
Government is committed to augment
fair compensation. Additionally, employers
the efficiency and effectiveness of various
should view higher wages as catalysts for
implementing agencies through the Pangkalan
business productivity growth3, encouraging
Data Utama (PADU) as the national repository
engagement of the locals in 3D jobs and of socioeconomic data. This strategy is
reducing dependence on low-skilled foreign crucial to support accurate and transparent
workers. These measures collectively aim to distribution of socioeconomic assistance and
bolster earnings, thereby empowering the targeted subsidies in eradicating poverty, thus
workforce and fostering social mobility. enhance the social protection system within
the society.
Focus 3: Good Governance
through Efficient Service An effective fiscal policy requires a proactive
Delivery and more holistic approach of fiscal
management, encompassing prudent measures,
An effective governance ecosystem that credible institutional and governance structure,
is centred on efficiency, integrity, and as well as transparent reporting. Therefore,
transparency principles, demands unwavering the Government’s fiscal policy is aimed at
commitment from all stakeholders. Thus, strengthening public finances and rebuilding
the initiatives under the Budget 2024 will fiscal buffers to supporting the economic
concentrate on reforming the ecosystem growth. The Government will continue to
such as fortifying parliamentary and legal pursuing fiscal reform initiatives by enacting
institutions; digitalising government services; the FRA, enhancing revenue mobilisation,
reinforcing social resilience; ensuring fiscal broadening the tax base, optimising
sustainability; enhancing legislations; and expenditures effectively, and formulating the
optimising public service delivery. Government Procurement Act (GPA), guided
by the Medium-Term Fiscal Framework. These
At the institutional level, the primary efforts are aimed at ensuring long-term fiscal
objective is to fortify democratic elements
sustainability and supporting the nation’s
through systematic integration of public
development agenda.
consultation processes, transparent channels
of communication, and rigorous quality
Enhancing governance with strong ethical
audits. These initiatives will raise awareness
foundations, as well as fostering accountability,
on new and existing policies as well as gain
support from all stakeholders and public transparency and integrity among public
to be more engaged in policy formulation servants, is vital in serving the interests of
and implementation process. Furthermore, the nation. As outlined in the National Anti-
special attention will be given to protect and Corruption Plan (NACP) 2019 – 2023, the
promote children’s rights, aligning with the Government will intensify efforts to combat
international commitments under the United corruption mainly by upholding the rule of law,

3
Analysis by EU-ERA in 2022 showed that increasing wages can create a positive cycle where higher wages lead to increased productivity. Every percentage increase
in wages could expand labour productivity by 2.2% compared to every percentage increase in labour productivity will merely increase wages by 0.2%.

economic outlook 2024 49

Chapter [Link] 49 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

restructuring the public service administration,

fostering the concept of good governance and
Conclusion
integrity within the business environment.
The nation’s strong economic fundamentals
coupled with strategies and programmes as
In boosting the productivity and efficiency
outlined in the Budget 2024, will continue
of public services, it is imperative to foster
to support the momentum of the economy
the culture of innovation, active public
to grow with the estimated range of 4% to
engagement, inter-agency collaboration, and
5% in 2024. Hence, the Ekonomi MADANI
effective leadership. Efforts will emphasise
framework, which aimed at building a
on streamlining the functions and roles of
better malaysia together, underscores the
agencies, empowering governance, reducing
collective commitment and dedication from
bureaucracy, enforcing accountability,
all stakeholders to ensure the successful
promoting transparency, and enhancing
realisation of the economic development
public trust. Furthermore, the Budget 2024
goals and national aspirations. In this context,
will empower the Special Task Force on
the Government will facilitate industry
Agency Reform (STAR) to continue its effort
transformation and productivity growth
on improving efficiency of work processes
through the formulation of evidence-based
and encouraging collaborative efforts among
policies and the provision of a conducive
ministries and agencies.
business environment.

The Government remains steadfast towards

The Budget 2024 will prioritise initiatives
digital transformation through process
that nurture future generation and improve
re-engineering, as evidenced by the
standard of living. The Government will
implementation of Government Technology
focus on efficiency in the implementation
(GovTech). Public services that are people-
of initiatives and programmes through
centric, readily available, efficient, transparent,
empowering good governance and fostering
and user-friendly are the driving force behind
an agile public service delivery. Collectively,
this strategic approach. The Government will
adopting a whole-of-nation approach will
focus on single digital identity initiative, which
elevate the overall competitiveness and
facilitate self-verification and identification
safeguard the nation’s wealth, ultimately
via online services. This aspiration will fortify
enhancing the wellbeing of the rakyat towards
the Government’s commitment to effective
sustainable, prosperous, and high-income
governance and prudent resource allocation.
nation.

50 economic outlook 2024

Chapter [Link] 50 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

References

Abdul Hamid, H., & Sazali, N. T. (2020). Bank Negara Malaysia. (2023a). The Financial
Shrinking “salariat” and growing “precariat”? Capability and Inclusion Demand Side Survey
Estimating informal and non-standard 2021. In Financial stability review in the
employment in Malaysia. Khazanah Research first half 2022. [Link]
Institute, Discussion Paper 10/20. https:// documents/20124/8440087/fsr22h1_en_box1.
[Link]/assets/contentMS/img/ pdf
template/editor/200810%20Informal%20
[Link] Bank Negara Malaysia. (2023b). Financial
stability review 2nd Half 2022. [Link]
Abu Rahim, M. A. R., & Suhaimi, S. A. (2022). [Link]/publications/fsr2022h2
Fresh graduate adversities: A decade’s insight
on the Graduate Tracer Study. Khazanah Bernama. (2023a, June 1). Jendela Phase 1
Research Institute, Working Paper 6/22. implementation successful, exceeds targets:
MCMC. New Straits Times. [Link]
AlphaBeta. (2021). Positioning Malaysia as [Link]/news/nation/2023/06/915714/
a regional leader in the digital economy: jendela-phase-1-implementation-successful-
The economic opportunities of digital exceeds-targets-mcmc
transformation and Google’s contribution.
[Link] Bernama. (2023b, June 20). Govt gives AP182
uploads/2023/03/Malaysia-Digital- exemption to ministries/agencies with
[Link] immediate effect. Ministry of Finance,
Malaysia. [Link]
Asian Development Bank. (2019). The social en/news/press-citations/govt-gives-ap182-
protection indicator for Asia: Assessing exemption-to-ministries-agencies-with-
progress. [Link] immediate-effect
TCS190257-2
Bernama. (2023c, July 3). Perluas Projek
Azahar, S. (2020, October 2). Make full use of Bitara Madani, tingkat kualiti penyampaian
the gig economy incentives. EMIR Research. perkhidmatan awam. Pejabat Perdana
[Link] Menteri Malaysia. [Link]
of-the-gig-economy-incentives/ ms/2023/07/perluas-projek-bitara-madani-
tingkat-kualiti-penyampaian-perkhidmatan-
Bank Negara Malaysia. (2015). Musyarakah. awam-pm-anwar/
[Link]
20124/938039/[Link]/ Bernama. (2023d, July 31). BNM, bank, agensi
e99baaa9-d7cd-a61f-8d0a- kerajaan kerjasama tangani penipuan dalam
9c9f2521dd4d?t=1592218252160 talian. Harian Metro. [Link]
[Link]/bisnes/2023/07/993836/bnm-bank-
Bank Negara Malaysia. (2019). Annual report agensi-kerajaan-kerjasama-tangani-penipuan-
2018. [Link] dalam-talian
report-2018
Bernama. (2023e, September 7). Rasuah: NACS
kesinambungan NACP. Astro Awani. https://
[Link]/berita-malaysia/rasuah-
nacs-kesinambungan-nacp-436319

economic outlook 2024 51

Chapter [Link] 51 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Cheng, C. (2017, December 19). Cash Employees Provident Fund. (2023).

programmes and poverty alleviation. Institute Belanjawanku: Expenditure guide for
of Strategic & International Studies Malaysia. Malaysian individuals & families: Klang Valley
[Link] & selected cities 2022/2023. [Link]
programmes-and-poverty-alleviation/ [Link]/documents/20126/142907/
Belanjawanku+2022-2023+-+[Link]
Department of Statistics Malaysia. (2022a).
Graduate statistics 2021. Gibson, J., & McKenzie, D. (2010). The economic
consequences of “brain drain” of the best and
Department of Statistics Malaysia. (2022b, brightest: Microeconomic evidence from five
October 4). Salaries & Wages Survey Report, countries. The Institute for the Study of
Malaysia, 2021. [Link] Labor (IZA), Discussion Paper, 5124. https://
portal-main/release-content/salaries-&-wages- [Link]/[Link]
survey-report-malaysia-2021
Goh, E., & Omar, N. (2019, December 18). Gig
Department of Statistics Malaysia. (2023a). work: Side hustle or main job? Part 1. The
Consumer prices. reality of hours worked in the gig world. The
Centre. [Link]
Department of Statistics Malaysia. (2023b). work-main-job-or-side-hustle
Household Expenditure Survey Report 2022.
Gunasekaran, P. (2020, October 7). Towards
Department of Statistics Malaysia. (2023c). an agile public service. New Straits
Household Income Survey Report 2022. Times. [Link]
letters/2020/10/630176/towards-agile-public-
Department of Statistics Malaysia. (2023d). service
Supply and Utilization Accounts Selected
Agricultural Commodities, 2018-2022. Guvenen, F., Karahan, F., Ozkan, S., & Song,
J. (2019). What do data on millions of U.S.
Economist Intelligence Unit. (2022). 2023 risk workers reveal about life-cycle earnings
outlook assessment: Ten risk scenarios that dynamics? Federal Reserve Bank of New
could reshape the global economy. https:// York Staff Reports, 710. [Link]
[Link]/n/campaigns/risk-outlook-2023/ [Link]/medialibrary/media/research/
staff_reports/[Link]
Economic Planning Unit, Prime Minister’s
Department, Malaysia. (2015). Strategy Harun, H. N. (2023, June 22). Fahmi:
Paper 2: Elevating B40 households towards Government to amend new data,
a middle-class society. Eleventh Malaysia cybersecurity laws for Malaysia to
Plan, 2015-2020. [Link] become Asian digital hub. New Straits
my/sites/default/files/2021-05/Strategy%20 Times. [Link]
Paper%[Link] nation/2023/06/923029/fahmi-government-
amend-new-data-cybersecurity-laws-malaysia-
Economic Planning Unit, Prime Minister’s become-asian
Department, Malaysia. (2022). Malaysia
Digital Economy Blueprint. [Link] International Institute for Management
[Link]/sites/default/files/2021-02/ Development. (2023). World competitiveness
[Link] ranking. [Link]
world-competitiveness-center/rankings/world-
competitiveness-ranking/2023/

52 economic outlook 2024

Chapter [Link] 52 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Institute for Labour Market Information and Malaysian Employers Federation. (2023). MEF
Analysis, Ministry of Human Resources. salary survey for executives and non executives
(2019a). What do Malaysians who work in 2022.
Singapore do with their earnings?
Merttens, F., Hurrell, A., Marzi, M., Attah, R.,
Institute of Labour Market Information and Farhat, M., Kardan, A., & MacAuslan, I.
Analysis, Ministry of Human Resources. (2013). Kenya hunger safety net programme
(2019b). A study on Malaysians working in monitoring and evaluation component: Impact
Singapore (Phase 2). evaluation final report: 2009 to 2012. Oxford
Policy Management. [Link]
International Labour Organization. (2021). derec/unitedkingdom/Evaluation-of-the-
World social protection report 2020–22: Social [Link]
protection at the crossroads ‒ in pursuit of a
better future. [Link] Ministry of Economic Affairs, Malaysia. (2018).
groups/public/---ed_protect/---soc_sec/ Mid-Term Review of the Eleventh Malaysia Plan
documents/publication/wcms_817572.pdf 2016-2020. [Link]
economic-developments/development-plans/
International Monetary Fund. (2023). IMF rmk/mid-term-review-eleventh-malaysia-
world economic outlook update, July 2023: plan-2016-2020
Near-term resilience, persistent challenges.
[Link] Ministry of Economy, Malaysia. (2022). National
Issues/2023/07/10/world-economic-outlook- Energy Policy, 2022 – 2040. [Link]
update-july-2023 [Link]/sites/default/files/2022-09/
National%20Energy%20Policy_2022_2040.pdf
Jayabalan, P., Ibrahim, R., & Manaf, A. A. (2014).
Understanding cybercrime in Malaysia: An Ministry of Economy, Malaysia. (2023a). Mid-
overview. Sains Humanika, 2(2), 109–115. Term Review of the Twelfth Malaysia Plan,
[Link] 2021-2025. Malaysia MADANI: Sustainable,
sainshumanika/article/view/424/387 prosperous, high income. https://
[Link]/ksp/storage/
Malaysian Anti-Corruption Commission. (2023, fileUpload/2023/09/2023091145_main_
May 9). Progress of the National Anti- document_ksp_rmke_12.pdf
Corruption Plan (NACP) 2019-2023 [Press
release]. [Link] Ministry of Economy, Malaysia. (2023b).
uploads/media/pdf/PR%20Eng%209%20 National Energy Transition Roadmap. https://
May%202023%[Link] [Link]/sites/default/files/2023-08/
National%20Energy%20Transition%20
Malay Mail. (2023, June 1). MCMC COO: [Link]
JENDELA will roll out its Phase 2 later
this year. Malaysian Communications and Ministry of Finance, Malaysia. (2022). Principles
Multimedia Commission. [Link] of good governance for government linked
[Link]/en/media/press-clippings/mcmc-coo- investment companies. [Link]
jendela-will-roll-out-its-phase-2-later-t my/portal/pdf/pgg/[Link]

Malaysian Communications and Multimedia Ministry of Finance, Malaysia. (2023). Arahan

Commission. (2022). JENDELA Phase 1 Perbendaharaan (Pindaan 2023). https://
Concluding Report. [Link] [Link]/portal/pdf/arahan-
Sitejendela/media/Doc/JENDELA-Phase-1- perbendaharaan/ap2023/
[Link]

economic outlook 2024 53

Chapter [Link] 53 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Ministry of Investment Trade and Industry, Parliament of Australia. (2002). Income support
Malaysia. (2023). New Industrial Master Plan arrangements. In Chapter 5 - Income support.
2030. [Link] A hand up not a hand out: Renewing the
fight against poverty. Report on poverty and
Ministry of Manpower, Singapore. (2023). financial hardship. [Link]
Median monthly basic and gross wages au/parliamentary_business/committees/
of selected occupations within each major senate/community_affairs/completed_
occupational group by industry, June 2022. inquiries/2002-04/poverty/report/c05
In Table: Occupational wages 2022. https://
[Link]/Pages/Occupational-Wages- Povera, A. (2023, June 15). New law to boost
[Link] cybersecurity. New Straits Times. [Link]
[Link]/news/nation/2023/06/920589/
Mohamed Firouz, A. M. (2023, January 6). A new-law-boost-cybersecurity
new vision for social protection in Malaysia.
Khazanah Research Institute. [Link] Prime Minister’s Office of Malaysia. (2023a,
[Link]/Views-@-A_New_Vision_for_ July 27). MADANI Economy: Empowering the
Social_Protection_in_Malaysia.aspx people [Speech text]. [Link]
my/2023/07/teks-ucapan-ekonomi-madani-
Mutalib, H. (2022, July 31). 72.1% lepasan memperkasa-rakyat/
SPM tidak sambung belajar. Utusan
Malaysia. [Link] Prime Minister’s Office, Malaysia. (2023b).
nasional/2022/07/72-1-lepasan-spm-tidak- Ekonomi MADANI: Memperkasa Rakyat.
sambung-belajar/ [Link]
malaysia-madani-2/ekonomi-madani-
Muthusamy, N., Khalidi, J. R., & Abdul Rahim, memperkasa-rakyat/
M. A. R. (2023). The returns to Malaysian
labour - Part 1: Wage growth and inequality Radin, F. A. (2023, February 10). Malaysia must
from 1995 to 2019. Khazanah Research balance economic corridors development
Institute, Working Paper 3/23. https:// to support growth, says World Bank. New
[Link]/assets/contentMS/img/ Straits Times. [Link]
template/editor/Working%20Paper_The%20 business/2023/02/878213/malaysia-must-
Returns%20to%20Malaysian%20Labour%20 balance-economic-corridors-development-
-%20Part%[Link] support-growth-says

Naval, A. (2023, April 12). The global economic Rahman, A. A., & Schmillen, A. (2020). From
landscape: Trends and insights for the farms to factories and firms: Structural
future. LinkedIn. [Link] transformation and labor productivity growth
pulse/global-economic-landscape-trends- in Malaysia. In Policy Research Working
insights-future-naval-abbas Paper, 9463. World Bank Group. https://
[Link]/server/api/
Organisation for Economic Co-operation and core/bitstreams/ae3613b3-4d58-55ab-890d-
Development. (2022). Social Expenditure f1f67b9d99e8/content
Database (SOCX). [Link]
[Link] Ramli, H. (2007, February 9). Birokrasi jejas
sistem penyampaian. Utusan Malaysia.
[Link]
[Link]

54 economic outlook 2024

Chapter [Link] 54 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

RinggitPlus. (2019). RinggitPlus Malaysian The Star. (2023, March 21). Ekuinas launches
Financial Literacy Survey 2019. RM100mil fund to accelerate growth of mid-
market bumiputera companies. https://
RinggitPlus. (2022). RinggitPlus Malaysian [Link]/business/business-
Financial Literacy Survey 2022. news/2023/03/21/ekuinas-launches-rm100mil-
fund-to-accelerate-growth-of-mid-market-
Sanghi, A., Teh Sharifuddin, S. B., Bandaogo, bumiputera-companies
M. A. S. S., Chong, Y. K., Arulthevan, Y. N.,
Jing Wen, F. L., Reddy, R., Didier Brandao, T., Tumin, S. A. (2021). Starting point matters: Low
Kuriakose, S., & Ting, K. O. (2023). Malaysia wages in the job market. Khazanah Research
economic monitor: Expanding Malaysia’s digital Institute, Views 7/21. [Link]
frontier (February 2023) (English). World org/assets/contentMS/img/template/
Bank Group. [Link] editor/20210421_LowWagesinLM_v5.pdf
org/curated/en/099063502042320186/
P179681008aa910db0bca9057d2dfa76bed United Nations Childrens’ Fund Malaysia.
(2018). Children without: A study of urban
Securities Commission Malaysia. (2023, child poverty and deprivation in low-cost flats
August 28). Malaysia Co-Investment Fund in Kuala Lumpur. Urban Child Poverty Report.
(MyCIF): Efficient mechanism for partnership [Link]
with Malaysian private investors to empower [Link]/files/2019-04/UNICEF-
MSMEs. [Link] ChildrenWithout-EnglishVersion-Final%20
26.2.18_0.pdf
Shafaki, R. E. (2022, August 29). State of
the Global Islamic Economy Report 2022. United Nations Childrens’ Fund Thailand.
DinarStandard. [Link] (2022, June 7). UNICEF calls for universal Child
com/post/state-of-the-global-islamic- Support Grant to ensure no child left behind in
economy-report-2022 Thailand’s COVID-19 recovery [Press release].
[Link]
The Edge Malaysia. (2022, March 28). Propelling releases/unicef-calls-universal-child-support-
smart industries in 2022. grant-ensure-no-child-left-behind-thailands
[Link]
advertise/propelling-smart-industries-2022 United Nations Economic and Social
Commission for Asia and the Pacific. (2009).
The Malaysian Reserve. (2022, April 6). What is good governance? [Link]
Malaysia remains top in global Islamic [Link]/sites/default/files/good-
economy. Malaysian Investment Development [Link]
Authority. [Link]
news/malaysia-remains-top-in-global-islamic- United Nations. (2022, August 13). Just and
economy/ sustainable transition. [Link]
development/desa/dpad/our-work/committee-
The Malaysian Reserve. (2023, June 12). MyCIF for-development-policy/just-and-sustainable-
boosts MSMEs with RM638m co-investment in [Link]
3,635 businesses. [Link]
com/2023/06/12/mycif-boosts-msmes-with- Veno, J. (2020, November 27). Industry 4.0 in
rm638m-co-investment-in-3635-businesses/ Malaysia. Axxis Consulting. [Link]
[Link]/industry-4-0-in-malaysia/

economic outlook 2024 55

Chapter [Link] 55 06/10/2023 7:39 PM

 chapter 1 economic management and prospects

Wade, R. (2004). Governing the market: Economic World Bank Group. (2022). Publication:
theory and the role of government in East Islamic finance and the development of
Asian industrialization. Princeton University Malaysia’s halal economy. [Link]
Press. net/10986/38043

Wan, Y. S., & Kan, G. (2020). Social protection World Bank. (2011). Malaysia economic monitor:
for the poor and vulnerable Malaysians during Brain drain. World Bank Group.
COVID-19. Institute for Democracy and [Link]
Economic Affairs. [Link] curated/en/282391468050059744/
RG.2.2.15869.38880 pdf/614830WP0malay10Box358348B01PUBLIC1.
pdf
Wee, R. (2022, September 9). Malaysia –
Loopholes in Malaysian cyber laws. Conventus World Bank. (2014, November 14). A model from
Law. [Link] Mexico for the World. World Bank Group.
malaysia-loopholes-in-malaysian-cyber-laws/ [Link]
feature/2014/11/19/un-modelo-de-mexico-
Wetzel, D. (2013, November 4). Bolsa família: para-el-mundo
Brazil’s quiet revolution. The World Bank.
[Link]
opinion/2013/11/04/bolsa-familia-Brazil-quiet-
revolution

56 economic outlook 2024

Chapter [Link] 56 06/10/2023 7:39 PM

 chap ter 2

Macroeconomic
Outlook

59 ov e rv i e w

60 econom y i n 2023
globa l econom y
Information Box 2.1 –­ ASEAN Taxonomy for
Sustainable Finance: Building a Sustainable ASEAN

dome s t ic econom y
Feature Article 2.1 ­– Towards an Investment-
Driven Economy for a Sustainable Growth in
Malaysia

Feature Article 2.2 – Navigating High-Impact

Economic Growth through Direct Investment

97 outlook for 202 4

globa l outlook
dome s t ic outlook

103 conclus ion

10 4 r e fe r e nce s

Chapter 2 [Link] 57 06/10/2023 5:48 PM

Chapter 2 [Link] 58 06/10/2023 5:48 PM
 chapter 2 macroeconomic outlook

chapter 2

Macroeconomic Outlook

Overview from the previous year. Nevertheless, domestic

demand will continue to drive growth. Hence,
Persistent external uncertainties testing the the GDP is anticipated to register a growth of
resiliency of Malaysia’s economy approximately 4% in 2023.

Global growth is projected to moderate in For 2024, the economy is projected to grow
2023 and 2024 following slow growth in within the range of 4% to 5%. The growth
advanced economies; volatile financial market is envisaged to be broad-based, led by the
due to tightening monetary policy; prolonged services sector as intermediate and final
geopolitical tensions; and increasing climatic services groups are anticipated to rise further
changes. Nevertheless, inflation continues driven by sustained domestic consumption
to soften as markets head towards supply and improved export activities. The retail
chain stabilisation. In addition, world trade trade, accommodation and restaurants as well
is projected to moderate in 2023 in line with as communication segments are expected to
weaker global demand. However, global trade increase in line with consumption trend, while
is expected to increase in 2024 in tandem with the wholesale trade segment and transport
improved trade activity in advanced economies, and storage subsector will benefit from higher
and emerging market and developing trade-related activities.
economies (EMDEs).
The manufacturing sector is expected to
In the case of Malaysia, the economy accelerate, accounted by improved export-
continued to expand amid these persistent oriented industries particularly the E&E
challenges in the external environment. During products as external demand recovers,
the first half of 2023, GDP posted a growth while the domestic-oriented industries are
of 4.2% supported by resilient domestic anticipated to remain favourable in line with
demand, in particular private expenditure. The robust domestic consumption and investment.
services sector, the largest contributor to the The construction sector is expected to
economy, continued to lead growth following grow supported by an expansion across all
higher tourist arrivals and improved consumer subsectors. Prospects for the agriculture
spending. The construction sector continued sector remain positive supported by higher
to expand in tandem with the acceleration production of crude palm oil (CPO), other
of infrastructure projects and realisation of agriculture and livestock. The mining sector
investment in non-residential and residential is estimated to turn around owing to the
developments. These developments helped to recovery in production of natural gas, and
cushion the negative impact from the external crude oil and condensates.
sector following slow external demand,
particularly from Malaysia’s major trading On the demand side, growth will be buoyed
partners. by strong private sector expenditure and
improving global demand. The encouraging
The increased external uncertainties will pose performance of private sector is partly due
risks to the economic growth. Notwithstanding to the Government’s deliberate efforts to
these challenges, the economy continues accelerate a more vibrant and dynamic private
reaping the benefit from policies and initiatives sector by providing a conducive business
undertaken over the years to enhance and investment environment, underpinned
resilience and competitiveness. Overall, the by the implementation of comprehensive
economy is projected to expand moderately in Ekonomi MADANI framework as well as policies
the second half of the year as external demand and blueprints such as the National Energy
is expected to remain low and high base effect Transition Roadmap (NETR) and New Industrial

economic outlook 2024 59

Chapter 2 [Link] 59 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

Master Plan 2030 (NIMP 2030). Meanwhile, EMDEs varies across regions. Despite subdued
consumer spending is envisaged to be investment in the real estate sector, China’s
robust supported by improved labour market economy is anticipated to expand at 5.2%,
conditions. contributed by higher net exports following
relaxation of lockdown policies. Meanwhile,
Furthermore, recovery in external demand India’s economy is projected to grow 6.1%
is anticipated to boost exports performance, buoyed by stronger domestic investment.
leading to a larger trade surplus. This surplus Similarly, the GDP growth of ASEAN-5 is
is attributed to higher export receipts from envisaged to expand at 4.6%.
the goods account, which will cushion the net
outflows from transport and other services World trade is expected to moderate further
accounts. Thus, the current account is to 2%, reflecting the weaker path of global
projected to post a surplus of RM62.2 billion demand and the shift towards domestic
or 3.2% of gross national income (GNI). services. Trade in advanced economies and
EMDEs are expected to register a slower
On the income front, an encouraging economic growth of 2.3% and 1.5%, respectively. Among
growth projected in 2024 will stimulate higher others, the strengthening of the US dollar is
income for the workforce. Strengthening projected to eventually slow trade activities,
existing initiatives by adopting advanced affecting EMDEs more adversely compared
technology in production activities and to advanced economies. Meanwhile, global
enhancing productivity through continuous inflation is anticipated to record 6.8%,
improvement in retraining and upskilling may attributed to easing food and energy prices
also contribute in higher income for workers. as well as weakening of global economic
Hence, the labour income share is expected to activities.
improve further in moving towards Ekonomi
FIGURE 2.1. Global Gross Domestic Product,
MADANI aspiration to achieve 45% share of Trade and Inflation Growth
GDP in long-term period. 2022 – 2024
(% change)

Economy in 2023 %
10
Global Economy 8.7

Lacklustre global recovery 8

6.8

Global growth is projected to expand at 3% 6

due to the slow post-pandemic global recovery, 5.2 5.2

prolonged geopolitical tension and the increase

in interest rates by various economies to 4 3.5 3.7
3.0 3.0
manage inflation. The GDP growth in advanced 2.0
economies is expected to moderate at 1.5%
2
due to subdued manufacturing activities in
advanced economies despite strong services
sector. In this respect, the US’s economy is 0
2022 20231 20242 2022 20231 20242 2022 20231 20242
anticipated to record 1.8%, underpinned by GDP TRADE INFLATION
lower domestic consumption as well as further
GLOBAL
Fed rate hikes. The euro area is expected ADVANCED ECONOMIES
to grow marginally at 0.9%, following the EMERGING MARKET AND DEVELOPING ECONOMIES
effect of monetary policy tightening despite
improvements in the services and tourism 1
Estimate
activities. 2
Forecast
Note: Trade for Advanced Economies and Emerging Market and Developing
Economies refers to the average volume of exports and imports of goods
and services
The EMDEs’ economic growth is expected to This document was finalised before the publication of the World
Economic Outlook, October 2023
register 4%, which is stronger than advanced
Source: International Monetary Fund, World Economic Outlook Update
economies. However, the growth rate among (July 2023)

60 economic outlook 2024

Chapter 2 [Link] 60 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

information box 2.1

ASEAN Taxonomy for Sustainable Finance: Building a Sustainable

ASEAN

Introduction to ASEAN Taxonomy

ASEAN recognises the importance of sustainable finance in the region and the necessity to create
a credible and inclusive regional sustainable finance taxonomy. The taxonomy would serve as a
standardised classification framework, providing clear guidelines and definitions for sustainable
economic activities and financial instruments within the ASEAN region. The ASEAN Taxonomy
for Sustainable Finance (ASEAN Taxonomy) aims to guide investors, issuers, regulators and
other stakeholders in the ASEAN region to align their investment and activities with the region’s
sustainability goals taking into account the diversity of the region. This taxonomy is designed to be
interoperable with existing regional and international sustainable finance taxonomies, promoting
cross-border investments and global collaboration in addressing environmental and social
challenges.

Development of the ASEAN Taxonomy for Sustainable Finance

Recognising the imperative need to establish a robust framework for sustainable finance, an ASEAN
Taxonomy Board (ATB) was established in March 2021 with a mandate to develop, maintain, and
promote an ASEAN Taxonomy. The ATB then developed ASEAN Taxonomy Version 1 in November
2021 followed by Version 2 in March 2023 to harmonise ASEAN financial system with sustainability
principles. The ASEAN Taxonomy consists of two main elements:

i. The Foundation Framework which is applicable to all ASEAN Member States (AMS) and
allows a qualitative assessment of activities; and

ii. The Plus Standard with metrics and thresholds to further qualify and benchmark eligible
green activities and investments.

The environmental objectives of the ASEAN Taxonomy are universal and applicable to all AMS,
in alignment with national environmental laws. These objectives include climate change and
adaptation, protection of healthy ecosystems and biodiversity; promotion of resource resilience; and
transition to circular economy. Meanwhile, the Plus Standard provides details on how to determine
if an economic activity is in accordance with the ASEAN Taxonomy.

The ASEAN Taxonomy Board

ATB membership comprises representatives from the four ASEAN finance sectoral bodies i.e., the
ASEAN Capital Markets Forum (ACMF), the ASEAN Senior Level Committee on Financial Integration
(SLC), the Working Committee on Capital Market Development (WC-CMD) and the ASEAN Insurance
Regulators Meeting (AIRM). Members of the Board comprise organisations from all 10 AMS,
selected by their respective sectoral bodies. This ensures that every ASEAN country has a voice in
developing the ASEAN Taxonomy. Malaysia is represented on the ATB by the Securities Commission
Malaysia (SC) and Bank Negara Malaysia (BNM). In addition, SC chairs the ATB’s Working Group
on Market Financing and Resourcing while BNM, chairs the ATB’s Working Group on Conceptual
Framework and Principles.

economic outlook 2024 61

Chapter 2 [Link] 61 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

ASEAN Taxonomy Version 1

The ASEAN Taxonomy Version 1 covers six economic focus sectors, which were identified based
on their environmental and economic importance to ASEAN, aligned to the International Standard
Industrial Classification (ISIC). These focus sectors are:

i. Agriculture, forestry and fishing;

ii. Electricity, gas, steam, and air conditioning supply (Energy);
iii. Manufacturing;
iv. Transportation and storage;
v. Water supply, sewerage, water management and remediation activities; and
vi. Construction and real estate activities.

In addition to these six focus sectors, the ATB also identified three enabling sectors, which
play a crucial role in enhancing the performance of sectors and activities, and are essential for
decarbonising the economy. Importantly they do not compromise the environmental objectives of
the Taxonomy. These enabling sectors are:

i. Information and Communication Technology (ICT);

ii. Professional, scientific, and technical activities; and

iii. Carbon Capture, Utilisation, and Storage (CCUS).

In Version 1, it was established that the four environmental objectives and two essential criteria
of the ASEAN Taxonomy would apply to all AMS, players in the financial sector, as well as business
enterprises. These environmental objectives were of equal importance and were designed to be
interoperable with the six environmental objectives of the European Union (EU) Taxonomy. The
ASEAN Taxonomy’s environmental objectives and essential criteria consist of:

Environmental Objective

§ Environmental Objective 1: Climate change mitigation;

§ Environmental Objective 2: Climate change adaptation;

§ Environmental Objective 3: Protection of healthy ecosystems and biodiversity; and

§ Environmental Objective 4: Promote resource resilience and transition to a circular

economy.

Essential Criteria

§ Essential Criteria 1: Do no significant harm (DNSH); and

§ Essential Criteria 2: Remedial measures to transition.

The ASEAN Taxonomy aims for maximum inclusivity, taking into account the different stages
of economic development, financial sector maturity and infrastructure readiness among AMS.
The Foundation Framework is applicable to all AMS, financial sector stakeholders and business

62 economic outlook 2024

Chapter 2 [Link] 62 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

enterprises. It employs a qualitative, sector-agnostic criteria and decision flow in order to assess
activities. Under the Foundation Framework, economic activities must fulfil at least one of the
Taxonomy’s environmental objectives and both essential criteria. Consequently, these activities can
be classified as either Green, Amber or Red within the Foundation Framework.

The Plus Standard consists of Technical Screening Criteria (TSC) for activities within each focus
sector. It serves as an additional guidance and scope for AMS to further qualify eligible activities
and investments, aligning them with goals in-line with the Paris Agreement. This standard also sets
activity-level criteria to assess an activity’s contribution to the Taxonomy’s environmental objectives.
The Plus Standard takes a ‘stacked approach’ in developing activity-level thresholds. It incorporates
different thresholds for multiple decarbonisation pathways for each activity, resulting in more
than one threshold referenced at a single point in time, as shown in Figure 2.1.1. Under the Plus
Standard, activities can be classified as either Green, Amber or Red based on their compliance.

FIGURE 2.1.1. Plus Standard ‘stacked approach’ in developing activity-level thresholds

Upper limit established by specified metric (e.g. average emissions of that activity in the region)

A performance level not meeting T1

Specific metrics (e.g. emissions)

Tier 3: but above business as usual and will

Entry be retired at an established point in
time

Tier 2: A performance level not meeting T1 but contributing

Intermediate significantly, and will be retired at an established point
in time
Dec
linin
g th
re
traj shold
ecto se
Tier 1: This is the tier where the performance level is aligned ry t t by sc
on
Advanced et z ience-
with global net zero targets and/or Paris Agreement ero bas
ed

Year

Source: Securities Commission Malaysia

ASEAN Taxonomy Version 2

Following a series of consultation with targeted stakeholders, Version 2 of the ASEAN Taxonomy
was released in March 27, 2023. This version expands upon the conceptual thinking of the multi-
tiered framework set out in Version 1. The ASEAN Taxonomy is meant to be interoperable with
the EU Taxonomy and other national Taxonomies of AMS. In Version 2, Essential Criteria 3 was
introduced to promote social aspects as illustrated in Figure 2.1.2. Social aspects focus on the
following:

i. Promotion and protection of human rights;

ii. Prevention of forced labour and protection of children’s rights; and

iii. Impact on people living close to investments.

economic outlook 2024 63

Chapter 2 [Link] 63 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

FIGURE 2.1.2. The Design of the ASEAN Taxonomy Version 2

Foundation Framework (FF)

Qualitative based sector-agnostic screening criteria and decision flow

Green - FF Amber - FF Red - FF

Enviromental Objectives
1 2
Climate change Climate change Plus Standard (PS)
mitigation adaptation
Technical Screening Criteria for 6 Focus Sectors and 3 Enabling Sectors
3 4 Focus Sectors Enabling Sectors
Promote resource 1. Agriculture, forestry and fishing; 1. Information and Communication
Protection of
resilience and 2. Electricity, gas, steam, and air conditioning Technology (ICT);
healthy ecosystems
transition to supply (Energy); 2. Professional, scientific, and technical
& biodiversity
circular economy 3. Manufacturing; activities; and
4. Transportation and storage; 3. Carbon Capture, Utilisation, and Storage
Essential Criteria 5. Water supply, sewerage, water management (CCUS).
1 2 and remediation activities; and
Do no Remedial measure 6. Construction and real estate activities.
significant harm to transition

3 Green - Tier 1
Social aspects
Amber - Tier 2
Amber - Tier 3
Red - PS

Source: Securities Commission Malaysia

A unique feature introduced in Version 2 is the criteria governing the early retirement of coal-fired
power plants, also known as coal phase-out. This feature emphasises a just transition to address
the needs of affected communities and industries. By addressing the developmental needs of AMS,
the ASEAN Taxonomy aims to mitigate potential social and economic disruptions that might arise
during this transformative period. By classifying coal phase-out as a green activity and maintaining
strict evaluation standards, the ASEAN Taxonomy incentivises and promotes a shift towards cleaner
and more sustainable energy alternatives within the region. This approach serves as a progressive
and proactive measure to combat climate change and enhance environmental protection in ASEAN.

Impact on ASEAN and Malaysia

The ASEAN Taxonomy has generated significant global interest, not only as the first regional
transition taxonomy published globally, but also for its specific treatment of important aspects of
transition such as coal phase-out. It also provides an important signal of the region’s collective
commitment towards a sustainable ASEAN and models an example of an inclusive yet credible
classification system for sustainable activities that will help equalise climate outcomes across the
AMS. Subsequently, ASEAN Taxonomy will be a key to attracting international investments and
financial flows into sustainable projects in the region.

For Malaysia, the BNM and SC have been working closely to ensure the ASEAN Taxonomy is aligned
with the Climate Change and Principle-based Taxonomy (CCPT) issued by BNM, and the Sustainable
and Responsible Investment (SRI) Taxonomy issued by the SC. The implementation of CCPT and SRI
in the Malaysian financial system as well as the adoption of the ASEAN Taxonomy will boost more
investment flow and foreign funds into the country.

64 economic outlook 2024

Chapter 2 [Link] 64 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

Moving Forward

Version 2 of the ASEAN Taxonomy is undergoing a stakeholder consultation process, following

which the TSC for the Energy sector is expected to be finalised in early 2024. The ASEAN Taxonomy
is a living document subject to frequent revisions to incorporate latest technological, scientific, and
economic developments. In line with this approach, TSCs for the remaining five focus sectors and
two enabling sectors are currently in development and will be introduced in phases.

Conclusion

The ASEAN Taxonomy represents the collective commitment and dedication of AMS in transitioning
towards a sustainable region. It is designed to be an inclusive and credible classification system for
sustainable activities and will be one of the game changers for attracting investments and financial
flows into sustainable projects in the region.

