This year is a special one for Malaysia as we celebrate 50 years of independence. The country has witnessed political, economic and social stability over the years. The economy in particular has gone through a substantial transformation, changing from a commodity-based economy to a manufacturing and services-oriented one. Policies have been fine-tuned and adjusted to take advantage of the changes brought about by globalisation and technology.

The economy grew by 5.9% in 2006. Growth was led by the expansion of the services, manufacturing and agricultural sectors. For the first quarter of 2007, a gross domestic product (GDP) growth of 5.3% was recorded. This was mainly due to the strong performance of the services sector, which expanded by 9.6%. The strong expansion was driven mainly by increased consumption-related activities, finance and business services. The projected GDP growth for 2007 is 6% against a global growth rate of 4.5%.


Malaysia’s strong economic fundamentals will continue to be supported by a low inflation rate of 2.5% and an unemployment rate of 3.5%.

In 2006, Malaysia’s total trade was 196% the size of GDP. Total trade increased by 10.5% in 2006 to reach $255.6bn in 2005, with exports expanding by 10.3% to $160.5bn and imports increasing by 10.8%, to $131.1bn.

In 2006, the World Trade Organization ranked Malaysia as the 19th largest trading nation, 19th largest exporter and 23rd largest importer.

The manufacturing sector recorded a positive growth of 1.7% during the same period. The growth in this sector was mainly in the resource-based and domestic-oriented industries.

Malaysia attracted a higher level of foreign investments in 2006, involving a total value of $5.5bn in 571 approved manufacturing projects, compared with $4.9bn in 2005.

Over the years, many foreign companies have expanded and diversified their operations in Malaysia. These reinvestments are testimony to the confidence the companies have in the business environment.

The major areas of investment by foreign companies are in sectors such as electronics and electrical products, chemicals and chemical products, basic metal products, non-metallic mineral products, food manufacturing, plastic products, and scientific and measuring equipment.

Malaysia also welcomes companies to set up services-based operations in the country, particularly to serve the regional markets. The non-government services sector’s contribution to GDP expanded from 42.1% in 1990 to 53.3% in 2006, and the sector’s growth for the year was 6.5%. The contribution of the sector to GDP is expected to increase to 62.2% by 2020.

The opportunities for investments in Malaysia’s services sectors include business and professional services, integrated logistics, information and communications technology services, distributive trade, regional establishments, education and training, construction, health services and tourism services.

Malaysia is also promoting the biotechnology industry to capitalise on its status as one of the 12 mega biodiversity centres in the world. The government has established the Malaysian Biotech Corporation to oversee, promote and co-ordinate the development of the biotechnology industry. Among the areas that are being promoted are food and agro biotechnology, biopharmaceuticals such as antibodies and vaccines, and biodiagnostics.

Malaysia’s attractiveness and viability as a business location is reflected in the international rankings of the country by international organisations. The International Institute for Management Development, for example, ranked Malaysia as the 23rd most competitive country in 2007 for overall performance out of 61 countries.

For three consecutive years, including this year, A T Kearney ranked Malaysia as the third most attractive destination for offshore services (business process outsourcing) after India and China.

The Capital Access Index of US independent economic think tank Milken Institute, which ranks the ability of entrepreneurs to gain access to financial capital in countries around the world, placed Malaysia in 12th position in 2006, ahead of countries such as Germany, Denmark and Japan.

Despite these positive rankings by international organisations, the Malaysian government will continue to strive to make further improvements to its international competitiveness.

I would like to invite all of you to visit Malaysia and explore for yourself the opportunities available.

Rafidah Aziz

August 2007