Malaysia Labour Datafile

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Malaysia Labour DatafileArticle | 12 Aug 2005

A well functioning labour force is key to economic growth. The charts below display some

of the key trends and significant features of both the working population and the

unemployed across sex, age and activity.

Employment, unemployment and economically active population: 2004

Employment '000; Unemployment '000

Source: Euromonitor International from ILONote: Size of bubble denotes economically active

population (EAP) i.e. employed + unemployed

This chart plots unemployed population across the x (horizontal) axis and employed

population across the y (vertical) axis. The size of the bubble denotes the totaleconomically active population (unemployed + employed population). It allows the overall

size and strength of the labour market to be seen at a glance. A strong labour market is

important for economic growth and stability as it is one of the primary factors in potential

output i.e. GDP.

Asia Pacific female participation in the labour market: 2004

Ranking Country Female EAP: female population

1 Singapore 0.58

2 China 0.53

3 Vietnam 0.52

4 Thailand 0.51

5 Kazakhstan 0.45

6 Hong Kong, China 0.44

7 Japan 0.44

8 Turkmenistan 0.42

9 Azerbaijan 0.41

10 South Korea 0.40

14 Malaysia 0.27

Source: Euromonitor International from ILO

This ratio shows the female economically active population as a proportion of the totalfemale population. The closer the figure is to 1, the higher proportion of women in the


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labour market. Female participation in the labour market varies dramatically across

countries. Women play an important role in the economy, and in developed countries in

particular, it is important that they are fully integrated as populations age and the pool of

available labour diminishes.

Annual percentage change in number of unemployed: 1988-2004

%


This chart denotes annual percentage growth or decline in the number of unemployed.

Changes in unemployment are cyclical i.e. as demand increases businesses take on more

workers and unemployment falls.

Asia Pacific % aged 60+ who are employed: 2004

Country % of those aged 65+ who are employed1 Philippines 50.6

2 Thailand 48.8

3 South Korea 33.2

4 Indonesia 30.9

5 India 30.7

6 Pakistan 23.4

7 Japan 20.6

8 Malaysia 12.9

9 Singapore 8.6

10 Hong Kong 5.1

Source: Euromonitor International from ILO and national statistics

Note: Malaysia ranking is for % aged 60+ who are employed

This ranking shows the % of those aged 65+ in employment. A majority of developed

economies are suffering from ageing populations, which can have negative knock-on

effects on the economy. Many need to encourage the older population to work longer in

order to avoid a pensions crisis and also to keep the labour market at levels necessary for

continuing economic growth. On the other hand, in both developed and developing

countries, high old age employment figures could also indicate a lack of pension provision

and economic security for the elderly.

Employment by category: 2004


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%

Source: Euromonitor International from ILONote: A: agriculture, hunting, forestry and fishing; B:

community, education, health, social, personal services, public admin and defence; C:construction; D: electricity, gas and water supply; E: finance, insurance, real estate and

business services; F: manufacturing; G: mining and quarrying; H: transport, storage and

communications; I: trade, motor vehicles and personal and household goods repair, hotels and

restaurants; J: undefined sectors

This chart shows the percentage of those employed in each major category. It provides an

indicator of the structure of the labour market. When viewed in conjunction with GDP by

origin, labour productivity of each sector can also be measured. A high proportion of

employment in a sector does not necessarily result in a high economic output of that

sector, it may well indicate a lack of competitiveness.

Unemployment by Age 1999-2004

'000


This chart shows the age composition of the unemployed population. Unemployment often

differs substantially across age groups. Reasons are numerous and depend on the

flexibility of the labour market, employment legislation and educational attainment

amongst others. For example, it can be harder to dismiss an older worker, as job security

may increase with time-servedand hence age. Conversely, in a time of increasing


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technological advancement and structural change to an economy, an older worker may

find his or her skills become obsolete resulting in unemployment.

