Malaysia industry sector
Between 1970 and 1990, Malaysia experienced rapid industrialization, transitioning from a primary mineral and agricultural export economy to one dominated by services and industry. In 2021, the service sector accounted for 50.9% of GDP (value added), industry for 39.2%, and agriculture for 8.9%
Major industries include
Manufacturing industry
Talent pool development and Industry 4.0 remain key focus areas in Malaysia's manufacturing sector, revitalizing many mature industries and opening new opportunities. The government encourages companies to accelerate automation and innovation, conduct research, development, and commercialization, and implement green and sustainable production practices to improve productivity
Service industry
As the domestic economy matures, the service sector's share of GDP is increasing, a trend evident in developed countries. Malaysia is gradually becoming a developed nation, and the development of the service sector will be a major driver and sustainer of economic growth
Macroeconomy
Economic overview
Since 2004, Malaysia’s economy has maintained steady growth. In September 2021, the Malaysian government presented the Twelfth Malaysian Plan (2021-2025) to Parliament, focusing on revitalizing the economy impacted by the COVID-19 pandemic, enhancing social welfare, security, and inclusivity, and promoting environmental sustainability, with the aim of building a “prosperous, inclusive, and sustainable Malaysia.” The main development goals of the plan include achieving an annual GDP growth rate of 4.5% to 5.5% from 2021 to 2025, reaching an average household monthly income of 10,000 ringgit by 2025, reducing regional development disparities, and promoting energy efficiency and emission reductions
In 2022, Malaysia’s GDP grew by 8.7% year-on-year, significantly higher than the 3.1% growth in 2021 and the highest growth rate since 2000, primarily due to the smooth transition from pandemic control, full economic activity resumption, and strong domestic demand and export growth
【Gross Domestic Product】
In 2022, Malaysia’s Gross Domestic Product (GDP) was 1,507.3 billion ringgit (approximately 343.5 billion USD) (real GDP at 2015 constant prices), with a year-on-year growth of 8.7%. The per capita income was approximately 52,819 ringgit (about 12,040 USD)
【GDP industry structure】
In 2022, the proportions of agriculture, mining, manufacturing, construction, and services in GDP were 6.6%, 6.4%, 24.2%, 3.5%, and 58.2%, respectively
Trade agreements
Economic and trade cooperation
【Regional trade agreements】
Malaysia is a founding member of the Association of Southeast Asian Nations (ASEAN), which was established on August 8, 1967. At the 4th ASEAN Summit held in Singapore in January 1992, it was decided to establish the ASEAN Free Trade Area (AFTA) within 15 years, starting from January 1, 1993. At the 27th ASEAN Summit in November 2015, ASEAN leaders signed the Kuala Lumpur Declaration on the Establishment of the ASEAN Community 2015, officially establishing the ASEAN Community by the end of 2015
Malaysia has built an extensive network of free trade agreements covering its major trading partners. As of July 2023, Malaysia has signed 16 free trade agreements, all of which are in force, including bilateral agreements with Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey, as well as regional agreements with China, South Korea, Japan, Australia, New Zealand, India, and Hong Kong as an ASEAN member
On March 8, 2018, Malaysia, along with Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, and Vietnam, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The agreement was formally approved and came into effect in November 2023. Additionally, Malaysia is negotiating the Malaysia-European Free Trade Association Economic Partnership Agreement. In May 2022, the U.S. announced the launch of the Indo-Pacific Economic Framework, with Malaysia being one of the 13 founding countries
Trade volume
Foreign trade
In 2022, Malaysia’s total foreign trade in goods amounted to 2.848 trillion ringgit, an increase of 27.8% year-on-year. Of this, exports were 1.55 trillion ringgit, up by 25%, and imports were 1.297 trillion ringgit, up by 31.3%. The trade surplus was 255.1 billion ringgit, a 0.6% increase. Malaysia has achieved a trade surplus for 25 consecutive years since 1998
In 2022, China, Singapore, and the United States remained Malaysia’s top three trading partners. China continued to be Malaysia’s largest trading partner for the 14th consecutive year, with a record trade volume of 203.5 billion USD. Malaysia was China’s 10th largest trading partner and the second largest trading partner among ASEAN countries
In 2022, Malaysia’s top five export products were electronics and electrical products, petroleum products, palm oil and derivatives, chemical and chemical products, and liquefied natural gas. The top five import products were electronics and electrical products, petroleum products, chemical and chemical products, machinery and parts, and metal products
In 2022, Malaysia’s total foreign trade in services amounted to 336.94 billion ringgit, a year-on-year increase of 39.4%. Of this, exports were 140.27 billion ringgit, up by 59.3%, and imports were 196.67 billion ringgit, up by 27.9%. The trade deficit was 5.64 billion ringgit, a 14.2% increase
Investment attractiveness
Investment environment
The Malaysian government welcomes and encourages foreign investors to invest in its manufacturing and related service sectors. In recent years, it has been committed to improving the investment environment, refining investment laws, and strengthening investment incentives to attract foreign capital into relevant industries. Due to Malaysia’s well-established investment legal system, alignment with international standards, and relatively standardized industry processes, combined with its unique geographical advantages, it has attracted companies from various countries, including China, to invest and operate in Malaysia
The competitive advantages of Malaysia’s investment environment are primarily reflected in its strategic geographic location in the heart of Southeast Asia, serving as a bridge to the ASEAN market and the Middle East and Australia; a solid economic foundation with favorable growth prospects; rich natural resources; high-quality human resources with relatively low wage costs; and harmonious ethnic relations with low political instability risks
The World Bank’s 2020 Doing Business Report shows that Malaysia ranks 12th out of 190 economies globally, and second in the ASEAN region after Singapore. The Malaysian government is also actively promoting innovation and development, offering tax incentives and capital expenditure deductions to high-tech companies in the Multimedia Super Corridor (MSC) and those involved in Industry 4.0 technologies and digital transformation (such as AI, blockchain, and fintech), as well as companies in economic development corridors and SMEs. The World Intellectual Property Organization’s 2023 Global Innovation Index ranks Malaysia 36th among 132 countries and regions
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