The framework is designed to be credible and science-based, while being inclusive and catering to
the different development stages of its member states. A regional green taxonomy that is aligned
with international benchmarks would be useful for policymakers, financial market stakeholders and
international investors in sustainable financing decisions. It underscores ASEAN’s commitment to
sustainability, ensuring that its journey towards a greener and more resilient future is supported by
a robust framework accessible to all member states.

economic outlook 2024 65

Chapter 2 [Link] 65 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

TABLE 2.2. Services Sector Performance,

Domestic Economy 2022 – 2024
(at constant 2015 prices)
Sectoral
SHARE CHANGE
Services Sector (%) (%)
2023¹ 2022 2023¹ 20242
Tourism industry recovery, rejuvenates the sector Wholesale and retail 30.1 13.5 5.8 5.6
trade
The services sector increased by 6% in the Finance and insurance 11.3 0.8 -1.3 4.3
first half of 2023, mainly attributed to the Information and 11.2 5.2 5.0 6.5
wholesale and retail trade; transportation communication
and storage; and food & beverages and Real estate and business 7.5 22.7 7.3 5.4
accommodation subsectors. However, finance services
and insurance contracted during the period. Transportation and 6.9 30.8 14.5 7.4
The performance of the sector in the second storage
half of the year is anticipated to rise by Food & beverages and 5.2 33.0 10.4 7.9
5.1% driven by tourism- and travel-related accommodation
subsectors following higher tourist arrivals Utilities 4.5 3.4 3.3 5.3
and improved consumer spending. Overall, the Other services 7.7 9.3 6.4 5.0
sector is projected to grow by 5.5% in 2023, Government services 15.6 5.0 4.9 4.7
with nearly all subsectors recording positive
Services 100.0 10.9 5.5 5.6
growth, except for the finance and insurance
subsector. 1
Estimate
2
Forecast
Note: Total may not add up due to rounding
Source: Department of Statistics and Ministry of Finance, Malaysia
TABLE 2.1. Gross Domestic Product by Sector,
2022 – 2024
(at constant 2015 prices) spending in non-specialised stores. Meanwhile,
the motor vehicles segment benefitted from an
SHARE CHANGE
(%) (%) upward momentum in total industry volume
20231 2022 20231 20242 (TIV) subsequent to the fulfilment of backlog
Services
bookings made during the sales tax exemption
59.3 10.9 5.5 5.6
period in 2022 and new model launches.
Manufacturing 23.5 8.1 1.4 4.2
The wholesale trade segment experienced
Agriculture 6.3 0.1 0.6 1.2 moderate growth, in tandem with the gradual
Mining 6.1 2.6 -0.8 2.7 recovery in the global supply chain. The
subsector is expected to expand by 4.8% in the
Construction 3.6 5.0 6.3 6.8
second half of the year, following improvement
GDP 100.0 8.7 ∼ 4.03 4.0 – 5.0 in all segments, especially the retail trade,
attributed to higher tourist expenditure, special
1
Estimate
2
Forecast appreciation in terms of aids for civil servants
3
Approximate
Note: Total may not add up due to rounding and exclusion of import and pensioners as well as e-wallet credit
duties component
Source: Department of Statistics and Ministry of Finance, Malaysia incentives for targeted groups. The motor
vehicles segment is also anticipated to grow
The wholesale and retail trade subsector grew supported by continuation of high order books
by 7% in the first half of 2023, with robust for the whole year in line with the upward
performance observed, especially in retail revision of TIV for vehicle sales in 2023 from
trade and motor vehicle segments. The growth 650,000 to 725,000 units. Subsequently, the
of the subsector was driven by the retail subsector is projected to record a significant
trade segment, propelled by higher consumer growth of 5.8% in 2023.

66 economic outlook 2024

Chapter 2 [Link] 66 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

FIGURE 2.2. Selected Indicators for the Services Sector

Tourist Arrivals and Receipts Volume Index of Wholesale & Retail Trade
(2015 = 100)
RM billion Million Index
120 42 200
TOURIST RECEIPTS WHOLESALE & RETAIL TRADE
TOURIST ARRIVALS (RIGHT SCALE) RETAIL TRADE
WHOLESALE TRADE
100 35 MOTOR VEHICLES
160

80 28
120
60 21
80
40 14

40
20 7

0 0 0
2019 2020 2021 2022 20231 J A J O J A J O J A J
2021 2022 2023

Container Handling and Ship Calls Information and Communication Index

(2015 = 100)
Million Units Index
30 TEUs 60,000 240
SHIP CALLS (RIGHT SCALE) INFORMATION AND COMMUNICATION
COMPUTER AND INFORMATION SERVICE
TELECOMMUNICATIONS
25 50,000 200
PUBLISHING AND BROADCASTING ACTIVITIES

20 40,000 160

15 30,000 120

10 20,000 80

5 10,000 40

0 0 0
2019 2020 2021 2022 20231 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021 2022 2023

Air Passengers and Cargo Electricity Consumption

Million tonne Million Million kilowatt-hours
1.5 AIR CARGO 150 18,000 DOMESTIC AND PUBLIC LIGHTING
PASSENGER TRAFFIC (RIGHT SCALE) INDUSTRIAL, COMMERCIAL AND MINING

15,000
1.2 120

12,000
0.9 90
9,000
0.6 60
6,000

0.3 30
3,000

0.0 0 0
2019 2020 2021 2022 20231 J A J O J A J O J A J
2021 2022 2023
1
Estimate
Source: Department of Statistics, Malaysia; Malaysia Airports Holdings Berhad; Malaysia Tourism Promotion Board; Senai International Airport;
and seven major ports (Bintulu, Johor, Klang, Kuantan, Kuching, Pulau Pinang and Tanjung Pelepas)

economic outlook 2024 67

Chapter 2 [Link] 67 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

The transportation and storage subsector The real estate and business services subsector
expanded by 15.2% in the first half of 2023, rose by 9.8% in the first half of 2023 supported
attributed to the increase in passenger traffic, by higher demand for professional services,
particularly in land and air transport segments particularly in engineering-, accounting- and
as well as supporting activities related to architectural-related activities, as well as the
airports and highway operations. The land and increase in real estate agents and brokers
air transport segments' growth were mainly activities. The subsector is expected to grow
driven by robust tourism-related activities by 5% in the second half of the year driven by
following higher traffic volume in toll highways the higher demand for professional services
and airports, which increased by 7% to 456 following the vigorous construction-related
million vehicles and 90.7% to 40.4 million activities and consulting services by diverse
passengers, respectively. In the second half industries. Likewise, the real estate segment
of 2023, the subsector is expected to increase is also anticipated to boost the subsector
by 13.7% supported by the land transport with various Government’s initiatives primarily
segment, particularly road and rail transports for the households in the B40 and M40
on the back of state elections, festivities income groups. These initiatives include the
and school holidays. The performance of air introduction of affordable housing ownership
cargo is anticipated to moderate due to softer and renting under the MADANI Neighbourhood
performance in global trade, which is offset scheme, continuation of 100% stamp duty
by the notable performance of air passenger exemption for first-time homeowners on
traffic, in tandem with the additional number the purchase of properties valued at up to
of flights to several main and new routes such RM500,000 as well as enhancement of the
as Istanbul, Okinawa and Tashkent. The water loan scheme under the Syarikat Jaminan Kredit
transport segment is forecast to grow at a Perumahan Berhad by increasing financing
slower rate, however it remains as a significant guarantees up to 120% of the house price up
contributor to the growth of the subsector. to RM300,000. For the year, the subsector is
Overall, the subsector is projected to rise by expected to grow by 7.3%.
14.5% in 2023.
The information and communication subsector
The food & beverages and accommodation rose by 3.7% in the first half of 2023 and
subsector is projected to record a significant expected to grow by 6.2% in the second half
growth of 10.4% in 2023 following the of the year following attractive and affordable
expansion in all segments. The subsector grew internet packages with devices, for high-speed
by 10.7% in the first half of 2023 supported by connectivity such as 5G RAHMAH Package and
high hotel occupancy rates and patronage at RAHMAH Public Servant Postpaid Incentive.
eateries, mainly attributed to the increase of These packages, which are offered by major
tourist arrivals to 9.2 million. The subsector is telecommunication companies are expected
expected to increase by 10.1% in the second to further increase the internet subscription
half of the year, on the back of vibrant rate. Therefore, the subsector is projected to
tourism related activities. The favourable rise by 5% in 2023. Meanwhile, the utilities
outlook is in line with the revised projection subsector rose by 2.3% in the first half of 2023
of 18.6 million tourist arrivals in 2023 by and is estimated to increase further by 4.3%
the Ministry of Tourism, Arts and Culture. in the second half of the year. For the year,
The upsurge revision is echoed in the Global the subsector is expected to expand by 3.3%
Muslim Travel Index 2023, of which Malaysia supported by higher electricity consumption
continues to maintain the top position as a by commercial and residential segments in
Muslim travel destination for five consecutive tandem with the hot weather from the El Niño
years. phenomenon.

68 economic outlook 2024

Chapter 2 [Link] 68 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

During the first half of 2023, the finance and growth. All segments are projected to expand
insurance subsector contracted by 1.3% due to particularly food and beverages, as well as
slow credit growth within the banking segment transport equipment. These segments will
and a notable increase in claims, particularly benefit from the strengthening of tourism
from life insurance policyholders. In the second activities and increasing demand for passenger
half of the year, the subsector is projected to cars and related motor parts and accessories.
continue a negative trajectory at 1.2% due to In addition, anticipated acceleration and
a surge in payouts for medical claims in the realisation of projects in the construction
insurance segment. This, in turn, will weigh sector will increase the demand for metal-
down the overall subsector’s performance with related segments. Meanwhile, within the
a contraction of 1.3% in 2023. export-oriented industries, the E&E segment
is expected to pivot away from the downcycle
The other services subsector grew by 6.8% trend, in line with gradual improvements
in the first half of 2023 contributed by in global demand especially for computing
entertainment and recreational activities, in devices, electronics and semiconductors as well
line with increasing momentum in domestic as growing domestic demand for industrial
tourism. The subsector is expected to expand electronics, electric vehicles (EV) and medical
by 6% in the second half of the year, driven by technology devices. Furthermore, the demand
sustained demand for private education as well for chemicals segment is expected to increase
as healthcare services following continuous in line with the bottom out of E&E downcycle.
effort to promote health tourism. Overall, the Hence, the manufacturing sector is anticipated
subsector is anticipated to grow by 6.4% in to register a modest growth of 1.4% in 2023.
2023. Meanwhile, the government services
subsector recorded a growth of 5.3% in the
FIGURE 2.3. Output of Manufacturing Sector
first half of 2023 owing to additional salary (% change)
increment of RM100 for public servants. The
subsector is expected to expand by 4.5% in the %
second half and 4.9% for the whole year. 70

60
Manufacturing Sector
50

40
Growth driven by domestic-oriented industries
30

The manufacturing sector grew by 1.7% 20

during the first half of 2023 underpinned by 10

resilient domestic-oriented industries amid 0
sluggish external demand. The domestic- -10
oriented industries’ steady growth of 4.4% was -20
backed by increasing demand for consumer
-30
goods and construction-related segments.
-40
Meanwhile, export-oriented industries J A J O J A J O J A J
expanded marginally by 0.5% weighed down 2021 2022 2023

by the lower production of E&E due to cyclical

MANUFACTURING PRODUCTION INDEX
downturn in global semiconductor industry. INDUSTRIAL PRODUCTION INDEX

The sector is forecast to grow by 1.2% in Source: Department of Statistics, Malaysia

the second half of the year with domestic-
oriented industries remain as the mainstay of

economic outlook 2024 69

Chapter 2 [Link] 69 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

TABLE 2.3. Manufacturing Indices by Export- and Domestic-Oriented Industries,

January – July 2022 and 2023
(2015 = 100)

INDEX CHANGE SHARE

(%) (%)
2022 2023 2022 2023 2022 2023
Export-oriented industries 137.9 137.9 7.0 0.0 68.9 67.9
Manufacture of vegetable and animal oils and 88.6 93.4 -4.5 5.5 3.6 3.7
fats
Manufacture of textiles 118.2 113.7 6.0 -3.8 0.7 0.7
Manufacture of wearing apparel 116.4 123.2 5.7 5.8 0.8 0.8
Manufacture of wood and products of wood 122.5 114.6 13.7 -6.5 1.9 1.8
and cork, except furniture; manufacture of
articles of straw and plaiting materials
Manufacture of coke and refined petroleum 116.8 118.1 4.6 1.1 11.9 11.9
products
Manufacture of chemicals and chemical 122.4 127.7 5.1 4.3 8.5 8.7
products
Manufacture of rubber products 196.1 177.2 -21.3 -9.6 4.7 4.2
Manufacture of plastics products 131.5 124.3 5.2 -5.5 3.2 3.0
Manufacture of computer, electronics and 164.7 165.7 17.7 0.6 24.9 24.7
optical products
Manufacture of electrical equipment 147.0 147.3 12.6 0.2 3.5 3.5
Manufacture of machinery and equipment n.e.c. 146.2 147.4 5.9 0.8 3.4 3.4
Manufacture of furniture 136.9 125.0 14.5 -8.7 1.6 1.4

Domestic-oriented industries 127.4 133.3 12.9 4.6 31.1 32.1

Manufacture of food processing products 156.7 163.2 9.8 4.1 6.3 6.4
Manufacture of beverages 131.6 132.3 19.0 0.5 0.9 0.9
Manufacture of tobacco products 109.0 128.2 31.9 17.6 0.6 0.7
Manufacture of leather and related products 145.9 158.2 18.7 8.5 0.2 0.3
Manufacture of paper and paper products 137.6 142.1 9.4 3.3 1.7 1.8
Printing and reproduction of recorded media 119.0 125.6 7.0 5.5 1.2 1.3
Manufacture of basic pharmaceuticals, medicinal 162.5 165.6 7.6 1.9 0.7 0.7
chemical and botanical products
Manufacture of other non-metalic mineral 109.0 112.5 11.9 3.2 3.5 3.6
products
Manufacture of basic metals 118.5 122.1 10.5 3.1 3.0 3.1
Manufacture of fabricated metal products, 111.5 118.3 8.0 6.2 4.6 4.8
except machinery and equipment
Manufacture of motor vehicles, trailers and 145.1 153.5 27.2 5.8 5.0 5.2
semi-trailers
Manufacture of other transport equipment 97.8 101.3 7.8 3.6 1.3 1.3
Other manufacturing 116.7 119.8 13.4 2.6 0.9 1.0
Repair and installation of machinery and 129.8 136.8 11.5 5.4 1.1 1.1
equipment

Manufacturing 134.4 136.3 8.8 1.4 100.0 100.0

Note: Total may not add up due to rounding

Source: Department of Statistics and Ministry of Finance, Malaysia

70 economic outlook 2024

Chapter 2 [Link] 70 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

Agriculture Sector fresh fruit bunches production, following peak

harvest season and further improvement in
Anticipated to grow marginally labour supply. Other agriculture and livestock
subsectors are forecast to record positive
The agriculture sector declined by 0.1% growth, underpinned by better production on
in the first half of 2023 as all subsectors the back of growing demand from domestic
recorded lacklustre performance, except for market. Overall, agriculture sector is estimated
other agriculture. The oil palm subsector, the to grow marginally by 0.6% in 2023.
major contributor in the agriculture sector,
shrank during the period on the back of lower Mining Sector
production of CPO from Peninsular Malaysia.
This production was affected by slow manuring Subdued growth outlook
activities in the previous year, shorter working
period following a series of festivities as The mining sector turned around to record
well as hot weather condition. Likewise, the 0.1% growth in the first half of 2023. This was
decrease in natural rubber output has led to supported by improved performance of crude
a contraction in the rubber subsector. The oil and condensate as well as other mining &
rubber production from the smallholdings quarrying and supporting services subsectors.
segment, which accounted about 86% of total Meanwhile, natural gas subsector was
production, waned by 9%, while output from subdued following interruption of operations
the estates segment decreased by 2.7%. In in Peninsular Malaysia and plant shutdown in
addition, other subsectors recorded negative Sarawak. The mining sector’s performance is
growth during the period, partly due to anticipated to contract by 1.7% in the second
unfavourable weather condition. half of the year, owing to lower production of
crude oil and condensate as well as natural
For the second half of the year, the sector is gas. The decline in production is due to plant
forecast to expand by 1.1% mainly supported maintenance shutdown at several oil and gas
by the oil palm, other agriculture and fields as well as lower external demand for
livestock subsectors. The oil palm subsector liquefied natural gas (LNG) amid challenging
is projected to increase on account of higher global environment. Against this backdrop,
growth in the mining sector is projected to
contract by 0.8% in 2023.
TABLE 2.4. Value-added in the Agriculture Sector,
2022 – 2024 With regard to oil prices, the Brent crude
(at constant 2015 prices) oil is anticipated to average around USD80
per barrel in 2023, partly due to dampening
SHARE CHANGE demand following weaker-than-expected
(%) (%)
recovery in China's economy and moderate
20232 2022 20232 20243
global growth. However, proactive oil market
Oil palm 36.4 3.8 0.4 1.1 management by OPEC+, as well as continued
Other agriculture¹ 29.1 -3.2 3.4 3.5 investments in the oil sector are envisaged to
Livestock 16.7 0.1 0.7 1.2 provide some support to prices.
Fishing 11.4 2.5 -1.9 -1.2
Forestry and logging 4.8 -3.6 -5.5 -6.8
Construction Sector
Rubber 1.6 -19.7 -10.1 0.6
Steady growth across the sector
Agriculture 100.0 0.1 0.6 1.2
1
Including paddy, fruits, vegetables, coconut, tobacco, tea, flowers, The construction sector improved steadily by
pepper, cocoa and pineapple
2
Estimate 6.8% in the first half of 2023 mainly driven by
Forecast the civil engineering and special construction
3

Note: Total may not add up due to rounding

Source: Department of Statistics and Ministry of Finance, Malaysia activities subsectors. The civil engineering

economic outlook 2024 71

Chapter 2 [Link] 71 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

subsector rebounded, supported by the TABLE 2.5. Gross Domestic Product by Aggregate
acceleration of ongoing infrastructure and Demand, 2022 – 2024
(at constant 2015 prices)
utilities projects, which include East Coast Rail
Link (ECRL) and Large Scale Solar 4 projects.
SHARE CHANGE
The non-residential buildings and residential (%) (%)
buildings subsectors also registered positive 20232 2022 20232 20243
growth in line with vibrant economic activities. Domestic demand 94.0 9.2 4.9 5.3
Private expenditure 76.6 10.3 5.3 5.6
The sector is forecast to expand by 5.9% in the Consumption 61.2 11.2 5.6 5.7
second half of the year supported by growth Investment 15.4 7.2 4.3 5.4
in all subsectors. The residential buildings Public expenditure 17.4 4.7 2.8 4.1
subsector is anticipated to remain encouraging Consumption 12.9 4.5 1.0 2.6
Investment 4.6 5.3 8.2 8.3
on the back of Government’s initiatives such as
External sector1 5.3 -1.0 1.1 5.5
i-MILIKI and Housing Credit Guarantee Scheme
Exports 67.3 14.5 -6.2 4.1
in assisting first-time home buyers, spurring
Imports 62.0 15.9 -6.8 3.9
demand for home ownership. Similarly,
GDP 100.0 8.7 ∼ 4.04 4.0 – 5.0
the non-residential buildings subsector is
envisaged to increase, particularly with the 1
Goods and non-factor services
2
Estimate
realisation of approved private investments. 3
Forecast
4
Approximate
The continuous implementation of strategic Note: Total may not add up due to rounding and excluding change in
stocks component
infrastructure and utilities projects will further Source: Department of Statistics and Ministry of Finance, Malaysia
support the civil engineering subsector. For the
year, performance of the sector is expected to is attributable to the lagged effect from
remain steady and grow by 6.3%. the increased Overnight Policy Rate (OPR),
dissipating effect from the Employees Provident
Domestic Demand Fund special withdrawal and lower corporate
earnings of the export-oriented industries.
Domestic activity remains the main driver of Nonetheless, private spending is expected
growth to remain resilient supported by continued
improvement in the labour market, easing of
Domestic demand continues to drive inflationary pressures, and provision of cash
growth in an environment of increasing assistance by the Government such as the
external uncertainties. In the first half of special appreciation aid for civil servants and
2023, domestic demand registered a growth retirees as well as e-wallet credit for youths,
of 4.5% contributed by strong private and students and Malaysians earning annual
public expenditures. Domestic demand is wages of RM100,000 and below. The growing
expected to expand by 4.9% for the whole trend of digital lifestyle which corresponded
year, contributing 4.5 percentage point to GDP with a higher e-commerce income and the
growth. Propelled by both consumption and implementation of Payung Rahmah initiative
investment spending, private and public sector are also expected to provide additional boost
expenditures are expected to expand by 5.3% in consumer spending.
and 2.8%, respectively, in 2023.
Private investment, which expanded by
Private consumption, which recorded a 4.9% in the first half of the year, is projected
growth of 5.1% in the first half of 2023, is to grow by 4.3% in 2023 mainly supported
expected to grow by 5.6% for the whole by new and ongoing projects such as the
year. The lower growth as compared to 2022 construction of data centre facilities, as well

72 economic outlook 2024

Chapter 2 [Link] 72 06/10/2023 5:48 PM

 chapter 2 macroeconomic outlook

as commercial and industrial buildings. This is The growth of GNI at current prices is
also backed by continuous implementations of estimated at 4.1% in 2023, in line with
measures under the Budget 2023. In addition, the moderating economic performance.
new policies guided by the Ekonomi MADANI Meanwhile, the gross national savings (GNS)
framework, which include NETR and NIMP and total investment are anticipated to
2030, are expected to accelerate investment record 25.4% and 22% of GNI, respectively.
activity in uplifting Malaysia as a preferred The savings-investment gap is expected to
investment destination. Furthermore, the register a surplus of RM62 billion or 3.4% of
realisation of approved investments by the GNI, providing sufficient liquidity to finance
Malaysian Investment Development Authority domestic economic activities.
(MIDA) is expected to have a positive spill over
impact on private investment in the near term.
FIGURE 2.4. Savings – Investment Gap
(% of GNI)
Public consumption registered a marginal
% %
growth of 0.8% in the first half of 2023 and 30 15
is anticipated to record 1% for the whole
year, supported by continued spending
on emoluments. This is aligned with the
continuous efforts by the Government to
25 10
rationalise and optimise expenditure while
upholding the quality of public service delivery.
Furthermore, the Government continues to
enhance value for money in the procurement
20 5
of supplies and services, reflecting prudent
spending.

Public investment registered 6.7% growth in

the first half of 2023, mainly driven by public 15 0
2020 2021 2022 20231 20242
corporations’ higher capital outlays. Overall,
public investment is expected to expand by GROSS NATIONAL SAVINGS
TOTAL INVESTMENT3
8.2% in 2023, supported by capital expenditure SAVINGS-INVESTMENT GAP (RIGHT SCALE)
by public corporations and acceleration of the
Federal Government development expenditure 1
Estimate
(DE). Capital spending in the transport segment 2
Forecast
3 Including change in stocks
is projected to continuously expand the Source: Department of Statistics and Ministry of Finance, Malaysia

segment’s operational capacity and improve

service quality. This includes spending on
the ongoing Pan Borneo Highway and ECRL.

economic outlook 2024 73

Chapter 2 [Link] 73 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

feature article 2.1

Towards an Investment-Driven Economy for a Sustainable Growth in

Malaysia

Introduction

Gross fixed capital formation1 (GFCF), commonly referred to as investment, is one of the factors
that contributes to Malaysia’s economic growth. Historically, the average real GDP growth was
recorded at 9.2%, while the share of GFCF to GDP was around 40% during the period of 1991 –
1997. However, after the Asian Financial Crisis (AFC) in 1997 – 1998, Malaysia experienced a lower
growth trajectory. The average real GDP growth registered 4.3% in 1998 – 2022 with a lower share
of GFCF to GDP of around 23%. To revitalise the economy, the Government introduced the Ekonomi
MADANI framework in July 2023, which outlines among others, efforts to attract quality investment,
with the aim to accelerate economic growth and improve the quality of life of the rakyat. In this
regard, it is imperative to highlight the economic and investment trends in Malaysia and the
driving policies aimed at attracting more high-value investments that will propel the nation’s
sustainable growth.

Malaysia’s Economic and Investment Trends

The nation has successfully undergone a structural transformation, transitioning from

an agriculture- and commodity-based economy to one that is driven by the services and
manufacturing sectors. The development of the economy was mainly guided by long-term
development policies namely the New Economic Policy (1971 – 1990) and the Vision 2020 (1991
– 2020). However, Malaysia was not spared from global economic crises. The AFC caused the
economy to contract by 7.4% in 1998. In 2020, the global economy was hit by the unprecedented
COVID-19 pandemic. The imposition of lockdowns worldwide including Malaysia to contain the
pandemic has resulted in slower global economic and trade activities. Consequently, Malaysia’s
economy contracted by 5.5% in 2020.

Post-pandemic, the Government continues to prioritise on measures to protect lives, restore

livelihoods and rebuild businesses. The nation had gradually recovered where real GDP grew by
3.3% in 2021 and expanded further to 8.7% in 2022. The growth was the fastest since 2000, mainly
attributed to the robust private consumption which recorded a double-digit growth of 11.2%,
more than the average of 7.5% during the period of 1991 – 1997. Similarly, the share of private
consumption to GDP also increased to 60.2% in 2022 as compared with an average of 48.3% during
the same period as shown in Figure 2.1.1. This indicates the economy is currently dependent on
private consumption-driven growth. On the contrary, the GFCF growth moderated to 6.8% in 2022
as compared with an average of 15.4% in the 1991 – 1997 period. The share of GFCF to GDP was
also lower at around 20% in 2022 as compared with an average of 40.2% during the same period.

1
Gross fixed capital formation (GFCF) is also known as investment in fixed assets that used repeatedly in the process of production for more than
one year (Department of Statistics, Malaysia, 2023).

74 economic outlook 2024

Chapter 2 [Link] 74 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

FIGURE 2.1.1. Gross Domestic Product, Gross Fixed Capital Formation and Private Consumption in Malaysia
at Constant Prices

1991 – 1997 2022

Private Consumption: 48.3% Private Consumption: 60.2%
% to GDP GFCF: 40.2% GFCF: 19.7% % change
100 GDP: 9.2% GDP: 8.7% 12
10
80 8
6
60 4
2
40 0
-2
20 -4
-6
0 -8

1992

2022
2002
1998
1996
1970

2000

2012

2014
2006

2010
1986

2020
2018
1978
1976

1988

1990
1972

2016
1984

2004
1980

1994
1982
1974

2008
PRIVATE CONSUMPTION
GROSS FIXED CAPITAL FORMATION (GFCF)
GROSS DOMESTIC PRODUCT (GDP) (RIGHT SCALE)

Source: Department of Statistics, Malaysia and World Development Indicators

Prior to the AFC, the significant increase in the share of investment to GDP coupled with higher
exports performance, particularly E&E products, had contributed to the country’s robust economic
growth. The increase was in line with supportive Government policies that primarily revolved
around substantial infrastructures and incentives to attract foreign direct investment (FDI) and
accelerate industrialisation (Yusuf and Nabeshima, 2009). Various measures were introduced to
incentivise domestic manufacturers to participate in the export market. Additionally, free trade
zones were established to attract foreign investment and export-intensive industries (Khalafalla and
Webb, 2001).

The E&E exports accounted for 57.6% of the total gross exports in 1999 as shown in Figure
2.1.2. However, since 2000, the downturn of the global electronic industry and the rise of China’s
economy have triggered changes in Malaysia’s manufactured exports components (Abidin and
Loke, 2008). Furthermore, the country also faced challenges in attracting FDI due to increased
competition from neighbouring countries offering lower labour costs. Consequently, Malaysia’s
exports of E&E products recorded a lower share of 38.3% in 2022.

The exports of non-E&E products showed an increasing trend and recorded a share of 46% in
2022 as compared with 27.1% in 1999. This trend is in line with higher value-added downstream
manufacturing activities, particularly in petroleum products; and chemicals and chemical products.
However, as an open economy, a decrease in external demand affected Malaysia’s economy to
record a moderate growth of 2.9% in the second quarter of 2023 as compared with 5.6% in the
first quarter of 2023, mainly due to lower non-E&E exports. Moving forward, the nation needs to
accelerate investments in higher value-added manufacturing activities, and diversify the nation’s
export products supported by greater international trade facilitations to expand market access.

economic outlook 2024 75

Chapter 2 [Link] 75 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

FIGURE 2.1.2. Malaysia’s Gross Exports (% share)

0.9% 0.6%
14.5%
22.8%
27.1%

37.6%
1999 2010

57.6% 0.5%
15.4%

39.1%

46%
2022
COMMODITY-BASED
E&E OF MANUFACTURED GOODS
NON-E&E OF MANUFACTURED GOODS
OTHERS 38.3%

Note: Total may not add up due to rounding

Source: Malaysia External Trade Development Corporation

In terms of GFCF by type of assets, investment in structure2 continued to record a significant

share, albeit at a declining trend since 2015 while investment in machinery and equipment3 (M&E)
showed a growing trend as reflected in Figure 2.1.3. The increasing composition of M&E investment
signifies greater adoption of new technology and digitalisation along the production process. This
is in tandem with the provision of Government grants and incentives to promote the adoption of
automation, Industry 4.0 technologies and digitalisation among businesses.

FIGURE 2.1.3. Gross Fixed Capital Formation by Type of Assets in Malaysia at Constant Prices

RM billion
400

7.9% 7.8% 8.1%

300 9.2% 8.5%
8.2%
8.5% 8.6%
34.8% 34.6% 33.3%
33.6% 33.1%
35.6% 42%
200 40.7%

100 57.6% 58.6%

57.2% 58.4% 57.3%
55.9% 50.7% 49.8%

0
2015 2016 2017 2018 2019 2020 2021 2022

OTHER ASSETS
MACHINERY AND EQUIPMENT
STRUCTURE

Source: Department of Statistics, Malaysia

2
Investment in structure comprises of residential buildings; non-residential buildings; other construction; and floating structure for oil and gas activities.
3
Investment in machinery and equipment comprises of transport equipment; other machinery & equipment; ICT equipment; and computer software
& database.

76 economic outlook 2024

Chapter 2 [Link] 76 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

The COVID-19 pandemic had an adverse impact on the GFCF in Malaysia, resulting in a decline
for two consecutive years in 2020 and 2021. Although investment has rebounded in 2022, it has
yet to reach its pre-pandemic level. The pandemic has heightened the need for digitalisation to
ensure the continuity of economic activities. In recognising this, the Government launched the
Malaysia Digital Economy Blueprint in 2021 outlining strategies to transform the country into
a digitally-driven economy by 2030. According to the report on Usage of ICT and E-Commerce
by Establishment, 93.8% of establishments used computers and electronic devices in 2021 as
compared with 86.2% in 2019. Meanwhile, internet usage increased to 90.6% as compared with
85.2% in 2019. Furthermore, income via e-commerce transactions in Malaysia also grew by
23.9% to RM1,037.2 billion as compared with RM675.4 billion in 2019, mainly contributed by the
manufacturing and services sectors at RM553.8 billion and RM473 billion, respectively.

Private investment, primarily concentrated in the services and manufacturing sectors, plays a
catalytic role in generating economic growth in Malaysia. In 2022, private investment share to GFCF
increased to around 78% as compared with 65.1% in 2015 as depicted in Figure 2.1.4, reflecting a
private sector-led investment in Malaysia. The Government has taken several initiatives to further
boost private investment, which include the announcement of the National Investment Aspirations
(NIA) in April 2021 as a foundation for comprehensive reforms in investment policies. Three main
objectives of the NIA are to catalyse investments to boost Malaysia’s economic recovery post-
pandemic; to secure Malaysia’s global position in a post-COVID era; and to deliver on the promise
of inclusive development. Furthermore, the New Investment Policy (NIP), which was launched in
October 2022, aims at strengthening Malaysia’s foundations for developing new and existing high-
value growth ecosystems, and ensuring Malaysia remains as a competitive destination for high-
value investments.

FIGURE 2.1.4. Gross Fixed Capital Formation by Sectors in Malaysia at Constant Prices

RM billion
350

300
31.9% 29.9% 27.2%
33.7% 22.2%
250 34.9% 25.1% 22.5%

200

150
68.1% 70.1% 72.8% 77.5% 77.8%
100 65.1% 66.3% 74.9%

50

0
2015 2016 2017 2018 2019 2020 2021 2022

PUBLIC SECTOR
PRIVATE SECTOR

Source: Department of Statistics, Malaysia

economic outlook 2024 77

Chapter 2 [Link] 77 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

During the period 2012 – 2020, domestic direct investment (DDI) contributed significantly to the
total approved investment, accounting for 69.6% or RM1,263.8 billion as shown in Figure 2.1.5.
However, post-pandemic, FDI has become the primary driver of the total approved investment.
Nevertheless, the Government remains committed to promote DDI by fostering a robust
domestic industrial ecosystem and integrating local companies into the supply chain alongside
multinational corporations. The Government also continues to provide funding to assist small
and medium enterprises (SMEs) in adopting Industry 4.0 technologies. The Government has
also issued a guideline requiring federal statutory bodies and subsidiary companies to prioritise
domestic investments to further boost the local equity market and strengthen the value of the
ringgit. Furthermore, the Ekonomi MADANI framework emphasises on cooperation and strategic
engagement by government-linked investment companies and government-linked companies to
accelerate domestic investment and support the development of local vendors.

FIGURE 2.1.5. Approved Investment in Malaysia

RM billion
250

208.6
200
175.1
160 163.3
151.1
150 144.5 146.2
133
124.2 126.5

103.2 100.8 104.4

100
84.9
80.1
64.6 61.8 64.2
59.5
48.6 54.4
50
34.9

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
FOREIGN DIRECT INVESTMENT
DOMESTIC DIRECT INVESTMENT

Source: Malaysian Investment Development Authority

Notwithstanding the ongoing economic recovery post-pandemic, several challenges persist in

balancing between the private consumption and investment that necessitate a renewed focus on
investment-related policies. Relying excessively on private consumption to drive economic growth
is not sustainable, particularly when it is driven by fiscal injection and household savings. An
empirical analysis involving 40 countries by Fukuda and Watanabe (2012) found that consumption is
the main driver of economic growth in developing economies. Meanwhile, advanced economies rely
on investment to fuel growth. Therefore, Malaysia needs to prioritise investment in innovative and
advanced technology to achieve higher productivity and sustainable economic growth.

Therefore, the revival of private investment and FDI is crucial in driving towards higher productivity,
hence allowing the country to break out of the middle-income trap (Menon, 2012). This is in line
with the finding by Lean and Tan (2011) that FDI and economic growth are positively related.
Inflows of FDI can encourage technological adoption and increase the production capacity of
economic sectors by forming supply chain linkages with local firms, including micro, small, and
medium enterprises (MSMEs). This, in turn, can lead to higher domestic investment and economic
growth.

78 economic outlook 2024

Chapter 2 [Link] 78 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Based on an internal estimation by the Ministry of Finance, Malaysia using a Structural Vector Error
Correction Model, private investment is an important factor in stimulating economic growth in the
short run. Therefore, the Government has implemented a responsive fiscal and accommodative
monetary policy to boost private investment. Meanwhile, in the long term, the Government is
focusing on structural reform strategies to strengthen economic growth, which include fostering
industries with high-growth value; enhancing technological advancement through innovation;
expediting digitalisation; and developing a future-ready workforce. These strategies will further
promote sustainable private investment for the future.

Government Policies to Attract Higher Investment for Sustainable Growth

Moving forward, the Ekonomi MADANI framework will serve as a foundation in revitalising the
economy to ensure the accumulated wealth is benefitted equitably among the rakyat. In order
to become a globally competitive investment destination, efforts will be intensified to strengthen
investment promotion, enhance incentive measures to attract high-quality investments, upgrade
existing infrastructure and develop human capital to meet investor needs. To date, several
Government policies have been introduced to complement the framework such as the National
Energy Transition Roadmap (NETR), New Industrial Master Plan 2030 (NIMP 2030) and Mid-Term
Review of the Twelfth Malaysia Plan (MTR of the Twelfth Plan).

National Energy Transition Roadmap

The NETR will guide investments in six energy transition levers which include energy efficiency,
renewable energy, hydrogen, bioenergy, green mobility as well as carbon capture, utilisation
and storage (CCUS). Therefore, the whole-of-nation approach is needed to ensure the successful
implementation of this initiative.

New Industrial Master Plan 2030

The NIMP 2030 encompasses six goals, namely increasing economic complexity; creating high-value
job opportunities; extending domestic linkages; developing new and existing clusters; improving
inclusivity; and enhancing ESG practices. The NIMP 2030 also identified several enablers which
include mobilising the financing ecosystem; fostering talent development and attracting talents;
developing a world-class investor ecosystem to facilitate ease of doing business; and introducing
a whole-of-nation governance framework. To achieve the six goals, the NIMP 2030 will require an
estimated total investment of RM95 billion during the seven-year implementation period led by the
private sector. At the same time, the Government will also provide allocations to fund the NIMP
2030 action plans through the NIMP Industrial Development Fund and the NIMP Strategic
Co-Investment Fund.

Mid-Term Review of the Twelfth Malaysia Plan

The MTR of the Twelfth Plan highlights 17 Big Bold catalytic strategies to reform the socioeconomic
development towards achieving the aspiration of the Ekonomi MADANI framework. In this regard,
focus will be given on accelerating the development of high growth high value (HGHV) industries,
attracting quality investment in technology-based industries, as well as enhancing technological
adoption and digitalisation. The private sector will also be encouraged to intensify green

economic outlook 2024 79

Chapter 2 [Link] 79 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

investment in business operations and premises. Measures will also be undertaken to remove the
barriers which hinder the expansion of MSMEs by facilitating their integration into domestic and
global supply chains. The labour market reforms will be expedited through upskilling and reskilling
programmes to produce industry-ready talent and retaining existing workforce.

Conclusion

The rapid expansion of investment in Malaysia has extensively contributed to the changing
structure of the economy from an agriculture- and commodity-based to an economy that is
driven by the services and manufacturing sectors. Post-AFC, the nation experienced lower growth
trajectory and lower investment. Without swift and effective reforms in investment-related policies,
Malaysia is far from achieving its aspiration to be the top 30 largest economies. Therefore,
strategies and measures under the NETR, NIMP 2030 and MTR of the Twelfth Plan as guided by
the Ekonomi MADANI framework will propel quality investments in high-value-added industries,
especially in the energy transition, digital and high-technology industries, ultimately creating more
high-income employment opportunities for the rakyat towards sustainable economic growth.

Income FIGURE 2.5. Gross Domestic Product by Income

Components, 2021 – 2024

Attaining balanced income sharing remains RM billion at current prices

3.1
challenging 2,000
2.7
0.6
15.5
Vibrant business and economic activities have 14.2 15.2
2.3
contributed to a substantial creation of new 1,500
jobs and income opportunities in the economy. 17.4 Gross
Operating
As a result, the labour income improved by 48.3 Surplus
52.8 49.7
6.5% to RM579.7 billion in 2022. Nevertheless,
1,000
the share of compensation of employees 45.2
(CE) to GDP continued to exhibit a downward
trend to 32.4% as the nominal GDP recorded
a faster growth of 15.7%. Though a similar 500
trend was also observed in other countries, the
35.1 32.4 32.4 33.1
decreasing trend implies that workers were still
not benefitting sufficiently from the economic 0
advancement through higher wages. This 2021 2022 20231 20242

may continue to post a challenge in attaining COMPENSATION OF EMPLOYEES

OPERATING SURPLUS
the target of 40% by 2025. The share of CE MIXED-INCOME
TAXES LESS SUBSIDIES
is expected to sustain at 32.4% in 2023, an
increase by 3.5% to RM599.9 billion in line with 1
Estimate
the expectation of continuous encouraging 2
Forecast
Source: Department of Statistics and Ministry of Finance, Malaysia
growth prospects. The share will be attributed
mainly to income from the services (61.7%) and
manufacturing (24.4%) sectors, particularly in
electrical, electronic and optical products and
tourism-related industries.