Malaysia minimum wage delayArticle | 27 May 2008

Although still relatively low on a regional basis, Malaysia is beginning to experience inflationary

pressure in 2008 largely owing to rising global prices for oil and basic foodstuffs. While the

government's commitment to maintaining price controls on essential goods should help control

inflation, this may mean that the government rejects proposals to introduce a national minimum

wage, which would have boosted consumer purchasing power.

Issue

Malaysia's inflation rate is beginning to increase, albeit from a low base:

In March 2008 Malaysia's inflation rate reached 2.8%, up from 2.7% in February 2008; This represented a 13-month high for inflation, which has been kept low via price controls on

foodstuffs;

This inflation increase is externally led, reflecting rises in global prices for import goods such asoil, wheat, grain and rice;

This has revived opposition pressure for the introduction of a minimum wage, which would boostpurchasing power particularly among low-income workers.

Consumers are beginning to experience mild erosion of purchasing power as high import costs

put up the prices of goods not covered by price controls.

Importance

Malaysia's inflation remains low on a regional basis:

Malaysia's end-year inflation in 2007 reached 2.1%, in comparison to 8.3% in Vietnam, 7.8% inPakistan and 6.4% in India and Indonesia. This was one of the lowest rates in the region;

Inflation rates in selected Asia Pacific countries: 2007

Source: Euromonitor International from IMF

Consumers will not suffer greatly from inflationary pressure, experiencing only mild pressure asopposed to the greater purchasing power erosion experienced elsewhere in the region. This is

largely owing to extensive government subsidies on basic goods, including fuel, which have kept

prices low relative to the region;


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The potential introduction of a minimum wage would therefore shield low-income workersagainst future inflationary rises, by adding to their purchasing power.

Prices are rising sharply among non-subsidised goods and gradually among subsidised goods, as

the government adjusts its level of subsidy according to higher import costs. The impact of

rising inflation may be felt more by perceptions than actual purchasing power damage, as

consumers become concerned about future price increases.

Implications

Malaysia's government will seek to rein in inflationary tendencies to ensure that domestic

demand remains strong:

The government has stated that it will retain price controls, despite the extra state fiscal costsinvolved in maintaining effective subsidies. This is intended to maintain domestic demand, one

of the key drivers of economic growth. Private final consumption expenditure totalled 46.1% of

GDP in 2007;

However, in the longer term increasing pressure on state finances may reduce the government'sability to finance social programmes and public investment. Government spending rose 17.4%

year-on-year in Q4 2007, largely reflecting greater public investment rather than spending onsubsidies;

However, the government will avoid unnecessary expenditure. As such, the government hasrejected proposals by trade unions to introduce a minimum wage, which it had only agreed to

consider rather than to implement;

This would have set a minimum monthly wage of US$379, boosting consumer incomes. Theaverage gross income of the population aged 20-24 was RM22,073 in 2007, RM24,158 for age

30-34 and RM23,113 for 40-44;

Malaysia average gross income by age group: 2007

RM

Source: Euromonitor International from national statistics

Approximately 2.7 million of Malaysia's 27.1 million population would benefit from a minimumwage, mainly being the low-income or unskilled workers;

Other countries in the region such as Taiwan, South Korea, Japan, Thailand, India and Chinahave introduced minimum wage legislation although it is not always enforced in the latter two.

Consumer purchasing power will not be significantly affected by inflation in the short term but

may begin to suffer from reduced state investment in the medium term.

Future Scenarios

Malaysia's economic growth is set to moderate in 2008, weighing on potential for wage and job

growth:


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Malaysia's economy is forecast to grow by 5.0% in 2008, down from 6.3% in 2007. However,this is due more to a fall in export demand from the USA than to a decline in domestic demand.

The US economy is forecast to grow by 0.5% in 2008, down from 2.2% in 2007;

As such, slowing demand for exports will weigh on purchasing power, as the potential for wagegrowth recedes;

This factor will have a greater impact on purchasing power than rising inflation, which thegovernment will continue to keep under control;

The government stated in May 2008 that it is not considering introducing a minimum wage inthe near term, although it may come under pressure to reconsider if inflationary pressures

continue.

