Malaysia attracts a number of our clients with its large, literate, young and largely urban population, which equates to a healthy labour market. Foreign workers and businesses are relatively safe as Malaysia has lower crime rates than most other emerging market economies in Asia. Companies also benefit from the country’s high quality transport network, with well connected ports via inland transport to major economic hubs and neighbouring countries.

Our coverage, using our unique Total Analysis model, ensures that our clients make sound, risk-assessed decisions in Malaysia. We keep our clients informed of the latest market moves and political developments, supported by our interactive data and forecasting. Clients also benefit from in-depth analysis of 23 of Malaysia’s most important industries, as part of our 'top-down' and 'bottom-up' perspective. We aim to keep you, as one of our clients, always one step ahead in Malaysia.

Country Risk

Malaysia Country Risk

BMI View:

Core Views

  • Malaysia's 2015 real GDP growth came in at 5.0%, slightly above our forecast of 4.7%. Ongoing weakness in the Chinese economy coupled with continued headwinds in the domestic economy will continue to weigh on Malaysia's economic growth. As such, we maintain our 2016 real GDP forecast at 4.5%.

  • We maintain our forecast for Malaysia's 2016 fiscal deficit to come in at 3.1% of GDP, with the government having taken positive steps to increase its revenue and prioritise development projects. While we maintain our constructive outlook on Malaysia's ability to reduce its fiscal deficit, the increase in spending could present downside risks to our view should oil prices fall further.

  • The decision by BNM to keep its OPR steady at 3.25% during its March 9 monetary policy meeting was in line with our...

Malaysia Operational Risk Coverage (9)

Malaysia Operational Risk

BMI View:

BMI View: Malaysia is among the most attractive countries in the Asia region as a location for investment and a base of operations. Economic growth is set to slow in the medium term; however, the fundamentals are looking strong, and we expect a buoyant economy to drive trade flows and increase the attractiveness of the country as an investment location. This will be further supported by the fact that the government adopts a welcoming attitude towards foreign direct investment (FDI) into most sectors and has established policies that have lowered the burden of bureaucracy, promoted ICT activity and intellectual property rights (IPR) protection, and generally created a healthy business environment. Malaysia is therefore ranked highly in the Asia region in the BMI Trade and Investment Risk Index, in third place out of 38 states in Asia, just behind Hong Kong and ahead of Taiwan. Its high score of 77.5 out of 100 also places...

Malaysia Crime & Security

BMI View:

BMI considers Malaysia to be relatively safe for foreign workers and businesses, with lower crime rates, fewer threats from terrorism and less of a risk of interstate conflict than in two-thirds of the emerging market countries in the region. In particular, we highlight that Malaysia has a markedly lower impact from terrorist activity than most of its neighbours, including Thailand, Indonesia and the Philippines, while its involvement in the South China Sea disputes has been less confrontational than Vietnam and China. Malaysia is therefore ranked highly overall in the BMI Crime and Security Risk Index, in 10th place out of 30 countries in Asia with a score of 62.0 out of 100. BMI notes that the main risks to foreigners come from petty crimes and scams, and the potential spreading of terrorist activity over the borders from neighbouring states. The limited threat of international terrorist...

Malaysia Labour Market

BMI View:

Malaysia's labour force is characterised by a large, healthy and urbanised population, with reasonably good basic skills as well as a large number of specialised graduates. The domestic labour market therefore provides a wide variety of options for businesses. The workforce is also relatively unregulated, and trade unions have minimal influence. Nevertheless, BMI emphasises that the poor quality of education, combined with tough restrictions on the recruitment of foreign labour, means business will most likely have to provide extra training for local workers. Malaysia is ranked highly in the Asia region in terms of Labour Market Risk, in eighth place with a score of 62.5 out of 100.

The Malaysian labour market benefits from a high number of adults who have completed secondary and tertiary education, which means there are greater options for businesses looking to recruit skilled labour. The government is also investing...