80 economic outlook 2024

Chapter 2 [Link] 80 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

TABLE 2.6. Gross Domestic Product by Income in Selected Countries,

2020 – 2022

COMPENSATION OF EMPLOYEES GROSS OPERATING SURPLUS TAXES LESS SUBSIDIES

2020 2021 2022 2020 2021 2022 2020 2021 2022

SHARE OF GDP (%)

Malaysia 37.4 35.1 32.4 59.9 62.6 67.0 2.7 2.3 0.6
Philippines 34.8 36.7 36.4 58.6 55.7 55.8 6.6 7.6 7.8
Singapore 42.8 37.9 36.6 56.6 57.5 57.7 0.6 4.6 5.8
Republic of Korea 48.2 47.2 47.6 41.9 42.4 42.2 9.9 10.3 10.2
Australia 48.3 47.8 45.6 44.5 46.2 45.7 7.1 6.0 8.8
Netherlands 50.6 49.1 48.0 41.2 42.0 42.1 8.2 8.9 9.9
United Kingdom 55.9 54.7 52.9 37.3 35.5 35.1 6.8 9.9 12.0
Germany 54.4 53.2 52.3 37.6 38.9 38.5 8.0 7.9 9.2
United States 54.5 53.5 53.0 41.4 41.4 40.6 4.1 5.0 6.4
Source: Department of Statistics, Malaysia

Meanwhile, gross operating surplus (GOS) expenditure was allocated for fuel subsidy
continued to be the major income component to mitigate the rising cost of products and
with its share to GDP amounting to 67%, services. Nevertheless, income from taxes on
following a significant increase of 23.9% in production and imports is expected to improve
2022. Capital owners, particularly in the mining in 2023, following a lower expenditure on
and quarrying sector, continued to reap a subsidies and incentives. Hence, the overall
35.1% double-digit profit growth from business share of net taxes on production and imports
enhancement attributed to higher commodity is expected to improve to 2.7% of GDP.
prices. On the other hand, the mixed-income
for the self-employed group persisted in a External Sector
contraction trend at 5.3% as this group is still
facing challenges to secure adequate income Lacklustre performance dampened the outlook
amid the transition phase towards endemicity.
Nonetheless, mixed-income is expected to Trade Performance
expand by 10.4% in 2023 as vigorous economic
activities and increasing domestic demand Total trade is expected to decline by 7.3%
will provide more employment and income to RM2,634.9 billion in 2023 attributed to
prospects for the self-employed group. Overall, slower external demand from major trading
the share of GOS to GDP is projected to record partners as a result of moderating global
64.9% in 2023 with most of the profit will be trade. Similarly, trade surplus is estimated to
owned by capital owners. decrease by 12.5% to RM224.2 billion.

Net taxes on production and imports Gross exports are projected to contract by
continued to decrease and contributed only 7.8% in 2023 due to sluggish external demand
0.6% to GDP in 2022, the lowest share ever from major trading partners owing to slower-
recorded in almost two decades, due to a large than-expected economic recovery, particularly
contraction of 69.2% recorded for net taxes. in China as well as moderate commodity
The contraction was attributed to a surge prices. Exports of manufactured goods are
of 134.4% in expenditure for subsidies and estimated to decline by 5.3% dragged by a
incentives in relation to income from taxes 10.4% decrease in non-E&E products, which
which merely increased by 23.8%. Most of the more than offset the marginal increase in

economic outlook 2024 81

Chapter 2 [Link] 81 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

exports of E&E products. Exports of non-E&E Likewise, exports of agriculture goods are
products, particularly petroleum products estimated to contract by 24.8%, weighed down
and palm oil-based manufactured products by weak demand for palm oil and palm oil
are expected to shrink following weakening based agriculture products as well as natural
external demand and moderate commodity rubber. Reduction in export earnings of palm
prices. Meanwhile, the marginal growth of oil is anticipated at 30.4% resulting from
0.8% in E&E products is attributed to softening lower demand by major trading countries,
external demand for global electronics particularly from China, India, the Netherlands,
manufacturing components due to weakening the Philippines and Turkiye. Furthermore,
economic conditions in China, the EU and the exports of mining goods are projected to
US. The E&E components with highest share contract by 18.5%, attributed to lower global
include semiconductor, telecommunication demand for LNG and crude petroleum by
equipment parts, and automatic data 21.8% and 16.2%, respectively.
processing equipment.

TABLE 2.7. External Trade,

2022 – 2024

RM MILLION CHANGE
(%)
2022 20231 20242 2022 20231 20242
Total trade 2,843,821 2,634,886 2,766,393 27.6 -7.3 5.0
Gross exports 1,550,009 1,429,547 1,501,859 24.9 -7.8 5.1
of which:
Manufactured 1,304,668 1,235,167 1,303,202 22.1 -5.3 5.5
Agriculture 120,903 90,876 92,405 23.3 -24.8 1.7
Mining 117,346 95,609 98,343 68.2 -18.5 2.9
Gross imports 1,293,811 1,205,339 1,264,533 31.0 -6.8 4.9
of which:
Capital goods 120,231 113,335 119,079 15.8 -5.7 5.1
Intermediate goods 706,551 636,558 669,696 29.5 -9.9 5.2
Consumption goods 104,017 96,462 100,388 24.0 -7.3 4.1
Trade balance 256,198 224,208 237,326 1.0 -12.5 5.9

1
Estimate
2
Forecast
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia External Trade Development Corporation and Ministry of Finance, Malaysia

TABLE 2.8. Gross Exports,

January – August 2022 and 2023

RM MILLION CHANGE SHARE

(%) (%)
2022 2023 2022 2022 2022 2023
Manufactured 850,880 800,624 26.4 -5.9 84.0 85.6
Agriculture 81,941 60,810 41.0 -25.8 8.1 6.5
Mining 75,147 68,272 70.7 -9.1 7.4 7.3
Others 1 4,514 5,510 49.0 22.1 0.4 0.6
Gross exports 1,012,482 935,217 30.0 -7.6 100.0 100.0

1
Including gold scrap and waste; worn clothing; and special transaction not classified
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

82 economic outlook 2024

Chapter 2 [Link] 82 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

TABLE 2.9. Exports of Manufactured Goods,

January – August 2022 and 2023

RM MILLION CHANGE SHARE

(%) (%)
2022 2023 2022 2023 2022 2023
E&E 380,126 380,685 34.4 0.1 44.7 47.5
Non-E&E 470,754 419,939 20.5 -10.8 55.3 52.5
Petroleum products 101,772 96,500 69.7 -5.2 12.0 12.1
Chemicals & chemical products 53,071 46,965 18.7 -11.5 6.2 5.9
Manufactures of metal 44,803 37,579 24.9 -16.1 5.3 4.7
Machinery, equipment & parts 40,009 36,461 27.6 -8.9 4.7 4.6
Optical & scientific equipment 36,196 35,564 22.1 -1.7 4.3 4.4
Palm oil-based manufactured products 28,941 20,849 45.0 -28.0 3.4 2.6
Rubber products 21,075 13,983 -58.3 -33.6 2.5 1.7
Processed food 18,341 19,067 18.3 4.0 2.2 2.4
Iron & steel products 23,227 20,127 34.0 -13.3 2.7 2.5
Transport equipment 11,068 11,172 9.7 0.9 1.3 1.4
Textiles, apparels & footwear 11,775 10,548 16.3 -10.4 1.4 1.3
Manufactures of plastics 11,631 10,458 12.5 -10.1 1.4 1.3
Wood products 12,689 9,455 22.9 -25.5 1.5 1.2
Non-metallic mineral products 7,850 8,097 15.7 3.1 0.9 1.0
Jewellery 4,682 4,988 34.1 6.5 0.6 0.6
Paper & pulp products 6,327 7,238 16.7 14.4 0.7 0.9
Beverages & tobacco 1,710 2,038 8.6 19.2 0.2 0.3
Other manufactures 35,588 28,849 29.3 -18.9 4.2 3.6
Exports of manufactured goods 850,880 800,624 26.4 -5.9 100.0 100.0

Note: Total may not add up due to rounding

Source: Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

FIGURE 2.6. Top 10 Trading Partners,

January – August 2023
(% share)

Exports Imports

15.9%
21.1%
26.3%
28.8%
13.2%
RM935.2 RM782.3
billion billion 11.8%
3.0%
3.3% 3.7%
3.5% 11.2% 4.4% 7.1%
3.6%
4.5%
4.0% 6.2% 5.1% 7.0%
4.2% 6.1% 6.0%

SINGAPORE REPUBLIC OF KOREA CHINA THAILAND

CHINA AUSTRALIA SINGAPORE REPUBLIC OF KOREA
US INDONESIA US SAUDI ARABIA
HONG KONG VIET NAM TAIWAN AUSTRALIA
JAPAN REST OF THE WORLD JAPAN REST OF THE WORLD
THAILAND INDONESIA

Note: Total may not add up due to rounding

Source: Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

economic outlook 2024 83

Chapter 2 [Link] 83 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Gross imports are projected to slip by 6.8% slowdown in manufactured exports. Similarly,
in 2023 dragged down by major categories, capital goods and consumption goods are
namely intermediate, capital and consumption estimated to contract by 5.7% and 7.3%,
goods, partly due to the depreciation of respectively. Of the total imports, capital goods
ringgit. Imports of intermediate goods, which form a share of 9.4% while consumption goods
constitute the largest share of 52.8%, are constitute 8%.
expected to decrease by 9.9% as a result of a

TABLE 2.10. Gross Imports by End Use,

January – August 2022 and 2023

RM MILLION CHANGE SHARE

(%) (%)
2022 2023 2022 2023 2022 2023
Capital goods 77,275 78,169 15.7 1.2 9.0 10.0

Capital good (except transport equipment) 68,861 70,586 9.2 2.5 8.0 9.0

Transport equipment (industrial) 8,414 7,583 125.7 -9.9 -1.0 1.0

Intermediate goods 473,467 399,416 35.9 -15.6 55.3 51.1

Food and beverages, primary and processed, mainly 23,529 20,142 33.4 -14.4 2.7 2.6
for industries
Fuel and lubricants, primary, processed and others 72,698 68,452 129.9 -5.8 8.5 8.8

Industrial supplies, primary, processed and n.e.s. 1

213,359 183,184 20.9 -14.1 24.9 23.4

Parts and accessories of capital goods and transport 163,881 127,638 33.5 -22.1 19.1 16.3
equipment
Consumption goods 67,897 67,021 25.0 -1.3 7.9 8.6

Food and beverages, primary and processed, mainly 29,778 31,031 24.8 4.2 3.5 4.0
for household
Transport equipment (non-industrial) 1,160 999 5.8 -13.9 0.1 0.1

Other consumer goods 36,959 34,991 25.8 -5.3 4.3 4.5

Durables 9,203 8,881 16.5 -3.5 1.1 1.1

Semi-durables 11,443 11,255 36.6 -1.6 1.3 1.4

Non-durables 16,313 14,854 24.5 -8.9 1.9 1.9

Others 26,763 27,037 70.8 1.0 3.1 3.5

Re-exports 210,964 210,650 47.3 -0.1 24.6 26.9

Gross imports 856,366 782,293 36.3 -8.6 100.0 100.0

1
Not elsewhere stated
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia

84 economic outlook 2024

Chapter 2 [Link] 84 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Balance of Payments tourist arrivals is anticipated to contribute

to a smaller deficit of RM28.7 billion in the
The current account surplus of the balance transport account. On the other hand, other
of payments widened to RM13.4 billion or services account is expected to register a
1.6% of GNI in the first half of 2023. This is wider deficit of RM27.3 billion following
attributed to a smaller deficit in the services increasing payments for construction,
and income accounts while the goods account maintenance and repair services as well as
continuing to register a surplus albeit financial services.
narrowing. The performance is expected
to continue in the second half of the year The primary income account is projected to
with the current account surplus is forecast register a narrower deficit of RM47.1 billion in
to expand to RM48.6 billion or 5.2% of GNI 2023 owing to a smaller deficit in investment
following smaller deficit in the services and income account albeit higher deficit in
income accounts albeit narrowing surplus in compensation of employees. The narrowing
the goods account. Overall, a wider current deficit in investment income account to RM37.8
account surplus of RM62 billion or 3.4% of GNI billion is attributed to higher investment
is expected to be recorded in 2023. income earnings, mainly other investment
account albeit lower investment income
The goods account is forecast to register payments, particularly in the direct investment
a lower surplus of RM170.2 billion in 2023, account. Correspondingly, compensation of
weighed down by decreasing exports of employees is anticipated to record a wider
manufactured, agriculture and mining goods. deficit of RM9.3 billion attributed to a gradual
Meanwhile, the services account is expected increase in wages. This is also partly due to an
to record a smaller deficit of RM41.5 billion, increase in the number of foreign professionals
following a turnaround in the travel account in Malaysia following ongoing infrastructure
and narrowing deficit in the transport account and utilities projects.
albeit wider deficit in other services accounts.
The gradual return to normalcy in many Earnings in the secondary income account for
nations post COVID-19 pandemic, including the the whole year are anticipated to increase to
reopening of China’s borders, is projected to RM35.3 billion following higher remittances
have a positive impact on tourism in Malaysia. by Malaysians working abroad. Nonetheless,
Consequently, the travel account is expected payments in the secondary income account
to register a surplus of RM14.5 billion. The are expected to increase to RM54.9 billion,
positive impact in the air travel industry will leading to a higher deficit of RM19.6 billion.
be mainly contributed by the increase in flight The increase in payments is due to larger
frequencies and resumption of direct flight remittances by foreign workers from
operations. These, in turn, will contribute Bangladesh, India, Indonesia, Nepal and the
to domestic companies’ higher earnings Philippines following continuous expansion in
following competitive air fares and freight economic activities and the upward revision of
charges as well as fees generated from airport minimum wage.
and port activities. In addition, the surge in

economic outlook 2024 85

Chapter 2 [Link] 85 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

TABLE 2.11. Current Account of the Balance of Payments,

2022 – 2024
(RM million)

2022 20231 20242

RECEIPTS PAYMENTS NET RECEIPTS PAYMENTS NET RECEIPTS PAYMENTS NET
Balance on goods and 1,378,452 1,248,820 129,632 1,272,424 1,143,757 128,667 1,345,773 1,206,785 138,988
services
Goods 1,238,180 1,052,151 186,029 1,078,138 907,968 170,171 1,134,967 960,092 174,876
Services 140,272 196,670 -56,397 194,285 235,789 -41,504 210,806 246,693 -35,888
Transport 25,604 59,649 -34,045 32,298 60,983 -28,685 34,220 62,129 -27,908
Travel 28,370 29,526 -1,156 63,989 49,539 14,450 76,550 53,815 22,735
Other services 86,299 107,495 -21,196 97,998 125,268 -27,269 100,035 130,750 -30,715
Primary income 88,704 148,118 -59,414 93,005 140,124 -47,119 97,067 155,557 -58,490
Compensation of employees 7,124 14,359 -7,235 8,306 17,642 -9,336 8,736 18,968 -10,232
Investment income 81,580 133,759 -52,179 84,699 122,482 -37,783 88,331 136,589 -48,258
Secondary income 22,765 37,885 -15,120 35,334 54,909 -19,575 37,546 55,804 -18,258
Balance on current account 1,489,921 1,434,823 55,098 1,400,763 1,338,791 61,972 1,480,386 1,418,146 62,240
% of GNI 3.2 3.4 3.2

1
Estimate
2
Forecast
Note: Total may not add up due to rounding
Source: Department of Statistics and Ministry of Finance, Malaysia

In the first half of 2023, the financial account FIGURE 2.7. International Reserves
registered a net outflow of RM13.9 billion,
RM billion Months/Times
resulting from a significant drop of net inflows 600 12
in direct investment and other investment
500 10
accounts, coupled with wider net outflows
in the portfolio investment and financial 400 8
derivatives accounts. FDI registered a net
inflow of RM15.1 billion, channelled mainly to 300 6

the financial and insurance/takaful activities;

200 4
information and communication sector; as
well as professional, scientific and technical 100 2

activities. Net outflows of direct investment

0 0
abroad by Malaysian companies narrowed J A J O J A J O J A J
to RM9.1 billion. The outflows were mainly 2021 2022 2023

directed into financial and insurance/takaful INTERNATIONAL RESERVES

MONTHS OF IMPORTS OF GOODS AND
activities; electricity, gas, steam and air SERVICES RIGHT SCALE
TOTAL SHORT-TERM EXTERNAL DEBT
conditioning supply; as well as transportation
and storage sectors.
As at 30 August 2023, Malaysia's international reserves
amounted to RM525.5 billion or USD112.2 billion adequate to
finance 5.2 months of imports of goods and services and 1.0
times of the total short-term external debt (end-December
2022: RM503.3 billion; USD114.6 billion; 5.2 months; 1.0 times)

Source: Bank Negara Malaysia

86 economic outlook 2024

Chapter 2 [Link] 86 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

feature article 2.2

Navigating High-Impact Economic Growth through Direct Investment

Introduction

Direct investment has a pivotal role in facilitating economic growth as it boosts job creation and
productivity as well as improves competitiveness. It provides both direct and indirect contributions
to economic activity in terms of GDP. The objective of direct investment is to establish a lasting
interest that implies a long-term relationship between the direct investor1 and the direct investment
enterprise2 in another economy. Direct investment is a key element in international economic
integration and an important channel for the transfer of technology.

According to directional principle basis, direct investment is shown as either inward or outward
in the host economies that refer to the countries in which they are resident, as depicted in
Figure 2.2.1. Inward direct investment (hereafter known as FDI) encompasses all liabilities and
assets between resident enterprises and the foreign investors. FDI is commonly used to describe
investment flows into a specific country and highlighting the inflow of capital and expertise from
foreign investors.

FIGURE 2.2.1. Inward and Outward Direct Investment

MALAYSIA
MALAYSIA COUNTRY X
(Home
(Host Country) (Home Country)
Country) Inward Direct Investment
(also known as Foreign Direct Investment, FDI)

Direct Investment Enterprise Direct Investor

Direct Investor Direct Investment Enterprise

Outward Direct Investment

MALAYSIA
MALAYSIA (also known as Direct Investment Abroad, DIA) COUNTRY X
(Home
(Home Country)
Country) (Host Country)

Source: OECD Benchmark Definition of Foreign Direct Investment, Fourth Edition, 2008, Balance of Payments and International Investment
Position Manual Sixth Edition (BPM6), 2009 and Ministry of Finance, Malaysia

1
A direct investor is an entity (an institutional unit) resident in one economy that has acquired, either directly or indirectly, at least 10% of the
voting power of a corporation (enterprise), or equivalent for an unincorporated enterprise, resident in another economy.
2
A direct investment enterprise is an enterprise resident in one economy and in which an investor resident in another economy owns, either directly
or indirectly, 10% or more of its voting power if it is incorporated or the equivalent for an unincorporated enterprise.

economic outlook 2024 87

Chapter 2 [Link] 87 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Otherwise, outward direct investment, also known as direct investment abroad (DIA), covers assets
and liabilities between resident direct investors and direct investment enterprises. DIA emphasises
the outward investment by residents or entities of a country and highlighting their engagement
in foreign markets and assets. The summarised characteristics of FDI and DIA are shown in
Figure 2.2.2. Both FDI and DIA involve cross-border investment activities with different focus and
perspective.

FIGURE 2.2.2. Characteristics of Foreign Direct Investment and Direct Investment Abroad

DIRECT INVESTMENT

Foreign Direct Investment (FDI) Direct Investment Abroad (DIA)

Also referred to as inward direct investment Also known as outward direct investment

The value of inward direct investment made by The value of outward direct investment made by
non-resident investors in the reporting economy the residents of the reporting economy to
external economies

Includes liabilities and assets transferred between Includes assets and liabilities transferred between
resident direct investment enterprises and their resident direct investors and their direct
direct investors investment enterprises

It also covers transfers of assets and liabilities It also covers transfers of assets and liabilities
between resident and non-resident fellow between resident and non-resident fellow
enterprises, if the ultimate controlling parent is enterprises, if the ultimate controlling parent is
non-resident resident

Source: OECD Benchmark Definition of Foreign Direct Investment, Fourth Edition, 2008, Balance of Payments and International Investment
Position Manual Sixth Edition (BPM6), 2009 and Ministry of Finance, Malaysia

Malaysia’s Investment at a Glance

In accordance with the guidelines provided in the Balance of Payments and International Position
Manual by International Monetary Fund (IMF), the transactions for direct investment are recorded
in the financial account of the balance of payments. These entries are then translated into a
calculation of the GDP and gross national income (GNI). The performance of Malaysia’s direct
investment recorded net outflows from 2008 to 2015, while from 2016 to 2022, it registered net
inflows contributed by higher FDI inflows.

Located in the central region of the ASEAN and on the Asia Pacific Rim, Malaysia remains an
attractive destination for investors due to its favourable investment climate, well-developed
infrastructure and telecommunications, robust financial and banking services, strong legal
framework, skilled labour force as well as diversified market opportunities supported by the

88 economic outlook 2024

Chapter 2 [Link] 88 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

16 ratified free trade agreements (FTAs). Malaysia maintained its strong position globally,
ranking the second-highest in Southeast Asia and 14th out of 171 countries in the DHL Global
Connectedness Index (GCI) report in 2023 and 27th in the IMD World Competitiveness 2023.
Regardless of global headwinds following the COVID-19 pandemic, the rankings by various agencies
further reinforced Malaysia’s position as a competitive and attractive investment destination.

Notwithstanding, the uncertainty in global outlook, financial sector turmoil, high inflation and
lingering geopolitical tensions pose as potential challenges to Malaysia. The IMF has forecast
the global growth to moderate from 3.5% in 2022 to 3% in 2023 and 2024, while the World Bank
projected the global growth to decelerate from 3.1% in 2022 to 2.1% in 2023. The slower-than-
expected global growth is affecting the investment landscape holistically as investors become more
selective and cautious in business decisions.

Foreign Direct Investment in Malaysia

Many developing countries favour FDI over other forms of capital flows attributed to its resilience
towards economic uncertainties. Being a highly open economy, Malaysia is not spared from the
impact of challenges arising from various crises. Nevertheless, FDI in Malaysia has proven to be
resilient and continued to record net inflows even during the Global Financial Crisis of 2008 – 2009
and the recent COVID-19 pandemic.

Despite recording negative growth during these crises, Malaysia is still able to record net inflows
of RM5.1 billion in 2009 and RM13.3 billion in 2020, as depicted in Figure 2.2.3. The net inflows
of FDI surged more than threefold in 2021 to RM50.4 billion and registered a historic peak of
RM74.6 billion in 2022. The increment was driven by effective policies in placing greater emphasis
in promoting FDIs, strong economic recovery and spillover benefit arising from trade diversion. This
is attributed to the relocation of MNCs to circumvent the high tariffs as well as a steady growth of
high-quality investment, particularly in the manufacturing sector.

FIGURE 2.2.3. Performance of Foreign Direct Investment in Malaysia and Malaysia’s Direct Investment Abroad

RM billion
80
Global Financial COVID-19
Crisis Pandemic
60

40

20

-20

-40

-60

-80
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

FOREIGN DIRECT INVESTMENT IN MALAYSIA

MALAYSIA’S DIRECT INVESTMENT ABROAD
Source: Bank Negara Malaysia and Department of Statistics, Malaysia

economic outlook 2024 89

Chapter 2 [Link] 89 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

FDI can bring many advantages to the host country, particularly in the transfer of advanced
technologies, managerial expertise, and best practices from foreign investors. In addition, FDI
provides employment opportunities for the local workforce. More than 700,000 employment
opportunities or 44.7% of total employment in 2000 to 2022, generated through investment
projects under MIDA, were sourced from foreign-owned projects. Of these job creations, about 82%
were for locals, mostly in the manufacturing sector (MIDA, 2023). The transfer of knowledge can
elevate local industries’ technological capabilities, thus increasing local companies’ competitiveness
on a global scale. Employees’ skill development will also be enhanced through on-the-job training,
professional development opportunities, and exposure to international work practices, provided by
foreign companies. The FDI could also offer access to global distribution networks and contribute
to export expansion by utilising local contents and resources as well as producing goods locally to
fulfil international demand.

Malaysia has diversified the economy to move up the value chain and reduce dependency
on commodities. On a sectoral basis, the focus of FDI has shifted from commodity-based to
manufacturing- and services-based sectors, as depicted in Figure 2.2.4. In 2010, the bulk of the
FDIs were channelled to the manufacturing sector with 56.7%, followed by the services (33.6%) and
commodity-based (11%) sectors. Contribution of the manufacturing and services sectors became
more significant in 2022, totalling more than 97% of total FDIs resulting from the strategic change
in policy direction towards higher value-added activities and quality investment in these sectors.
The evolution in the manufacturing sector from a conventional industrial production process to an
inclusive concept also helped in the expansion. Greater emphasis is also given to the development
of the services sector as the main engine of growth to propel and sustain the economy.

FIGURE 2.2.4. Performance of Foreign Direct Investment in Malaysia by Sectors (% share)

0.7% 0.2%
10.6%
17.8% 1.9% Wholesale & Retail Trade, 13.8%
Information & Communication, 12.2%

6.4%
33.0% 50.3% 31.5% Financial & Insurance/Takaful
Activities, 52.5%
55.7% 66.4%

25.5%
Other Services, 21.5%

2010 2016 2022

MANUFACTURING
SERVICES ACTIVITIES
COMMODITY-BASED
CONSTRUCTION

Source: Bank Negara Malaysia and Department of Statistics, Malaysia

In terms of the flow of FDI in Malaysia by continent, East Asian countries, particularly Japan and
Hong Kong, have invested the most, constituting about 35% of total net FDI from 2010 to 2022
amounting to RM497 billion. In 2022, North America contributed the most FDI with a share of
49.8%, followed by East Asia (29.5%) and Southeast Asia (19%), as shown in Figure 2.2.5. Among
the ASEAN peers, Singapore received the highest FDIs of USD1,016 billion for the period of 2010 to
2022, followed by Indonesia (USD239.7 billion), Viet Nam (USD161.5 billion) and Malaysia (USD132.2
billion).

90 economic outlook 2024

Chapter 2 [Link] 90 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

FIGURE 2.2.5. Foreign Direct Investment in Malaysia by Major Block of Countries

RM billion
40

35

30

25

20

15

10

0
North America East Asia Southeast Asia Latin America

2022
2016
2010

Source: Bank Negara Malaysia and Department of Statistics, Malaysia

Although FDIs offer various advantages to the nation, there are still potential risks that requires
Malaysia to exercise caution. These include, among others, overreliance on foreign companies
could reduce the sovereign control over strategic sectors. Moreover, profits generated by foreign
companies could be repatriated to home countries, thus reducing the economic benefit retained in
Malaysia. Another major concern is the uneven playing field between foreign and local businesses
that could threaten the development and survival of domestic enterprises.

Malaysia’s Direct Investment Abroad

Outward direct investment or DIA offers several benefits to investors, including diversification to
reduce dependency on a single market and minimise risks associated with economic downturns in
the home economy. In addition, companies gain potential benefits from abundant foreign resources
such as raw materials, industry experts, advanced technologies as well as market access in the
respective region. Investing abroad also exposes companies to international business practices,
fostering innovation and increasing global competitiveness.

A notable amount of DIA registered during the pre-pandemic period proved that Malaysian
companies are globally competitive with an annual average of RM35.7 billion recorded from 2005
to 2019. However, the depreciation of ringgit posed a challenge to Malaysian companies investing
abroad. The unfavourable global economic environment and geopolitical tensions have also
impacted the investment landscape globally. These challenges have affected the performance of
DIA which trended downward from 2015 to 2018 and dropped sharply in 2020 due to COVID-19
pandemic. Nevertheless, the trend rebounded in 2021 and 2022 following the resumption of
economic activities post-pandemic.

From the sectoral perspective, DIA are primarily focused on the services sector, particularly
financial and insurance/takaful activities. Investment contribution in the services sector expanded
from 61% in 2010 to 72% in 2022, partly attributed to a surge in wholesale and retail trade sector.
Meanwhile, the contribution of the commodity-based sector dropped from 27.5% in 2010 to 14.6%
in 2022, in tandem with reduced dependency on low value-added activities as well as the evolution
in global megatrends, as shown in Figure 2.2.6.

economic outlook 2024 91

Chapter 2 [Link] 91 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

FIGURE 2.2.6. Malaysia’s Direct Investment Abroad by Sectors (% share)

Wholesale & Retail Trade, 32.3%

28.9% 14.6%
27.5% Information & Communication, 14.4%
61.2% 56.5% 72.2%
3.0% Financial & Insurance/Takaful
10.2% Activities, 38.7%
0.8%
0.5% 10.8% 13.9% Other Services, 14.6%

2010 2016 2022

MANUFACTURING
SERVICES ACTIVITIES
COMMODITY-BASED
CONSTRUCTION

Source: Bank Negara Malaysia and Department of Statistics, Malaysia

Southeast Asia remains the preferred investment destination for Malaysian companies, which
accounted for 44% of total DIA in 2010 and expanded to 50% in 2022, as depicted in Figure 2.2.7.
Meanwhile, Malaysian companies’ investment in Europe has gained traction with a significant
increase in share of DIA from 16% in 2010 to 36% in 2022. Similarly, there was an increase in the
North American market contribution from 0.5% in 2010 to 6.9% in 2022. Both markets attraction
can be attributed to their attractive investment returns.

FIGURE 2.2.7. Malaysia’s Direct Investment Abroad by Major Block of Countries

RM billion
0

-5

-10

-15

-20

-25

-30
Southeast Asia Europe Latin America North America

2022
2016
2010

Source: Bank Negara Malaysia and Department of Statistics, Malaysia

92 economic outlook 2024

Chapter 2 [Link] 92 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

However, it is important to note the challenges of DIA to Malaysian companies, such as regulatory
differences, which could lead to complexities and potential legal issues for companies operating in
multiple jurisdictions. In addition, investment abroad is at risk of currency volatility, thus impacting
profits and cash flows. The companies are also vulnerable to geopolitical risks, including changes in
government policies, trade tensions and political instability.

Moving Forward

As envisaged under the Ekonomi MADANI framework, Malaysia aims to be a leader at the global
front, hence efforts shall be focused on increasing its competitiveness and promoting the nation
as a prime investment destination. In this regard, a comprehensive investment policy with
concerted efforts between government agencies and private sectors will be intensified. At the same
time, Malaysian companies should also actively explore new emerging markets and venture into
greenfield investments such as ESG-related investment.

Recognising the significant contribution of investment to the economic development, the National
Investment Aspirations (NIA) was introduced in 2022 as a key guiding principle for the Malaysia’s
New Investment Policy (NIP), 2022 – 2027. The New Industrial Master Plan 2030 (NIMP 2030) was
recently launched to further boost high quality FDI and DIA. Five key pillars have been outlined
in these policy documents to reinvigorate the investment ecosystem, underpinned by the need
to enhance the ESG practices across the economy. The key pillars are to increase economic
complexity; create high-value job opportunities; extend domestic linkages; develop new and existing
clusters; and improve inclusivity.

Conclusion

FDI and DIA play a significant role in shaping Malaysia’s economic landscape. FDI has been a
driving force behind Malaysia’s economic growth and industrialisation. DIA, on the other hand,
reflects the expansion of Malaysian businesses globally. Thus, it is crucial for Malaysia to adopt
balanced and strategic approaches to FDI and DIA that encourage high-quality and high-value
investments, while simultaneously, transfer valuable knowledge and resources to further accelerate
economic growth and expedite the transition into an advanced economy.

Prices relative to the long-term average. For the year,

inflation is estimated to range between 2.5%
Headline inflation continues to moderate to 3%.

The Producer Price Index (PPI) by local

The Consumer Price Index (CPI) grew by 2.8%
production decreased by 2.4% during the first
from January to August 2023, attributed to
eight months of 2023, attributed to moderate
moderating trend in global commodity prices;
global commodity prices, particularly crude
easing supply-related disruptions; existing price
oil. Within specific sectors, the contraction in
controls and provision of subsidies for selected
PPI was predominantly driven by a significant
items; as well as the lagged impact from the
decrease in agriculture, forestry and fishing
normalisation of OPR. Inflation is expected to
(19.4%) as well as mining (8.4%) sectors. The
moderate in the remaining months, while core PPI is expected to contract between -2.5% to
inflation is expected to remain elevated -0.5% in 2023, given lower global input cost.

economic outlook 2024 93

Chapter 2 [Link] 93 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

TABLE 2.12. Consumer Price Index,

January – August 2022 and 2023
(2010 = 100)

CHANGE CONTRIBUTION TO
(%) CPI GROWTH
WEIGHT1 (PERCENTAGE POINTS)
2022 2023 2022 2023
CPI 100.0 3.1 2.8 3.10 2.80
Food and non-alcoholic beverages 29.5 5.1 5.7 1.50 1.69
Alcoholic beverages and tobacco 2.4 0.5 0.6 0.01 0.02
Clothing and footwear 3.2 0.0 0.3 0.00 0.01
Housing, water, electricity, gas and other fuels 23.8 1.7 1.7 0.40 0.41
Furnishings, household equipment and routine household 4.1 3.3 2.7 0.14 0.11
maintenance
Health 1.9 0.5 2.0 0.01 0.04
Transport 14.6 4.5 1.6 0.66 0.23
Communication 4.8 0.0 -2.6 0.00 -0.12
Recreation services and culture 4.8 1.8 1.7 0.09 0.08
Education 1.3 1.0 1.8 0.01 0.02
Restaurants and hotels 2.9 4.0 6.2 0.12 0.18
Miscellaneous goods and services 6.7 1.8 2.4 0.12 0.16

1
Based on Household Income and Expenditure Survey 2016
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia

TABLE 2.13. Producer Price Index,

January – August 2022 and 2023
(2010 = 100)

CHANGE CONTRIBUTION TO
(%) PPI GROWTH
WEIGHT 1
(PERCENTAGE POINTS)
2022 2023 2022 2023
PPI 100.000 9.7 -2.4 9.700 -2.400
Agriculture, forestry and fishing 6.730 11.0 -19.4 0.740 -1.306
Mining 7.927 18.8 -8.4 1.490 -0.666
Manufacturing 81.571 9.2 0.2 7.505 0.163
Electricity and gas supply 3.442 0.4 0.8 0.014 0.028
Water supply 0.330 1.8 3.2 0.006 0.011
Producer Price Index by stage of processing 100.000 9.7 -2.4 9.700 -2.400
Crude materials for further processing 16.410 13.7 -14.8 2.248 -2.429
Intermediate materials, supplies and components 56.119 12.2 -0.2 6.847 -0.112
Finished goods 27.471 1.1 3.6 0.302 0.989

1
Based on Economic Census 2016
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia

94 economic outlook 2024

Chapter 2 [Link] 94 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

FIGURE 2.8. Consumer Price Index and Producer Price Index Trends
(% change)

% Consumer Price Index % % Producer Price Index %

5 30 16 100
14
25 80
4 12
20 10 60
3
15 8
40
6
2 10
4 20
5 2
1
0 0
0
0 -2
-5 -20
-4
-1 -10 -6 -40
J A J O J A J O J A J J A J O J A J O J A J
2021 2022 2023 2021 2022 2023

CPI PPI
TRANSPORT AGRICULTURE, FORESTRY AND
FOOD AND NON-ALCOHOLIC BEVERAGES FISHING
RIGHT SCALE RIGHT SCALE
HOUSING, WATER, ELECTRICITY, MINING
GAS AND OTHER FUELS MANUFACTURING

Source: Department of Statistics, Malaysia

Labour Market number of retrenchments remained low at

21,371 persons as businesses are retaining
Strong improvement in labour market adequate talents to support encouraging
business operations. Meanwhile, the number of
Recovery in the labour market remained strong vacancies registered as at end-June 2023 were
in the first half of 2023 in tandem with stable over 164,000 positions, mostly in semi- and
economic growth driven by the encouraging low-skilled occupations. However, the number
domestic demand. Thus, aggregate demand of job seekers declined by 18% to record
for labour increased, creating more job around 52,000 persons. This may indicate
opportunities in the market. The labour force that more people are more interested in self-
increased by 2.7% to record 16.3 million employment as the main source of income as
persons, resulting in a significant rise in opposed to standard paid employment.
the labour force participation rate to 69.9%.
Similarly, total employment also registered a The labour market is expected to sustain
higher growth of 3.4% to record 15.7 million the improving growth momentum in the
employed persons. These improvements second half of 2023, backed by continuous
have led to a substantial reduction in the enhancements in the domestic economy.
unemployed persons to 569,400, with the Thus, the overall unemployment rate in 2023
unemployment rate of 3.5%, indicating the is expected to record around 3.5% while
trend of the labour market is returning to the employment increasing by 2.6% to register 15.8
pre-pandemic level. The services (65.3%) and million persons. The services sector remains
manufacturing (16.8%) sectors remained as the as the major source of employment with a
main source of employment opportunities in share of 65.1%, mainly in the wholesale retail
the economy. and trade, as well as accommodation and food
and beverages subsectors. The manufacturing
Other labour market indicators also continued sector is expected to provide 16.7% of total
to progress positively during the same employment, particularly in the E&E as well
period. Job placements increased by 58% as food and beverages industries, while
to over 72,000 signifying more job seekers the agriculture sector accounting for 10%,
managed to secure new jobs while the especially in the oil palm industry.

economic outlook 2024 95

Chapter 2 [Link] 95 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

TABLE 2.14. Labour Market Indicators

(‘000) CHANGE
(%)
H11 20232 20243 H11 20232 20243
Labour force 16,312.3 16,358.6 16,669.4 2.7 2.1 1.9
Employment 15,743.0 15,784.2 16,099.9 3.4 2.6 2.0
Unemployment 569.4 574.4 569.5 (3.5) (3.5) (3.4)

1
January to June 2023
2
Estimate
3
Forecast
Note: Figures in parentheses refer to unemployment rate
Source: Department of Statistics and Ministry of Finance, Malaysia

TABLE 2.15. Employed Persons by Sector

(‘000) SHARE
(%)
H12 20233 20244 H12 20233 20244
Agriculture, forestry and fishing 1,555.8 1,574.7 1,603.0 9.9 10.0 10.0
Mining and quarrying 84.9 84.9 85.5 0.5 0.5 0.5
Manufacturing 2,644.1 2,642.5 2,690.9 16.8 16.7 16.7
Construction 1,185.3 1,196.8 1,212.4 7.5 7.6 7.5
Services 10,272.8 10,283.3 10,506.4 65.3 65.1 65.3
Total 1 15,743.0 15,784.2 16,099.9 100.0 100.0 100.0

1
Total includes ‘Activities of extraterritorial organisations and bodies’
2
January to June 2023
3
Estimate
4
Forecast
Source: Department of Statistics and Ministry of Finance, Malaysia

As at end-August 2023, the number of services (16.4%) sectors. Nevertheless, the

registered low-skilled foreign workers hiring of low-skilled foreign workers was kept
increased by 43.1% to 1.8 million persons within the threshold of below 15% from the
compared to 1.2 million persons in the same total employment in line with current policy to
period last year partly attributed to the reduce economic reliance on migrant workers.
temporary implementation of a relaxation Likewise, the number of expatriates increased
programme during the first quarter of the by 20.7% to register 106,788 persons, which
year. The programme aimed to expedite the is partly due to the relaxation of migrant
approval process of low-skilled foreign workers workers mobility. Majority of expatriates were
recruitment into Malaysia in meeting the from China (22%), India (19.8%) and Japan
labour requirement from all economic sectors, (7.5%). Expatriates were mainly employed in
particularly in plantation and construction the services (51.3%), information technology
sectors. The total foreign workers were (37.1%) and construction (7.6%) sectors.
sourced mainly from Bangladesh (32.1%),
Indonesia (24.7%) and Nepal (19.6%). The Labour productivity improved by 1.2% to
manufacturing sector employed the highest RM47,124 in the first half of 2023, cushioned
number of foreign workers with a share of by productivity improvements in the
35.1%, followed by construction (22.3%) and construction and services sectors, particularly

96 economic outlook 2024

Chapter 2 [Link] 96 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

in transportation and storage as well as real to grow by 6.3%, mainly contributed by

estate and business services subsectors, continuous domestic investment. The ASEAN-5’s
despite marginal contractions in agriculture, growth is forecast to moderate to 4.5%.
manufacturing and mining sectors. Overall,
labour productivity is expected to improve Global trade is projected to improve to 3.7%
by 1.4% to RM97,200 in 2023, following following uptrend trade activities in advanced
continuous productivity gains expected in economies and EMDEs, which are expected
construction (6.3%) and services (2.2%) to grow by 3.2% and 4.5%, respectively. Both
sectors. exports and imports in advanced economies
are expected to grow by 3.1% and 2.7%,
In 2022, the average monthly salaries and respectively. Likewise, exports grow by 4.3%
wages received by paid employees1 increased and imports by 5.1% for EMDEs.
by 5.8% to RM3,212 per employee. The
increment was partly due to the revision of Underpinned by the expected further
the monthly minimum wage from RM1,200 tightening of monetary policies, global
to RM1,500, which came into effect on 1 inflation is forecast at 5.2%, with advanced
May 2022. All industries recorded a positive economies projected at 2.8% and EMDEs
wage growth, particularly in tourism-related at 6.8%. These are also supported by
industries as well as other service activities. improvements in global supply chain as well as
Further improvement in productivity and easing of energy and food prices.
employment opportunities is expected to
increase the overall salaries and wages by 4.4%
to RM3,355 in 2023. Domestic Outlook
Sectoral
Outlook For 2024
Services Sector
Global Outlook
Spearheading growth for resilient economy
Modest growth prospect
The services sector is forecast to increase
The global economy is projected to grow by by 5.6% in 2024 driven by expansion in all
3% as a result of moderate growth in both subsectors. In addition, vibrant tourism-related
advanced economies and EMDEs. Advanced activities as well as continuous consumer
economies’ growth is expected to moderate spending are expected to further spur the
further to 1.4%, which will continue to weigh growth of the sector.
down the global growth. The US’s GDP is
anticipated to grow at a slower pace by 1% The wholesale and retail trade subsector will
amid continuous monetary policy tightening. remain as the key contributor to the services
Meanwhile, growth in the euro area is sector with the expected growth of 5.6%.
expected to expand slightly to 1.5% supported The growth will be driven by the expansion
by stronger services and tourism activities. in retail segment through wider automation,
The EMDEs’ growth is projected to expand e-commerce and omnichannel shopping
by 4.1% with China’s economy is forecast to experience, which enable seamless physical
moderate to 4.5%, underpinned by continuous and online interactions. The motor vehicles
lower investment and bearish labour market. segment is also anticipated to expand with the
Meanwhile, the economy of India is expected introduction of environmentally-friendly models

1
Refer to Malaysian citizens.

economic outlook 2024 97

Chapter 2 [Link] 97 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

featuring advanced technology, particularly competitiveness and further facilitate shipping

EV and hybrid vehicles within the lower price services. The platform serves as a one-stop
range. portal for single submission of documents
related to maritime regulatory and port services.
The real estate and business services subsector
is poised to grow by 5.4% attributed to The food & beverages and accommodation
sustained demand for professional services, subsector is poised to grow by 7.9%, attributed
particularly in the field of engineering to the steady rise in tourist arrivals that will
following vigorous construction activities. drive the hospitality industry, surpassing the
In addition, the real estate segment is pre-pandemic level. The tourism industry will
projected to improve owing to the increase benefit from the provision and upgrading of
in non-residential and residential property tourism facilities as well as the adoption of
transactions. Meanwhile, the information digital platforms for promotional activities. In
and communication subsector is expected addition, 2024 visit state year programmes
to expand by 6.5%, primarily underpinned in Melaka, Perak and Perlis are expected to
by telecommunication segment following contribute to the subsector’s growth.
fast rollout of 5G coverage and the adoption
of a dual network model. The performance The finance and insurance subsector is
of the subsector will also benefit from the projected to rebound by 4.3%, driven by
increasing demand for high-speed connectivity, resilient economic and investment activities
particularly through the adoption of satellite and greater clarity in economic policy and
internet technology in rural and remote direction, following the implementation of
areas. Likewise, the digital-based services are NETR, NIMP 2030 and Mid-Term Review
anticipated to spur the subsector’s growth of the Twelfth Malaysia Plan (MTR of the
following streaming coverage of major events Twelfth Plan). These endeavours, as well
such as the 2024 UEFA European Football as the increasing digitalisation of financial
Championship (UEFA Euro 2024) and the services, will induce the demand for financing,
2024 Olympic Games; adoption of cloud mortgages and loan facilities. The insurance
solutions and services; and the uptick in social segment is projected to rebound, supported
commerce activities. by strong capital and adequate liquidity.
Nonetheless, net claims are expected to
The transportation and storage subsector remain elevated due to rising medical costs
is forecast to grow by 7.4%, supported by and sustained demand for medical treatment
all segments following the expansion in services.
rail, highway, port and airport activities as
well as buoyant external demand. The land The utilities subsector is forecast to rise
transport segment is anticipated to increase by 5.3%, driven by the increasing demand
propelled by improvement in frequencies of for electricity usage, particularly industrial,
rail services as well as higher traffic volume at commercial and domestic segments. Energy
all main highways. Likewise, the air transport consumption in the industrial segment
segment is projected to rise following higher is expected to moderate as compared to
passenger traffic induced by competitive commercial and domestic segments due to
airfares as airlines increasing their capacity energy efficiency initiatives and the increase in
and flight frequencies. Meanwhile, the water self-generating energy sources in the industrial
transport segment is expected to remain segment, including rooftop solar. Nevertheless,
steady backed by the expansion in cargo and the increasing demand for vehicle charging
container handling capacity. Furthermore, the infrastructure, targeted at 10,000 EV charging
commencement of Malaysia Maritime Single bays by 2025 supported by the expectation
Window, a unified digital platform by the of high EV sales, will boost electricity
end of 2023 is expected to enhance port’s consumption.