Domestic demand will moderate in line with economic growth in 2008, although inflation will

remain low relative to the region, projected at 2.4% in 2008.

Regional Focus: Rising labour migration within Asia

PacificArticle | 28 Sep 2010

Intra-regional labour migration within Asia Pacific has increased since the late 1990s, driven by

globalisation and disparities in labour demand and wage opportunities in the region. Rising

labour mobility will have positive impacts on employment, consumer spending and economic

growth as migrant workers enhance the flow of remittances, trade and investment in the region.

However, it can also be a source of social tensions.

Key points

As a result of economic integration and rising labour shortages in the region's newlyindustrialised countries, intra-regional labour migration on short-term contracts within Asia

Pacific has increased since the late 1990s. According to a United Nation Development

Programme (UNDP) report in 2009, intra-regional migration in Asia accounts for around 20% oftotal international migration;

The flows of labour migration in Asia Pacific are often from lower-income countries such as India,Indonesia, the Philippines and Vietnam to countries which have labour shortages and offer

higher wage opportunities such as Japan, South Korea, Taiwan, Hong Kong and Singapore;

Japan and South Korea, however, remain strict on migration due to their emphasis on theimportance of maintaining ethnic homogeneity. Foreign citizens accounted for 1.8% and 1.7%

of Japan's and South Korea's population in 2009 respectively;

Migrant workers play an important role in several Asia Pacific economies such as Singapore andMalaysia. Rising labour migration will improve the region's labour markets and facilitate the flow

of remittances, trade and investment between different countries, thus having positive impacts

on consumption and economic growth. In the Philippines, the region's largest labour exporter,

remittances inflows accounted for 12.2% of GDP in 2009; However, growing migration including illegal labour migration can be a source of tensions

between countries and within host countries, undermining the business environment. Flows of

migration and remittances in Asia Pacific declined in 2009 as the region's economies were hit by

the global recession.

Changes in migration trends

While the majority of Asia Pacific migrants traditionally went to the West and the Middle East,

the largest migration flows are now within the region:

Migration within the Asia Pacific region is characterised by the rising movement of workers fromone country to another on short-term contracts as the region's labour markets have become

more integrated;


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Rising intra-regional migration has been driven by a growing demand for labour from theregion's new industrialised countries such as South Korea, Taiwan, Hong Kong, Singapore and

Malaysia. Workers emigrate in search of higher income opportunities offered by these countries;

Annual disposable income per capita in Malaysia was US$4,007 compared to US$1,274 in the

Philippines in 2009;

The early flows of labour migration within Asia Pacific were mainly unskilled and semi-skilledworkers. Since 2000s, however, the flows of highly-skilled workers have increased due to rising

skills shortages. In Singapore, for example, 79.5% of new immigrants in 2009 had post

secondary education qualifications, according to national statistics;

The share of women among Asian migrants has been increasing due to a growing demand forjobs such as domestic helpers, healthcare workers, as well as workers in the garment and

electronic industry.

Labour migration sources and destinations

Hong Kong, Japan, Singapore, South Korea, Taiwan, Malaysia and Brunei are the majordestinations for Asian migrant workers owing to their relatively higher wage opportunities and

rising demand for both unskilled and skilled labour. Malaysia, for example, had a net migration

the difference between immigrants and emigrants of 93,400 people in 2009; Since the late 1990s, Thailand has moved from being a major supply of labour to the Middle

East to becoming a destination country for unskilled migrant workers from its lower-income

neighbouring countries. According to the UNDP, the stock of immigrants in Thailand will reach

1.2 million in 2010, compared to 387,500 in 1990;

With about 10.0% of the country's total population working abroad in 2009 according tonational statistics, the Philippines is considered to be the region's largest labour exporting

country. Filipinos take up not only unskilled jobs such as domestic helpers but also semi and

high-skilled work as nurses and engineers;