Malaysia Logistics

BMI View:

Malaysia benefits from an abundance of natural of resources, impressive economic growth rates and a reliable and extensive transport network. It also boasts some of the lowest trade costs and most efficient trade procedures in the world. Malaysia is therefore an attractive destination for investors and has established itself as one of the most low-risk, stable and cost-effective locations globally to conduct trade. BMI scores Malaysia an impressive 80.5 out of 100 in the our Logistics Risk Index, ranking it second in the Asia region and third globally, well ahead of neighbouring countries Indonesia and Singapore, and outperforming regional powerhouses China, Japan and India. The stable nature of its political and trading environment, the inexpensiveness of fuel and the large-scale connectivity across the country has aided Malaysia in becoming one of the most competitive countries in the world in terms of trade.


Malaysia Trade & Investment

BMI View:

BMI considers Malaysia to be among the most attractive countries in the Asia region as a location for investment and a base of operations. Economic growth is set to slow in the medium term; however, the fundamentals are looking strong, and we expect a buoyant economy to drive trade flows and increase the attractiveness of the country as an investment location. This will be further supported by the fact that the government adopts a welcoming attitude towards foreign direct investment (FDI) into most sectors and has established policies that have lowered the burden of bureaucracy, protected ICT activity and intellectual property, and generally created a healthy business environment. Malaysia is therefore ranked highly in the Asia region in the BMI Trade and Investment Risk Index, in third place out of 30 in Asia, just behind Hong Kong and ahead of Taiwan. Its high score of 75.0 out of 100 also places it favourably on a...

Malaysia Industry Coverage (32)


Malaysia Agribusiness

BMI View:

BMI View: Malaysia's agribusiness sector is experiencing challenging times, as its most emblematic sector, the palm oil industry, is undermined by low prices and growing structural challenges. The cocoa sector is in an even worse position, suffering a severe decline after the stellar performance of the 1990s. The cocoa processing sector is facing increasing competition from Indonesia and is losing market share at a fast pace. The medium term outlook is brighter, amidst strong growth prospects in the poultry sector and opportunities for value added palm based oleochemical exports. Malaysia will have to remain ahead of its biggest competitor, Indonesia, if its ...


Malaysia Autos

BMI View:

BMI View: Tighter lending conditions, weak private consumption and a slowdown of the Malaysian economy will see subdued growth in passenger vehicle sales over our 2016-2019 forecast period. Forecasted passenger vehicles sales growth in 2016 will reach 2.5%, and domestic vehicle production will outperform domestic sales growth over our forecast period.

Passenger Vehicle Sales Experiencing Subdued Growth
Passenger Vehicle Sales, Units
f = forecast. Source: MAA, BMI

Commercial Banking

Malaysia Commercial Banking

BMI View:

Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Malaysia Consumer Electronics

BMI View:

BMI View: The Malaysian consumer electronics market was hit hard by ringgit depreciation and wider economic uncertainty in 2015, with a sharp contraction in US dollar terms, but the outlook is considerably brighter over the medium term. As the ringgit stabilises and confidence strengthens we expect all three device segments to return to growth from 2016 onwards, with an added boost from deferred purchases during 2015. Our bullish outlook is based on our Country Risk team's forecast for household income growth, which will translate to an expanding middle and upper middle class. This will present an opportunity for volume growth as well as an easing of price sensitivity that vendors can...

Defence & Security

Malaysia Defence & Security

BMI View:

BMI View: Defence Spending in Malaysia will be ramped up in 2015, with a 10% budgetary increase announced in October 2014. We expect a slight increase in procurement activity while the majority of the development budget will be dedicated to expanding existing projects. The release of a new five year development plan and a review of Malaysia's defence offsetting programme could yield changes for the indigenous defence sector when unveiled in 2015. Malaysia enjoys peace and stability with regards to internal and external security threats. Key concerns include continued incursions by Filipino groups and rising piracy in regional waters.

We expect import volumes to grow in 2015 in line with the 10% year-on-year (y-o-y) defence budget increase, announced in October 2014, with development expenditure for 2015 set at USD1.0bn compared to USD0.8bn in 2014. The government has yet...