98 economic outlook 2024

Chapter 2 [Link] 98 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

The other services subsector is projected Agriculture Sector

to rise by 5%, driven by private health
and education segments. The Malaysia Expansionary trend continues
Healthcare Travel Council (MHTC) will engage
in reinvigorating the Malaysian healthcare The agriculture sector is expected to grow
industry in an effort to establish a larger by 1.2% in 2024 driven by expansion in
market base, especially in targeted markets most subsectors, particularly oil palm, other
such as China, India and Indonesia. In 2024, agriculture and livestock. With the anticipation
MHTC estimates that the healthcare tourism of minimal impact from the El Niño
industry’s revenue trajectory will be restored phenomenon and labour conditions returning
to its pre-pandemic level at RM1.7 billion. to pre-pandemic level, the oil palm production
Meanwhile, Malaysia will continue to draw is projected to increase, contributing to the
in students from abroad through continuous subsector’s growth. Furthermore, increased
promotional efforts by the Education Malaysia matured area especially in Peninsular Malaysia
offices and the Education Malaysia Global and higher oil extraction rate arising from
Services, along with local universities. These more frequent harvesting rounds are also
include implementing high-impact programmes expected to support the subsector's growth.
to promote the Education Malaysia brand The CPO price is forecast to average within
overseas, namely Edutourism; Meet and Greet the range of RM4,000 and RM4,500 per tonne
with International Students in Malaysia; and in 2024 (2023: RM3,500 – RM4,000 per tonne),
the International Higher Education Seminar. partly attributed to anticipation of low output
Correspondingly, the government services from other vegetable oils and higher demand
subsector is forecast to record a growth of for CPO from major importing countries. The
4.7% in 2024. other agriculture and livestock subsectors
are anticipated to expand further, driven by
Manufacturing Sector concerted efforts to strengthen food security
and modernise the agriculture sector. In
Export-oriented industries gain traction addition, the rubber subsector is expected
to gain traction on account of better labour
The manufacturing sector is forecast to supply as well as more tapping activities by
expand by 4.2% in 2024 driven by better smallholders following Government’s initiatives
performance in both export- and domestic- to increase income.
oriented industries. The export-oriented
industries are expected to benefit from the Mining Sector
recovery of external demand with E&E segment
projected to surge, primarily driven by memory Poised for expansion
products. This is in line with the rebound in
demand for technologically advanced products. The mining sector is forecast to rebound
Similarly, domestic-oriented industries are by 2.7% in 2024 driven by remarkable
anticipated to grow steadily backed by higher performance in natural gas as well as crude
output in transport- and construction-related oil and condensate subsectors. Anticipation of
segments, in tandem with better consumer first natural gas production from new gas field
spending and business activities. In addition, development projects such as Gansar, Jerun
the implementation of initiatives under the and Kasawari as well as higher production
Chemical Industry Roadmap 2030, NETR and from the existing gas fields are estimated to
NIMP 2030 will further strengthen the sector’s boost the growth of the natural gas subsector.
growth. In addition, the mining sector is also expected
to benefit from higher production of crude
oil and condensate, especially in Peninsular

economic outlook 2024 99

Chapter 2 [Link] 99 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Malaysia and Sarawak. In terms of prices, Private consumption is expected to increase

the Brent crude oil is projected to average at by 5.7% owing to continued improvement in
USD85 per barrel on anticipation of higher the labour market as well as stronger domestic
demand given the positive global outlook economic and social activities. In addition,
for the year. However, changes in world Government initiatives, including cash transfers
production and consumption could significantly to targeted groups are envisaged to support
alter the oil prices forecast. household spending. Major events such as the
UEFA Euro 2024 and the 2024 Olympic Games;
Construction Sector as well as the growing social commerce
trend are also expected to boost private
Growth remains robust consumption in 2024.

The construction sector is forecast to Private investment is likely to register

increase by 6.8% in 2024 following better a growth of 5.4%, in tandem with more
performance in all subsectors. Civil engineering favourable business sentiments and improved
subsector continues to be bolstered by external environment. As such, the private
strategic infrastructure and utilities projects sector is expected to intensify its efforts to
which include ongoing projects such as the inject additional capital outlays in the economy.
Central Spine Road (CSR), the Pan Borneo In addition, private investment will continue
Sabah Highway and acceleration of projects to benefit from the realisation of approved
under the Twelfth Malaysia Plan, 2021 – 2025 investments by MIDA, mainly in the E&E,
(Twelfth Plan). Furthermore, a new solar transport equipment, as well as information
power plant project under the Corporate and communications subsectors. It is also
Green Power Programme will support the envisaged that investors will respond positively
subsector’s growth. The implementation of to the Government’s strategies and measures
NIMP 2030 is expected to further strengthen in attracting high-tech and high-value
the performance of non-residential buildings investments such as those outlined under the
subsector as the Plan will provide a platform NETR and NIMP 2030.
to attract more investments into the country.
In addition, the residential buildings subsector Public investment is projected to increase
is projected to improve further in line with by 8.3% in 2024, supported by higher
the Government’s effort to increase more Federal Government’s DE and non-financial
affordable houses as outlined under the public corporations expenditure. In addition,
MTR of the Twelfth Plan and the MADANI DE allocation will be channelled mainly
Neighbourhood scheme, as well as new to social and economic sectors in tandem
launching by the private sector. with objectives outlined in the MTR of the
Twelfth Plan. The continuation of transport-
Domestic Demand related projects such as CSR, ECRL and Rapid
Transit System Link as well as acceleration
Continuous expansion in private sector expenditure of refurbishments of dilapidated schools and
clinics in rural areas will also generate the
Domestic demand is forecast to expand momentum for the public investment growth
by 5.3% in 2024. Private sector expenditure trajectory. Strategic projects that are expected
continues to lead economic activities with a to commence in 2024 include the flood
growth of 5.6%, contributing 4.3 percentage mitigation projects as well as expansion of
points to GDP growth. Meanwhile, public sector Samajaya High-Tech Park in Sarawak and Tok
expenditure is estimated to increase by 4.1% Bali Industrial Park in Kelantan. Meanwhile,
with a contribution of 0.7 percentage points to public consumption is expected to grow by
GDP growth. 2.6%, driven by higher spending in supplies

100 economic outlook 2024

Chapter 2 [Link] 100 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

and services to improve the public service mixed-income for the self-employed or
delivery, coupled with the effort to spend more independent entrepreneurs is expected to
effectively and efficiently. improve by 8.9% as the rising demand for gig
works will create more earning prospects for
In line with the expansion in domestic this group. Efforts to enhance social protection
economic activities, the GNI at current prices among all self-employed workers, including
is expected to increase by 6.2% in 2024. those in the informal sector may also attract
Similarly, the GNS is anticipated to expand by more participation from youth to choose self-
2.9% to RM471.8 billion, with total investment employment as the main source of income. As
envisaged to increase by 3.3% to RM409.6 a result, the share of mixed-income to GDP is
billion. The share of GNS is projected to projected to rise to 15.5%.
remain significant at 24.6% of GNI. The
savings-investment gap is expected to remain The indirect tax and non-tax revenue on
in surplus at RM62.2 billion or 3.2% of GNI. production and imports is projected to expand
This provides sufficient liquidity in the financial further at 4.5% in 2024 in tandem with the
system, which can be mobilised to finance continued efforts to increase revenue collection
long-term investments in the country. and strategies to implement a wider tax
base. Meanwhile, expenditure for subsidies
Income and incentives is expected to decrease by
24.8% in line with the Government’s move to
The need for structural reform to support higher rationalise subsidies and implement a more
income targeted assistance. Thus, income from net
taxes on production and imports is projected
An encouraging economic growth anticipated to contribute 3.1% to GDP.
in 2024 will stimulate higher income prospects
for the workforce. Existing initiatives will be External Sector
intensified by adopting advanced technology
in production activities, improving productivity Recovery in external demand to invigorate trade
through retraining and upskilling as well
as reducing reliance on low-skilled foreign In 2024, gross exports are anticipated to grow
workers. Hence, the share of CE of GDP by 5.1% across all sectors, supported by better
is projected to improve to 33.1% in 2024. performance in global trade and improved
Nevertheless, the share is still relatively low prospects in commodity sector. Furthermore,
compared to other advanced economies the growth is partly attributed to the
and the CE target of 40% in 2025. Thus, ratification of trade agreements, namely the
transformation from a low-wage labour market Regional Comprehensive Economic Partnership
structure to a decent wage standard is vital (RCEP) and the Comprehensive and Progressive
in achieving a more equitable distribution of Agreement for Trans-Pacific Partnership
economic growth between employees and (CPTPP), that will enable Malaysian products
capital owners. Employers must also consider to further penetrate into wider markets.
paying higher wages as a source of growth,
which would not only alleviate the prolonged Exports of manufactured goods are projected
structural issues in the labour market, but to rebound by 5.5% resulting from rising
could also contribute to a higher business demand for both E&E and non-E&E products,
growth. constituting 48.1% and 51.9%, respectively.
The E&E products are forecast to grow by
The share of GOS of GDP is forecast to decline 4.9% bolstered by the steady demand for
to 63.8% in 2024, with capital owners continue semiconductor, following the upcycle trend in
to receive a sizable share of GOS. Meanwhile, E&E. The projected growth is also in tandem

economic outlook 2024 101

Chapter 2 [Link] 101 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

with the implementation of the NIMP 2030 that in payments for transport account, reaching
will propel high-impact sectors such as E&E RM62.1 billion, amid robust trade activities.
and aerospace. Similarly, exports of non-E&E
are estimated to expand by 6.1% following Earnings in the travel account is expected
increasing demand, particularly for petroleum to improve to RM76.6 billion attributed to
products, chemicals and chemical products as thriving tourism activities in 2024 following
well as manufactures of metal. higher tourist arrivals and per capita spending.
Similarly, payments in travel account are
Exports of agriculture goods are forecast anticipated to increase to RM53.8 billion due
to expand by 1.7%, supported by a higher to residents’ spending abroad for business,
demand for palm oil and palm oil based education and pilgrimage travelling activities.
agriculture products amid anticipated minimal Meanwhile, with the ongoing implementation
impact from the El Niño phenomenon. of strategic projects and stronger economic
Furthermore, export earnings from mining activities following expansion in the services,
goods are estimated to increase by 2.9% manufacturing and construction sectors, the
contributed by stronger demand from major other services account is expected to register
markets, particularly for LNG (3.2%) and crude a wider deficit of RM30.7 billion due to higher
petroleum (2.8%), as well as favourable global payments.
energy prices.
The primary income account is projected to
Gross imports are expected to increase by record a wider deficit of RM58.5 billion owing
4.9% in 2024 buoyed by higher demand for to higher payments by foreign investors in
intermediate, capital and consumption goods. tandem with the ongoing investment activities.
Imports of intermediate goods are anticipated Additionally, the continuous adoption of
to grow by 5.2%, mainly attributed to the advanced technology, including artificial
expansion in construction sector fuelled by intelligence, cloud computing, digitalisation
strategic infrastructure and utilities projects as and automation is expected to increase the
well as acceleration in the implementation of compensation for foreign professionals, thus
projects under the Twelfth Plan. Furthermore, contributing to the higher deficit. Similarly, the
imports of capital goods are projected to secondary income account is anticipated to
expand by 5.1% in tandem with favourable register net outflows of RM18.3 billion mainly
investment activities. In addition, imports of due to higher remittances by foreign
consumption goods are anticipated to rise by workers.
4.1%, driven by food and beverages.
Prices
The current account balance is expected to
register a surplus of RM62.2 billion or 3.2% Projected to remain manageable
of GNI in 2024, on the back of continuous
improvement in economic activities. The goods The inflation rate is forecast to range
account is projected to record a surplus of between 2.1% to 3.6% in 2024, partly
RM174.9 billion following better growth prospect attributed to a gradual shift towards targeted
in major trading partners. Higher earnings subsidy mechanism in ensuring a more
in the transport, travel and other services equitable distribution of resources. Additionally,
accounts are anticipated to narrow the deficit potential risks to the inflation outlook remain
in services account to RM35.9 billion. Receipts subject to the fluctuations in exchange rates
from transport account are projected to rise and supply-related factors, such as global
to RM34.2 billion, bolstered by higher earnings commodity prices, geopolitical uncertainties
from air travel and cargo handling services and climatic conditions. Meanwhile, the PPI is
provided by domestic companies. However, expected to be higher in 2024 between 0.1%
the continued reliance on foreign transport to 2.1% in tandem with diminishing base effect
services is anticipated to result in an increase and better production activities.

102 economic outlook 2024

Chapter 2 [Link] 102 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Labour Market Similarly, average monthly salaries and wages

are anticipated to grow by 4.7% to RM3,514
A more promising employment prospect in 2024, in line with the progression in labour
productivity and favourable economic growth.
Anticipation of better economic growth Initiatives to transform the wage ecosystem
prospects in 2024, attributed to a stable and foster employers to perceive higher wages
domestic and external economy, will stimulate as a source of growth will also contribute to
stronger labour demand and spur a more higher salaries and wages. Strategies outlined
solid growth in employment opportunities. in the MTR of the Twelfth Plan and NIMP
2030 to create high-value job opportunities
Efforts to uplift the wellbeing of the workforce
and accelerate industries’ technology adoption
and attract higher participation into the labour
will contribute to higher CE in 2024, thus
market, as outlined in the Ekonomi MADANI
positioning the economy on track to realising
framework, will be carried out. These include
the target of CE at 45% of GDP in the long-term.
strengthening skills training programmes to
be more demand-driven, providing a more
conducive working environment for women
and expanding the social protection coverage
Conclusion
for all workers. As a result, the unemployment
The global economy is anticipated to moderate
rate in 2024 is anticipated to return to the
in 2023 and 2024 due to various downside
pre-pandemic level at 3.4%. The total
risks, including weaker-than-expected global
employment is projected to expand by 2% to
demand; tighter global financial conditions;
reach 16.1 million persons with more than 80%
worsening trade tensions between major
of employment opportunities continue to be
economies; mounting geopolitical uncertainty;
provided by the services and manufacturing
and a further rise in protectionist measures.
sectors.
World trade is projected to moderate in 2023
in line with weaker global demand. However,
The number of low-skilled foreign workers
world trade is expected to strengthen in 2024
and expatriates is expected to increase in
in tandem with improved trade activities. As an
2024 as a result of strategies to facilitate
open economy, Malaysia is not spared from
the supply of sufficient workers in meeting
external developments. Thus, the GDP is
industries’ requirement. Nevertheless, the
expected to moderate in 2023. Nonetheless,
Government will continue to encourage the economy is expected to strengthen in 2024
productivity improvements through automation supported by expansion in all sectors and
and digitalisation, mainly in labour-intensive better prospect in global trade.
industries. Efforts will also be taken to
expedite the implementation of a multi-tiered Efforts will be intensified to strengthen
levy system as well as encourage employers Malaysia’s agility in keeping pace with the
to give more employment opportunities for fast-changing environment, which requires
locals to reduce the reliance on migrant a paradigm shift and innovation culture to
workers. enhance economic growth. The continuation
of strategic projects, digitalisation, improved
Labour productivity is projected to expand productivity and advanced manufacturing will
further by 2.9% to RM99,900 in 2024, mainly further stimulate the growth of the economy
contributed by the services sector, following in the medium term. All economic sectors are
robust activities in tourism-related industries. expected to benefit from the recent policies
Strengthening the implementation of such as NETR, NIMP 2030 and MTR of the
talent skills enhancement programmes and Twelfth Plan, which are in tandem with the
strategies to shift industrial structure towards Ekonomi MADANI framework. Looking ahead,
technology-driven will also contribute to the effective implementation of these policies
improvement in labour productivity. will further enhance economic growth and
resilience as Malaysia navigates through the
challenging global landscape.

economic outlook 2024 103

Chapter 2 [Link] 103 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

References

Abdul Karim, Z., Abdul Karim, B., & Ahmad, Bank Negara Malaysia. (2018). A critical
R. (2012). Fixed investment, household assessment of direct investments abroad (DIA)
consumption, and economic growth: A structural and the changing nature of foreign direct
vector error correction model (SVECM) study of investments (FDI). [Link]
Malaysia. International Journal of Business and documents/20124/826852/AR+BA6+-+A+Critical+
Society, 13(1), 63-76. Assessment+of+Direct+Investments+Abroad+%2
8DIA%29+and+[Link]
Abidin, M. Z., & Loke, W. H. (2008). Revealed
comparative advantage of Malaysian exports: Bank Negara Malaysia. (2023a, March 30). ASEAN
The case for changing export composition. Asian Finance Sectoral Bodies release ASEAN taxonomy
Economic Papers, 7(3), 130-147. for sustainable finance version 2. [Link]
[Link]/-/asean-taxonomy-v2
Altman, S. A., & Bastian, C. R. (2023). DHL Global
Connectedness Index 2022. DHL & NYU Stern Bank Negara Malaysia. (2023b, September 7).
School of Business. [Link] International Reserves of Bank Negara Malaysia as
content/dam/dhl/global/delivered/documents/ at 30 August 2023. [Link]
pdf/dhl-global-connectedness-index-2022- international-reserves-of-bank-negara-malaysia-
[Link] as-at-30-august-2023

ASEAN Capital Markets Forum. (2023, June 8). Bank Negara Malaysia. (2023c). Monthly highlights &
Initiatives: Sustainable finance. ASEAN taxonomy statistics in July 2023. [Link]
for sustainable finance version 2. [Link] monthly-highlights-statistics-in-july-2023
[Link]/initiatives/sustainable-finance/
asean-taxonomy-for-sustainable-finance- Coalition of Finance Ministers for Climate Action.
version-2 (2023). ASEAN taxonomy for sustainable finance
version 2 [PowerPoint slides]. [Link]
ASEAN Secretariat. (2021, November 10). ASEAN [Link]/sites/cape/files/
Sectoral Bodies release ASEAN taxonomy for inline-files/2023%20Green%20Transition%20
sustainable finance – Version 1. [Link] Taxonomy%[Link]
asean-sectoral-bodies-release-asean-taxonomy-
for-sustainable-finance-version-1/ Department of Statistics Malaysia. (2021). Statistics
handbook Malaysia year 2021.
ASEAN Statistics Division. (2022). Flows of inward
foreign direct investment (FDI) to ASEAN Countries. Department of Statistics Malaysia. (2022). Statistics
[Link] handbook Malaysia year 2022.
[Link]
Department of Statistics Malaysia. (2023a). Gross
ASEAN Taxonomy Board. (2021). ASEAN taxonomy domestic product income approach 2022.
for sustainable finance. [Link]
asean-taxonomy-for-sustainable-finance/ Department of Statistics Malaysia. (2023b). Gross
fixed capital formation 2022.
ASEAN Taxonomy Board. (2023a). ASEAN taxonomy
for sustainable finance – Version 2. [Link] Department of Statistics Malaysia. (2023c). Labour
org/wp-content/uploads/2023/03/ASEAN- force survey report 2022.
[Link]
Department of Statistics Malaysia. (2023d). Malaysia
ASEAN Taxonomy Board. (2023b, March 27). ASEAN economic statistics – Time series 2019.
Finance Sectoral Bodies release ASEAN taxonomy
for sustainable finance – Version 2 [Press release]. Department of Statistics Malaysia. (2023e). Micro,
[Link] small and medium enterprises 2022.
Media-statement_ASEAN-Taxonomy-Version-2-
[Link] Department of Statistics Malaysia. (2023f). Monthly
external trade statistics, August 2023.

104 economic outlook 2024

Chapter 2 [Link] 104 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Department of Statistics Malaysia. (2023g). Lean, H. H., & Tan, B. W. (2011). Linkages between
Quarterly balance of payments, Malaysia – First foreign direct investment, domestic investment
quarter 2023. and economic growth in Malaysia. Journal
of Economic Cooperation and Development,
Department of Statistics Malaysia. (2023h). 32(4), 75-96. [Link]
Quarterly balance of payments, Malaysia – Second php?file=[Link]
quarter 2023.
Malaysian Automotive Association. (2023, July 20).
Department of Statistics Malaysia. (2023i). Salaries New motor vehicles sales continues its upwards
& wages survey report 2022. momentum; MAA ups its TIV 2023 forecast [Press
release]. [Link]
Department of Statistics Malaysia. (2023j). Usage of Market_Review_1st_Half_2023.pdf
ICT and e-commerce by establishment 2022.
Malaysia External Trade Development Corporation.
Economist Intelligence Unit. (2023, August 16). (2023). Trade performance: August 2023 and
EIU global outlook – A summary of our latest January - August 2023. [Link]
views. [Link] [Link]/en/about-matrade/211-malaysian-
article/843464867/ exporters/trade-performance-2023/5932-
trade-performance-august-2023-and-january-
Fukuda, K., & Watanabe, C. (2012). A transition august-2023
from consumption-dependent development
to investment-driven development: A Malaysian Investment Development Authority.
comparison of 40 countries. Journal (2023a). Investment statistics: Investment
of Technology Management for Growing performance. [Link]
Economies, 3(2), 137-157. [Link] malaysia/investment-statistics/
org/10.15415/jtmge.2012.32011
Malaysian Investment Development Authority.
International Institute for Management (2023b). Malaysia investment performance report
Development. (2023). World competitiveness 2022: Sustainable investments for growth. https://
booklet 2023. [Link] [Link]/wp-content/uploads/2023/03/
world-competitiveness-center/rankings/world- [Link]
competitiveness-ranking/2023/
Mastercard-Crescentrating. (2023). Mastercard-
International Monetary Fund. (2009). Balance of Crescentrating Global Muslim Travel Index 2023.
payments and international investment position [Link]
manual – Sixth edition (BPM6). [Link] [Link]
org/external/pubs/ft/bop/2007/pdf/[Link]
Menon, J. (2012). Malaysia’s investment malaise: What
International Monetary Fund. (2023a). World happened and can it be fixed? ADB Economics
economic outlook, April 2023: A rocky recovery. Working Paper Series, 312. [Link]
[Link] sites/default/files/publication/29933/economics-
Issues/2023/04/11/world-economic-outlook- [Link]
april-2023
Ministry of Economy, Malaysia. (2023a). Mid-Term
International Monetary Fund. (2023b). World Review of the Twelfth Malaysia Plan 2021 – 2025.
economic outlook update, July 2023: Near-term Malaysia MADANI: Sustainable, prosperous, high-
resilience, persistent challenges. [Link] income. [Link]
org/en/Publications/WEO/Issues/2023/07/10/ storage/fileUpload/2023/09/2023091145_main_
world-economic-outlook-update-july-2023 document_ksp_rmke_12.pdf

Khalafalla, K. Y., & Webb, A. J. (2001). Export–led Ministry of Economy, Malaysia. (2023b). National
growth and structural change: Evidence from Energy Transition Roadmap. [Link]
Malaysia. Applied Economics, 33(13), 1703-1715. [Link]/sites/default/files/2023-08/National%20
[Link] Energy%20Transition%[Link]

economic outlook 2024 105

Chapter 2 [Link] 105 06/10/2023 5:49 PM

 chapter 2 macroeconomic outlook

Ministry of Investment, Trade and Industry, Securities Commission Malaysia. (2023, April 6).
Malaysia. (2023a). National investment Energy firms to be engaged over readiness under
aspirations. [Link] ASEAN taxonomy for sustainable financing.
html [Link]
media-release/energy-firms-to-be-engaged-
Ministry of Investment, Trade and Industry, over-readiness-under-asean-taxonomy-for-
Malaysia. (2023b). New Industrial Masterplan sustainable-financing
2030. [Link]
Sustainable Finance Institute Asia. (2023, June 9).
Organisation for Economic Co-Operation and Webinar on version 2 of the ASEAN taxonomy for
Development. (2008). OECD benchmark sustainable finance. [Link]
definition of foreign direct investment – Fourth the-asean-taxonomy/
edition 2008. [Link]
investmentstatisticsandanalysis/[Link] World Bank. (2023a). Global economic prospects:
Weakening growth, financial risks, June 2023.
Parliament of Malaysia. (2023). Hansard Dewan [Link]
Rakyat Parlimen Kelima Belas, Penggal Kedua global-economic-prospects
Mesyuarat Kedua, Bil. 32, 22 May 2023. https://
[Link]/files/hindex/pdf/DR- World Bank. (2023b). World Bank East Asia and The
[Link] Pacific economic update October 2023: Services for
development. [Link]
Prime Minister’s Office of Malaysia. (2023). Ekonomi org/server/api/core/bitstreams/5620cb1a-0b68-
MADANI: Memperkasa rakyat. [Link] 4a83-91c1-d8d701910a7f/content
[Link]/membangun-malaysia-madani/
ekonomi-madani-memperkasa-rakyat/ Yusuf, S., & Nabeshima, K. (2009). Tiger economies
under threat: A comparative analysis of Malaysia’s
industrial prospects and policy options. World
Bank Group.

106 economic outlook 2024

Chapter 2 [Link] 106 06/10/2023 5:49 PM

 chap ter 3

Monetary
and Financial
Developments

10 9 ov e rv i e w

10 9 mone ta ry de v e lopme nts

110 pe r for m a nce of r i nggi t

111 ba nk i ng s ec tor pe r for m a nce

114 c a p i ta l m a r k et pe r for m a nce

Information Box 3.1 – Key Capital Market Measures

120 i s l a m ic ba nk i ng a nd c a p i ta l
m a r k et pe r for m a nce
Information Box 3.2 – An update: Bolstering Islamic
Finance in Malaysia

127 conclus ion

128 r e fe r e nce s

Chapter [Link] 107 05/10/2023 8:22 PM

Chapter [Link] 108 05/10/2023 8:22 PM
 chapter 3 monetary and financial developments

chapter 3

Monetary and Financial Developments

Overview increment was commensurate with the health

of the economy and signified the withdrawal
of monetary stimulus provided during the
Financial market resilience amid external
COVID-19 crisis to support economic recovery.
turbulence
The OPR was subsequently maintained at
3.00% until September.
Monetary and financial conditions remain
supportive of financial intermediation activities
with demand for financing continues to be FIGURE 3.1. Overnight Policy Rate Level
sustained, supported by steady economic (%)
growth and improved labour market
conditions. Banks’ lending capacity remains %
3.00
3.00
sound backed by strong capital and liquidity
buffers. The capital market exhibits resilience
underpinned by a deep and broad market, 2.75

and initiatives undertaken to enhance its

efficiency and competitiveness. Monetary policy 2.50
has been normalised to its pre-pandemic
level. At the Overnight Policy Rate (OPR)
2.25
of 3.00%, the policy remains supportive of
sustainable economic growth while ensuring
an environment of price stability. Nevertheless, 2.00

the domestic financial market performance is

confronted by challenges, mainly emanating 1.75
from external factors. These factors include the
pace of monetary policy tightening by global 1.50
central banks, the banking distress in the S D M J S D M J S D M J S D M J S

US and Europe, the US debt ceiling debacle, 2019 2020 2021 2022 2023

geopolitical tensions and China’s flagging

economic recovery. Source: Bank Negara Malaysia

At the global level, the policy normalisation

Monetary Developments exercise which commenced in 2022 witnessed
central banks tightening monetary policies at
Policy rate returns to the pre-pandemic level varying paces. Bank Negara Malaysia (BNM)
took a more prudent approach in normalising
Monetary policy resumed its normalisation monetary policy, which was done gradually
path in 2023 amid resilient domestic growth. and at a measured pace compared to other
The OPR was adjusted in May with an major and regional central banks which
increment of 25 basis points (bps), bringing the increased their policy rates quickly and by
OPR to its pre-pandemic level of 3.00%. This larger magnitudes to manage soaring inflation.

economic outlook 2024 109

Chapter [Link] 109 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

From January 2022 to September 2023, Monetary policy will continue to be guided by
total increase of policy rate in Malaysia was the mandate of achieving price stability and
relatively low at 125 bps compared with other sustainable economic growth in the long term.
major economies, particularly the US (525 In carrying out this mandate, the Monetary
bps) and the UK (500 bps), as well as regional Policy Committee (MPC) remains vigilant to
economies such as the Philippines (425 bps) ongoing developments and how evolving
and Indonesia (225 bps). domestic and global conditions will impact
the overall outlook of domestic inflation and
FIGURE 3.2. Comparison of Interest Rates among growth.
Central Banks, January 2022 – September 2023
(basis points, bps)
bps Performance of Ringgit
600
0.25%
-
0.25%
-
5.25%
5.50%
External factors suppressing the ringgit
500 525
2.00% 500
-
0.10%
-
6.25% The movement of the ringgit in the first eight
4.10%
400 425 months of 2023 was mainly driven by global
400
factors, particularly development in the US
300 and weaker-than-expected recovery of China’s
1.25% 3.50%
- -
0.50%
-
3.50% 5.75% economy. The ringgit began the year on a
2.50%
200 225 225 strong note, appreciating by 3.2% to close at
1.75% 200
-
3.00% RM4.2677 against the US dollar as at end-
100 125 January. The strong performance was buoyed
by expectations that the US Federal Reserve
0 (Fed) will reach its terminal interest rate soon
Indonesia
Malaysia

Thailand

Republic of Korea

Australia

Philippines

UK

US

and optimism surrounding China’s reopening.

Nevertheless, the ringgit began to experience

a series of depreciations from the middle of
February until August. The depreciation was
Source: Bank Negara Malaysia and Bloomberg attributed to the change in narrative towards
a hawkish tone regarding US policy rate
The interest rates in the banking system increases during this period. The ringgit was
remained steady for the first four months of also compounded by the slowdown of China’s
2023 prior to the upward adjustment of the economic recovery where the People’s Bank of
OPR in May. In tandem with the increase, the China announced surprise rate cuts in June and
weighted average lending rate (ALR) trended August, which weakened the renminbi and this
higher by 21 bps to 5.07% as at end-July. continued to affect sentiments surrounding the
Higher OPR also led to an increase in the ringgit.
average saving deposit rate, which increased
by 9 bps to 0.96% during the same period. During the same period, foreign exchange
Similarly, returns to depositors increased by markets were also affected by the collapse
between 20 to 29 bps, with average nominal of Silicon Valley Bank (SVB) and the US debt
fixed deposit rates ranging from 2.71% ceiling crisis. Despite these incidents, the US
to 2.94% across all tenures of 1-month to dollar remained favourable among investors as
12-month. a safe-haven currency. Furthermore, the rapid

110 economic outlook 2024

Chapter [Link] 110 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

and large adjustments in US interest rates by

100 bps and expectations of future policy rate
Banking Sector
increases provided additional support to the US Performance
dollar. Thus, the ringgit depreciated by 4.9% to
close at RM4.6385 against the US dollar as at Banking sector remains sound amid a more
end-August, in tandem with other major and challenging operating environment
regional currencies which also declined against
the greenback. The capital position of the banking system
remains strong to withstand potential shocks
Moving forward, in addition to Malaysia’s in the economy and provide sufficient credit to
good economic fundamentals, expectations support economic activities. The excess capital
of the US Fed reaching the end of its hiking buffers1 stood at RM142.3 billion as at end-July
cycle and China’s economic recovery may 2023 while the Common Equity Tier 1 Capital
provide support for the ringgit. Since Malaysia (CET1), Tier 1 Capital, and Total Capital ratios
adopts a flexible exchange rate regime, the remain stable at 15.1%, 15.6% and 18.8%,
value of the local currency will continue to respectively, well above the Basel III minimum
be market-determined, and its performance regulatory levels2. Similarly, banks continued
will be influenced by global and domestic to maintain sufficient liquidity with a healthy
developments. Liquidity Coverage Ratio (LCR) of 154.8% and
supportive of credit intermediation activities
FIGURE 3.3. Performance of Ringgit against Selected with a stable aggregate loan-to-fund ratio
Currencies
(% change) of 82%.

End-2022 – End-August 2023 The banks continued to set aside adequate

provisions against potential credit losses, with
100 JAPANESE YEN
total provisions including regulatory reserves
CHINESE RENMINBI
of RM33.2 billion as at end-July. Similarly, the
100 KOREAN WON loan loss coverage ratio (including regulatory
AUSTRALIAN DOLLAR
reserves) remained at a prudent level of
115.8% of impaired loans, with total provisions
100 PHILIPPINE PESO
accounting for 1.6% of total loans within the
100 THAI BAHT same period. This was further supported by
SINGAPORE DOLLAR the assets quality of the banking system, which
remained intact, where the net impaired loan
US DOLLAR
ratio was steady at 1.1%. The slight increase
EURO in impairments remains manageable amid the
100 INDONESIAN RUPIAH environment of uneven recovery, high input
costs and rising cost of living.
POUND STERLING

-10 -5 0 5 10

Source: Bank Negara Malaysia

1
Excess total capital buffer refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5% of risk-weighted
assets – RWA) and bank-specific higher minimum requirements.
2
The Basel III minimum regulatory levels of CET1 Capital (4.5%), Tier 1 Capital (6%), and Total Capital ratios (8%), respectively, of RWA.

economic outlook 2024 111

Chapter [Link] 111 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

FIGURE 3.4. Banking System: Impaired Loans and segments and the high base effect in the
Net Impaired Loans Ratio
(End-period) second quarter of 2022. Financing to SMEs
remained strong with the availability of various
RM billion % financing offered by the banking system,
45 4 amounting to RM347.3 billion or 49.6% of total
40 loans outstanding in the business segment.