Besides the Philippines and Indonesia as the traditional source countries, the flows of migrantworkers from Vietnam, Cambodia, Laos and Burma have been increasing. According to

Vietnam's Ministry of Labour, Invalids and Social Affairs, there were approximately 450,000

Vietnamese labourers working abroad by 2009, up from about 10,000 people in 1995;

South Asian countries including India and Pakistan continue to be net labour exporting countries.India, for example, had a net migration outflow of 652,000 people in 2009. Most Indian and

Pakistani low and semi-skilled migrant workers still go to the Gulf region;

Generally, immigrants make up a small share of the labour force in Asia overall compared toregions such as Europe but migrant workers have become a critical source of the labour force in

several Asia Pacific economies including Singapore and Malaysia. According to The International

Organisation for Migration (IOM), migrant workers accounted for 30.0% of Singapore's

workforce and 20.0% of Malaysia's workforce in 2009.

Stock of immigrants in selected Asian countries: 2005 and 2010


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000 people

Regional Focus: Labour Costs Rising Across Asia

PacificArticle | 06 Jun 2012

Labour costs have been rising rapidly across Asia Pacific as the region is moving up the value

added chain, thus driving production costs up and posing a challenge to the region's

competitiveness. While foreign investments and exports can be hurt, rising wages will

encourage consumer spending and economic rebalancing in Asia. The region will continue to be

attractive to investors owing to several advantages including its large labour pool with growing

productivity and huge consumer markets.

Key points

Asia Pacific has traditionally been attractive to investors due to the region's relatively cheaplabour and the ability to provide economies of scale. The region has become the world's largest

manufacturing centre, accounting for 49.1% of the global total manufacturing production in

2011. Yet labour costs have been rising across Asia Pacific due to growing productivity, inflation,

skills shortages and workers movements;

The trend of rising labour costs is most visible in China and India, the second and third largesteconomies in the world in 2011 in terms of GDP at purchasing power parity. The average wage

per hour in China grew at an average annual rate of 10.8% in real terms from 2006-2011. This

was mainly driven by an average yearly 20.1% increase in labour productivity as well as many

Chinese regional government policies to raise wages in order to encourage production and

exports of higher value-added goods. It was also due to numerous regional governments inChina raising the minimum wage, as part of a broader drive to encourage exporters to produce

more sophisticated goods in China. Since the late 2000s, minimum wages have also been raised

in many other countries such as Thailand, Vietnam and Indonesia;

Rising wages will push up production costs in Asia, putting downward pressures on businesses'profits and leading to higher prices for products made in Asia. This can affect exports and

foreign direct investment (FDI) inflows into the region. More expensive labour may also prompt

global manufacturers in Asia to relocate their production to cheaper places. The region attracted

a quarter of the world's total FDI inflows in 2010;

Consumer spending in Asia will be boosted owing to rising incomes, thus helping to restructureAsian Pacific economies which are used to relying on exports. Consumer expenditure accounted

for 51.2% of total GDP in Asia Pacific in 2011, compared to 61.1% for OECD countries;

Despite the pay hikes, wages in many Asian countries remain much lower compared to those inadvanced economies. The average wage in manufacturing in the United States in 2011, for


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instance, was 23.6 times higher than in Indonesia in the same year. Given their large labour

pools, growing productivity as well as vast consumer markets, Asian Pacific economies are still

an attractive option for manufacturers compared to other regions and countries.

Wage hikes across Asia Pacific

Many economies in Asia Pacific have seen a rapid rise in wages since the late 2000s: China and India are among the countries which have seen the fastest growth in labour costs.

From 2006-2011, the average wage per hour in manufacturing in China rose by 57.5% in real

terms to reach RMB18.5 (US$2.9) in 2011. The average wage in India's manufacturing sector

reached Rs37.9 (US$0.8) per hour in 2011, representing a real period growth of 39.0% during

2006-2011;

Growth of Wage per Hour in Manufacturing and Productivity in Selected Asian Pacific

Countries: 2006-2011

Real Average Annual Change %

Source: Euronomitor from International Labour Organisation (ILO)/Eurostat/national statistics.