Food & Drink

Malaysia Food & Drink

BMI View:

BMI View: The Malaysian food and drink industry will see robust growth over 2016, on the back of rising real private consumption. Stronger purchasing power will enable consumers to trade-up price points, which will bode well for the food industry. However, the effects of a 6% goods and services tax have yet to filter through to the economy, threatening discretionary expenditure.

Food And Drink Spending
f = BMI forecast. Source: BMI, national sources

Freight Transport

Malaysia Freight Transport

BMI View:

BMI View: We expect strong growth for trade in Malaysia over the coming years, boosting freight volumes for all modes. Rail will experience the biggest increase, catering for construction material transfers while road freight will dominate in terms of tonnage with industries utilising the country's extensive road network for their cargo transfer needs. Air freight will experience slow, steady growth limited by functional and cost constraints. Rising consumer demand in the growing economy is also contributing to our positive outlook with the recently agreed Trans-Pacific Partnership presenting further growth potential over the medium to long term.

Malaysia has enjoyed economic growth since 2010 and we forecast growth to continue over the medium term, although at slightly lower rates than previous years. For the years 2010-2014 real GDP average is estimated to have reached 5.7%, while we...

Malaysia Freight Transport

BMI View:

BMI View: We expect healthy growth across the freight modes in Malaysia in 2016, with rail freight pencilled in to register the strongest y-o-y gains. As a regional transhipment hub, Malaysia's freight modes benefit from strong trade links with its neighbours and this will only be strengthened over the medium to long term with the relatively advantageous agreement obtained by the country in the Trans Pacific Partnership. These gains will be largely derived from increases in allocative efficiencies, productivity gains, and the fall in investment barriers due to the gradual removal of tariff and non-tariff barriers.

Key Updates and Forecasts

  • Malaysia's 2015 real GDP growth came in at 5.0%, slightly above our forecast of 4.7%. Ongoing...

Information Technology

Malaysia Information Technology

BMI View:

BMI View: After a challenging 2015, when ringgit depreciation and wider economic uncertainty held back IT market growth, we expect the Malaysian IT market to move to a stronger growth trajectory over the medium term, with a CAGR of 5.1% over 2016-2019 in local currency terms. In the hardware market, rising incomes and increased access to affordable data connectivity will boost consumer spending in volume terms and through an easing of price sensitivity. Meanwhile, in the enterprise software and services market growth will be robust, with cloud computing and Internet of Things application adoption...


Malaysia Infrastructure

BMI View:

BMI View: The 2016 federal budget reinforces the government's commitment to infrastructure development and supports ongoing developments plans such as the 11 thMalaysia Plan and the Economic Transformation Programme. We note that the weakening residential and non-residential buildings segments will be a drag on overall growth.

Latest Updates And Structural trends

  • We maintain our positive outlook for Malaysia's construction sector, and forecast real growth of 10.6% and 7.6% in 2015 and 2016 respectively.

  • The federal budget for 2016, which was announced in November 2015, underscores the government's commitment to infrastructure development, and public projects will continue to drive construction activity.

  • Our forecast...


Malaysia Insurance

BMI View:

BMI View: Although premiums in both the non-life and life segments of Malaysia's insurance sector are increasing at single-digit rates, there remain good prospects for profitable growth by the leading insurers. Most of the major insurers have strengths that they are able to leverage such as ability to innovate, multi-channel distribution, access to global capital markets and well-established brands. Many are providing takaful solutions.

Headline Insurance Forecasts (Malaysia 2013-2020)

Medical Devices

Malaysia Medical Devices

BMI View:

BMI Industry View: The new GST tax and exchange rate fluctuations will temper the performance of imports and market growth. The Trans-Pacific Partnership (TPP) agreement is unlikely to result in a dramatic rise in imports as most already have a zero percent tax duty. We expect the Malaysian medical device market to expand by a CAGR of 6.3% in US dollar terms to 2019.