35
3

30
TABLE 3.1. Banking System: Loan Indicators1,
January – July 2022 and 2023
25
2
RM BILLION CHANGE
20
(%)
15 2022 2023 2022 2023
1 Total2
10
Loans applications 769.5 797.5 20.1 3.6
5
Loans approvals 386.4 413.6 26.7 7.0
0 0
M J S D M J S D M J S D M J S D M J J1 Loans disbursements 1,319.2 1,388.0 15.5 5.2
2019 2020 2021 2022 2023 Loans repayments 1,311.9 1,396.0 13.2 6.4
Loans outstanding2,3 1,973.8 2,056.3 5.9 4.2
IMPAIRED LOANS
NET IMPAIRED LOANS RATIO (RIGHT SCALE) of which:
Business Sector
1
End-July 2023
Source: Bank Negara Malaysia Loans applications 290.7 310.3 17.6 6.8
Loans approvals 163.2 183.5 18.0 12.4
Loans disbursements 928.1 933.0 15.9 0.5
The banking sector maintained prudent
Loans repayments 929.4 944.5 15.3 1.6
lending activities amid tighter financial
conditions during the first seven months Loans outstanding 3
698.4 700.1 5.4 0.2

of 2023. As at end-July 2023, the growth in of which:

total loan outstanding moderated by 4.2% to SMEs

RM2,056.3 billion mainly due to the slower Loans applications 156.7 180.7 8.7 15.4

growth in the business segment. Meanwhile, Loans approvals 80.1 95.0 9.2 18.5

financing activities in the banking system in Loans disbursements 277.9 291.7 32.7 5.0
all categories for both business and household Loans repayments 273.6 283.9 31.0 3.8
segments such as loan applications, approvals, Loans outstanding3 325.7 347.3 6.3 6.6
and disbursements expanded at a slower pace Households
of 3.6%, 7%, and 5.2%, respectively. Loans applications 454.2 466.0 20.5 2.6
Loans approvals 201.5 212.7 30.5 5.5
In the business segment, loan applications and Loans disbursements 237.1 266.4 23.7 12.4
approvals expanded by 6.8% to RM310.3 billion Loans repayments 231.1 265.8 11.9 15.0
and 12.4% to RM183.5 billion, respectively, Loans outstanding 3
1,163.1 1,226.0 6.2 5.4
following the expansion in economic activity.
1
Loans for all segments include data from the banking system and
However, the total loan outstanding slowed development financial institutions (DFIs)
2
Refer to the sum of outstanding business and household loans, and
by 0.2% to RM700.1 billion due to slower excludes loans to Government, financial institutions, non-bank financial
institutions and other entities
growth in working capital loans. Likewise, loan 3
As at end-period
Note: Total may not add up due to rounding
disbursements moderated by 0.5%, reflecting Source: Bank Negara Malaysia
lower growth mainly in the commodity-related

112 economic outlook 2024

Chapter [Link] 112 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

In the household segment, total loans TABLE 3.2. Banking System: Loans Outstanding by
Sector,
outstanding grew by 5.4% as at end-July.
End-July 2022 and 2023
Household borrowings were mostly supported
by continued demand for consumption- RM BILLION SHARE
related credit, mainly for the purchase of (%)

residential properties and passenger cars. 2022 2023 2022 2023

Loan applications and approvals moderated to Businesses 698.4 700.1 35.4 34.0
2.6% and 5.5%, respectively. Nonetheless, the Non-SMEs 1
369.4 350.3 18.7 17.0
volume of loan repayments of the segment SMEs 325.7 347.3 16.5 16.9
continued to record double-digit growth, Selected sectors
increasing further by 15% in the first seven Primary agriculture 32.5 31.7 4.6 4.5
months of 2023 supported by improvements Mining and 10.6 9.2 1.5 1.3
quarrying
in employment and income growth. The strong
Manufacturing 131.1 126.6 18.8 18.1
performance was also backed by ongoing
Construction 89.1 89.7 12.8 12.8
support from the banking system, which
Electricity, gas and 23.3 21.2 3.3 3.0
provided assistance such as rescheduling
water supply
and restructuring of loans, and advisory
Wholesale and retail 141.0 145.0 20.2 20.7
support by Credit Counselling and Debt trade
Management Agency (AKPK) to borrowers who Hotels and
19.6 19.4 2.8 2.8
restaurants
face difficulties in meeting their repayment
Transport and 29.0 30.9 4.2 4.4
obligations. storage
Information and 19.5 22.0 2.8 3.1
Moving forward, the Second Financial Inclusion communication
Framework (2023 – 2026), a four-year strategic Finance, insurance 170.0 171.2 24.3 24.5
and business
roadmap launched in June 2023 will further activities
advance financial inclusion by elevating the Households 1,163.1 1,226.0 58.9 59.6
people’s financial well-being and standard of which:
of living. This Framework complements the Purchase of 705.8 755.2 60.7 61.6
Financial Sector Blueprint 2022 – 2026 (FSBP) residential
properties
and takes into consideration new emerging
Purchase of 80.3 80.8 6.9 6.6
growth angles in financial services and the non-residential
aspirations of SDG and ESG propositions. properties
Purchase of 162.1 175.4 13.9 14.3
passenger cars
Household debt grew at a moderate pace of
Credit cards 35.5 40.3 3.1 3.3
5.1% as at June 2023, primarily driven by the
Personal use 106.7 110.6 9.2 9.0
purchase of residential properties facilitated
Purchase of 72.3 63.3 6.2 5.2
by homeownership incentive programmes and securities
the purchase of motor vehicles following the Others 0.3 0.3 0.0 0.0
extension of the Sales Tax exemption and 3
Other sectors 112.3 130.3 5.7 6.3
new vehicle registration period. Despite the Total 2 1,973.8 2,056.3 100.0 100.0
moderate pace of household debt growth, the
1
Non-SMEs refer to large corporations, including foreign entities,
debt-to-GDP ratio increased to 81.9% as at June other domestic entities, Government and others
2
Refer to the sum of outstanding business and household loans, and
due to the modest expansion in nominal GDP excludes loans to Government, financial institutions, non-bank financial
institutions and other entities
over the same period. The bulk of household Note: Total may not add up due to rounding
Source: Bank Negara Malaysia

3
The Sales Tax exemption was extended until June 2022, while new vehicle registration until March 2023.

economic outlook 2024 113

Chapter [Link] 113 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

debt is intended for wealth accumulation which

constituted 60.3% for residential properties,
Capital Market
non-residential properties (5.5%), and Performance
investment in securities (4.5%).
Fundraising activities remain steadfast
Household financial resilience was supported
by healthy debt servicing capacity and strong Gross funds raised in the capital market
financial buffers. The debt service ratios during the first seven months of 2023 rose by
(DSRs) for outstanding and newly-approved 11.4% to RM184.1 billion. The commendable
loans remained sound owing to prudent debt performance was attributed to increased
underwriting standards. Overall, the household fundraising activities by the public and private
financial assets4 totalled RM3,036 billion as at sectors, which grew by 10.8% and 12.4% to
end-June and exceeded total household debt RM114 billion and RM70.1 billion, respectively.
by 2.05 times. With improvements in income
and employment conditions, most borrowers The private sector’s gross funds raised through
have exited the repayment assistance new corporate bonds grew by 11.8% to
programme and resumed loan payments. RM67.1 billion despite the tighter financing
These developments will augur well for environment. The funds were primarily raised
household financial position. via medium-term notes valued at RM65.3
billion, followed by straight bonds (RM1,005.8
The Ministry of Finance together with BNM and million) and Islamic bonds (RM865.6 million).
Securities Commission Malaysia (SC) are in the Most of the funds were raised by finance,
process of formulating the Consumer Credit insurance, real estate, and business services
Act (CCA) which will strengthen protection for accounting for 55.6%; electricity, gas and water
credit consumers in Malaysia by providing (21.8%); and construction (9.3%) sectors. These
a comprehensive regulatory framework for funds were primarily used to finance working
credit business and credit service business, capital, new projects and refinancing.
ensuring proper conduct of entities carrying
out such businesses and promoting a fair, Meanwhile, funds raised via the domestic
efficient and transparent credit industry. equity market during the same period
Through CCA, non-bank credit providers recorded RM2.9 billion, with the growth driven
and credit service providers offering credit by IPOs. The new issuances under both Main
products or credit services such as Buy-Now- and ACE markets comprise of consumer and
Pay-Later, leasing and factoring companies, industrial products and services, construction,
debt collection agencies, impaired loan buyers technology, property and healthcare counters.
and debt counselling and management The increasing number of businesses
agencies will be subjected to authorisation, planning to list in the near term will enhance
governance and proper conduct requirements. investment opportunities and boost domestic
Regulated entities are expected to adhere to equity market vibrancy.
among others responsible lending practices,
transparency and disclosure information and For the public sector, Malaysian Government
fair treatment of credit consumers. These will Securities (MGS) issuances increased by 8.3%
strengthen consumer protection in Malaysia to RM57.4 billion, while Malaysian Government
and heighten the level of professionalism Investment Issues (MGII) increased by 13.5%
within the industry. to RM56.6 billion. The issuances take into
consideration of the Government’s financial
requirement and maturity profile. Meanwhile,

4
Assets held by households including deposits, investments in unit trust and equities, insurance/takaful policies and Employee Provident Fund (EPF).

114 economic outlook 2024

Chapter [Link] 114 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

foreign holdings of MGS and MGII outstanding The increase in gross funds raised in the
stood at 36.6% and 10.2%, respectively, as at capital market by the public and private
end-July. Malaysia’s debt market continued to sectors was primarily supported by economic
be supported by diverse group of institutional recovery initiatives to boost economic growth.
and foreign investors, complemented by the With the implementation of various measures
deep and liquid secondary bond market. such as tax reform, access to credit, and
additional stimulus packages, the public and
TABLE 3.3. Funds Raised in the Capital Market, private sectors have more opportunities to
January – July 2022 and 2023 raise capital. Additionally, foreign and domestic
direct investments have increased significantly,
RM MILLION
thus unlocking more capital and creating more
2022 2023 opportunities for investors to invest in a wide
Public Sector range of projects.
Government securities

Malaysian Government 53,010.8 57,402.9 TABLE 3.4. New Issuance of Corporate Bonds by
Securities Sector,
January – July 2022 and 2023
Malaysian Government 49,912.6 56,633.9
Investment Issues
RM MILLION SHARE
New issues of debt securities 102,923.4 114,036.8
(%)
Less: Redemptions 47,478.8 58,370.0
2022 2023 2022 2023
Net funds raised by the 55,444.6 55,666.8 Agriculture, forestry 2,119.6 348.0 3.5 0.5
public sector and fishing
Private Sector Manufacturing 5,102.0 836.0 8.5 1.2

Shares /Warrants
1 Construction 4,428.6 6,250.4 7.4 9.3
Electricity, gas and 9,520.3 14,632.2 15.9 21.8
Initial Public Offers 2,265.7 2,912.3 water
Rights Issues - - Transport, storage 2,100.0 2,785.5 3.5 4.1
and communication
Warrants - -
Finance, insurance, 31,747.3 37,358.2 52.9 55.6
New issues of shares/warrants 2,265.7 2,912.3 real estate and
business services
Debt securities2
Government and 4,270.5 4,535.8 7.1 6.8
Straight bonds 222.3 1,005.8 other services
Wholesale and retail 270.0 392.5 0.4 0.6
Convertible bonds - -
trade, restaurant
Islamic bonds 453.1 865.6 and hotels
Mining and 500.0 0.0 0.8 0.0
Medium-term notes 59,382.9 65,267.3 quarrying
New issues of debt securities 60,058.3 67,138.7 Total 60,058.3 67,138.7 100.0 100.0
Less: Redemptions 52,839.3 45,894.4
Note: Includes corporate bonds issued by Cagamas and non-resident
corporations
Net issues of debt securities 7,219.0 21,244.3 Total may not add up due to rounding
Source: Bank Negara Malaysia
Net funds raised by the 9,484.7 24,156.6
private sector

Total net funds raised 64,929.3 79,823.5 During the first seven months of 2023, MGS
and corporate bond yields broadly declined
1
Excludes funds raised by the exercise of Employee Share Option across all tenures. The yields on 1-year, 3-year,
Scheme, Transferable Subscription Rights, Warrants and Irredeemable
Convertible Unsecured Loan Stocks 5-year, and 10-year MGS decreased by 2 bps,
2
Excludes short-term papers in conventional and Islamic principles
Note: Total may not add up due to rounding 18 bps, 26 bps, and 26 bps, respectively.
Source: Bank Negara Malaysia
The decline in benchmark yields was mainly

economic outlook 2024 115

Chapter [Link] 115 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

driven by market expectations of the policy FIGURE 3.6. Share of Foreign Holdings in Total
rate reaching its peak. This trend was also Malaysian Government Securities Outstanding
influenced by global macro developments, (End-period)
including easing inflationary expectations in
RM billion %
the US, as well as the subdued global banking
600 65
turmoil. As at end-July, the 1-year, 3-year,
5-year and 10-year MGS yields closed at 3.24%,
500
3.49%, 3.60% and 3.83%, respectively. 58

400
FIGURE 3.5. Malaysian Government Securities
Indicative Yields 51
(End-period) 300

44
% 200
5.0
37
4.5 100

4.0
0 30
M J S D M J S D M J J1
3.5
2021 2022 2023
3.0
TOTAL MALAYSIAN GOVERNMENT SECURITIES
OUTSTANDING
2.5
SHARE OF FOREIGN HOLDINGS (RIGHT SCALE)
2.0 1
End-July 2023
Source: Bank Negara Malaysia
1.5
M J S D M J S D M J S D M J S D M J J1

2019 2020 2021 2022 2023

FIGURE 3.7. 5-Year Corporate Bond Yields
10-YEAR
(End-period)
5-YEAR
3-YEAR %
1-YEAR 12

1
End-July 2023 10
Source: Bank Negara Malaysia

8
Meanwhile, the corporate bond yields on
the 5-year AAA-rated, AA-rated and A-rated 6
securities decreased by 42 bps, 42 bps and 10
bps, respectively. However, BBB-rated corporate
4
bond yield increased by 21 bps during the
same period and closed at 7.01%. Nonetheless,
2
Malaysia’s BBB-rated corporate bond yield M J S D M J S D M J S D M J S D M J J1
trended slightly higher driven by investors 2019 2020 2021 2022 2023

seeking corporate bonds with relatively safer BBB

A
credit ratings in light of risk-off sentiment AA
following US banking distress. Overall, the AAA

yield trend in the corporate debt market

1
End-July 2023
generally points towards the expectation of Source: Bank Negara Malaysia

116 economic outlook 2024

Chapter [Link] 116 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

lower interest rates, signalling lower borrowing FIGURE 3.8. Performance of Bursa Malaysia
costs, which will be an advantage to many
businesses. Billion Points
800 2,200

It is envisaged that local sukuk and bonds will

play a vital role as the financing instruments 2,000
600
for programmes and projects featured in the
National Energy Transition Roadmap (NETR), 1,800

the New Industrial Master Plan 2030 (NIMP 400

2030) and the Mid-Term Review of the Twelfth 1,600
Malaysia Plan (MTR of the Twelfth Plan).
200
Overall, the outlook for MGS, MGII as well as 1,400
corporate bonds and sukuk remains positive,
buoyed by expectations of sustained economic 0 1,200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q31
growth, manageable inflation levels, and the
2019 2020 2021 2022 2023
anticipated conclusion of BNM’s rate hiking
cycle this year. Nonetheless, external factors TOTAL TRANSACTION (UNITS)
VALUE OF TRANSACTION (RM)
such as the US Fed rate hike uncertainties, COMPOSITE INDEX2 (RIGHT SCALE)
the banking sector turmoil and geopolitical
tensions could pose as short-term market 1
End-August 2023
volatility risks. 2
As at end-period
Source: Bursa Malaysia

The local equity market continued to be

affected by external challenges during the Switzerland. Although early interventions
first eight months of 2023. In early 2023, the by the authorities managed to prevent the
US Fed hinted of possible small interest rate incident from spreading to other financial
hikes due to easing inflationary pressures. institutions, investors were still cautious of the
Meanwhile, China reopened its borders, giving potential contagion effect within the sector. In
hope of a positive global economic spillover. May, the OPR was increased coincident with
These factors improved risk sentiments but the US Fed’s decision. Meanwhile, fears over
were not sufficient to propel the FTSE Bursa the lingering US banking crisis, US debt ceiling
Malaysia Kuala Lumpur Composite Index (FBM negotiations and Malaysia’s six-state election
KLCI) to close the month at a higher level led to more defensive investment approach
with the Index declining by 0.7% to 1,485.50 and profit-taking activities. In addition, slower
points as at end-January (end-December 2022: economic activity in Europe and weak domestic
1,495.49 points). The lacklustre performance corporate earnings compounded these fears.
can be attributed to various factors including Consequently, the FBM KLCI closed lower at
uncertainties surrounding global economic 1,387.12 points at the end of May.
growth which affected investor sentiment.
Effective 13 July, the Government reduced the
The FBM KLCI decreased by 6.8% (year-to- stamp duty rate on shares traded on Bursa
date) to close at 1,393.83 points on 14 March, Malaysia from 0.15% to 0.10% as one of the
which was below the psychological level of measures to reinvigorate the domestic capital
1,400 points, as market sentiment was affected market. The measure aims at increasing
by the banking sector turmoil in the US and trading volumes and liquidity among retail

economic outlook 2024 117

Chapter [Link] 117 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

investors, motivating SMEs to pursue IPOs TABLE 3.5. Bursa Malaysia: Selected Indicators,
End-August 2022 and 2023
due to the expedited listing process while
encouraging foreign investors to participate in
2022 2023
Malaysia’s stock market. Consequently, the FBM
KLCI recovered, to close higher at 1,459.43 Indices

points as at end-July, buoyed by strong FBM KLCI 1,512.05 1,451.94

foreign buying interest and backing from local
FBM EMAS 10,697.65 10,740.70
institutions as well as higher bargain-hunting
FBM 100 10,449.43 10,412.03
activities. The recovery was further supported
by the launching of the Ekonomi MADANI FBM SCAP 14,380.26 16,072.89
framework. The market sentiment continued to FBM ACE 4,910.44 5,217.97
improve, supported by foreign buying interest
Total turnover 1
and impending policy announcements with
the index rising to close at 1,462.03 points on Volume (million units) 489,373.45 559,605.08
9 August. Subsequently, with improved local Value (RM million) 363,183.71 340,020.02
job openings data and stimulus measures
Average daily turnover1
announced by China, the FBM KLCI ended the
month to close at 1,451.94 points. Likewise, Volume (million units) 3,020.82 3,475.81

the accumulated net equity inflows for July and Value (RM million) 2,241.87 2,111.93
August recorded RM1,555 million.
Market capitalisation 1,706.31 1,776.33
(RM billion)
FIGURE 3.9. Performance of Selected Stock Markets
(% change) Total number of listed
companies

End-2022 – End-August 2023 Main Market 764 773

US (NASDAQ) ACE Market 156 167
JAPAN
LEAP Market 46 48
VIET NAM

REPUBLIC OF KOREA Market liquidity

INDIA
Turnover value/market 21.3 19.1
US (DOW JONES) capitalisation (%)
INDONESIA
Market concentration
CHINA (SHANGHAI)

UK 10 highest capitalised 34.1 33.0

stocks/market
SINGAPORE
capitalisation (%)
MALAYSIA

PHILIPPINES 1
Based on market transactions and direct business transactions
between January and August
THAILAND
Source: Bursa Malaysia
HONG KONG

-10 -5 0 5 10 15 20 25 30 35

Source: Bloomberg

118 economic outlook 2024

Chapter [Link] 118 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

information box 3.1

Key Capital Market Measures

Several key measures were undertaken by the Securities Commission Malaysia (SC) and Bursa Malaysia
in the first eight months of 2023 to enhance the liquidity and efficiency of Malaysia’s capital market.
The measures are as follows:

3-Jan 16-Feb 17-Mar

Amendments to Business Rules and Launching of New Data Connectivity Bursa Carbon Exchange’s Inaugural
Listing Requirements Services Carbon Auction
Business Rules and Listing Requirements were Bursa Connectivity Services was launched Bursa Carbon Exchange (BCX), the world’s
amended, effective 10 January 2023, as a universal connectivity solution allowing first Shariah-compliant carbon exchange,
to facilitate continued operations on global users access to Bursa’s data pool successfully carried out the nation’s inaugural
non-gazetted holidays. On such holidays, quickly and seamlessly, which enables users carbon credit auction on 16 March 2023.
Bursa Malaysia will ensure all transactions can to create new financial products, analyse The BCX enables the trading of standardised
and will be delivered and settled as scheduled. trading opportunities and meet the growing contracts with Verra-registered carbon
demand of investors. credits from climate-friendly projects and
solutions, which corporates can use to offset
their emission footprint and meet climate
goals. The BCX will also facilitate
engagements between the public and private
sectors toward developing conducive policies
to support the emerging voluntary carbon
market.

31-Mar 27-Mar 22-Mar

New Transfer of Listing Framework Enhancement of Listing Requirements Commencement of Centralised

from LEAP Market to ACE Market to Facilitate Offering of Islamic REITs Sustainability Platform (Platform)
The ACE Market Listing Requirements and ETFs with Waqf Feature Bursa Malaysia, in collaboration with the
were amended to facilitate eligible LEAP The Main Market Listing Requirements were London Stock Exchange Group, has developed
Market-listed corporations to graduate to enhanced to facilitate the offering of listed and tested the Platform that will serve as a
the ACE Market and further increase the Islamic Real Estate Investment Trusts (REITs) repository for listed companies’ ESG
accessibility and attractiveness. and Exchange-traded Funds (ETFs) with the disclosures. The Platform will enable Malaysian
With these amendments, SMEs will have Waqf feature effective 3 April 2023. corporates to meet regulatory requirements as
better access to the capital market and These enhancements will promote the well as facilitate greater transparency and
provide a clearer roadmap for LEAP growth of Waqf and Sustainable and consistency in sustainability disclosures.
companies aiming to list on the ACE Responsible Investment (SRI) assets, It will also assist banks to develop green
Market. further bolstering Bursa’s position as a financing products and services, incentivising
leading global Islamic finance marketplace. and encouraging decarbonisation of the
corporate sector and their supply chain.

10-Apr 18-Apr 12-June

Memorandum of Understanding (MoU) New E-Payment Platform (e-PATH) Expansion of Approved Securities
to Develop Capital Market Graduate Beginning 1 May 2023, e-PATH was Criteria
Programme (CMGP) introduced to provide an efficient, secure Criteria for Approved Securities were
Ministry of Higher Education and SC signed an and effortless way for market participants expanded by reducing the daily market
MoU to develop CMGP, which aims to improve and the public to make online payments capitalisation requirement from
the knowledge and employability of to SC, such as application fees for IPOs, RM500 million to RM200 million to allow
9,000 public and private university graduates transfers of listing, as well as takeovers investors manage their portfolios while
to address shortage of skilled manpower in and mergers. boosting market vibrancy in Securities
the capital market industry. The three-year Borrowing and Lending, and short-selling
programme is partially funded through activities.
the Capital Market Development Fund.

29-Aug 27-June 19-June

Widens Access, Offers More Choices in FIKRA ACE to Spur Islamic Fintech Measures to Boost Capital Market
Fund Management Innovation, Growth for ICM Vibrancy and Competitiveness
In line with measures to liberalise the fund The FIKRA ACE, an enhanced version of The Honourable Prime Minister announced
management industry, SC introduced the Islamic fintech accelerator programme was short- and medium-term measures to drive
Foreign Exempt Scheme (FES) framework, launched to enable companies with fintech Malaysia’s economic growth and capital
providing high-net-worth entities and solutions to nurture, grow, and connect with market competitiveness, among others,
institutional investors greater onshore the Islamic Capital Market (ICM) ecosystem reducing the stamp duty rate for the trading of
access to foreign investment funds. The SC by facilitating the development of Islamic listed shares from 0.15% to 0.10% and
also introduced flexibility to wholesale fund fintech through a structured approach. promoting corporate venturing to drive
managers seeking to invest in alternative The programme consists of three greater domestic direct investment.
investment products beyond conventional components, namely FIKRA ACE - Accelerator,
assets, such as securities, derivatives, FIKRA ACE - Circle and FIKRA ACE - Excel.
money market instruments and deposits.
These measures are to enhance the depth
and breadth of the capital market.

economic outlook 2024 119

Chapter [Link] 119 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

Islamic Banking a frontier in addressing sustainability goals

through Shariah-compliant financing that
and Capital Market balances social and environmental needs with
Performance economic development.

Islamic banking and capital market thrive amid TABLE 3.6. Islamic Banking: Key Indicators1,
End-July 2022 and 2023
resilient economic growth

RM BILLION CHANGE
Islamic banking continues to support economic (%)
and social needs in line with principles
2022 2023 2022 2023
of value-based finance via diverse and
Assets 995.1 1,081.4 6.3 8.7
innovative Shariah-compliant solutions. As
at end-July 2023, the total assets of Islamic Financing 774.1 844.1 12.0 9.1

banking5 expanded by 8.1% to RM1,293.2 Primary agriculture 16.2 20.9 -2.6 23.1
billion, accounting for 36.4% of the market Mining and quarrying 3.0 3.2 -35.3 -29.1
share. Meanwhile, the total Islamic financing Manufacturing 36.0 33.7 4.6 -4.0
outstanding grew by 9.1% to RM844.1 billion as Electricity, gas and 11.8 8.5 94.1 3.6
at end-July which outpaced the growth trend in water supply
the conventional banking sector. The demand Wholesale and retail 42.7 54.0 18.2 17.8
for household financing remained strong, trade, restaurants
and hotels
accounting for the largest share of 63.1%
of the total financing, mainly for residential Construction 43.3 44.6 34.3 -3.5

properties and passenger cars. Real estate 31.8 35.3 1.5 10.3
Transport, 22.7 27.5 24.3 21.0
storage and
The outlook for Islamic banking remains
communication
promising, supported by a mature ecosystem
Finance, insurance 46.4 35.9 21.5 11.7
that promotes social and financial inclusion. and business
This ecosystem encapsulates regulations activities
enacted by the Islamic Financial Services Act Education, health 16.3 8.4 -41.4 14.2
2013 [Act 759], diversified and innovative and others

products and services, resilient industry Households 491.3 532.7 11.8 9.0
players, progressive digitalisation strategy Others 12.4 39.3 118.4 17.5
as well as strong foundation in value-based Liabilities 923.8 1,001.0 6.4 8.4
intermediation (VBI) financing. In addition, Deposits and 869.3 934.8 8.8 7.5
Malaysia’s strong commitment to the social Investment Account
finance agenda is reflected in the anticipated Investment 0.3 0.3 -22.1 -11.7
3rd cohort of the Value-based Intermediation Savings 75.1 71.6 5.5 -4.6
Financing and Investment Impact Assessment
Demand 134.9 132.7 16.3 -1.6
Framework (VBIAF) Sectoral Guides6 to be
Investment account 133.5 142.9 17.6 7.1
released by the year-end that integrates ESG
Others 525.5 587.3 5.5 11.8
risk considerations in financing and investment
decisions. The integration of VBI and social 1
Excluding DFIs
Note: Total may not add up due to rounding
finance will further position the nation as Source: Bank Negara Malaysia

5
Includes DFIs.
6
This framework is a continuation from the 1st and 2nd cohort Sectoral Guides issued in 2021 and 2022 covering palm oil, renewable energy,
energy efficiency, oil & gas, construction and infrastructure and manufacturing sectors. The 3rd cohort covers agriculture, mining & quarrying, road
transportation and waste management.

120 economic outlook 2024

Chapter [Link] 120 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

information box 3.2

An update: Bolstering Islamic Finance in Malaysia

The Evolution of Islamic Finance in Malaysia

Islamic finance has progressed significantly in Malaysia over the last four decades. It has
undergone three broad phases of development and evolved into one of the most developed
Islamic finance ecosystems globally as depicted in Figure 3.2.1. The solidification of the industry is
the culmination of efforts from the Government, financial regulators, and industry players, which
have continued to pursue a multi-pronged approach towards sustaining and sharpening Malaysia’s
proposition as a global leader in Islamic finance. These efforts include providing a conducive and
enabling legal and regulatory environment; advancing structural reforms that address market
frictions and industry competitiveness; as well as enhancing the dynamism of institutions and
talent.

FIGURE 3.2.1. Phases of Development and Current Ecosystem in Islamic Finance

Early Phases of Islamic Finance

Building foundation Mainstreaming Driving diversification

and innovation

Financial Sector Masterplan Financial Sector Blueprint

2001 – 2010 2011 – 2020

Strategic Intents

Current Strategic Thrusts of Islamic Financial Sector and Capital Market

Financial Sector Blueprint 2022 – 2026 Capital Market Masterplan 3, 2021 – 2025
Advance value-based finance through Shaping a stakeholder economy with SRI
Islamic finance leadership and ICM
Relevant to Relevant to Relevant to
A Sharpen Malaysia’s proposition as an broader halal environment society
international gateway for Islamic finance MSMEs
Facilitate access Empower Enable
B Strengthen policy enablers of value-based for MSMEs in the investors socio-economic
finance for greater impact halal economy and businesses development of
that are the nation,
C
Mainstream social finance responsible and leveraging Islamic
sustainable social finance

economic outlook 2024 121

Chapter [Link] 121 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

Islamic Finance Ecosystem in Malaysia

Growing market share Global recognition

Islamic deposits and
Islamic financing 1
investment accounts (IA)1

44.7% 41.6%
2018: 36.6% 2018: 35.4%

Enabling and comprehensive ecosystem

Financing Deposit and IA

Takaful fund assets2 Takaful net contribution

Enabling regulatory Host to key global Vibrant talent Shariah-compliant

13.7% 24.8% and legal Islamic finance ecosystem market
2018: 10.5% 2018: 19.7%
frameworks (e.g. infrastructures serving global infrastructures
CBA, IFSA, Shariah (e.g. IFSB, IILM) Islamic finance (e.g. BSAS6, BM-i7)
standards, and needs
Shariah governance
Fund assets Net contribution framework)

Deep capital market Diverse players offering wide range of services

Global and domestic sukuk Development

financial institutions3
40.3% Largest market share in global sukuk outstanding
Training and
USD800
Retakaful
operators 6 education
mil
World’s first sovereign US dollar sustainable sukuk
3 >68 entities
Takaful Ancillary
63.7% Sukuk market share out of total domestic bonds/sukuk outstanding
operators 16 >60 services
(e.g. legal,
Islamic equities Shariah firms)

66.3% Shariah market capitalisation out of total market capitalisation Banking 29 574 Islamic fund
institutions3 managers5
79.3% Shariah-compliant securities out of total securities listed and traded

Note:
1
Includes Development Financial Institutions (DFIs)
2
Not inclusive of the shareholders’ fund assets
3
Inclusive of Islamic windows of commercial and investment banks
4 As of Dec 2022
5 Inclusive of Islamic windows of fund managers
6 Bursa Suq Al-Sila` (BSAS) is a commodity trading platform specifically dedicated to facilitate Islamic liquidity management and financing by
Islamic financial institutions
7
Bursa Malaysia-i (BM-i) is a fully integrated Islamic securities exchange platform with a comprehensive range of exchange related facilities,
that incorporate Shariah-compliant features

Source: Bank Negara Malaysia, Securities Commission Malaysia and Bursa Malaysia

Strengthening the value and impact of Islamic finance

Under the framework of Ekonomi MADANI, Islamic finance is envisioned to intermediate more
diverse forms of capital that contribute to an inclusive and just economic system. Islamic finance
in Malaysia is called upon to not just embrace the value of Halal but also embrace the value of the
Tayyib principle. This aspiration aligns closely with the intrinsic values of Shariah applied in Islamic
finance as outlined in Figure 3.2.2. that are intended to promote a balanced distribution of wealth,
eradicate poverty, foster collaboration and encourage sustainable development. These values are
universal and can shape a more sustainable and inclusive financial system in Malaysia.

122 economic outlook 2024

Chapter [Link] 122 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

FIGURE 3.2.2. Shariah Principles underpinning Islamic Finance Development Effort

Economic growth that is balanced, progressive, sustainable and inclusive

Prevention of harm and

attainment of benefits

Fairness and self-drive for best quality (ihsan)

Money is only a store of Wealth creation must be Profit comes through

Profit comes through Assurance of transparency
value and medium of balanced with wealth
accepting and sharing risk
exchange transfer and circulation accepting
and and sharing risk
traceability

Shariah Compliance

Source: Bank Negara Malaysia

Strategies under Financial Sector Blueprint 2022 – 2026 are aligned with Ekonomi MADANI
Aspirations

The Financial Sector Blueprint 2022 – 2026 (FSBP) sets out visions for financial sector development
to ensure the sector is agile, dynamic and resilient to support the transition of the nation to
its next stage of development. The Blueprint consists of five strategic thrusts, where one of the
thrusts, “advance value-based finance through Islamic finance leadership”, envisions a financial
system that can deliver tangible socio-economic impact and ultimately demonstrate the values and
full potential of Islamic finance, including realising Maqasid Shariah1.

The thrust encapsulates three main strategies, namely:

i. Sharpen Malaysia’s proposition as an international gateway for Islamic finance;

ii. Strengthen policy enablers of value-based finance for greater impact; and
iii. Mainstream social finance.

As Malaysia aims to strengthen its role as a global gateway for Islamic finance markets in Asia
and Organisation of Islamic Cooperation (OIC) countries, the Blueprint outlines key strategic
priorities that will build upon the strength of the industry’s ecosystem. These strategic priorities
are further supported by concerted efforts and initiatives by various stakeholders in the ecosystem.
These initiatives include reviewing regulatory frameworks to spur innovation, developing a strong
and sustainable pool of quality talent, pursuing scalable and impactful pilot programmes in
collaboration with industry as well as partnering with global stakeholders as depicted in
Figure 3.2.3.

1
Maqasid Shariah means the objective of Shariah, the deeper meanings and inner aspects of wisdom considered by the lawgiver in all or most of the
areas and circumstances of legislation. (The Malaysian Islamic Financial Market Report 2023, Bank Negara Malaysia)

economic outlook 2024 123

Chapter [Link] 123 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

FIGURE 3.2.3. Key Development Priorities and Industry Players Initiatives

Key development priorities in the FSBP 2022 – 2026 Ecosystem-wide initiatives

• Formation of MIFC Leadership Council (MLC) provides a

i. Strengthen gateway-critical capabilities in collaborative platform for the industry to drive MIFC priorities
Sharpen Malaysia’s Malaysia’s Islamic financial industry • Pioneering a global network of Shariah scholars known as the
proposition as an ii. Promote greater industry leadership Centralised Shariah Advisory Authorities (CSAA) to strengthen
international
gateway for Islamic iii. Facilitate further deepening of Malaysia’s global connectivity and foster mutual respect on Shariah views
finance Islamic financial and capital markets • Formation of Islamic Financial Market Subcommittee (IFMC) to
formulate and implement strategies on Islamic financial market

i. Develop a more conducive regulatory • Intermediated RM302.2 billion in VBI-aligned initiatives between
environment to facilitate the application of 2017 and 2021 (16% share out of total key product segments – i.e.
Strengthen policy diverse Shariah contracts financing, investment, deposit and investment account)
enablers of ii. Support the industry’s innovation efforts in
value-based finance developing new value-based business • Collaboration on value-based solutions pilot programmes in
for greater impact mainstreaming value-based finance
models, solutions, and practices
iii. Facilitate greater stakeholder activism • Modernising Shariah contract-based regulatory framework to
through higher quality disclosures spur innovation

• Innovation using Islamic social finance concepts e.g. myWakaf,

myZakat, iTEKAD (blended finance programme for low-income
Mainstream i. Elevate social finance as an integral part of microentrepreneurs)
social finance
the Islamic finance ecosystem • Over RM65.2 million has been distributed under the Islamic social
finance tools from October 2020 until September 2021

Source: Bank Negara Malaysia, AIBIM Value-based Intermediation (VBI) Preview Report 2017 – 2020 and Full Report 2021 (based on member banks’
submission), ICD ‒ Refinitiv Islamic Finance Development Indicator Report 2022

The Malaysia International Islamic Financial Centre (MIFC) Leadership Council (MLC), established by
Bank Negara Malaysia (BNM) and Securities Commission Malaysia (SC) in October 2022 serves as
an important enabler to position Malaysia as a global marketplace and international gateway for
Islamic finance. The MLC as an industry-led platform is guided by the aspirations outlined in the
FSBP and the Capital Market Masterplan 3 (CMP3).

The Council which comprises ten prominent local and international industry figures has since
actively engaged the industry players and key partners, as well as participated in various domestic
and international platforms as part of its strategic and advocacy roles in advancing Islamic
finance and its impact creation. As part of its immediate priorities, MLC will strive to unlock
impactful innovations and collaboration towards delivering outcomes in positioning Malaysia as
the preferred Islamic fundraising and investment destination, addressing inequality, advancing
sustainability, elevating relevant human capital and knowledge initiatives in Islamic finance as well
as strengthening digital empowerment.

Value-based Intermediation (VBI) is one of the key catalysts towards developing a more balanced,
progressive, sustainable and inclusive financial system. VBI aims to deliver the intended outcomes
of Shariah that generate positive and sustainable impacts on the economy, community and
environment. Since the introduction of VBI in 2017, the Islamic finance industry has facilitated
a total of RM302.2 billion in VBI-aligned initiatives. Presently, efforts are also directed towards
facilitating innovative value-based solutions that support wider intermediation of capital and
support the digital transformation of the financial sector.

The announcement of two Islamic digital banks2 in 2022 and intensification of digitalisation efforts
undertaken by existing Islamic banks will further enhance access to affordable and quality financial
solutions, particularly for the underserved and unserved market segments. Furthermore, greater

2
In 2022, BNM announced the five successful applicants for the digital bank licences of which two are licensed under the Islamic Financial Services
Act 2013 (IFSA). The successful applicants will undergo a period of operational readiness.

124 economic outlook 2024

Chapter [Link] 124 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

digitalisation in the takaful sector, propelled by the Licensing and Regulatory Framework for
Digital Insurers and Takaful (DITO), also presents opportunities to reduce critical protection gaps in
Malaysia.

Ongoing efforts are being undertaken to facilitate innovative value-based solutions that support
the wider intermediation of capital. In supporting implementation towards SDG, social finance is
also envisioned to play a greater role in complementing public sector finance, commercially-driven
financial solutions, and corporate social responsibility (CSR) activities of financial institutions to
promote greater social resilience. This goal is pursued by incorporating instruments such as zakat,
waqf, and sadaqah as integral parts of Islamic financial products and services. For example, iTEKAD,
a blended social finance programme introduced in 2020, provides financial and non-financial
components in the form of seed capital, microfinance, and structured training. The programme
targets low-income segment of aspiring and existing microentrepreneurs. The iTEKAD has expanded
to include 11 participating banks which have onboarded more than 3,000 participants while
mobilising over RM40 million of diverse social finance funds (donations, social impact investment,
and zakat) in 2023. The key performance indicators of VBI and iTEKAD are listed in Figure 3.2.4.