Labour costs also went up significantly in Thailand, South Korea, Malaysia and Azerbaijan. InMalaysia, the average per hour wage in manufacturing grew at a real average rate of 3.7% in

real terms during 2006-2011 as a result of rising living costs and labour shortages;

Japan still has the highest labour costs in the region, with an average wage in themanufacturing sector at 2,000 (US$25.1) per hour as of 2011. The country, however,

experienced a slight contraction of 1.4% in real wages from 2006-2011 due to years of

economic stagnation and deflation. Sri Lanka and Myanmar had the lowest average wage in

manufacturing in the region, at US$0.6 and US$0.3 per hour in 2011 respectively, making them

attractive options for manufacturers as wages increase elsewhere in the region;

Countries which also saw a slight decline in real wages are the Philippines and Indonesia,primarily due to inflation and currency depreciation. Since 2010, however, both countries have

raised their minimum wages. For instance, the 2011 minimum wage in Jakarta, Indonesia's

capital city, increased by 15.4% over the 2010 level, according to national statistics.

Rising productivity, workers' demands for higher pay and skill shortages as major

drivers

There are several factors contributing to the wage rises in Asia Pacific:

Due to a shift of labour from agricultural work into more productive jobs in industry, labourproductivity has increased quickly in most Asian Pacific countries, thus leading to wage growth.

Backed by strong investment and a robust expansion of the manufacturing sector, China's

labour productivity grew quickly at an average rate of 20.1% per year from 2006-2011.


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Manufacturing has now become an important driver of many Asian economies such as Thailand

as it accounted for 35.1% of the country's total GDP in 2011;

Workers across the region have called for better wages given their countries' healthy economicgrowth and rising living costs. In countries like Indonesia, Thailand, China, Sri Lanka, Vietnam

and Bangladesh, low-wage workers' protests have put pressures on governments and

businesses to raise wages. In 2011, Thailand's average wage per hour increased by 3.4% in real

terms over the previous year following numerous workers strikes to demand better wages;

Since the late 2000s, governments in the region have introduced new labour and minimumwage laws in an effort to protect workers, ease labour unrests and narrow the national income

gaps. Given rising discontent among workers, in 2008 China enacted new labour legislation

which limits overtime and sets minimum wages, which has led to higher costs for manufacturers;

As Asia Pacific is facing an increasingly shortage of skilled labour due to inadequate educationand vocational training, businesses must now pay higher wages to attract skilled workers. The

engineering designs/services sector in India saw the highest salary increase countrywide in

2011, at 14.4% over 2010 according to trade sources.

Impact on businesses and consumers

Given the region's position as the world's manufacturing hub, a rising trend of labour costs in

Asia Pacific will have important implications for consumers and businesses around the globe:

Investors and manufacturers in Asia Pacific will face downward pressures on their profit marginsas rising labour costs lead to higher production costs. This will significantly affect global

manufacturers and brands in the garment, automobile and electronics sectors which have major

production bases in Asia such as Adidas, H&M, Foxconn, Nokia and Honda;

Higher labour costs in Asia will eventually be passed on to consumers worldwide, who will haveto pay more for made-in-Asia goods. Despite a slowdown of the global economy, the world's

index of consumer prices rose to 214.7 in 2011 (1995=100), significantly up from 171.8 in 2006;

Wage rises will however benefit workers in Asia, thus enhancing their purchasing power. Thanksto rising disposable incomes, consumer expenditure in Asia Pacific grew robustly at an average

annual rate of 4.6% in real terms from 2006-2011. Rising purchasing power among Asianconsumers will in turn benefit consumer businesses in the region;

Rising wages will also have a positive impact on income distribution in Asia. Despite the region'sstrong economic growth, income inequality has been rising and is especially high in countries

such as China, Malaysia and Thailand, posing a threat to the country's business environment.