Projected Medical Device Market, 2014-2019
Total (USDmn) Per Capita (USD) ...


Malaysia Metals

BMI View:

BMI View: We have increased our 2016 tin price forecast to USD16,500/tonne owing to a stabilisation in the Chinese economy over Q116 that has boosted all industrial metal prices significantly over January-April. While we expect consolidation over the remainder of 2016, tin prices will continue to recover beyond 2016 as the global market posts sustained market deficits and inventories dwindle.

Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f ...

Malaysia Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Malaysia Metals

BMI View:

BMI View: Despite the strong H116 iron ore price rally, prices will edge lower due to weakening Chinese consumption over the latter half of 2016. From 2017 onwards, iron ore prices will remain subdued as iron ore prices remain under pressure from an over-supplied seaborne market, driven by strong production growth in Australia and Brazil, and weak consumption growth in China.

Global - Iron Ore Production Forecasts
2013 2014 2015e 2016f

Malaysia Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

Global Nickel Forecasts
2013 2014 2015e

Malaysia Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Malaysia Metals

BMI View:

BMI View: We have raised our gold price forecast for 2016 to USD1,275/oz and have a new five-year price target of USD1,400/oz. We have turned more positive towards prices due to rising inflation pressures and our view that real rates will remain depressed in developed markets beyond 2016. A modest rise in prices will be insufficient to reverse the trend of weak mine investment and industry consolidation.

BMI Gold Forecasts
2014 2015 2016f ...

Malaysia Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Malaysia Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Malaysia Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f


Malaysia Mining

BMI View:

BMI View: Malaysia's mining sector is facing into a more modest growth output than the one seen in recent years. Falling mineral prices have been eating increasingly into the profitability of the country's miners, leading many firms to scale back production as well as exploration and development. That said the continued presence of major miners across the gold and tin sub-sectors will ensure that output from both segments continues to grow over the forecast period, albeit at a slower rate to that seen in recent years.

We forecast Malaysia's mining industry to reach USD43.25bn by 2019, increasing at a steady clip of 5.0% per annum. Despite significant deposits of untapped minerals and positive reforms by the Malaysian government in recent years, a resource boom is unlikely to catch up with the country...

Oil & Gas

Malaysia Oil & Gas

BMI View:

BMI View: Malaysia's long-term crude oil production will be hit as investment in deepwater exploration and production is curtailed amid low oil prices. A more competitive Asian LNG market will reduce foreign gas demand in the short term.

Headline Forecasts (Malaysia 2013-2019)
2013 2014 2015f 2016f 2017f ...


Malaysia Petrochemicals

BMI View:

The Malaysian petrochemicals sector is seeing dynamic growth, with the government having stated its intention to become a leading petrochemicals hub in Asia. However, the country will require an increase in raw material imports as domestic resources are in decline.

There is evidence to suggest that Malaysia has been moving up the value chain, with exports of petroleum products (including petrochemicals) increasing from 12.0mn tonnes in 2010 to 22.4mn tonnes in 2014. We believe this will continue over the coming years, with the start-up of the Refinery and Petrochemical Integrated Development (RAPID) project further propelling this trend.

The USD16bn RAPID project in Johor is due to start in 2019. It will include a 300,000 barrels per day refinery and several downstream petrochemicals plants with the total capacity of 7.7mn tonnes per annum (tpa). The complex is the largest single investment in Malaysia and aims to...

Pharmaceuticals & Healthcare

Malaysia Pharmaceuticals & Healthcare

BMI View:

BMI View: We hold a bullish outlook for Malaysia's pharmaceutical market over our forecast period. We believe the government's commitment to expanding healthcare access coupled with the country's growing population and disease burden will drive medicine demand in the coming years. Furthermore, the signing of the Trans-Pacific Partnership (TPP) agreement - after years of negotiation and uncertainty - will work to strengthen multinational interest in the market, particularly patented drug manufacturers.