FIGURE 3.2.4. Key Performance Indicators of VBI and iTEKAD

VBI iTEKAD
Total funds intermediated by Islamic Financial Key Performance1
Institutions (IFIs)
11 participating >300 micro-entrepreneurs
RM146.6 billion between 2020 to 2021 2020: 1 financial institutions 2020: 57 enrolled

RM155.6 billion >50 implementation >RM40 mil total social finance

between 2017 to 2020 2020: 2 partners 2020: RM0.04 mil funds mobilised

Channelled towards Key Impact1

12.2% of deposit 18.0% of Over 27,000 Business growth

and investment financing balance financing
account balance is is VBI-related. >40% generated average monthly sales of more than
accounts for affordable
VBI-related. Worth Worth about housing. Worth over
RM4,000
about RM48.7 billion RM82.6 billion RM5 billion

About 42,000 Over 123,000

financing Over 4,400 Employment
financing accounts
accounts for green financing accounts >70% retained at least one employee
for financing to
financing. Worth over for financing for education.
SMEs and micro-SMEs.
RM7.1 billion Worth over RM5 billion
Worth over RM51 billion

Over 1,500 public 21.6% of Nearly 200 projects Financial resilience

infrastructure investments are of value-added >70% saved on average up to RM4,000 of business income
financing accounts. VBI-related. Worth services were professionally per month
Worth over RM3.9 billion over RM15.2 billion managed. Worth nearly
RM103 million

Over 193,000 71.5% of zakat

recipients of 62.3% of Islamic Digital upskilling
recipients fall
Islamic social social finance >90% conduct online sales and marketing and make
under the category of
recipients received zakat.
finance funds. Worth fi sabililläh (for education). business transactions through e-payments
over RM65 million Worth over RM36 million
Worth nearly RM17 million

Note: 1Figures are as of August 2023 and derived from sample of iTEKAD participants
Source: Bank Negara Malaysia, participating financial institutions of iTEKAD, AIBIM Value-based Intermediation 2021 Full Report

Conclusion

Collectively, the efforts undertaken thus far will further advance Malaysia’s Islamic finance system
and strengthen the nation’s position as a prominent leader in the global Islamic economy. The
culmination of efforts from the Government, particularly through BNM and SC, alongside various
stakeholders in the industry is poised to boost the value proposition of Islamic finance. In addition,
Malaysia is widely recognised as a global thought leader in this domain. Hence, the nation is
well-positioned to spearhead in charting the future of Islamic finance, given the rapidly evolving
financial and economic landscapes while striking a balance between economic development and the
social agenda, in line with the aspirations of Ekonomi MADANI.

economic outlook 2024 125

Chapter [Link] 125 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

The Islamic Capital Market (ICM) continues to Malaysian sukuk have often been considered
lead Malaysia’s capital market in fundraising attractive attributed to competitive yields and
and investing. As at end-July, the domestic a reputation for strong regulatory oversight.
size of ICM was valued at RM2,402.2 billion, Additionally, Malaysia’s efforts to become a hub
accounting for 64.4% of total capital market for Islamic finance have garnered interest from
size. Furthermore, the size of ICM increased foreign institutional investors in diversifying
further by 7.9% with the sukuk market investment portfolios. However, global sukuk
becoming more attractive to investors. issuances are likely to rise slowly in 2023 amid
slower growth and market volatility but will
During the first seven months, sukuk issuances remain a key funding source in core Islamic
amounted to RM178.2 billion or 61.7% of finance markets. Meanwhile, the medium- to
total issuances. The increasing demand from long-term outlook is expected to be positive
the private sector for Shariah-compliant amid sustained Islamic investors’ demand,
instruments continues to fuel the issuances issuer refinancing needs, and government
of sukuk. The total corporate sukuk issuances support in core markets.
reached RM50.9 billion, representing 75.6%
of overall corporate bonds and sukuk issued Bursa Malaysia continues to promote Shariah-
in Malaysia during the same period. Malaysia compliant securities products. As at end-July,
continued to record the largest share of global a total of 807 or 81.8% out of the total of 987
sukuk outstanding at 38.8% as at end-July. public listed companies are Shariah-compliant.
The market capitalisation of Shariah-compliant
Recognised as the pioneer in the global securities stood at RM1,142.9 billion or 65.1%
sukuk market, Malaysia has a well-established of the overall total market capitalisation of
Islamic finance infrastructure and sukuk listed companies on Bursa Malaysia.
issuances with diverse tenures and structures.

FIGURE 3.10. Global Sukuk Outstanding by Country

(% share)

8.7%
3.6% 17.4%

35.4%
3.0% 38.8%
15.7%
USD 746.5 billion USD 759.8 billion
End-2022 12.9% End-July 2023

6.9%

6.9%

29.6% 21.1%

MALAYSIA INDONESIA MALAYSIA INDONESIA

SAUDI ARABIA TURKIYE SAUDI ARABIA TURKIYE
UNITED ARAB EMIRATES OTHERS1 UNITED ARAB EMIRATES OTHERS1

1
Others include Bahrain, Bangladesh, Brunei, Egypt, France, Gambia, Hong Kong, Ireland, Ivory Coast, Jordan, Kuwait, Luxembourg, Maldives, Morocco,
Nigeria, Oman, Qatar, Senegal, Singapore, South Africa, UK and US
Note: Total may not add up due to rounding

Source: Bank Negara Malaysia

126 economic outlook 2024

Chapter [Link] 126 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

The Malaysian capital market is expected

to remain resilient and supportive of the
Conclusion
economy, buoyed by strong macroeconomic
Monetary policy will remain conducive to
fundamentals, high domestic liquidity, and
sustainable economic growth amid price
a well-developed infrastructure. The Capital
stability. Financial intermediation activities
Market Masterplan 3 (CMP3) seeks to make
continue to remain robust backed by positive
the capital market even more relevant to the
growth prospects and a stable labour
economic development of Malaysia and its
market with the availability of credit remains
stakeholders by 2025. The goal is to achieve
forthcoming. Likewise, the capital market
an efficient and effective capital market that
is projected to remain resilient in line with
channels capital into productive sectors as
a favourable domestic growth outlook. The
well as fosters diversity and competition.
NETR, NIMP 2030 and MTR of the Twelfth Plan
Towards this end, the SC continues to focus
guided by the Ekonomi MADANI framework are
its efforts on raising domestic investors’ digital
among policies that will advance Malaysia into
savviness and positioning fintech to promote
a better future. Along with the Government’s
solutions in the halal economy, Sustainable
announcement on measures to revitalise the
and Responsible Investment (SRI) and Islamic
capital market, the domestic financial market
social finance.
is poised to strengthen further and contribute
more significantly towards the nation’s wealth
and prosperity.

economic outlook 2024 127

Chapter [Link] 127 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

References

Association of Islamic Banking and Financial Bursa Malaysia. (2023b, February 16). Bursa
Institutions Malaysia. (2021). Value-based Malaysia launches new data connectivity
Intermediation full report 2021. https:// service.[Link]
[Link]/contents/pages/value-based- about_bursa/media_centre/bursa-malaysia-
intermediation/AIBIM-VBI-Full-Report-2021. launches-new-data-connectivity-service
pdf
Bursa Malaysia. (2023c, March 17). Bursa
Bank Negara Malaysia. (2023a). BNM Annual Carbon Exchange successfully completes
Report 2022. [Link] Malaysia’s inaugural carbon auction.
publications/ar2022 [Link]
sites/5bb54be15f36ca0af339077a/content_
Bank Negara Malaysia. (2023b). Economic and entry5c11a9db758f8d31544574c6/6413da6f5b
financial developments in Malaysia in the first 711a45ca10d6ad/files/17Mar_2023_Bursa_
quarter of 2023. [Link] Carbon_Exchange_Successfully_Completes_
qb23q1_en_pr Malaysia_s_Inaugural_Carbon_Action_.
pdf?1679028940
Bank Negara Malaysia. (2023c). Economic and
financial developments in Malaysia in the Bursa Malaysia. (2023d, March 22). Bursa
second quarter of 2023. [Link] Malaysia commences centralised sustainability
my/-/qb23q2_en_pr platform. [Link]
sites/5bb54be15f36ca0af339077a/content_
Bank Negara Malaysia. (2023d). Economic & entry5c11a9db758f8d31544574c6/641aac745b
Monetary Review 2022. [Link] 711a7239465262/files/Mar22_Bursa_Malaysia_
my/publications/emr2022 Commences_Centralised_Sustainability_
Platform_.pdf?1679471184
Bank Negara Malaysia. (2023e). Financial
Inclusion Framework (2023 – 2026) strategy Bursa Malaysia. (2023e, March 27). Bursa
paper. [Link] Malaysia enhances listing requirements to
frmwk facilitate offering of Islamic REITs and ETFs
with waqf feature. [Link]
Bank Negara Malaysia. (2023f). Financial Sector com/about_bursa/media_centre/bursa-
Blueprint 2022 – 2026. [Link] malaysia-enhances-listing-requirements-to-
my/publications/fsb3 facilitate-offering-of-islamic-reits-and-etfs-
with-waqf-feature
Bank Negara Malaysia. (2023g). The Malaysian
Islamic financial market report. [Link] Bursa Malaysia. (2023f, March 31). Bursa
[Link]/documents/20124/54166/The- Malaysia introduces new transfer of listing
[Link] framework from LEAP Market to ACE Market.
[Link]
Bursa Malaysia. (2023a, January 3). Bursa media_centre/bursa-malaysia-introduces-
Malaysia amends business rules and listing new-transfer-of-listing-framework-from-leap-
requirements. [Link] market-to-ace-market
com/about_bursa/media_centre/bursa-
malaysia-amends-business-rules-and-listing-
requirements

128 economic outlook 2024

Chapter [Link] 128 05/10/2023 8:22 PM

 chapter 3 monetary and financial developments

Bursa Malaysia. (2023g, June 12). Bursa Securities Commission. (2023b, April 18). SC
Malaysia expands “Approved Securities” criteria announces new e-payment platform. https://
to boost market vibrancy. [Link] [Link]/resources/media/media-
[Link]/about_bursa/media_ release/sc-announces-new-e-payment-
centre/bursa-malaysia-expands-approved- platform
securities-criteria-to-boost-market-vibrancy
Securities Commission. (2023c, June 27). SC’s
Bursa Malaysia. (2023h, June 19). SC- FIKRA ACE to spur Islamic fintech innovation,
Bursa Malaysia measures to boost capital growth for ICM. [Link]
market vibrancy and competitiveness. resources/media/media-release/scs-fikra-ace-
[Link] to-spur-islamic-fintech-innovation-growth-for-
com/sites/5bb54be15f36ca0af339077a/ icm
content_entry5c11a9db758f8d31544574c6/
649000665b711a176fd3fafe/files/ Securities Commission. (2023d, August 29). SC
June19_2023_SC-Bursa_Measures_To_ widens access, offers more choices in fund
Boost_Capital_Market_Vibrancy_And_ management. [Link]
[Link]?1687161434 media/media-release/sc-widens-access-offers-
more-choices-in-fund-management
Securities Commission. (2023a, April 10).
Ministry of Higher Education and Securities
Commission Malaysia ink MoU to develop
Capital Market Graduate Programme. https://
[Link]/resources/media/media-
release/ministry-of-higher-education-and-
securities-commission-malaysia-ink-mou-to-
develop-capital-market-graduate-programme

economic outlook 2024 129

Chapter [Link] 129 05/10/2023 8:22 PM

Chapter [Link] 130 05/10/2023 8:22 PM
 statistical tables

Statistical
Tables

economic outlook 2024 131

2. Statistical Table Combine BI [Link] 131 05/10/2023 8:38 PM

2. Statistical Table Combine BI [Link] 132 05/10/2023 8:38 PM
 statistical tables

LIST OF STATISTICAL TABLES

Table No.
I. Socioeconomic Indicators
Selected Socioeconomic Statistics 1.1

II. International Economy

Key Economic Data of Selected Countries 2.1

III. Macroeconomy
National Accounts
Gross Domestic Product by Kind of Economic Activity at Constant 2015 Prices 3.1
Index of Services 3.2
Industrial Production Index 3.3
Gross National Income by Demand Aggregates 3.4
Private Consumption Indicators 3.5
Private Investment Indicators 3.6

External Sector
Malaysia’s Trade with Major Trading Partners 3.7
External Trade Indices 3.8
Production, Exports Volume and Value of Major Primary Commodities 3.9
Direction of Major Exports 3.10
Exports of Manufactured Goods 3.11
Source of Major Imports 3.12
Balance of Payments 3.13

Prices
Consumer Price Index by Region 3.14
Consumer Price Index by Stratum 3.15
Consumer Price Index by State 3.16
Core Index 3.17
Producer Price Index - Local Production 3.18

Labour Market
Labour Force 3.19
Employment by Industry 3.20
Active Registrants 3.21
Vacancies and Placements 3.22

IV. Financial and Capital Markets

Interest Rates 4.1
Key Exchange Rates 4.2
Commercial Banks: Loans Outstanding by Purpose and Sector 4.3
Government and Corporate Bond Yields 4.4
Bursa Malaysia: Selected Indicators 4.5
Islamic Banks: Loans Outstanding by Purpose and Sector 4.6

V. Sustainable Development Goals

Progress on Sustainable Development Goals by Indicator 5.1

economic outlook 2024 133

2. Statistical Table Combine BI [Link] 133 05/10/2023 8:38 PM

 statistical tables

STATISTICAL ANNOTATION

The Statistics Appendix provides time series data on the key economic variables. Each table contains
current selected economic data. Percentage changes are provided for important variables as an
indication of economic trends. In addition, percentage of totals and footnotes are also provided
where necessary. The sum of the component figures may not be tally with the subtotal or total due
to rounding. In some series, historical figures have been revised. Estimates for 2023 are based on six
to eight months data and forecasts for 2024 have been provided where appropriate. Unless otherwise
stated, the source of data is from the Ministry of Finance, Malaysia.

Poverty Line Income (PLI)

Malaysia’s poverty line income was first developed in 1977 by introducing a basket of minimum basic
needs to support the life of the whole household. Cost estimates are made based on expenditure on
items in this basket which include the minimum basic needs of food and non-food. This assessment
of basic needs results in a minimum income level known as Poverty Line Income (PLI) which is the
ringgit value required by a household to meet life necessities.

The calculation of PLI method was updated in 2005 whereby the food necessity in food PLI are
determined based on minimum requirements of energy/ calorie taken by each household based
on the food pyramid and balanced eating practices by the World Health Organization (WHO) and
Recommended Dietary Allowance (RDA). This is to ensure that household members can live a healthy
and active life in society. The minimum amount of calories, by gender and age, will be converted to
macronutrients and adjusted with items and prices in the PLI food basket.

Meanwhile, the necessity for non-food PLI is determined by actual expenditure based pattern of low-
income households in Malaysia, which includes expenditure on clothing, housing, transport and other
non-food necessities. The non-food PLI measurement also considers the economies of scale factor in
household’s expenditure and the price changes by state, urban and rural areas.

In 2019, a review of the 2005 methodology was implemented. Elements in food and non-food necessities
are improved along with the latest commodity prices. The optimum minimum and balanced needs
for each household are the basis for food items, while for non-food items, which refer to the B20
expenditure pattern are readjusted based on current costs of basic needs. A total of 146 items have
been selected for non-food needs which include housing, clothing, health, education, transportation,
telecommunications and personal care items.

Based on the result of the conducted review, the PLI setting methodology has been improved in
three aspects. First, food PLI setting concept that has been updated from minimum requirements to
optimum minimum requirements. Second, the PLI food basket item setting takes into account the
quality improvement based on Recommendation Nutrient Intake (RNI) and Food Pyramid, on the back
of the Malaysian Dietary Guidelines, in line with daily physical activity and healthy life. Third, for non-
food PLI, the necessity item of the lowest 20 percent income household group (B20) has increased to
146 items to from 106 items in 2019.

134 economic outlook 2024

2. Statistical Table Combine BI [Link] 134 05/10/2023 8:38 PM

 statistical tables

STATISTICAL ANNOTATION

Acronyms and Abbreviations

NPISHs Non-profit institutions serving households

US United States
ASEAN Association of Southeast Asian Nations
EMDEs Emerging Market and Developing Economies
IMF International Monetary Fund
GDP Gross Domestic Product
FBM-KLCI Financial Times Stock Exchange (FTSE) Bursa Malaysia Kuala Lumpur Composite Index
MSIC Malaysia Standard Industrial Classification
SITC Standard International Trade Classification
PT3 Pentaksiran Tingkatan 3
PMR Penilaian Menengah Rendah
SRP Sijil Rendah Pelajaran
LCE Lower Certificate of Education
SPM Sijil Pelajaran Malaysia
MCE Malaysian Certificate of Education
STPM Sijil Tinggi Pelajaran Malaysia
MHSC Malaysian Higher School Certificate
n.a. Not available
cont’d Continued
n.e.c. Not elsewhere classified
etc. et cetera

economic outlook 2024 135

2. Statistical Table Combine BI [Link] 135 05/10/2023 8:38 PM

 statistical tables

136 economic outlook 2024

2. Statistical Table Combine BI [Link] 136 05/10/2023 8:38 PM

 statistical tables

1.1. SELECTED SOCIOECONOMIC STATISTICS

Malaysia

Indicator 2019 2020 2021 202210 202311

Demographic Statistics

Population1 (‘000)

Total 32,523 32,447 32,576 32,698 33,380

Male 16,765 16,966 17,001 17,040 17,460

Female 15,758 15,481 15,576 15,658 15,920

Sex ratio2 106 110 109 109 110

Population density (per square

98 98 99 99 101
kilometre)

Dependency ratio (%)

Total3 43.4 44.3 44.1 43.7 42.9

Young age4 33.7 34.6 34.0 33.3 32.3

Old age5 9.7 9.7 10.1 10.4 10.6

Life expectancy at birth1

Total 74.8 74.7 74.510 73.411 n.a.

Male 72.5 72.5 72.310 71.311 n.a.

Female 77.4 77.2 77.010 75.811 n.a.

2018 2019 2020 2021 2022

Education

Primary school enrolment rate6 (%) 97.9 98.1 98.2 98.3 98.7

Secondary school enrolment rate7 (%) 91.1 92.5 92.4 92.5 93.5

Higher education institutions enrolment8 1,343,830 1,323,449 1,224,098 1,207,593 1,202,202

Pupil-teacher ratio

Primary schools 11.6 11.6 12.0 12.3 12.3

Secondary schools 12.0 11.0 11.0 11.5 11.3

Literacy rate9 (%) 95.9 96.0 96.3 96.4 96.5

1
Year 2020 to 2023: Current Population Estimates based on the 2020 Population and Housing Census
2
The number of males per 100 females
3
The ratio of the number of persons aged 0–14 years and 65 years and above to the number of persons aged 15–64 years
4
The ratio of the number of persons aged 0–14 years to the number of persons aged 15–64 years
5
The ratio of the number of persons aged 65 years and above to the number of persons aged 15–64 years
6
Percentage of school aged children between 6+ and 11+ years at primary level in Government and private schools
7
Percentage of school aged children between 12+ and 16+ years at secondary level in Government and private schools
8
Includes public university, private higher education institutions, polytechnic and community college
9
Aged 15 years and above with formal education, excluding non-Malaysian citizens
10
Preliminary
11
Estimate

economic outlook 2024 137

2. Statistical Table Combine BI [Link] 137 05/10/2023 8:38 PM

 statistical tables

1.1. SELECTED SOCIOECONOMIC STATISTICS (cont’d)

Malaysia

Indicator 2018 2019 2020 2021 2022

Health

Population per doctor 530 482 441 420 412

Official beds strength in public sector12 46,611 46,988 48,305 49,781 49,981

Information Technology

Mobile-cellular penetration rate

130.2 135.4 133.6 142.1 145.3
per 100 inhabitants (%)

Mobile-broadband penetration rate

113.0 123.7 118.7 126.4 131.0
per 100 inhabitants (%)

Infrastructure

Rural electricity coverage (% of housing unit) 96.4 97.0 97.4 97.5 97.8

Electricity index 116.3 119.9 115.7 118.6 122.9

2012 2014 2016 2019 2022

Poverty Structure13

Incidence of absolute poverty

(% of households)

Total 1.7 0.6 0.4 5.6 6.2

Urban 1.0 0.3 0.2 3.8 4.5

Rural 3.4 1.6 1.0 12.4 12.0

Incidence of relative poverty

(% of households)

Total 19.2 15.6 15.9 16.9 16.6

Urban 17.9 13.7 11.1 12.8 11.9

Rural 15.1 14.4 33.0 33.2 33.3

12
Comprising Ministry of Health (MOH) hospitals (includes special medical institutions) and non-MOH Hospitals (university hospitals and military hospitals)
13
Based on Household Income and Basic Aminities Survey
Starting 2019, data is based on 2019 methodology Poverty Line Income (PLI)
Source: Department of Statistics, Malaysia; Malaysian Communications and Multimedia Commission; Ministry of Education; Ministry of Higher Education;
Ministry of Health and Ministry of Rural Development Malaysia

138 economic outlook 2024

2. Statistical Table Combine BI [Link] 138 05/10/2023 8:38 PM

 statistical tables

2.1. KEY ECONOMIC DATA OF SELECTED COUNTRIES

Real GDP Consumer Unemployment Current Gross Exports3 Imports4

GDP Per Capita1 Price Rate2 Account International (USD billion) (USD billion)
(% Growth) (USD) Index (%) Balance Reserves
(%) (USD billion) (USD billion)

Advanced Economies
2020 -4.2 52,240.3 0.7 6.6 125.5 – 14,137.8 13,909.9
2021 5.4 57,491.0 3.1 5.6 435.2 – 17,214.5 16,861.3
2022 2.7 62,924.9 7.3 4.5 -258.4 – 18,823.5 19,039.7
2023 5
1.5 65,891.3 4.7 4.7 13.3 – 19,487.8 19,397.0
20246 1.4 68,023.4 2.8 5.0 179.5 – 20,410.0 20,131.6
United States
2020 -2.8 63,577.3 1.3 8.1 -619.7 145.8 1,424.9 2,406.9
2021 5.9 70,159.8 4.7 5.4 -846.4 251.6 1,754.3 2,935.3
2022 2.1 76,348.5 8.0 3.6 -925.6 – 2,064.3 3,375.8
2023 5
1.8 80,034.6 4.5 3.8 -728.8 – – –
20246 1.0 82,131.5 2.3 4.9 -689.9 – – –
Euro Area
2020 -6.1 – 0.3 8.0 209.5 – 3,488.3 3,121.9
2021 5.4 – 2.6 7.8 337.6 – 4,160.7 3,713.1
2022 3.5 – 8.4 6.8 -102.3 – 4,378.4 4,320.8
2023 5
0.9 – 5.3 6.8 83.0 – – –
20246 1.5 – 2.9 6.8 144.1 – – –
Singapore
2020 -3.9 61,274.0 -0.2 3.0 57.3 362.3 362.5 329.8
2021 8.9 77,710.1 2.3 2.7 76.4 417.9 457.4 406.2
2022 3.6 82,807.6 6.1 2.1 90.2 289.5 515.8 475.6
2023 5
1.5 91,100.4 5.8 2.1 79.9 – – –
20246 2.1 94,594.6 3.5 2.1 80.6 – – –
Republic of Korea
2020 -0.7 31,728.3 0.5 3.9 75.9 443.1 512.5 467.6
2021 4.3 34,998.0 2.5 3.7 85.2 463.1 644.4 615.1
2022 2.6 32,250.4 5.1 2.9 29.8 423.2 683.6 731.4
2023 5
1.4 33,393.1 3.5 3.7 37.1 – – –
20246 2.4 34,806.9 2.3 3.7 50.4 – – –
Japan
2020 -4.3 40,117.9 0.0 2.8 147.9 1,440.2 641.3 635.5
2021 2.2 39,882.6 -0.2 2.8 197.3 1,448.1 756.0 769.0
2022 1.0 33,821.9 2.5 2.6 90.0 1,272.7 746.9 897.2
2023 5
1.4 35,385.1 2.7 2.3 131.8 – – –
20246 1.0 36,492.2 2.2 2.3 180.3 – – –
EMDEs
2020 -1.8 11,650.2 5.2 – 156.2 – 8,226.3 7,896.8
2021 6.9 12,920.3 5.9 – 325.7 – 10,701.6 10,093.6
2022 4.0 14,219.0 9.8 – 582.7 – 12,290.1 11,395.7
20235 4.0 15,183.2 8.3 – 146.8 – 12,094.9 11,719.5
2024 6
4.1 15,992.8 6.8 – 19.4 – 12,721.4 12,430.6

economic outlook 2024 139

2. Statistical Table Combine BI [Link] 139 05/10/2023 8:38 PM

 statistical tables

2.1. KEY ECONOMIC DATA OF SELECTED COUNTRIES (cont’d)

Real GDP Consumer Unemployment Current Gross Exports3 Imports4

GDP Per Capita1 Price Rate2 Account International (USD billion) (USD billion)
(% Growth) (USD) Index (%) Balance Reserves
(%) (USD billion) (USD billion)

China
2020 2.2 10,525.0 2.5 4.2 248.8 3,536.0 2,590.0 2,066.0
2021 8.4 12,572.1 0.9 4.0 317.3 3,606.2 3,358.2 2,686.7
2022 3.0 12,813.8 1.9 4.2 417.6 3,466.8 3,593.5 2,716.2
20235 5.2 13,721.1 2.0 4.1 272.5 – – –
20246 4.5 14,800.6 2.2 3.9 232.6 – – –
India
2020 -5.8 1,913.2 6.2 – 24.0 588.4 276.4 373.2
2021 9.1 2,234.3 5.5 – -38.7 635.3 395.4 573.1
2022 7.2 2,379.2 6.7 – -88.4 564.7 453.4 720.4
20235 6.1 2,601.4 4.9 – -81.6 – – –
20246 6.3 2,802.5 4.4 – -89.3 – – –
ASEAN-5 7

2020 -4.4 14,319.3 1.0 – 99.5 – – –

2021 4.0 15,441.7 2.0 – 77.5 – – –
2022 5.5 17,256.1 4.8 – 78.9 – – –
20235 4.6 18,551.8 4.3 – 83.4 – – –
20246 4.5 19,665.6 2.9 – 90.0 – – –
Indonesia
2020 -2.1 3,932.3 2.0 7.1 -4.4 135.9 163.3 141.6
2021 3.7 4,362.7 1.6 6.5 3.5 144.9 231.5 196.2
2022 5.3 4,798.1 4.2 5.9 13.2 137.2 292.0 237.4
20235 5.0 5,016.6 4.4 5.3 -3.8 – – –
20246 5.0 5,388.3 3.0 5.2 -11.1 – – –
Malaysia
2020 -5.5 10,400.1 -1.2 4.5 14.1 107.6 234.6 190.7
2021 3.3 11,475.6 2.5 4.6 14.5 116.9 299.3 238.2
2022 8.7 12,448.1 3.3 3.9 12.5 114.6 351.9 293.7
20235 ~ 4.012 12,332.3¹¹ 2.5 – 3.0 3.5 3.010 112.59‑ 208.18 174.18
20246 4.0 – 5.0 13,051.4¹¹ 2.1 – 3.6 3.4 13.8 – 334.2 281.4

¹ Expressed in current USD price except for Advanced Economies, EMDEs and ASEAN-5 (Purchasing Power Parity (PPP) dollars per person)
² Composites for the country groups are averages of national unemployment rates weighted by labour force in the respective countries
³ Expressed in Exports of Merchandise only except for Advanced Economies, EMDEs and ASEAN-5 (Exports of Merchandise and Services)
4
Expressed in Imports of Merchandise only except for Advanced Economies, EMDEs and ASEAN-5 (Exports of Merchandise and Services)
5
Estimate
6
Forecast
7
Indonesia, Malaysia, the Philippines, Thailand and Viet Nam
8
As at August 2023
9
As at 30 August 2023
10
As at June 2023
¹¹ USD rate is the average for period of January to August 2023 at RM4.4944/USD. Data is sourced from BNM Monthly Statistical Bulletin (August 2023)
12
Approximate
Sources: International Monetary Fund (IMF), World Economic Outlook (April and July 2023); IMF Database; World Trade Organization Trade Statistics;
Department of Statistics; Bank Negara Malaysia and Ministry of Finance, Malaysia

140 economic outlook 2024

2. Statistical Table Combine BI [Link] 140 05/10/2023 8:38 PM

 statistical tables

3.1. GROSS DOMESTIC PRODUCT BY KIND OF ECONOMIC ACTIVITY

at constant 2015 prices, Malaysia
RM million

Kind of Economic Activity 2020 2021 20222 20233 20244

Agriculture 99,109 99,000 99,073 99,620 100,770

(-2.4) (-0.1) (0.1) (0.6) (1.2)

Mining and quarrying 92,879 93,717 96,199 95,448 98,030

(-9.7) (0.9) (2.6) (-0.8) (2.7)

Manufacturing 307,606 336,839 364,131 369,359 384,727

(-2.7) (9.5) (8.1) (1.4) (4.2)

Construction 53,616 50,889 53,441 56,824 60,688

(-19.3) (-5.1) (5.0) (6.3) (6.8)

Services 777,693 794,552 881,310 930,125 981,990

(-5.2) (2.2) (10.9) (5.5) (5.6)

Utilities 37,950 39,025 40,337 41,676 43,900

(-1.0) (2.8) (3.4) (3.3) (5.3)

Wholesale and retail trade 228,561 233,144 264,511 279,976 295,685

(-5.8) (2.0) (13.5) (5.8) (5.6)

Food & beverages and accommodation 36,539 32,731 43,547 48,072 51,853
(-26.7) (-10.4) (33.0) (10.4) (7.9)

Transportation and storage 42,078 42,653 55,799 63,863 68,598

(-21.5) (1.4) (30.8) (14.5) (7.4)

Information and communication 89,203 94,639 99,576 104,531 111,274

(5.9) (6.1) (5.2) (5.0) (6.5)

Finance and insurance 96,102 105,839 106,667 105,310 109,841

(2.9) (10.1) (0.8) (-1.3) (4.3)

Real estate and business services 58,766 53,088 65,143 69,920 73,663
(-14.5) (-9.7) (22.7) (7.3) (5.4)

Other services1 63,795 61,950 67,714 72,059 75,658

(-10.1) (-2.9) (9.3) (6.4) (5.0)

Government services 124,699 131,484 138,015 144,717 151,519

(5.0) (5.4) (5.0) (4.9) (4.7)

(+) Import duties 15,346 15,646 16,785 17,868 18,873

(-5.2) (2.0) (7.3) (6.5) (5.6)

GDP at purchasers’ prices 1,346,249 1,390,644 1,510,939 1,569,247 1,645,078

(-5.5) (3.3) (8.7) (~ 4.0)5 (4.0 – 5.0)

1
Owner occupied dwellings, community, social and personal services, private non-profit services to households and domestic services of households
2
Preliminary
3
Estimate
4
Forecast
5
Approximate
Note: Figures in parentheses are annual percentage changes
Source: Department of Statistics and Ministry of Finance, Malaysia

economic outlook 2024 141

2. Statistical Table Combine BI [Link] 141 05/10/2023 8:38 PM

 statistical tables

3.2. INDEX OF SERVICES

2015 = 100, Malaysia

2019 2020 2021 2022 20231

Weights
(%)
Annual Change (%)

Services 100.0 6.4 -7.9 1.6 14.4 6.9

Wholesale & retail trade, food & beverages 45.2 6.6 -9.6 0.5 17.2 7.3
and accommodation
Wholesale and retail trade 37.9 6.1 -6.1 2.3 14.3 6.7

Food and beverages 5.7 10.2 -20.4 -8.3 24.3 2.7

Accommodation 1.6 6.8 -49.8 -25.2 140.7 43.5

Business services and finance 26.8 6.1 -4.0 2.6 9.3 4.5

Finance and insurance 16.0 4.6 2.6 9.9 1.0 0.0

Professional, scientific & technical and 7.2 9.3 -10.3 -6.7 22.2 13.6
administrative & support services
Real estate 3.6 5.2 -17.9 -12.8 31.1 5.6

Information & communication and 21.9 6.5 -5.4 5.0 14.1 7.8
transportation & storage
Information and communication 12.9 6.5 5.7 6.5 5.1 3.7

Transportation and storage 9.0 6.5 -22.5 1.8 33.7 14.9

Other services 6.1 6.3 -21.8 -8.7 19.7 11.7

Arts, entertainment & recreation and 2.6 7.9 -41.3 -28.1 52.9 14.6
personal services & other activities
Private education 1.9 4.9 -7.5 -5.6 7.3 10.5

Private health 1.6 5.5 -6.7 7.6 9.5 10.2

1
January to June 2023
Source: Department of Statistics, Malaysia

142 economic outlook 2024

2. Statistical Table Combine BI [Link] 142 05/10/2023 8:38 PM

 statistical tables

3.3. INDUSTRIAL PRODUCTION INDEX

2015 = 100, Malaysia

2019 2020 2021 2022 20231

Weights
Subsector
(%) Annual Change (%)

Total Industrial Production 100.00 2.4 -4.1 7.4 6.7 1.2

Mining 25.14 -1.3 -8.9 1.5 2.2 0.3

Electricity 6.61 3.1 -3.5 2.5 3.6 1.6

Manufacturing 68.25 3.6 -2.7 9.5 8.2 1.4

Export-oriented industries 45.82 2.9 -0.7 11.6 7.0 0.0

Manufacture of vegetable and animal oils and fats 3.71 -1.4 -3.9 -8.4 -1.8 5.5

Manufacture of textiles 0.58 4.4 -13.2 13.3 4.3 -3.8

Manufacture of wearing apparel 0.60 6.1 -11.4 1.6 2.1 5.8

Manufacture of wood and products of wood and cork, 1.44 4.9 -12.1 9.2 6.7 -6.5
except furniture; manufacture of articles of straw and
plaiting materials
Manufacture of coke and refined petroleum products 9.36 2.7 -10.6 11.6 6.3 1.1
Manufacture of chemicals and chemical products 6.37 1.8 -7.1 9.4 4.1 4.3

Manufacture of rubber products 2.22 6.8 48.9 23.2 -16.9 -9.6

Manufacture of plastics products 2.26 2.9 2.1 12.1 2.8 -5.5

Manufacture of computer, electronics and optical products 13.89 2.9 2.5 15.6 16.0 0.6

Manufacture of electrical equipment 2.20 3.4 0.9 12.2 9.7 0.2

Manufacture of machinery and equipment n.e.c. 2.14 3.5 1.1 11.6 7.0 0.8

Manufacture of furniture 1.04 8.1 -7.0 -3.7 9.5 -8.7

Domestic-oriented industries 22.44 5.0 -6.6 5.0 10.9 4.6

Manufacture of food processing products 3.68 6.8 4.9 10.1 8.7 4.1

Manufacture of beverages 0.65 2.8 -14.5 9.9 13.3 0.5

Manufacture of tobacco products 0.52 5.8 -16.0 -12.4 22.1 17.6

Manufacture of leather and related products 0.15 5.1 -17.9 11.5 25.6 8.5

Manufacture of paper and paper products 1.15 4.3 -2.9 14.9 7.5 3.3

Printing and reproduction of recorded media 0.93 4.2 -5.1 3.1 6.8 5.5
Manufacture of basic pharmaceuticals, medicinal 0.38 4.2 14.5 15.7 6.1 1.9
chemical and botanical products
Manufacture of other non-metallic mineral products 2.97 4.5 -14.3 1.0 9.1 3.2

Manufacture of basic metals 2.35 4.0 -4.8 2.8 6.8 3.1

Manufacture of fabricated metal products, except 3.79 3.7 -15.5 6.3 7.1 6.2
machinery and equipment
Manufacture of motor vehicles, trailers and semi-trailers 3.17 7.0 -1.7 0.8 25.6 5.8

Manufacture of other transport equipment 1.19 4.8 -13.2 2.8 7.0 3.6

Other manufacturing 0.74 5.3 -7.6 2.6 9.9 2.6

Repair and installation of machinery and equipment 0.76 3.9 -8.5 -0.1 10.2 5.4

1
January to July 2023
Source: Department of Statistics, Malaysia

economic outlook 2024 143

2. Statistical Table Combine BI [Link] 143 05/10/2023 8:38 PM

 statistical tables

3.4. GROSS NATIONAL INCOME BY DEMAND AGGREGATES

Malaysia
RM million

Type of Expenditure 2020 2021 20223 20234 20245

Current Prices

A. Final consumption expenditure

Public 183,869 196,941 208,887 213,063 221,165

Private 865,450 897,573 1,031,759 1,111,748 1,204,270

B. Gross fixed capital formation

Public1 74,405 67,130 72,330 79,856 88,271

Private 222,259 231,308 253,939 269,856 290,016

C. Changes in inventories and valuables2 -17,816 43,974 94,811 46,912 31,317

D. Exports of goods and services 873,477 1,093,895 1,378,452 1,272,424 1,345,773

E. Imports of goods and services 783,152 981,922 1,248,820 1,143,757 1,206,785

Gross Domestic Product at purchasers’
F. 1,418,491 1,548,898 1,791,358 1,850,102 1,974,027
prices (A+B+C+D-E)

G. Balance of primary income -28,520 -42,153 -59,414 -47,119 -58,490

H. Gross National Income (F+G) 1,389,971 1,506,745 1,731,944 1,802,983 1,915,537

Constant 2015 Prices

A. Final consumption expenditure

Public 179,721 191,268 199,943 201,904 207,132

Private 802,747 817,756 908,974 960,111 1,014,649

B. Gross fixed capital formation

Public1 70,522 62,674 65,985 71,423 77,380

Private 210,653 216,308 231,830 241,708 254,724

C. Changes in inventories and valuables 2

-4,464 19,060 21,465 10,475 2,986

D. Exports of goods and services 830,157 984,094 1,126,661 1,056,379 1,099,226

E. Imports of goods and services 743,087 900,516 1,043,918 972,752 1,011,020

F. Gross Domestic Product at purchasers’ 1,346,249 1,390,644 1,510,939 1,569,247 1,645,078

prices (A+B+C+D-E)

G. Balance of primary income -13,783 -19,567 -31,320 -24,978 -30,464

H. Gross National Income (F+G) 1,332,466 1,371,077 1,479,619 1,544,269 1,614,614

1
Includes investment of public corporations
2
Includes statistical discrepancy arising from balancing
3
Preliminary
4
Estimate
5
Forecast
Source: Department of Statistics and Ministry of Finance, Malaysia

144 economic outlook 2024

2. Statistical Table Combine BI [Link] 144 05/10/2023 8:38 PM

 statistical tables

3.5. PRIVATE CONSUMPTION INDICATORS

Malaysia

Indicator 2019 2020 2021 2022 2023

Imports of consumption goods1 (RM million) 74,155 74,134 83,893 104,017 67,021²

Bursa Malaysia (end-period)

FBM–KLCI 1,588.76 1,627.21 1,567.53 1,495.49 1,451.94³

Market capitalisation (RM billion) 1,711.84 1,817.29 1,789.20 1,736.21 1,776.33³

Sales number (units)

Passenger cars 550,179 479,647 452,486 641,773 384,600⁴

Motorcycles 546,813 498,327 497,262 680,749 429,5945

Production of televisions (‘000 units) 9,935 12,229 15,072 15,978 7,809⁴

Outstanding balance of credit card

41,192 36,056 35,982 41,310 42,8323
(RM million, end-period)

Banking system’s consumption credit

296,276 305,039 311,319 332,123 348,9023
(RM million, end-period)

1
Refers to imports by broad economic categories published by the Department of Statistics, Malaysia
2
January to August 2023
3
End-August 2023
4
January to July 2023
5
January to September 2023

Source: Bank Negara Malaysia; Bursa Malaysia; Department of Statistics, Malaysia; Malaysian Automotive Association;‑ and Motorcycle & Scooter
Assemblers and Distributors Association of Malaysia

economic outlook 2024 145

2. Statistical Table Combine BI [Link] 145 05/10/2023 8:38 PM

 statistical tables

3.6. PRIVATE INVESTMENT INDICATORS

Malaysia

Indicator 2019 2020 2021 2022 2023

Imports (RM million)

Capital goods1 100,179 90,733 103,823 120,231 78,169³

Intermediate goods1 467,211 429,190 545,801 706,551 399,416³

Loan disbursements by banking system

(RM million)

Manufacturing 258,602 253,200 378,577 490,706 289,6083

Construction 90,046 77,782 110,379 149,403 112,4753

Housing loans (RM million, end-period)