Due to existing disparities between regions and ethnic groups, Malaysia's Gini index a

standard economic measure of income inequality varying between 0% (perfect equality) and

100% (perfect inequality) rose from 44.2% in 2000 to 50.6% in 2011.

Impacts on economies in the region and beyond

Rising labour costs will challenge Asia Pacific's competitiveness in labour-intensivemanufacturing sector, thus impacting FDI inflows to the region. The region attracted 25.0% of

the world's total FDI inflows in 2010, with China and India being among the world's largestreceivers of FDI. FDI inflows are traditionally important for Asia Pacific's economies as a source

of capital, employment, and technology transfer;

Facing higher costs, businesses in the region may relocate their production bases within oroutside the region. As labour has become pricier in China, since late 2000s some manufacturers

have moved to cheaper sites such as Vietnam, Cambodia and Bangladesh. Economies outside

Asia such as Mexico or sub-Saharan countries could also benefit from a potential shift of

investments out of Asia;

The region's export sector could also be hurt by increasing labour costs and a loss ofinvestments. Exports have been a key driver of economic growth in many Asian Pacific countries

including China, Malaysia, Singapore, Thailand and Vietnam. Total exports made up 84.4% of

Malaysia's total GDP in 2011;

Asia Pacifics Real GDP and Total Exports Growth: 2006-2011


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annual % change

Source: Euronomitor from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF),

International Financial Statistics (IFS).

Domestic consumption will however receive a boost as workers' wages are rising. This will helpto rebalance many of the region's economies which have been depending on external demands.

Consumer expenditure accounted for 39.9% of China's total GDP in 2011, significantly lower

than 61.1% in the United Kingdom, for example;

Economic restructuring may encourage emerging economies in the region to shift from low-costmanufacturing to higher value-added products. Countries such as India and China have raised

their investments in research and development (R&D) activities, with total expenditure on R&D

expanding robustly 35.5% and 91.2% in real terms from 2006-2011 respectively.

Prospects

As emerging economies in Asia Pacific are moving up to the value added chain, the rise of

labour costs is an inevitable trend but the region should maintain its comparative advantages:

Pressure for wage increases will continue to grow in line with economic growth and inflation.The region's real GDP growth is forecast to remain strong at 5.9% in 2012, the highest rate in

the world while the inflation rate is expected to ease from 5.7% in 2011 to 4.3% in 2012 as a

result of monetary tightening policies;

In November 2011 China launched a national five-year plan (2011-2015) which aims torestructure the economy away from low cost manufacturing towards value-added industries.

According to the plan, expenditure on research and development will be raised to account for

2.2% of the country's total GDP, compared to 1.5% in 2011. This would fuel more wage rises in

China in the long term, while cheaper economies elsewhere in Asia will take on low cost

manufacturing activity;

While Asia may see some withdrawals of production and investments as a result of rising labourcosts, the region will remain competitive globally due to its large labour pool, growing

productivity levels and huge consumer markets. China and India alone had more than one third

of the world's total labour force (38.8% of the world's population aged 15-64 in 2011). In

addition, countries such as Singapore, Malaysia, Hong Kong and South Korea are likely to

remain attractive to investors due to their excellent infrastructure and favourable business

environments.

Emerging Focus: Potential of Female

Employment in Emerging Market Economies


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Article | 23 Feb 2012

Better access to education and global initiatives towards empowering women is benefitting

female employment in emerging market economies. Higher female labour participation is

playing a significant role in driving economic growth by expanding the labour force,

yielding higher disposable incomes for women, enhancing spending power and consumer

markets for female-oriented consumer goods. Over the coming years, this could unravel

untapped potential and benefit many businesses.

