MALAYSIA is on track for further economic growth this year, following a 4.2 per cent upturn in the first quarter of 2024, as announced by Bank Negara Malaysia (BNM) on May 17.
Free Malaysia Today reports that improvements in productivity in pivotal sectors of the economy — palm oil, manufacturing, services and oil and gas (O&G) — have fueled this growth.
Other contributing factors to the country's economic surge include higher household spending, growth in employment and wages, higher capital spending and a rebound in exports.
An analysis by Ratings Agency Malaysia also projected a growth rate of 5.5 per cent in 2024, up from 3.7 per cent recorded in 2023.
Here is a closer look at how various sectors are contributing to Malaysia's economic output.
PALM OIL
Palm oil is the cornerstone of Malaysia's agricultural output and global trade, positioning the country as the world's second-largest producer of the commodity.
It is also a major contributor to Malaysia's gross domestic product (GDP) growth.
In 2022, Malaysia exported around 15 million metric tonnes of palm oil and palm oil-based products valued at around RM137 billion. The sector contributes about RM40 billion annually to the GDP.
MANUFACTURING
The manufacturing sector, accounting for RM1.2 trillion of the GDP, is one of the largest contributors to the Malaysian economy — it includes the chemical, automotive and electrical and electronics (E&E) sub-sectors.
The chemical sub-sector is expected to add RM40 billion to the GDP by 2030, following the launch of Malaysia's Chemical Industry Roadmap 2030 (CIR2030) last August.
"With the CIR deviated policies and strategies put in place, this will move up the value chain with the high value products and would add additional RM40 billion by 2030," said Investment, Trade and Industry (Miti) Minister Tengku Datuk Seri Zafrul Abdul Aziz.
The automotive sub-sector contributes about RM40 billion to the GDP annually, with homegrown brands like Proton and Perodua leading the way.
With almost 30 producers and more than 600 component manufacturers, the Malaysian automotive industry is also among the largest in Asia.
As a leading player in Southeast Asia, the E&E industry is the backbone for Malaysia's manufacturing sector. The Malaysian Investment Development Authority (Mida) reported that it accounted for 5.8 per cent of the GDP in 2023.
It aims to contribute RM120 billion to the GDP and RM495 billion in export earnings by 2025.
SERVICES
The services sector is the largest contributor to the economy, accounting for close to 55 per cent of GDP growth annually.
It includes tourism, finance and information and communications technology (ICT).
The tourism sub-sector brought in RM75 billion revenue in 2023, while the market for ICT services was valued at RM121.72 billion, according to various global databases.
The Malaysian finance sub-sector is also stable. BNM's Financial Sector Blueprint 2022-2026 outlines efforts to foster market dynamism and support sustainable development objectives, with a continued focus on its monetary and financial stability mandates.
OIL & GAS
Of Malaysia's many natural resources, O&G continues to be the mainstay, contributing around RM300 billion to the country's economy.
While Petronas is the main driver of this sector, major oil companies like Exxon-Mobil and Hess Corporation of the US, PTT Exploration and Production Public Co Ltd of Thailand and EnQuest of the UK have invested in the upstream segment of the O&G sector.
Over the years, the sector has weathered global market volatilities, remaining a key source of revenue and employment for Malaysians. It significantly contributes to Malaysia's economy at both national and state levels.
In states such as Sarawak, Sabah, Terengganu, and Johor, Petronas has trained local vendors and brought substantial economic benefits to these communities.
DRIVING THE ECONOMY TOGETHER
Malaysia's rapid economic growth is driven by the strong partnership between the federation and the states, with national policies designed to ensure each state benefits from the country's diverse resources.
While oil is largely extracted in or off the coast of a few states, even non-producers of the commodity share in its benefits.
In fact, each state contributes equally to the economy in its own way — Penang and Selangor lead the manufacturing sector, while Sabah, Sarawak, and Johor are the largest producers of palm oil.
Together, these sectors bolster the strength and stability of the nation's economy.
In conclusion, all Malaysians play a role in the country's economic growth and share in its benefits.