Government2 80,675 89,980 96,602 102,871 106,2164

Banking system 604,847 647,883 689,219 736,916 770,0475

Production of construction materials

Cement roofing tiles ('000 units) 43,484 47,874 37,054 39,760 24,4016

Ready-mixed concrete ('000 cubic metres) 34,067 34,841 35,425 37,696 22,3796

Iron and steel bars and rods ('000 metric

1,404 1,296 708 931 6466
tonnes)

Sales of commercial vehicles (units) 54,108 48,543 56,397 78,885 45,2076

1
Refers to imports by broad economic categories published by the Department of Statistics, Malaysia
2
Based on principal amount
3
January to August 2023
4
End- July 2023
5
End-August 2023
6
January to July 2023
Source: Bank Negara Malaysia, Department of Statistics Malaysia, Malaysian Automotive Association and Public Sector Home Financing Board

146 economic outlook 2024

2. Statistical Table Combine BI [Link] 146 05/10/2023 8:38 PM

 statistical tables

3.7. MALAYSIA’S TRADE WITH MAJOR TRADING PARTNERS

RM million

2019 2020 2021 2022 20231

RM RM RM RM share RM share
million million million million (%) million (%)
Total Trade 1,844,483 1,784,308 2,228,366 2,843,821 100.0 1,717,509 100.0
Exports 995,072 983,827 1,241,022 1,550,009 54.5 935,217 54.5
Total
Imports 849,411 800,481 987,344 1,293,811 45.5 782,293 45.5
Net 145,661 183,345 253,678 256,198 – 152,924 –
Total Trade 316,598 331,440 421,491 486,381 100.0 288,506 100.0
Exports 140,931 159,223 192,475 210,554 43.3 123,604 42.8
China
Imports 175,667 172,217 229,016 275,826 56.7 164,902 57.2
Net -34,735 -12,994 -36,541 -65,272 – -41,298 –
Total Trade 226,574 215,824 267,607 367,524 100.0 241,782 100.0
Exports 137,078 142,146 173,974 232,484 63.3 149,111 61.7
Singapore
Imports 89,497 73,678 93,633 135,040 36.7 92,671 38.3
Net 47,581 68,467 80,341 97,444 – 56,439 –
Total Trade 165,220 178,785 216,971 267,629 100.0 160,287 100.0
Exports 96,542 109,080 142,244 167,208 62.5 104,665 65.3
United States
Imports 68,678 69,705 74,727 100,421 37.5 55,623 34.7
Net 27,863 39,376 67,517 66,788 – 49,042 –
Total Trade 129,592 124,142 149,759 181,734 100.0 104,042 100.0
Exports 65,998 62,561 75,816 98,658 54.3 56,932 54.7
Japan
Imports 63,594 61,581 73,942 83,076 45.7 47,110 45.3
Net 2,403 981 1,874 15,582 – 9,823 –
Total Trade 94,077 91,907 115,828 157,748 100.0 82,922 100.0
Exports 37,032 33,874 40,625 51,745 32.8 27,843 33.6
Taiwan
Imports 57,046 58,033 75,203 106,003 67.2 55,079 66.4
Net -20,014 -24,160 -34,579 -54,258 – -27,237 –
Total Trade 70,226 66,283 95,307 129,704 100.0 73,153 100.0
Exports 31,328 29,589 39,180 55,736 43.0 33,151 45.3
Indonesia
Imports 38,898 36,694 56,127 73,968 57.0 40,002 54.7
Net -7,570 -7,106 -16,947 -18,232 – -6,851 –
Total Trade 100,595 79,640 97,546 121,959 100.0 75,141 100.0
Exports 56,318 45,339 52,162 65,774 53.9 39,573 52.7
Thailand
Imports 44,277 34,300 45,383 56,186 46.1 35,568 47.3
Net 12,042 11,039 6,779 9,588 – 4,005 –
Total Trade 73,058 80,826 88,308 114,093 100.0 71,759 100.0
Exports 34,230 34,714 38,224 54,906 48.1 37,047 51.6
Republic of Korea
Imports 38,828 46,113 50,084 59,187 51.9 34,712 48.4
Net -4,599 -11,399 -11,860 -4,280 – 2,336 –
Total Trade 80,688 82,363 94,343 113,271 100.0 67,375 100.0
Exports 66,624 68,167 76,706 95,671 84.5 58,328 86.6
Hong Kong
Imports 14,064 14,196 17,637 17,601 15.5 9,048 13.4
Net 52,561 53,971 59,069 78,070 – 49,280 –
Total Trade 51,770 44,046 57,041 88,728 100.0 56,865 100.0
Exports 28,448 24,359 34,479 48,091 54.2 33,669 59.2
Australia
Imports 23,322 19,687 22,562 40,637 45.8 23,196 40.8
Net 5,126 4,672 11,917 7,453 – 10,473 –

1
January to August 2023
Source: Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

economic outlook 2024 147

2. Statistical Table Combine BI [Link] 147 05/10/2023 8:38 PM

 statistical tables

3.8. EXTERNAL TRADE INDICES

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Commodity Section
(%)
Annual Change (%)

Export Unit Value Indices

Total 100.0 0.8 -2.5 10.2 17.2 0.4

Food 3.5 2.5 3.4 3.8 4.3 3.6

Beverages and tobacco 0.6 7.5 3.5 3.5 4.4 3.1

Crude materials, inedible 2.7 -0.7 -0.6 7.2 2.9 -1.0

Mineral fuels, lubricants, etc. 16.1 0.1 -24.9 34.2 60.0 1.6

Animal and vegetable oils and fats 6.0 -9.7 22.5 48.1 18.6 -27.4

Chemicals 7.8 -0.7 0.5 6.3 7.7 0.9

Manufactured goods 9.7 -2.8 -1.1 5.1 4.5 -0.3

Machinery and transport equipment 42.3 2.5 1.1 1.8 10.3 6.6

Miscellaneous manufactured articles 10.9 2.2 0.7 1.8 1.0 0.2

Miscellaneous transactions and commodities 0.4 -5.1 -8.2 11.4 78.4 41.1

Import Unit Value Indices

Total 100.0 -0.3 -3.0 3.9 10.0 0.5

Food 6.8 2.5 2.3 2.3 2.8 1.7

Beverages and tobacco 0.6 2.7 1.7 1.6 1.1 0.1

Crude materials, inedible 3.3 -0.3 0.4 10.7 1.3 -0.7

Mineral fuels, lubricants, etc. 12.9 -10.1 -27.0 25.8 56.3 -1.8

Animal and vegetable oils and fats 1.1 -12.0 15.1 48.5 44.6 -9.2

Chemicals 10.5 0.3 -0.6 2.6 0.5 -1.7

Manufactured goods 13.4 0.4 -0.3 4.6 1.9 -0.8

Machinery and transport equipment 41.8 1.7 -0.9 -1.3 4.8 2.8

Miscellaneous manufactured articles 7.6 0.4 -0.1 0.2 2.4 1.5

Miscellaneous transactions and commodities 2.0 10.2 23.6 2.6 4.8 -1.6

1
Weights based on values of Malaysia imports and exports of merchandise during 2015
2
Annual changes was calculated based on monthly unit value indices of January to August 2023
Source: Department of Statistics, Malaysia

148 economic outlook 2024

2. Statistical Table Combine BI [Link] 148 05/10/2023 8:38 PM

 statistical tables

3.9. PRODUCTION, EXPORTS VOLUME AND VALUE OF MAJOR PRIMARY COMMODITIES

Malaysia

Major Commodities 2019 2020 2021 2022 20231

Palm oil

Production (‘000 tonnes) 19,858 19,141 18,117 11,570 9,692²

Volume (‘000 tonnes) 17,429 16,214 14,835 14,905 9,426

Value (RM million) 39,128 45,647 64,615 82,480 38,455

Natural rubber

Production (‘000 tonnes) 640 515 470 216 161²

Volume (‘000 tonnes) 631 565 653 621 368

Value (RM million) 3,773 3,286 4,568 4,592 2,328

Crude petroleum

Volume (‘000 tonnes) 12,452 13,095 8,901 8,921 6,113

Value (RM million) 26,346 18,843 18,372 31,847 18,074

Liquefied natural gas (LNG)

Volume (‘000 tonnes) 25,498 24,083 24,697 27,316 17,582

Value (RM million) 42,484 29,868 38,193 68,002 38,965

1
January to August 2023
2
January to July 2023
Source: Bank Negara Malaysia, Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

economic outlook 2024 149

2. Statistical Table Combine BI [Link] 149 05/10/2023 8:38 PM

 statistical tables

3.10. DIRECTION OF MAJOR EXPORTS

Malaysia

2019 2020
Exports ‘000
RM million share (%) ‘000 tonnes RM million share (%)
tonnes

Electrical and Electronics (E&E)

Total 373,118 100.0 386,292 100.0
Singapore 60,424 16.2 69,832 18.1
United States 51,060 13.7 52,857 13.7
China 49,651 13.3 53,901 14.0
Hong Kong 54,786 14.7 57,537 14.9
European Union 46,866 12.6 38,324 9.9
Non-E&E
Total 467,468 100.0 463,206 100.0
Singapore 65,625 14.0 64,350 13.9
China 66,421 14.2 82,859 17.9
United States 42,753 9.1 53,562 11.6
European Union 41,783 8.9 36,752 7.9
Indonesia 26,175 5.6 25,015 5.4
Palm oil
Total 17,429 39,128 100.0 16,214 45,647 100.0
India 4,244 8,915 22.8 2,602 7,149 15.7
China 2,368 5,057 12.9 2,600 6,961 15.2
European Union 1,990 4,525 11.6 1,827 5,224 11.4
Turkiye 695 1,588 4.1 619 1,779 3.9
Kenya 224 475 1.2 514 1,448 3.2
Natural rubber
Total 631 3,773 100.0 565 3,286 100.0
China 309 1,812 48.0 293 1,640 49.9
European Union 143 880 23.3 108 655 19.9
United Arab Emirates 11 66 1.7 27 156 4.7
United States 25 150 4.0 19 113 3.4
India 18 100 2.6 13 73 2.2
Crude petroleum
Total 12,452 26,346 100.0 13,095 18,843 100.0
Australia 3,266 6,890 26.2 3,219 5,060 26.9
Thailand 2,559 5,535 21.0 2,030 2,911 15.4
India 3,177 6,604 25.1 2,780 3,832 20.3
Japan 509 1,071 4.1 1,318 1,981 10.5
Brunei 7 15 0.1 282 334 1.8
Liquefied natural gas (LNG)
Total 25,498 42,484 100.0 24,083 29,868 100.0
Japan 9,352 16,804 39.6 10,638 14,070 47.1
China 7,130 10,265 24.2 6,003 6,812 22.8
Republic of Korea 4,805 7,767 18.3 5,107 6,207 20.8
Thailand 1,251 2,194 5.2 1,130 1,434 4.8
Taiwan 2,431 4,869 11.5 664 932 3.1

1
January to August 2022
Source: Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

150 economic outlook 2024

2. Statistical Table Combine BI [Link] 150 05/10/2023 8:38 PM

 statistical tables

2021 2022 20231

‘000 tonnes RM million share (%) ‘000 tonnes RM million share (%) ‘000 tonnes RM million share (%)

455,953 100.0 592,956 100.0 380,685 100.0

85,869 18.8 115,275 19.4 75,961 20.0
66,494 14.6 96,023 16.2 65,941 17.3
59,671 13.1 81,097 13.7 49,176 12.9
65,774 14.4 79,087 13.3 48,305 12.7
41,882 9.2 52,021 8.8 33,441 8.8

612,478 100.0 711,713 100.0 419,939 100.0

79,258 12.9 105,751 14.9 65,738 15.7
101,825 16.6 89,647 12.6 52,044 12.4
72,825 11.9 68,453 9.6 37,226 8.9
49,598 8.1 59,850 8.4 35,140 8.4
34,722 5.7 49,975 7.0 28,695 6.8

14,835 64,615 100.0 14,905 82,480 100.0 9,426 38,455 100.0

3,440 15,285 23.7 2,913 15,382 18.6 1,763 6,944 18.1
1,769 7,029 10.9 1,694 8,447 10.2 727 2,877 7.5
1,421 6,181 9.6 1,229 6,978 8.5 612 2,811 7.3
688 3,048 4.7 767 4,309 5.2 577 2,417 6.3
835 3,450 5.3 762 4,042 4.9 526 2,109 5.5

653 4,568 100.0 621 4,592 100.0 368 2,328 100.0

316 2,132 46.7 286 2,076 45.2 176 1,086 46.6
124 919 20.1 112 862 18.8 62 416 17.9
37 247 5.4 52 372 8.1 34 215 9.2
39 284 6.2 34 251 5.5 10 63 2.7
23 156 3.4 25 177 3.9 21 128 5.5

8,901 18,372 100.0 8,921 31,847 100.0 6,113 18,074 100.0

2,823 5,796 31.5 2,343 8,431 26.5 1,431 4,212 23.3
1,725 3,572 19.4 2,089 7,307 22.9 1,705 5,076 28.1
1,369 2,723 14.8 1,507 5,291 16.6 503 1,444 8.0
1158 2,494 13.6 1,341 4,622 14.5 1,426 4,274 23.6
744 1,629 8.9 1,035 3,891 12.2 659 1,923 10.6

24,697 38,193 100.0 27,316 68,002 100.0 17,582 38,965 100.0

10,277 16,413 43.0 11,777 30,566 44.9 7,026 16,778 43.1
8,433 12,929 33.9 7,489 18,053 26.5 5,089 10,405 26.7
4,186 6,150 16.1 5,361 12,480 18.4 3,820 8,400 21.6
1086 1648 4.3 1,893 4,461 6.6 1,137 2,280 5.9
372 529 1.4 374 1,214 1.8 312 681 1.7

economic outlook 2024 151

2. Statistical Table Combine BI [Link] 151 05/10/2023 8:38 PM

 statistical tables

3.11. EXPORTS OF MANUFACTURED GOODS

Malaysia
RM million

2019 2020 2021 2022 20232

share (%)

Electrical and electronics products

373,118 386,292 455,953 592,956 380,685 47.5
(E&E)

Petroleum products 71,511 61,889 96,206 161,205 96,500 12.1

Chemical and chemical products 57,477 50,736 70,683 80,579 46,965 5.9

Manufactures of metal 41,490 36,830 61,557 63,551 37,579 4.7

Machinery, equipment and parts 41,599 39,446 49,922 60,409 36,461 4.6

Optical and scientific equipment 39,905 42,220 46,928 56,632 35,564 4.4

Palm oil-based manufactured products 23,338 21,006 32,704 41,385 20,849 2.6

Iron and steel products 21,961 23,552 29,409 33,827 20,127 2.5

Rubber products 25,841 44,302 64,615 28,790 13,983 1.7

Processed food 21,773 21,283 24,600 28,414 19,067 2.4

Transport equipment 19,143 18,460 15,914 18,988 11,172 1.4

Wood products 15,777 16,084 16,555 18,096 9,455 1.2

Textiles, apparels and footwear 15,531 13,951 15,827 17,341 10,548 1.3

Manufactures of plastics 14,978 13,187 15,971 17,262 10,458 1.3

Non-metallic mineral products 9,079 8,346 10,572 11,945 8,097 1.0

Paper and pulp products 6,405 6,363 8,516 9,948 7,238 0.9

Jewellery 6,974 4,157 5,804 7,395 4,988 0.6

Beverages and tobacco 3,452 2,593 2,495 2,757 2,038 0.3

Other manufactures¹ 31,233 38,801 44,201 53,190 28,849 3.6

Total 840,586 849,498 1,068,431 1,304,668 800,624 100.0

1
Includes animal feed, printed matter, miscellaneous manufactured articles, etc
2
January to August 2023
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia

152 economic outlook 2024

2. Statistical Table Combine BI [Link] 152 05/10/2023 8:38 PM

 statistical tables

3.12. SOURCE OF MAJOR IMPORTS

Malaysia
RM million

Imports 2019 2020 2021 2022 20231

share share share share share

(%) (%) (%) (%) (%)
Electrical and
Electronic (E&E)

Total 245,538 100.0 253,000 100.0 314,546 100.0 393,474 100.0 227,356 100.0

China 64,090 26.1 68,025 26.9 91,244 29.0 110,095 28.0 62,837 27.6

Taiwan 40,497 16.5 42,649 16.9 51,815 16.5 76,704 19.5 41,350 18.2

United States 27,180 11.1 30,413 12.0 32,658 10.4 42,278 10.7 19,526 8.6

Chemicals and
chemical products

Total 81,589 100.0 74,296 100.0 96,551 100.0 115,514 100.0 69,381 100.0

China 13,976 17.1 13,882 18.7 21,718 22.5 28,611 24.8 16,328 23.5

European Union 11,094 13.6 9,540 12.8 12,175 12.6 12,982 11.2 8,628 12.4

Singapore 7,695 9.4 6,705 9.0 8,971 9.3 9,704 8.4 6,988 10.1

Petroleum products

Total 77,480 100.0 60,007 100.0 89,546 100.0 145,639 100.0 89,113 100.0

Singapore 29,334 37.9 17,453 29.1 26,759 29.9 51,051 35.1 29,258 32.8

China 10,506 13.6 7,643 12.7 12,400 13.8 18,356 12.6 14,028 15.7

Republic of Korea 7,284 9.4 6,157 10.3 11,181 12.5 16,693 11.5 9,926 11.1

Machinery, equipment
and parts

Total 69,638 100.0 60,129 100.0 68,638 100.0 89,381 100.0 56,933 100.0

China 19,964 28.7 19,126 31.8 23,944 34.9 30,546 34.2 18,493 32.5

European Union 13,307 19.1 9,435 15.7 9,102 13.3 10,949 12.2 8,051 14.1

Japan 7,816 11.2 7,031 11.7 7,972 11.6 10,248 11.5 6,500 11.4

Manufactures of metal

Total 47,132 100.0 47,024 100.0 54,216 100.0 63,853 100.0 42,066 100.0

China 11,763 25.0 9,881 21.0 14,271 26.3 16,151 25.3 10,095 24.0

United States 3,861 8.2 4,491 9.5 6,177 11.4 7,678 12.0 5,680 13.5

Japan 4,866 10.3 5,197 11.1 7,260 13.4 7,604 11.9 3,715 8.8

1
January to August 2023
Source: Department of Statistics, Malaysia and Malaysia External Trade Development Corporation

economic outlook 2024 153

2. Statistical Table Combine BI [Link] 153 05/10/2023 8:38 PM

 statistical tables

3.13. BALANCE OF PAYMENTS

Malaysia
RM million

2019 2020
Components
Credits Debits Net Credits Debits Net
(+) (-) (+) (-)

Balance on goods and services 987,481 873,618 113,863 873,477 783,152 90,325

Goods 817,260 692,522 124,738 780,511 643,024 137,486

Services 170,221 181,096 -10,875 92,967 140,128 -47,161

Transport 21,707 47,632 -25,925 13,786 41,213 -27,427

Travel 82,143 51,309 30,833 12,503 20,071 -7,569

Other services 66,371 82,155 -15,783 66,678 78,844 -12,165

Primary income 65,344 104,840 -39,496 53,124 81,645 -28,520

Compensation of employees 6,614 15,843 -9,229 5,991 14,052 -8,061

Investment income 58,730 88,997 -30,267 47,133 67,592 -20,459

Secondary income 16,905 38,355 -21,450 27,185 29,899 -2,714

Balance on current account 1,069,731 1,016,813 52,918 953,787 894,696 59,091

% of Gross National Income 3.6 4.3

Capital account 371 -419

Financial account -38,024 -77,396

Direct investment 6,555 3,111

Assets -31,154 -13,808

Liabilities 37,709 16,919

Portfolio investment -32,403 -49,584

Financial derivatives -478 407

Other investment -11,697 -31,330

Balance on capital and financial

-37,653 -77,816
accounts

Net errors and omissions -6,849 -572

Overall balance 8,416 -19,297

1
January to June 2023
Note: Total may not add up due to rounding
Source: Department of Statistics, Malaysia

154 economic outlook 2024

2. Statistical Table Combine BI [Link] 154 05/10/2023 8:38 PM

 statistical tables

2021 2022 20231

Credits Debits Net Credits Debits Net Credits Debits Net

(+) (-) (+) (-) (+) (-)

1,093,895 981,922 111,973 1,378,452 1,248,820 129,632 605,120 559,879 45,241

1,005,841 828,206 177,634 1,238,180 1,052,151 186,029 516,343 446,984 69,359

88,054 153,716 -65,661 140,272 196,670 -56,397 88,777 112,895 -24,118

16,474 48,337 -31,863 25,604 59,649 -34,045 14,658 29,456 -14,798

323 15,180 -14,857 28,370 29,526 -1,156 28,594 23,505 5,090

71,258 90,199 -18,941 86,299 107,495 -21,196 45,525 59,934 -14,409

97,698 139,851 -42,153 88,704 148,118 -59,414 41,545 64,744 -23,199

6,433 13,092 -6,659 7,124 14,359 -7,235 3,948 8,095 -4,147

91,265 126,759 -35,494 81,580 133,759 -52,179 37,597 56,650 -19,053

20,504 30,146 -9,642 22,765 37,885 -15,120 16,855 25,504 -8,650

1,212,097 1,151,919 60,178 1,489,921 1,434,823 55,098 663,520 650,127 13,392

4.0 3.2 1.6

-469 -454 -103

16,242 12,356 -13,930

31,065 15,920 6,016

-53,200 -48,933 -12,342

84,265 64,853 18,359

18,802 -50,560 -25,166

-2,250 -2,212 -585

-31,375 49,208 5,804

15,774 11,902 -14,033

-30,266 -13,641 -17,471

45,686 53,359 -18,112

economic outlook 2024 155

2. Statistical Table Combine BI [Link] 155 05/10/2023 8:38 PM

 statistical tables

3.14. CONSUMER PRICE INDEX BY REGION

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Groups
(%)
Annual Change (%)

Malaysia

Total 100.0 0.7 -1.2 2.5 3.3 2.8

Food and non-alcoholic beverages 29.5 1.7 1.3 1.7 5.8 5.7

Alcoholic beverages and tobacco 2.4 1.5 0.3 0.5 0.5 0.6

Clothing and footwear 3.2 -2.0 -0.8 -0.4 0.1 0.3

Housing, water, electricity, gas and other fuels 23.8 1.9 -1.7 1.5 1.8 1.7

Furnishings, household equipment and 4.1 1.4 0.3 1.6 3.5 2.7
routine household maintenance
Health 1.9 0.7 1.1 0.4 0.7 2.0

Transport 14.6 -3.1 -10.0 11.0 4.7 1.6

Communication 4.8 0.4 1.1 0.0 0.0 -2.6

Recreation services and culture 4.8 0.7 0.4 0.4 2.3 1.7

Education 1.3 1.4 1.0 0.2 1.1 1.8

Restaurants and hotels 2.9 1.2 0.5 0.4 5.0 6.2

Miscellaneous goods and services 6.7 0.4 2.7 0.5 2.0 2.4

Peninsular Malaysia

Total 100.0 0.7 -1.1 2.6 3.5 2.8

Food and non-alcoholic beverages 29.0 1.8 1.4 1.9 5.8 5.7

Alcoholic beverages and tobacco 2.4 1.6 0.4 0.5 0.6 0.7

Clothing and footwear 3.3 -2.0 -0.7 -0.5 0.2 0.3

Housing, water, electricity, gas and other fuels 23.6 2.0 -1.7 1.9 1.9 1.6

Furnishings, household equipment and 4.2 1.6 0.3 1.7 3.8 2.7
routine household maintenance
Health 1.9 0.7 1.1 0.4 0.8 2.0

Transport 14.7 -3.1 -9.6 10.6 4.7 1.8

Communication 4.9 0.4 1.2 0.0 0.0 -2.8

Recreation services and culture 4.9 0.7 0.6 0.4 2.2 1.8

Education 1.4 1.5 0.9 0.2 1.1 1.7

Restaurants and hotels 3.0 1.2 0.5 0.4 4.9 6.2

Miscellaneous goods and services 6.7 0.4 2.7 0.5 2.1 2.6

1
Weights based on Household Expenditure Survey 2016
2
January to August 2023
Source: Department of Statistics, Malaysia

156 economic outlook 2024

2. Statistical Table Combine BI [Link] 156 05/10/2023 8:39 PM

 statistical tables

3.14. CONSUMER PRICE INDEX BY REGION (cont’d)

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Groups
(%)
Annual Change (%)

Sarawak

Total 100.0 0.1 -1.8 2.1 3.2 3.6

Food and non-alcoholic beverages 33.5 1.0 0.6 1.1 5.5 7.1

Alcoholic beverages and tobacco 2.7 0.6 0.2 0.3 0.2 0.9

Clothing and footwear 2.8 -2.5 -0.9 -0.4 0.0 0.4

Housing, water, electricity, gas and other 21.9 0.9 -1.8 -0.5 0.9 1.7
fuels
Furnishings, household equipment and 3.8 0.7 -0.2 0.9 2.3 2.8
routine household maintenance
Health 1.5 1.3 1.4 0.2 -0.8 1.6

Transport 14.0 -4.1 -13.6 15.7 3.9 1.1

Communication 4.6 0.4 0.6 0.0 0.0 -1.4

Recreation services and culture 4.8 0.3 -0.5 -1.5 4.9 0.7

Education 0.9 0.5 2.8 -0.7 1.5 2.6

Restaurants and hotels 2.4 2.1 0.5 0.6 5.2 6.2

Miscellaneous goods and services 7.1 -0.4 2.5 0.5 1.2 2.6

Sabah

Total 100.0 0.2 -1.9 1.6 3.0 2.7

Food and non-alcoholic beverages 31.5 0.5 0.2 0.6 5.1 5.1

Alcoholic beverages and tobacco 2.1 1.2 0.1 0.2 0.2 0.2

Clothing and footwear 3.0 -2.0 -0.9 -0.4 0.1 0.1

Housing, water, electricity, gas and other 28.0 1.3 -2.1 -1.1 1.9 2.6
fuels
Furnishings, household equipment and 3.4 0.1 -0.4 1.0 2.3 2.0
routine household maintenance
Health 1.1 0.7 1.1 0.3 1.5 1.4

Transport 13.9 -3.2 -10.7 12.6 3.5 0.3

Communication 4.5 0.2 0.4 0.0 -0.1 -1.0

Recreation services and culture 3.7 0.5 -0.1 2.4 0.2 1.3

Education 0.8 1.0 0.3 -0.4 1.4 2.4

Restaurants and hotels 1.8 1.2 0.7 0.4 7.3 6.8

Miscellaneous goods and services 6.2 0.0 1.5 0.7 1.6 2.1

1
Weights based on Household Expenditure Survey 2016
2
January to August 2023
Source: Department of Statistics, Malaysia

economic outlook 2024 157

2. Statistical Table Combine BI [Link] 157 05/10/2023 8:39 PM

 statistical tables

3.15. CONSUMER PRICE INDEX BY STRATUM

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Groups
(%)
Annual Change (%)

Rural

Total 100.0 0.3 -1.5 2.6 2.6 2.4

Food and non-alcoholic beverages 35.6 0.9 0.9 1.6 4.3 4.2

Alcoholic beverages and tobacco 3.0 1.6 0.1 0.2 0.2 0.1

Clothing and footwear 3.6 -0.5 -0.5 0.0 0.5 0.5

Housing, water, electricity, gas and other 19.9 1.8 -2.5 1.3 1.7 1.7
fuels

Furnishings, household equipment and 3.7 0.7 0.1 0.6 2.0 2.0
routine household maintenance

Health 2.0 0.6 1.7 0.5 0.6 1.5

Transport 14.6 -3.6 -11.2 12.1 2.9 1.3

Communication 4.4 0.5 1.0 0.1 0.0 -1.2

Recreation services and culture 3.6 1.0 0.8 0.3 1.6 1.1

Education 0.9 0.5 0.5 0.2 0.3 1.6

Restaurants and hotels 2.4 1.0 0.7 0.2 2.9 3.1

Miscellaneous goods and services 6.3 0.8 2.2 0.6 1.5 1.9

158 economic outlook 2024

2. Statistical Table Combine BI [Link] 158 05/10/2023 8:39 PM

 statistical tables

3.15. CONSUMER PRICE INDEX BY STRATUM (cont’d)

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Groups
(%)
Annual Change (%)

Urban

Total 100.0 0.7 -1.1 2.4 3.6 3.0

Food and non-alcoholic beverages 28.4 1.8 1.4 1.8 6.1 6.1

Alcoholic beverages and tobacco 2.3 1.5 0.4 0.6 0.7 0.8

Clothing and footwear 3.2 -2.2 -0.9 -0.5 0.1 0.3

Housing, water, electricity, gas and other 24.5 1.8 -1.6 1.6 1.8 1.7
fuels

Furnishings, household equipment and 4.2 1.6 0.3 1.8 3.7 2.8
routine household maintenance

Health 1.8 0.7 1.1 0.4 0.8 2.1

Transport 14.6 -3.1 -9.8 10.9 5.0 1.7

Communication 4.9 0.4 1.1 0.0 0.0 -2.8

Recreation services and culture 5.0 0.6 0.4 0.5 2.3 1.8

Education 1.4 1.5 1.1 0.2 1.1 1.8

Restaurants and hotels 3.0 1.3 0.4 0.4 5.3 6.6

Miscellaneous goods and services 6.7 0.4 2.7 0.4 2.1 2.6

1
Weights based on Household Expenditure Survey 2016
2
January to August 2023
Source: Department of Statistics, Malaysia

economic outlook 2024 159

2. Statistical Table Combine BI [Link] 159 05/10/2023 8:39 PM

 statistical tables

3.16. CONSUMER PRICE INDEX BY STATE

2010 = 100, Malaysia

2019 2020 2021 2022 20231

States
Annual Change (%)

Total

Malaysia 0.7 -1.2 2.5 3.3 2.8

Johor 0.6 -1.4 2.4 3.4 2.9

Kedah 1.4 -1.8 2.6 2.6 1.9

Kelantan 0.4 -1.5 3.1 2.8 2.0

Melaka 0.1 -1.9 2.4 2.7 2.8

Negeri Sembilan 0.7 -1.6 2.6 2.8 2.4

Pahang 0.3 -1.2 3.0 3.0 3.2

Pulau Pinang 1.1 -0.8 2.1 3.2 2.5

Perak 0.6 -1.3 2.7 3.3 3.1

Perlis 0.3 -2.1 2.9 3.2 2.4

Selangor 0.9 -0.6 2.7 4.2 3.4

Terengganu 0.1 -1.3 3.4 3.1 2.1

Sabah 0.2 -1.9 1.6 3.0 2.7

Sarawak 0.1 -1.8 2.1 3.2 3.6

Federal Territory of Kuala Lumpur 1.2 -0.6 2.0 3.0 2.6

Federal Territory of Labuan 0.3 -1.9 1.6 2.4 1.7

Federal Territory of Putrajaya 1.1 -0.2 3.9 7.3 3.8

160 economic outlook 2024

2. Statistical Table Combine BI [Link] 160 05/10/2023 8:39 PM

 statistical tables

3.16. CONSUMER PRICE INDEX BY STATE (cont’d)

2010 = 100, Malaysia

2019 2020 2021 2022 20231

States
Annual Change (%)

Food and Non-Alcoholic Beverages

Malaysia 1.7 1.3 1.7 5.8 5.7

Johor 1.9 1.5 1.8 6.1 5.3

Kedah 2.6 0.7 1.2 3.7 3.3

Kelantan 1.0 0.9 2.1 4.5 3.9

Melaka 1.3 0.7 1.4 4.7 5.5

Negeri Sembilan 1.5 1.2 1.6 4.8 5.5

Pahang 0.9 1.4 2.3 4.9 5.9

Pulau Pinang 1.8 1.3 1.1 6.0 5.6

Perak 1.5 1.6 1.8 5.4 5.7

Perlis 1.6 0.6 1.4 4.9 4.0

Selangor 1.8 2.0 2.4 7.4 7.1

Terengganu 1.2 1.4 2.2 4.9 4.3

Sabah 0.5 0.2 0.6 5.1 5.1

Sarawak 1.0 0.6 1.1 5.5 7.1

Federal Territory of Kuala Lumpur 3.5 0.7 1.3 5.1 5.2

Federal Territory of Labuan 1.2 0.7 1.3 3.5 3.7

Federal Territory of Putrajaya 3.8 2.9 3.6 7.7 6.8

1
January to August 2023
Source: Department of Statistics, Malaysia

economic outlook 2024 161

2. Statistical Table Combine BI [Link] 161 05/10/2023 8:39 PM

 statistical tables

3.17. CORE INDEX

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Groups
(%)
Annual Change (%)

Total 100.0 1.1 1.1 0.7 3.0 3.4

Food and non-alcoholic beverages 26.5 2.1 1.2 1.3 5.8 6.7

Alcoholic beverages and tobacco – – – – – –

Clothing and footwear 4.5 -2.0 -0.8 -0.4 0.1 0.3

Housing, water, electricity, gas and other 26.5 2.1 1.3 0.6 1.4 1.9
fuels

Furnishings, household equipment and 5.5 1.4 0.3 1.6 3.5 2.7
routine household maintenance

Health 2.6 0.7 1.1 0.4 0.7 2.0

Transport 6.5 -3.1 0.1 0.7 5.6 5.2

Communication 6.5 0.4 1.1 0.0 0.0 -2.6

Recreation services and culture 6.6 0.7 0.4 0.4 2.3 1.7

Education 1.8 1.4 1.0 0.2 1.1 1.8

Restaurants and hotels 3.9 1.2 0.5 0.4 5.0 6.2

Miscellaneous goods and services 9.1 0.4 2.7 0.5 2.0 2.4

1
Weights based on Household Expenditure Survey 2016
2
January to August 2023
Source: Department of Statistics, Malaysia

162 economic outlook 2024

2. Statistical Table Combine BI [Link] 162 05/10/2023 8:39 PM

 statistical tables

3.18. PRODUCER PRICE INDEX - LOCAL PRODUCTION

2010 = 100, Malaysia

2019 2020 2021 2022 20232

Weights1
Sectors and Stage of Processing
(%)
Annual Change (%)

Sector (MSIC 2008)

Total 100.0 -1.4 -2.7 9.5 7.8 -2.4

Agriculture, forestry and fishing 6.7 -4.0 15.7 30.2 1.3 -19.4

Mining 7.9 -3.7 -36.3 41.2 12.6 -8.4

Manufacturing 81.6 -0.9 -0.4 5.5 8.4 0.2

Electricity and gas supply 3.4 1.5 -0.4 -0.4 0.7 0.8

Water supply 0.3 -2.2 -0.2 0.5 2.6 3.2

Producer Price Index by

Stage of Processing

Total 100.0 -1.4 -2.7 9.5 7.8 -2.4

Crude materials for further processing 16.4 -3.9 -12.3 30.3 6.2 -14.8

Intermediate materials, supplies and 56.1 -1.4 -0.5 7.7 10.9 -0.2
components

Finished goods 27.5 0.6 -0.1 -0.2 1.8 3.6

1
Weights based on Economic Census 2016
2
January to August 2023
Source: Department of Statistics, Malaysia

economic outlook 2024 163

2. Statistical Table Combine BI [Link] 163 05/10/2023 8:39 PM

 statistical tables

3.19. LABOUR FORCE

Malaysia

2019 2020 2021 2022 20234

Labour force (‘000) 15,581.6 15,667.7 15,797.2 16,022.1 16,312.3

Employment (‘000) 15,073.4 14,956.7 15,064.2 15,391.7 15,743.0

Unemployment (‘000) 508.2 711.0 733.0 630.4 569.4

Unemployment rate (%) 3.3 4.5 4.6 3.9 3.5

Labour force participation rate1 (%)

Total 68.7 68.4 68.6 69.3 69.9

Male 80.8 80.6 80.9 81.9 82.5

Female 55.6 55.3 55.5 55.8 55.9

Number of collective agreements signed in

298 187 154 334 179
the current year2

Labour productivity3 2.2 -5.3 2.0 5.4 1.2

Agriculture 0.3 -2.0 -0.5 0.8 -0.7

Mining and quarrying -0.3 -7.6 -0.8 1.4 -0.5

Manufacturing 1.7 -2.7 6.7 4.1 -1.0

Construction 3.6 -15.6 -4.1 5.2 5.9

Services 2.9 -5.7 0.7 6.5 2.1

Foreign workers (‘000) 1,999.6 1,483.4 1,171.9 1,459.2 1,781.05

1
The ratio of the labour force to the working age population (15-64 years), expressed as percentage
2
Based on the information in the Collective Agreement and the feedback from the employer for which has been given cognisance by the Industrial Court for the year
3
Annual change (%)
4
For the first half of 2023
5
As at end-August 2023
Source: Department of Statistics, Ministry of Home Affairs and Ministry of Human Resources, Malaysia

164 economic outlook 2024

2. Statistical Table Combine BI [Link] 164 05/10/2023 8:39 PM

 statistical tables

3.20. EMPLOYMENT BY INDUSTRY

‘000 persons, Malaysia

Industry1 2019 2020 2021 2022 20234

share share
(%) (%)

Total employment2 15,073.4 14,956.7 15,064.2 15,391.7 100.0 15,743.0 100.0

Agriculture, forestry and fishing 1,541.1 1,566.0 1,550.0 1,540.8 10.0 1,555.8 9.9

Mining and quarrying 91.0 82.2 81.9 84.3 0.5 84.9 0.5

Manufacturing 2,612.0 2,498.0 2,501.4 2,590.7 16.8 2,644.1 16.8

Construction 1,246.7 1,173.4 1,159.6 1,170.5 7.6 1,185.3 7.5

Services 9,582.6 9,637.1 9,771.0 10,005.3 65.0 10,272.8 65.3

Electricity, gas, steam and air conditioning

75.4 76.4 77.7 79.1 0.5 81.0 0.5
supply
Water supply; sewerage, waste
88.8 83.7 85.5 88.3 0.6 89.9 0.6
management and remediation activities
Wholesale and retail trade; repair of motor
2,604.6 2,765.6 2,826.5 2,932.6 19.1 2,981.5 18.9
vehicles and motorcycles

Transportation and storage 677.8 689.2 704.5 711.4 4.6 731.9 4.6

Accommodation and food and beverage

1,549.7 1,540.0 1,535.5 1,547.7 10.1 1,598.3 10.2
service activities

Information and communication 223.9 223.4 235.1 236.4 1.5 255.1 1.6

Financial and insurance/takaful activities 355.1 372.1 386.5 397.2 2.6 412.1 2.6

Real estate activities 90.3 82.1 83.4 83.7 0.5 84.0 0.5

Professional, scientific and technical

394.7 379.3 358.9 365.7 2.4 385.1 2.4
activities
Administrative and support service
809.2 801.9 846.0 862.4 5.6 877.2 5.6
activities
Public administration and defence;
737.1 734.9 725.1 747.7 4.9 757.6 4.8
compulsory social security

Education 992.1 937.6 924.3 943.7 6.1 963.1 6.1

Human health and social work activities 527.7 559.6 582.2 599.0 3.9 636.8 4.0

Arts, entertainment and recreation 84.0 58.2 60.5 63.5 0.4 64.8 0.4

Others service activities 266.1 267.0 274.7 279.0 1.8 280.0 1.8

Activities of households as employers3 104.3 66.1 64.6 67.8 0.4 72.8 0.5

1
Industry is classified according to the ‘Malaysia Standard Industrial Classification (MSIC) 2008 Ver. 1.0’
2
Total includes ‘Activities of extraterritorial organisations and bodies
3
Labour Force Survey does not classify the subsistence goods-and services-producing activities of households as persons who are economically active. Therefore,
the classification of industry by MSIC 2008 for ‘Activities of households as employers; undifferentiated goods-and services-producing activities of household for
own use’ only accounted for ‘Activities of household as employers’
4
For the first half of 2023
Source: Department of Statistics, Malaysia

economic outlook 2024 165

2. Statistical Table Combine BI [Link] 165 05/10/2023 8:39 PM

 statistical tables

3.21. ACTIVE REGISTRANTS

Malaysia

2019 2020 2021 2022 20232

share share
(%) (%)

Total Active Registrants (end-period) 299,648 500,391 887,977 546,325 100.0 253,849 100.0

Age

19 and below 36,966 327 1,805 17,016 3.1 18,606 7.3

20 – 24 199,476 71,087 219,340 170,139 31.1 94,581 37.3

25 – 29 49,080 173,200 295,432 161,879 29.6 59,933 23.6

30 and above 14,126 255,716 371,306 197,212 36.1 80,326 31.6

Gender

Male 109,227 240,250 422,685 264,974 48.5 125,185 49.3

Female 190,421 260,141 465,292 281,351 51.5 128,664 50.7

Educational Level

Less than PT3/PMR/SRP/LCE 924 7,167 11,846 4,882 0.9 1,790 0.7

PT3/PMR/SRP/LCE 2,516 13,044 20,826 9,538 1.7 3,806 1.5

SPM/MCE 14,754 122,489 283,259 108,173 19.8 49,592 19.5

Skills Certificate1 8,663 – – – – – –

MHSC/STPM, Matriculation,
272,791 214,017 325,930 210,964 38.6 86,383 34.0
Diploma and Degree

Employment Status

Unemployed 137,712 179,367 351,459 188,099 114,451

1
Malaysian Skills Certificate (SKM), other skills certificate and non-technical skills certificate
2
January to June 2023
Note: Covers job seekers registered with Labour Department through JobsMalaysia and within valid registration period for data prior 2020. Beginning 2020, data
are provided by Social Security Organisation obtained via MyFutureJobs portal. The figures for certain variables for Active Registrants may not add up to total
actual active registrants. Active registrants are defined as jobseekers who have registered and active profile throughout the year. As of now, some variables are
not mandatory to be filled-up by Job Seekers hence may not add up to the overall total
Source: Ministry of Human Resources and Social Security Organisation, Malaysia

166 economic outlook 2024

2. Statistical Table Combine BI [Link] 166 05/10/2023 8:39 PM

 statistical tables

3.22. VACANCIES AND PLACEMENTS

Malaysia

2019 2020 2021 2022 20233

share share
(%) (%)

Number of Vacancies by Occupational

974,612 745,304 2,480,577 4,753,418 100.0 1,187,271 100.0
Category1

Managers 8,563 36,052 98,813 228,840 4.8 72,337 6.1

Professionals 31,900 109,260 462,024 373,444 7.9 179,665 15.1

Technician and associate professionals 34,429 87,311 301,750 326,714 6.9 180,779 15.2

Clerical support workers 11,554 55,372 182,056 211,790 4.5 79,100 6.7

Service and sales workers 42,462 134,488 398,567 510,071 10.7 145,588 12.3

Skilled agricultural, forestry and

2,089 4,839 8,347 49,120 1.4 16,249 1.4
fishery workers

Craft and related trade workers 31,982 49,815 176,813 315,621 6.8 60,505 5.1

Plant and machine operators and

147,321 80,695 221,789 367,929 7.2 54,398 4.6
assemblers

Elementary occupation 664,312 187,472 630,418 2,369,889 49.9 398,407 33.6

Number of Vacancies by Sector 974,612 745,304 2,480,577 4,753,418 100.0 1,187,271 100.0

Agriculture, forestry and fishing 204,324 18,547 75,676 244,694 5.1 68,051 5.7

Mining and quarrying 3,435 1,325 9,226 12,176 0.3 16,123 1.4

Manufacturing 351,942 190,278 603,216 1,600,230 33.7 201,648 17.0

Construction 141,783 55,590 164,651 761,870 16.0 147,764 12.4

Services 273,128 479,564 1,627,808 2,134,448 44.9 753,685 63.5

Number of Placements by Sector2 – 161,603 320,864 294,044 100.0 77,187 100.0

Agriculture, forestry and fishing – 2,857 3,815 2,650 0.9 746 1.0

Mining and quarrying – 1,590 736 782 0.2 174 0.2

Manufacturing – 29,375 57,388 63,966 22.1 15,232 19.7

Construction – 7,662 16,510 8,544 2.9 3,939 5.1

Services – 117,378 227,377 184,603 73.9 57,096 74.0

1
Classification of occupational groups is based on the Malaysia Standard Classification of Occupations (MASCO) 2013
2
Data for 2018 covers period from January to Jun 2018. Data was not available for 2019
3
January to June 2023
Note: Definition of vacancies refers to job vacancy listings by employers in public (selected only) and private sector on JobsMalaysia. The job listing includes non-
substantive vacancies such as sales person, promoter, insurance agent and part-time workers as well as foreign workers. Prior 2020, data was obtained from
Labour Department through JobsMalaysia portal. Beginning 2020, data are provided by Social Security Organisation obtained via MyFutureJobs portal. The figures
for certain variables for number of placements by sectors may not add up to total actual placements. As of now, some variables are not mandatory to be filled-up
by employers, hence may not add up to the overall total
Source: Ministry of Human Resources and Social Security Organisation, Malaysia

economic outlook 2024 167

2. Statistical Table Combine BI [Link] 167 05/10/2023 8:39 PM

 statistical tables

4.1. INTEREST RATES

Malaysia

Average rates during the period Average rates during the period in 2023
(%) (%)

2019 2020 2021 2022 Jan. Feb. Mar. Apr. May Jun. Jul.