Key points

The employed female population in 25 key emerging market economies (EMEs) rose to707 million in 2011, from 679 million in 2006. However, at 38.3% of total employed

population in 2011, the employed female population as a proportion of total employed

population in EMEs has remained relatively unchanged since 2006;

Female labour participation rates, however, remain low. On average, EMEs had a femaleemployment rate of 48.6% of working age (15-64 years) female population in 2011. This

was only marginally higher than 47.6% recorded in 2006 and significantly lower than theaverage male employment rate of 75.5% of working age (15-64 years) male population in

the same year;

China accounted for 49.2% of the employed female population within EMEs in 2011,employing the largest number of women in the world (348 million). India employed the

second largest number of women in EMEs at 94.7 million in 2011, followed by Indonesia

(42.2 million), Brazil (41.3 million) and Russia (34.5 million);

Russia and Ukraine had the highest proportion of employed female population among EMEs.In 2011, women accounted for almost 50.0% of the total employed population in these

countries. On the other hand, countries in the Middle East and North Africa (MENA) like the

UAE, Saudi Arabia and Egypt had the lowest proportion of employed female population

among EMEs (12.0-18.0% of total employed population) in 2011;

With better access to education and improvements in wage discrimination legislation, agrowing number of women are joining the workforce in EMEs. As a result, average female

disposable incomes are rising and women are increasingly having a significant influence on

spending patterns. This can benefit businesses across sectors that are particularly

targeting this consumer group.

Female employment varies across EMEs

In 2011, emerging Asia employed the largest number of women within EMEs. China, Indiaand Indonesia alone accounted for 65.2% of the total employed female population in EMEs

as these three countries have amongst the largest populations in the world. In addition,economic, social and political developments in emerging Asia have brought profound

changes in the status of women since the early 2000s;

India employed 94.7 million women in 2011 the second largest in EMEs. However,women accounted for only 22.8% of the total employed population during the year,

significantly lower than the average of 38.3% in EMEs. Despite improvements in education,

many women in India, particularly in rural areas, remain uneducated and work informally

in the agricultural sector;

EMEs in Eastern Europe have the largest proportion of employed female population as aresult of high female literacy rates, low gender inequalities, equal opportunities in

employment and generous maternity policies. In Russia and Ukraine, women accounted for

almost 50.0% of the total employed population in 2011 the highest amongst EMEs;


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During the same year, women accounted for less than 20.0% of the total employedpopulation of EMEs in the MENA region like the UAE, Saudi Arabia and Egypt. These

countries are still governed by patriarchal societies where gender based disparities,

particularly in education and employment, are high and in some countries codified by law;

On average, female employment rates in EMEs stood at 48.6% in 2011, significantly lowerthan 62.9% in developed economies. During the year, Saudi Arabia had the lowest female

employment rate within EMEs at 14.7%, followed by Egypt (17.2%), and India (25.0%).

On the other hand, Thailand, China and Vietnam had the highest female employment rates

in 2011 among EMEs, at over 70.0%.

Employed Male and Female Population in Selected EMEs: 2011

% of total employed population

Source: Euromonitor International from International Labour Organisation/Euromonitor

International

Barriers for working women

Women face widespread challenges in entering and staying in the workforce. As a result,

female employment rates in EMEs like India, Morocco, Saudi Arabia, Romania and China

dropped marginally between 2006 and 2011 while many others only saw a slight

improvement:

Family and social pressures prevent women from either joining the workforce or result inwomen dropping out of the workforce. Well-qualified women in EMEs like Brazil and China

are sideswiped about childcare issues and elderly care. In addition, stereotype

discrimination against women in managerial positions exists particularly in China, India

and the UAE as women are not seen as having leadership potential;

In the UAE and other Middle Eastern countries, where traditional gender boundariesremain entrenched, women need to exercise caution to maintain their reputations in

predominantly male environments. According to the World Economic Forum's Gender Gap

Report 2011, the UAE ranked 103 out of 135 countries the highest rank in the MENA

region;

Women in many EMEs have limited access to health, education and employment. Forexample, in India, a majority of females, particularly in rural India, still remain illiterate, as

families prefer to educate males to females. Although female adult literacy has improved

from 46.0% in 2000 to 55.0% in 2011, it is significantly lower than the male adult literacy

rate of 79.5% in 2011;


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There are also some barriers around mobility for women in EMEs. Safe commuting hasproven to be a challenge in emerging Latin America and Asia. Many women feel unsafe

about getting to and from work, particularly if the job entails late evening travel.