Headline Expenditure Projections

  • Pharmaceuticals: MYR7.88bn (USD2.02bn) in 2015 to MYR8.59bn (USD2.05bn) in 2016; +9.0% in local currency and +1.4% in US dollar terms. Forecast unchanged from last quarter.

  • ...


Malaysia Power

BMI View:

BMI View : The Malaysian power sector is set to grow 6.1% in 2016, following an estimated expansion of 5.3% in 2015. Growth in 2016 will be powered by the completion of major thermal projects.

Headline Power Forecasts (Malaysia 2015-2021)
2015e 2016f 2017f 2018f 2019f

Real Estate

Malaysia Real Estate

BMI View:

BMI View : Malaysia's location in South East Asia and its welcoming attitude to foreign investment are major attractions to overseas investors. The real estate market is affected at present by slower economic growth, but the medium-term prospects are good. An expanding service sector as well as rising incomes and improving trade indicate a more positive outlook for all three sub-markets we cover.

Following a strong 6.0% GDP growth in 2014, the economy has been facing some challenges in 2015 and growth is expected to be lower, at 4.7%. This trend is expected to continue in 2016, with GDP growth predicted at 4.5%. This is partly explained by the impact of tighter monetary policy and...


Malaysia Retail

BMI View:

BMI View: In 2015, Malaysia's retail market suffered from the rapid depreciation of ringgit as well as the introduction of the Goods and Services Tax, which significantly dented sales, particularly in the second half of the year. While these factors will remain in play during the first quarters of 2016, we believe the country's retail sales will recover in 2016 on account of sustained Malaysia's economic growth, rising household incomes and accommodative monetary policy. That said, we note that precipitous household debt levels pose a downside risk to our forecasts, especially over the medium term.

Headline Household Spending


Malaysia Shipping

BMI View:

BMI View : The 2016 growth picture at Malaysia's ports is slightly mixed, with tonnage and box gains differing between the facilities. The Port of Kuantan is set to be the outperformer once more in terms of tonnage growth (just under 10%) as the port is smaller than others and so there is spare capacity at the facility. Meanwhile, the box throughput outperformer is set to be Port Klang with growth of 8.46% pencilled in for 2016.

Looking at the macroeconomic picture, although we estimate that export growth is enduring a...


Malaysia Telecommunications

BMI View:

Latest Updates & Industry Developments

  • Malaysia's three leading mobile network operators experienced a net loss of 339,000 subscriptions in the first nine months of 2015. This is based on data reported by Maxis and DiGi and on estimates for Telenor-backed Celcom, Despite this, we maintain that the total number of mobile subscriptions reached 46.411mn by the end of 2015, equivalent to a penetration rate of 151%. This view is based on the belief that the three established operators lost customers to the smaller players, a trend which coincided with the continued p hasing-out of unused prepaid subscriptions.

  • By the end of 2019 we expect the number of mobile...


Malaysia Tourism

BMI View:

BMI View: We have a highly positive outlook for Malaysia's tourism industry. Awareness of the country's many attractions is improving and international transport connections are expanding, making Malaysia much more accessible to potential visitors. As visitor numbers increase over the forecast period we expect to see greater investment in the hotel and accommodation sector, where the mid-range and high end sectors are attracting considerable interest, particularly in up and coming tourism regions where real estate opportunities are plentiful.

Key Forecasts (Malaysia 2012-2019)
Indicator 2012...


Malaysia Water

BMI View:

Overall, we hold a positive view of the country's water sector, which benefits from large volumes of available water and a moderately strong project pipeline, offering opportunities to infrastructure companies. However, supplies can vary from region to region, and this, in conjunction with an incoherent water management structure, can pose risks to water utilities companies, as can the high levels of water losses and non revenue water consumption.

As with many of its Asian peers, rapid urbanisation is creating environmental degradation as flooding, water pollution, sedimentation and squatters establish themselves along rivers. These issues are compromising the quality of drinking water supplies and are contributing to higher water shortage frequency. However, overall Malaysia offers large volumes of surface freshwater in most states, with good mains networks and a comparatively strong project pipeline offering advantages for...

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