Overnight interbank 3.05 2.10 1.74 2.74 2.74 2.74 2.74 2.74 2.97 2.99 3.01

1-week interbank 3.12 2.14 1.77 2.77 2.78 2.78 2.77 2.78 3.00 3.02 3.04

3-month interbank 3.46 2.39 1.92 3.63 3.67 3.61 3.61 3.54 3.46 3.41 3.50

Commercial banks

Fixed deposits

3-month 2.98 1.95 1.56 2.55 2.50 2.52 2.54 2.50 2.71 2.73 2.71

12-month 3.17 2.13 1.72 2.65 2.70 2.70 2.70 2.69 2.90 2.89 2.89

Savings deposit 1.01 0.61 0.54 0.85 0.85 0.85 0.86 0.87 0.93 0.94 0.96

Weighted Base Rate1

3.76 2.76 2.43 3.42 3.42 3.42 3.42 3.42 3.67 3.67 3.67
(BR)

Base lending rate (BLR) 6.78 5.83 5.49 6.42 6.42 6.42 6.42 6.42 6.68 6.68 6.68

1
Effective from 1 August 2022, the Standardised Base Rate (SBR) replaced the BR as the main reference rate for new retail floating rate loans and
financing facilities
Source: Bank Negara Malaysia

168 economic outlook 2024

2. Statistical Table Combine BI [Link] 168 05/10/2023 8:39 PM

 statistical tables

4.2. KEY EXCHANGE RATES

Malaysia

RM to one unit of foreign currency1 Change (%)

2019 2020 2021 2022 2023 2019 2020 2021 2022 20232

End-December End-
End-December End-August
August

Special Drawing Rights

5.6592 5.7798 5.8447 5.8730 6.1499 1.7 -2.1 -1.1 -0.5 -4.5
(SDR)

US dollar 4.0925 4.0130 4.1760 4.4130 4.6385 1.1 2.0 -3.9 -5.4 -4.9

Singapore dollar 3.0387 3.0354 3.0896 3.2819 3.4301 -0.2 0.1 -1.8 -5.9 -4.3

100 Japanese yen 3.7655 3.8891 3.6286 3.3264 3.1731 -0.5 -3.2 7.2 9.1 4.8

Pound sterling 5.3722 5.4653 5.6361 5.3159 5.8580 -2.2 -1.7 -3.0 6.0 -9.3

Euro 4.5852 4.9324 4.7256 4.7038 5.0410 3.2 -7.0 4.4 0.5 -6.7

100 Thai baht 13.6827 13.3990 12.5011 12.7811 13.2203 -7.2 2.1 7.2 -2.2 -3.3

100 Indonesian rupiah 0.0295 0.0286 0.0293 0.0283 0.0304 -3.1 3.1 -2.2 3.4 -6.9

100 Korean won 0.3540 0.3698 0.3507 0.3494 0.3509 5.1 -4.3 5.4 0.4 -0.4

100 Philippine peso 8.0720 8.3569 8.1902 7.9214 8.1748 -2.5 -3.4 2.0 3.4 -3.1

Chinese renminbi 0.5866 0.6143 0.6552 0.6342 0.6362 2.6 -4.5 -6.2 3.3 -0.3

1
US dollar (USD) rates are the average of buying and selling rates at noon in the Kuala Lumpur Interbank Foreign Exchange Market. Rates for foreign currencies
other than USD are cross rates derived from rates of these currencies against the USD and the RM/USD rate
2
End-December 2022 – End-August 2023
Source: Bank Negara Malaysia

economic outlook 2024 169

2. Statistical Table Combine BI [Link] 169 05/10/2023 8:39 PM

 statistical tables

4.3. COMMERCIAL BANKS: LOANS OUTSTANDING BY PURPOSE AND SECTOR

Malaysia

2021 2022 2023

December December July4

RM RM RM
share (%) share (%) share (%)
million million million

Purpose

Purchase of securities 30,249 2.5 29,603 2.4 27,815 2.3

Purchase of fixed assets other than land and

94,923 8.0 96,388 7.9 98,360 8.0
building

of which:

Purchase of transport vehicles 85,582 7.2 87,574 7.2 89,737 7.3

Purchase of residential property 455,320 38.2 470,286 38.7 478,458 39.1

Purchase of non-residential property 170,492 14.3 172,610 14.2 174,673 14.3

Personal uses 36,566 3.1 35,621 2.9 35,707 2.9

Credit card 32,107 2.7 36,635 3.0 37,456 3.1

Construction 42,523 3.6 38,739 3.2 38,404 3.1

Working capital 282,778 23.7 287,767 23.7 287,003 23.4

Other purpose 48,345 4.1 48,666 4.0 46,167 3.8

Total Loans1 1,193,303 100.0 1,216,315 100.0 1,224,043 100.0

Sector2

19,643 1.6 16,887 1.4 16,174 1.3

Agriculture, forestry and fishing

of which:

Crops and animal production, hunting and 17,788 1.5 15,263 1.3 14,650 1.2
related service activities

Mining and quarrying 8,513 0.7 6,847 0.6 6,780 0.6

of which:
1,006 0.1 124 0.0 100 0.0
Mining of metal ores

91,962 7.7 92,421 7.6 91,889 7.5

Manufacturing

of which:
Food products 16,882 1.4 17,409 1.4 17,504 1.4
8,801 0.7 8,422 0.7 8,553 0.7
Basic metals

170 economic outlook 2024

2. Statistical Table Combine BI [Link] 170 05/10/2023 8:39 PM

 statistical tables

4.3. COMMERCIAL BANKS: LOANS OUTSTANDING BY PURPOSE AND SECTOR (cont’d)

Malaysia

2021 2022 2023

December December July4
RM RM RM
share (%) share (%) share (%)
million million million

Electricity, gas, steam and air conditioning supply 9,855 0.8 11,626 1.0 8,982 0.7

Water supply, sewerage, waste management and

1,953 0.2 1,978 0.2 1,949 0.2
remediation activities

Construction 59,865 5.0 58,457 4.8 58,299 4.8

of which:

Construction of buildings 31,902 2.7 32,658 2.7 32,365 2.6

Wholesale and retail trade; repair of motor vehicles

94,418 7.9 99,376 8.2 98,822 8.1
and motorcycles

Accommodation and food service activities 17,283 1.4 17,706 1.5 16,545 1.4

Transportation and storage 15,848 1.3 15,542 1.3 16,988 1.4

Information and communication 11,502 1.0 12,479 1.0 12,476 1.0

Finance, insurance, real estate and business

162,873 13.6 168,174 13.8 170,940 14.0
activities

Education, health and others 27,854 2.3 26,454 2.2 27,197 2.2

Household sector 665,617 55.8 680,853 56.0 689,425 56.3

Other sector3 6,117 0.5 7,514 0.6 7,576 0.6

1
Includes loans sold to Cagamas
2
Definitions of economic sectors/industries are based on Malaysia Standard Industrial Classification 2000
3
Includes loans to individual businesses
4
Data for loans/financing from July 2022 onwards are the new set of loan/financing data, reflecting the latest requirements established in 1997,
with several enhancements over the years to reflect developments in the financial sector
Note: Data based on BNM Monthly Statistical Bulletin ( July 2023). Total may not add up due to rounding
Source: Bank Negara Malaysia

economic outlook 2024 171

2. Statistical Table Combine BI [Link] 171 05/10/2023 8:39 PM

 statistical tables

4.4. GOVERNMENT AND CORPORATE BOND YIELDS

Malaysia

2023
2021 2022
Jan. Feb. Mar. Apr. May Jun. Jul.

Malaysian Government Securities market indicative yield (%)

1-year 1.85 3.25 3.17 3.20 3.11 3.07 3.19 3.28 3.24

3-year 2.80 3.67 3.39 3.51 3.35 3.32 3.40 3.48 3.49

5-year 3.15 3.86 3.59 3.65 3.54 3.45 3.46 3.61 3.60

10-year 3.58 4.09 3.81 3.93 3.90 3.74 3.71 3.84 3.83

5-year corporate bond yields (%)

AAA 3.57 4.50 4.28 4.22 4.18 4.15 4.08 4.11 4.08

AA 3.86 4.71 4.50 4.48 4.45 4.38 4.30 4.33 4.30

A 4.89 5.70 5.60 5.64 5.63 5.61 5.60 5.60 5.60

BBB 6.31 6.80 6.81 6.85 6.96 7.16 7.07 7.10 7.01

Source: Bank Negara Malaysia

172 economic outlook 2024

2. Statistical Table Combine BI [Link] 172 05/10/2023 8:39 PM

 statistical tables

4.5. BURSA MALAYSIA: SELECTED INDICATORS

2019 2020 2021 2022 20233

Indices1

Composite 1,588.76 1,627.21 1,567.53 1,495.49 1,451.94

FBM EMAS 11,323.49 11,761.93 11,308.79 10,701.55 10,740.70

FBM ACE 5,226.59 10,734.69 6,419.60 5,308.33 5,217.97

Trading volume2 (million units) 653,085.5 1,855,808.5 1,433,358.5 729,295.8 559,605.1

Main Market 453,037.4 1,072,204.6 902,137.2 480,595.2 376,104.4

ACE Market 103,750.4 638,349.2 446,341.2 165,900.2 125,690.7

LEAP Market 332.8 187.7 209.5 170.7 214.8

Daily Average 2,676.6 7,483.1 5,850.4 3,001.2 3,475.8

Trading value2 (RM million) 525,225.9 1,068,009.6 897,043.9 530,856.0 340,020.0

Main Market 483,252.3 855,623.4 745,509.4 466,244.9 288,407.5

ACE Market 21,404.7 176,370.0 139,017.6 50,524.0 42,488.1

LEAP Market 33.2 37.8 44.5 35.6 65.5

Daily Average 2,152.6 4,306.5 3,661.4 2,184.6 2,111.9

Market capitalisation1 (RM billion) 1,711.8 1,817.3 1,789.2 1,736.2 1,776.3

Market capitalisation/GDP (%) 120.2 135.1 129.0 114.90 –

1
End-period
2
Based on market transactions and direct business transactions
3
End-August 2023
Source: Bursa Malaysia

economic outlook 2024 173

2. Statistical Table Combine BI [Link] 173 05/10/2023 8:39 PM

 statistical tables

4.6. ISLAMIC BANKS: LOANS OUTSTANDING BY PURPOSE AND SECTOR

Malaysia

2021 2022 2023

December December July4

RM RM RM
share (%) share (%) share (%)
million million million

Purpose

Purchase of securities 54,307 7.6 57,362 7.2 49,523 6.0

Purchase of fixed assets other than land and

98,165 13.7 110,877 13.9 119,133 14.5
building
of which:

Purchase of transport vehicles 93,046 13.0 104,701 13.1 112,566 13.7

Purchase of residential property 233,818 32.7 266,550 33.3 285,957 34.7

Purchase of non-residential property 60,050 8.4 67,151 8.4 69,843 8.5

Personal uses 68,504 9.6 72,359 9.0 75,072 9.1

Credit card 3,875 0.5 4,675 0.6 4,969 0.6

Construction 16,798 2.4 18,804 2.4 19,694 2.4

Working capital 146,782 20.5 168,671 21.1 166,018 20.2

Other purpose 32,306 4.5 33,607 4.2 33,298 4.0

Total Loans1 714,604 100.0 800,056 100.0 823,504 100.0

Sector2

17,375 2.4 19,731 2.5 19,703 2.4

Agriculture, forestry and fishing

of which:

Crops and animal production, hunting and 17,072 2.4 19,372 2.4 19,348 2.3
related service activities

Mining and quarrying 3,358 0.5 2,257 0.3 2,215 0.3

of which:
645 0.1 41 0.0 112 0.0
Mining of metal ores

31,413 4.4 34,515 4.3 34,946 4.2

Manufacturing

of which:

Food products 8,365 1.2 9,187 1.1 9,891 1.2

3,093 0.4 3,091 0.4 2,990 0.4

Basic metals

174 economic outlook 2024

2. Statistical Table Combine BI [Link] 174 05/10/2023 8:39 PM

 statistical tables

4.6. ISLAMIC BANKS: LOANS OUTSTANDING BY PURPOSE AND SECTOR (cont’d)

Malaysia

2021 2022 2023

December December July4
RM RM RM
share (%) share (%) share (%)
million million million

Electricity, gas, steam and air conditioning supply 6,121 0.9 10,953 1.4 8,635 1.0

Water supply, sewerage, waste management and

1,152 0.2 1,588 0.2 1,600 0.2
remediation activities

Construction 43,388 6.1 44,754 5.6 42,387 5.1

of which:

Construction of buildings 24,648 3.4 24,601 3.1 24,129 2.9

Wholesale and retail trade; repair of motor vehicles

35,310 4.9 42,799 5.3 46,341 5.6
and motorcycles

Accommodation and food service activities 2,371 0.3 2,443 0.3 2,781 0.3

Transportation and storage 12,247 1.7 13,719 1.7 13,946 1.7

Information and communication 7,180 1.0 10,328 1.3 9,807 1.2

Finance, insurance, real estate and business

70,005 9.8 77,014 9.6 78,346 9.5
activities

Education, health and others 16,361 2.3 19,058 2.4 20,634 2.5

Household sector 459,580 64.3 510,629 63.8 531,716 64.6

Other sector3 8,743 1.2 10,269 1.3 10,449 1.3

1
Includes loans sold to Cagamas
2
Definitions of economic sectors/industries are based on Malaysia Standard Industrial Classification 2000
3
Includes loans to individual businesses
4
Data for loans/financing from July 2022 onwards are the new set of loan/financing data, reflecting the latest requirements established in 1997,
with several enhancements over the years to reflect developments in the financial sector
Note: Data based on BNM Monthly Statistical Bulletin ( July 2023). Total may not add up due to rounding
Source: Bank Negara Malaysia

economic outlook 2024 175

2. Statistical Table Combine BI [Link] 175 05/10/2023 8:39 PM

 statistical tables

5.1. PROGRESS OF SUSTAINABLE DEVELOPMENT GOALS BY INDICATOR

Malaysia

No. Available Indicator Unit Year Value

SDG 1: No Poverty

2019 0.01
1. Households below the international poverty line %
2020 ....

2019 5.6
2. Households below the national poverty line %
2020 8.4

2019 0.011
3. Multidimensional Poverty Index Index
2020 ....

2020 612.2
4. Number of recipients of assistance (‘000)
2021 580.5

2020 96.9
5. Population using safely managed drinking water services %
2021 97.0

per 100,000 2020 0.0

6. a. Number of deaths attributed to disasters per 100,000 population
population
2021 0.1

2020 150.0
b. Number of affected people with damaged homes attributed to per 100,000
disasters per 100,000 population population 2021 761.0

SDG 2: Zero Hunger

2019 14.1
1. Prevalence of underweight among children under 5 years of age %
2020 ....

2019 21.8
2. Prevalence of stunting among children under 5 years of age %
2020 ....

2019 9.7
3. Prevalence of wasting of children under 5 years of age %
2020 ....

2019 5.6
4. Prevalence of overweight among children under 5 years of age %
2020 ....

2019 29.9
5. Prevalence of anaemia (women aged 15-49 years) %
2020 ....

2020 24,259
6. a. Number of semen (animal genetic resources) Number
2021 25,578

2020 529
b. Number of local live purebred cattle (animal genetic resources) Number
2021 414

2020 99.9
7. Local breeds at risk of extinction %
2021 99.9

176 economic outlook 2024

2. Statistical Table Combine BI [Link] 176 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

SDG 3: Good Health and Well-Being

2020 24.8
1. Maternal mortality ratio per 100,000 live births Ratio
2021 68.2

2020 99.6
2. Births attended by skilled health personnel %
2021 99.6

2020 7.3
3. Under-five mortality rate per 1,000 live births Ratio
2021 7.4

2020 3.9
4. Neonatal mortality rate per 1,000 live births Ratio
2021 4.1

2019 0.2
5. Number of new HIV infections per 1,000 uninfected population Ratio
2020 ...

2020 72.6
6. Tuberculosis incidence per 100,000 population Ratio
2021 64.0

2020 0.1
7. Malaria incidence per 1,000 population Ratio
2021 0.1

2020 12.6
8. Hepatitis B notification rate per 100,000 population Ratio
2021 11.6

Mass Drug Administration coverage among targeted population in 2020 91.3

9. %
filarial endemic
2021 97.2

a. Probability of dying between the exact ages 30 and 70 years from 2020 136.0
10. %
cardiovascular disease
2021 155.1

b. Probability of dying between the exact ages 30 and 70 years from 2020 71.4
%
cancer
2021 69.2

c. Probability of dying between the exact ages 30 and 70 years from 2020 8.0
%
diabetes
2021 10.3

d. Probability of dying between the exact ages 30 and 70 years from 2020 16.9
%
chronic respiratory disease
2021 21.4

2020 2.0
11. Suicide mortality rate per 100,000 population Ratio
2021 3.5

2020 86.3
12. a. Coverage of treatment interventions for Opioids %
2021 90.8

b. Coverage of treatment interventions for Amfetamine Type 2020 53.7

%
Stimulant (ATS)
2021 70.8

Prevalence of Heavy Episodic Drinking (HED) among 18 years old and 2019 1.0
13. %
above
2020 ....

economic outlook 2024 177

2. Statistical Table Combine BI [Link] 177 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

2020 14.3
14. Death rate of road traffic injuries per 100,000 population Ratio
2021 13.9

2014 47.7
15. Married women who use modern methods for family planning %
2020 ....

2020 0.1
16. a. Adolescent birth rate (aged 10-14 years) per 1,000 women Ratio
2021 0.1

2020 7.8
b. Adolescent birth rate (aged 15-19 years) per 1,000 women Ratio
2021 6.1

2016 2.0
17. a. Household expenditures on health (10%) %
2019 1.5

2016 0.2
b. Household expenditures on health (25%) %
2019 0.1

Mortality rate attributed to unsafe water, unsafe sanitation and lack 2020 0.3
18. Ratio
of hygiene per 100,000 population (reported by MOH facilities) 2021 0.7

Mortality rate due to the accidental poisoning by and exposure 2020 0.3
19. to noxious substance per 100,000 population (reported by MOH Ratio
facilities only) 2021 0.3

Age-standardised prevalence of current tobacco use among persons 2019 20.7

20.
aged 15 years and older 2020 ....

2020 97.7
21. a. Proportion of the target population covered by DTP (3rd dose) %
2021 94.2

2020 97.4
b. Proportion of the target population covered by MMR (2nd dose) %
2021 99.5

c. Proportion of the target population covered by HPV (last dose in 2020 82.6
%
the schedule) 2021 13.3

2020 2.3
22. a. Density and distribution of doctors per 1,000 population Ratio
2021 2.4

2020 0.4
b. Density and distribution of dentist per 1,000 population Ratio
2021 0.4

2020 86.0
23. Capacity and health emergency preparedness %
2021 85.0

Bloodstream infections due to selected antimicrobial resistant 2020 3.8

24. %
organisms 2021 3.3

178 economic outlook 2024

2. Statistical Table Combine BI [Link] 178 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

SDG 4: Quality Education

a. Proportion of children people in grades 2/3 achieving at least a 2018 98.0

1. %
minimum proficiency level in reading
2020 ....

b. Proportion of children people in grades 2/3 achieving at least a 2018 98.6

%
minimum proficiency level in mathematics
2020 ....

c. Proportion of children the end of primary achieving at least a 2019 95.0

%
minimum proficiency level in reading
2020 ....

d. Proportion of children at the end of primary achieving at least a 2019 83.1

%
minimum proficiency level in mathematics
2020

e. Proportion of young people at the end of lower secondary 2019 82.2

%
achieving at least a minimum proficiency level in reading
2020 ....

f. Proportion of young people at the end of lower secondary 2019 56.4

%
achieving at least a minimum proficiency level in mathematics
2020 ....

Proportion of children aged 24-59 months who are developmentally 2016 97.2
2. %
on track in health
2020 ....

2020 87.5
3. Participation rate in preschool
2021 86.1

Participation rate in education and formal training in the previous 12 2020 10.5
4.
months
2021 10.3
Adults with information and communication technology (ICT) skills 2020 87.7
5. in using copying and pasting techniques to duplicate or transfer %
information within document 2021 93.2

2020 1.02
6. Gender parity index for participation rate in preschool (female/male)
2021 1.03

2020 95.5
7. Achieving proficiency in literacy skil (15 years and above) %
2021 94.6

2020 99.0
8. Basic services for electricity offered by schools %
2021 100.0

2020 100.0
9. Teachers with minimum organised teacher training for preschool %
2021 36.7

SDG 5: Gender Equality

Number of non-muslim women aged 20-24 years old who were 2020 2,293
1.
married before 18 years
2021 2,169

2020 13.8
2. a. Seats held by women in Senate %
2021 18.2

economic outlook 2024 179

2. Statistical Table Combine BI [Link] 179 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

b. Seats held by Parliament of Malaysia women in House of 2020 14.4

%
Representatives
2021 14.9

2020 16.1
c. Seats held by women as Cabinet Ministers %
2021 15.6

2020 10.5
d. Seats held by Parliament of Malaysia women as Deputy Ministers %
2021 10.5

2020 24.8
3. Women in managerial positions %
2021 24.1

2014 89.3
4. Women aged 15-49 who use contraceptive use %
2020 ....

2020 96.4
5. Mobile phone ownership by individuals %
2021 97.4

SDG 6: Clean Water Sanitation

2020 96.9
1 Safely managed drinking water services %
2021 97.0

2019 99.7
2 Safely managed sanitation services %
2020 ....

2020 95.1
3 Proportion of bodies of water with good ambient water quality %
2021 95.1

2020 2.0
Proportion of transboundary basin area with an operational
4 %
arrangement for water cooperation 2021 2.0

SDG 7: Affordable and Clean Energy

2020 99.9
1. Access to electricity %
2021 99.9

2019 3.4
2. Renewable energy share in the total primary energy supplied %
2020 3.9

2019 69.2
3 Energy intensity (toe/ GDP at constant price 2015 (RM Million))
2020 70.0

SDG 8: Decent Work and Economic Growth

2020 -5.3
1. Annual growth rate of real GDP per capita %
2021 2.7

180 economic outlook 2024

2. Statistical Table Combine BI [Link] 180 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

2020 -5.3
2. Annual growth rate of real GDP per employed person %
2021 1.8

2019 9.3
3. Share of employment in the informal sector %
2020 ....

2020 2,933
4. Mean monthly salaries & wages of employees RM
2021 3,037

2021 4.6
5. Unemployment rate %
2022 3.9

2020 13.6
6. Proportion of youth not in education, employment or training %
2021 9.3

2020 2.09
7. a. Incidence rates of fatal occupational injuries per 100,000 workers Ratio
2021 2.00

b. Incidence rates of non-fatal occupational injunes per 100,000 2020 216.0

Ratio
workers
2021 141.0

2020 2.0
8. Growth rate of tourism to GDP %
2021 0.8

2020 9.0
9. a. Number of commercial bank branches per 100,000 adults Ratio
2021 8.7

2020 55.6
b. Number of automated teller machines (ATMs) per 100,000 adults Ratio
2021 54.3

2020 95.9
10. Adults with an account at a financial institution %
2021 95.7

SDG 9: Industry Innovation and Infrastructure

2020 137.4
1. a. Number of passengers by rails million
2021 78.5

2020 26.8
b. Number of passengers at airport million
2021 11.0

2020 4,551.0
c. Freight volumes and containers handled by KTMB (‘000 tonnes)
2021 4,793.0

2020 789.1
d. Cargo handled by airport (‘000 tonnes)
2021 1,008.1

(‘000 000 2020 564.3

e. Cargo throughput by port
tonnes)
2021 591.5

economic outlook 2024 181

2. Statistical Table Combine BI [Link] 181 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

2020 9,488
2. Manufacturing value added per capita RM
2021 10,352

Manufacturing employment as 2017 a proportion of total 2020 16.7

3. %
employment
2021 16.6

Share manufacturing value added of Small and Medium Enterprise 2020 34.5
4. %
(SMEs) to GDP
2021 34.2

2015 53.8
5. Proportion of SMEs with a loan or line of credit %
2020 ....

2018 1.0
6. Research and development expenditure as a proportion of GDP %
2020 ....

2018 2,127
7. Number of researchers per million inhabitants
2020 ....

Medium and high-tech industry value added ratio in total 2020 47.1
8. %
manufacturing value added (at constant prices)
2021 48.0

2020 96.7
9. Population covered by a mobile network %
2021 98.5

SDG 10: Reduced Inequalities

2019 3.4
1. Compounded annual growth rate among Bottom 40 (B40) %
2020 ....

2019 16.9
2. Households below 50 per cent of median income %
2020
e
16.2

Compensation of employees by kind of economic activity at current 2020 37.1

3. %
prices
2021 34.8

2020 2.5
4. Remittance costs as a proportion of the amount remitted %
2021 2.2

SDG 11: Sustainable Cities and Communities

2020 0.0
1. a. Number of deaths attributed to disasters per 100,000 population Ratio
2021 0.1

b. Number of affected people with damaged homes attributed to 2020 150.0

Ratio
disasters per 100,000 population
2021 761.0

2020 22
(PM10)
2. Annual mean levels of fine particulate matter in cities
(µg/m3) 2021 23

182 economic outlook 2024

2. Statistical Table Combine BI [Link] 182 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

SDG 12: Responsible Consumption and Production

Number of participations in international multilateral environmental 2020 17

1.
agreements
2021 17

2020 40
2. a. Quantity of clinical wastes handled (tonnes ‘000)
2021 57

2020 7,185.2
b. Quantity of Scheduled waste managed (tonnes ‘000)
2021 7,505.2

SDG 13: Climate Action

2020 0.0
1. a. Number of deaths attributed to disasters per 100,000 population Ratio
2021 0.1

b. Number of affected people with damaged homes attributed to 2020 150

Ratio
disasters per 100,000 population
2021 761

2016 316.8
(tonnes
2. CO2 eq emissions
(million)) 2020 ....

SDG 14: Life Below Water

a. Malaysia Marine Water Quality Index in coastal area with excellent 2020 55
1
status (number of station)
2021 85

b. Malaysia Marine Water Quality Index in estuary area with excellent 2020 3
status (number of station)
2021 7

c. Malaysia Marine Water Quality Index in island area with excellent 2020 46
status (number of station)
2021 53

2020 5.4
2. Coverage of protected areas in relation to marine areas %
2021 5.4

SDG 15: Life on Land

2019 ....
1. Forest area as a proportion of total land area %
2020 ....

Important sites for terrestrial and freshwater biodiversity that are 2019 ....
2. %
covered
2020 ....

2020 1,060
3. Number of wildlife crime cases for possession/ own use category
2021 600

economic outlook 2024 183

2. Statistical Table Combine BI [Link] 183 05/10/2023 8:39 PM

 statistical tables

No. Available Indicator Unit Year Value

SDG 16: Peace, Justice and Strong Institutions

2019 ....
1. Number of intentional homicide cases per 100,000 population Ratio
2020 ....

Children aged 1-5 years who experienced any physical punishment 2016 70.8
2.
and/or psychological aggression by caregivers in the past month 2020 ....

2020 40.5
3. Unsentenced detainees as of prisoner (%) %
2021 39.3

Federal Government expenditures as a proportion of original 2020 92.9

4. %
approved budget 2021 96.8

2020 3,649
5. Number of complaints on public services
2021 4,074

2020 0.3
6. Civil servant with disabilities in public service %
2021 0.3

SDG 17: Partnerships for the Goals

2020 15.9
1. Share government revenue as a proportion of GDP %
2021 15.1

2020 55.9
2. Share of Federal Government tax revenue and expenditure %
2021 58.7

2019 8.9
3. Fixed-broadband penetration rate per 100 inhabitants Ratio
2020 ....

2020 89.6
4. Individuals using the Internet %
2021 96.8

Value of financial and technical assistance committed to developing 2020 778.1

5. RM ‘000
countries 2021 2,594.5

2020 3.8
6. Worldwide weighted World Trade tariff-average %
2021 3.5

2020 1.3
7. Share of global exports %
2021 1.3

Statistical indicators for 2018 50.9 2019 Sustainable Development 2020 62.4
8. %
Goals monitoring 2021 75.1

Note: .... indicates data not available

Source: Department of Statistics, Malaysia

184 economic outlook 2024

2. Statistical Table Combine BI [Link] 184 05/10/2023 8:39 PM

 organisation of the ministry of finance malaysia

ORGANISATION OF THE MINISTRY OF FINANCE MALAYSIA

MINISTER OF FINANCE
YAB Dato' Seri Anwar bin Ibrahim

DEPUTY MINISTER OF FINANCE DEPUTY MINISTER OF FINANCE

YB Datuk Seri Ahmad Maslan YB Tuan Steven Sim Chee Keong

DEPARTMENTS UNDER THE MINISTRY OF FINANCE

TREASURY OF MALAYSIA
Secretary General of Treasury
Datuk Johan Mahmood Merican

ROYAL MALAYSIAN CUSTOMS ACCOUNTANT GENERAL’S VALUATION AND PROPERTY LANGKAWI DEVELOPMENT
DEPARTMENT DEPARTMENT OF MALAYSIA SERVICES DEPARTMENT AUTHORITY
Director General of Customs Accountant General of Malaysia Director General of Valuation Chief Executive Officer
Dato’ Anis Rizana binti Mohd Zainudin Pn. Nor Yati Ahmad and Property Services -
Sr Abdul Razak bin Yusak

AGENCIES UNDER THE MINISTRY OF FINANCE

CENTRAL BANK OF MALAYSIA SECURITIES COMMISSION BANK SIMPANAN NASIONAL MALAYSIA DEPOSIT
Governor MALAYSIA Chief Executive INSURANCE CORPORATION
Datuk Abdul Rasheed Ghaffour Chairman En. Jay Khairil Jeremy Abdullah Chief Executive Officer
Dato' Seri Dr. Awang Adek Hussin En. Rafiz Azuan bin Abdullah

BURSA MALAYSIA BERHAD INLAND REVENUE BOARD EMPLOYEES PROVIDENT LABUAN FINANCIAL
Chief Executive Officer OF MALAYSIA FUND SERVICES AUTHORITY
Datuk Muhamad Umar Swift Chief Executive Officer/ Chief Executive Officer Director General
Director General of Inland Revenue Datuk Seri Amir Hamzah Azizan En. Nik Mohamed Din bin Nik Musa
Dato’ Sri Dr. Mohd Nizom bin Sairi

PUBLIC SECTOR HOME MALAYSIA TOTALISATOR BOARD RETIREMENT FUND

FINANCING BOARD Chief Executive Officer (INCORPORATED)
Chief Executive Officer Pn. Nor Hashimah Hashim Chief Executive Officer
En. Mohd Farid bin Dato’ Hj Nawawi Datuk Hajah Nik Amlizan Mohamed

economic outlook 2024 185

ORGANISATION OF THE MINISTRY OF FINANCE MALAYSIA [Link] 185 05/10/2023 8:10 PM

 organisation of the ministry of finance malaysia

TREASURY OF MA L AYS I A

MINISTER OF FINANCE
YAB Dato' Seri Anwar bin Ibrahim

DEPUTY MINISTER OF FINANCE DEPUTY MINISTER OF FINANCE

YB Datuk Seri Ahmad Maslan YB Tuan Steven Sim Chee Keong

SECRETARY GENERAL OF TREASURY

Datuk Johan Mahmood Merican

DEPUTY SECRETARY GENERAL DEPUTY SECRETARY GENERAL DEPUTY SECRETARY GENERAL

OF TREASURY (POLICY) OF TREASURY (MANAGEMENT) OF TREASURY (INVESTMENT)
Dato’ Zamzuri bin Abdul Aziz Datin Rashidah binti Mohd Sies -

NATIONAL BUDGET OFFICE GOVERNMENT PROCUREMENT GOVERNMENT INVESTMENT

Dato' Shahrol Anuwar bin Sarman DIVISION COMPANIES DIVISION
Dato' Indera Ab Rahim bin Ab Rahman Dato’ Dr Amiruddin bin Muhamed
TAX DIVISION
Dato’ Che Nazli binti Jaapar STRATEGIC FINANCIAL CONTROL STRATEGIC INVESTMENT DIVISION
AND CORPORATE Pn. Nor Eni binti Ismail
FISCAL AND ECONOMICS DIVISION En. Mohd Sakeri bin Abdul Kadir
STATUTORY BODY STRATEGIC
Dr Mastura binti Abdul Karim
REMUNERATION POLICY AND MANAGEMENT DIVISION
INTERNATIONAL DIVISION MANAGEMENT DIVISION Datin Rosni binti Mohd Yusoff
En. Abu Bakar @ Salleh bin Jambol Datin Paduka Roslinah binti Md Jani PUBLIC ASSET MANAGEMENT
DIVISION
REGISTRAR OFFICE OF CREDIT INFORMATION TECHNOLOGY Dato’ Ahmad Suhaimi bin Endut
REPORTING AGENCIES DIVISION
En. Salsuriya bin Selamat Dato’ Shuhairi bin Abd Ghani

SABAH FEDERAL TREASURY

Pn. Rafidah binti Datu Derin

OFFICE OF THE SPECIAL

SARAWAK FEDERAL TREASURY
COMMISSIONERS OF INCOME TAX
En. Leonard Wilfred Yussin
Dato' Othman bin Yusof

LEGAL DIVISION
Pn. Rafidah binti Omar

CUSTOMS APPEAL TRIBUNAL

Tn. Haji Yaacub bin Haji Chik

TREASURY INTERNAL AUDIT

UNIT
En. Abd Ghani bin Sulaiman

NATIONAL INTER AGENCY UNIT

FOR ECONOMIC STIMULUS
IMPLEMENTATION AND
COORDINATION
-

INTEGRITY UNIT
Dato’ Zainul bin Darus

CORPORATE COMMUNICATIONS
UNIT
-

186 economic outlook 2024

ORGANISATION OF THE MINISTRY OF FINANCE MALAYSIA [Link] 186 05/10/2023 8:10 PM

 KOD JALUR / BARCODE

JUDUL : ECONOMIC OUTLOOK – [ONLINE]

eISSN : 3009-0660

e ISSN 3009-0660

9 773009 066001