Female Employment Rate in Selected EMEs: 2006 and 2011

% of working age (15-64) female population

Source: Euromonitor International from national statistics

Potential in working women

Empowering women has a multiplier effect that leads to more job growth, stronger domestic

economies and higher standards of living:

Between 2006 and 2011, the employed female population in EMEs grew by 4.1% to reach 707million by the end of the period. An increasing number of women who are actively employed can

play a significant role in driving economic growth by increasing productivity, reducing poverty

and improving social indicators like health, gender gaps and children's education outcomes;

In Turkey, for example, the low female employment rate (26.1% in 2011) is obstructing thecountry from becoming a fully-fledged member of the European Union. According to the World

Bank and the Turkish government, higher female labour force participation could yield

substantial social and economic dividends to the Turkish economy;

The structure of female employment is changing within EMEs, shifting from agricultural andmanufacturing jobs towards the service industries. As EMEs continue to drive global growth and

women comprise of almost 40.0% of the labour force in these economies, multinational

companies are looking at harnessing talents of qualified women to start up, expand and mange

their enterprises;

As the pool of working women increases, disposable incomes rise unraveling significantconsumer market potential for businesses across sectors that are targeting this consumer group.

Between 2006 and 2011, female annual disposable income per capita on average grew by 25.7%

in real terms (fixed US$ constant) with economies like Argentina, China, Ukraine and Thailand

witnessing over 40.0% real growth during this period;

Rising disposable incomes significantly impacts purchasing power and spending habits in women.Women tend to spend more of their earned income on food, healthcare, home improvement and

schooling. Higher wages will also allow for more discretionary spending on non-essentials like

clothing and footwear;


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In addition, EMEs offer a huge potential to businesses operating in the beauty and personal caremarket where there is an increasing demand in categories like skin care, hair care, cosmetics

and fragrances.

Prospects

Between 2012 and 2020, the employed female population in EMEs is forecast to grow by 12.4%on average. By 2020, the employed female population in EMEs will reach 752 million accounting

for 37.9% of total employed population in these countries;

EMEs in the MENA region like Egypt, the UAE and Saudi Arabia will see the largest growth inemployed female population between 2012 and 2020, at over 30.0%. As seen in the Arab

Spring of 2011, women in these countries are now defying gender roles and breaking

conservative attitudes by stepping out into the workforce;

China, India and Indonesia will continue to employ the largest number of women among EMEsin 2020 employing 67.2% of the total employed female population in EMEs. However, between

2012 and 2020, China's employed female population is forecast to shrink by 1.2% due the

country's one-child policy and preference for a male child;

In many EMEs like the Philippines, Colombia and others in the MENA region, female adultliteracy rates are catching up with male literacy rates. The potential of working women will be

realised by better education as it helps improve gender parity and change attitudes towards

women. This will continue to open up doors into the working world for women across EMEs.

Business Environment: MalaysiaCountry Briefing | 22 Jan 2013

Malaysia offers a very competitive business environment thanks to its continuous reform efforts,

efficient institutions, flexible labour market and relatively low tax levels. Foreign investment has

been strong while healthy economic growth will continue to boost consumer expenditure in the

medium and long term. However, rising labour costs, skills shortages, government affirmativeactions and foreign ownership limits remain problems faced by businesses in the country.

SUMMARY

Malaysia ranked 12th out of 185 countries in the World Banks Ease of Doing Business 2013

report. It was also the easiest ranked country for getting credit and the fourth most effective

country in terms of protecting investor rights. Malaysia ranked 60th out of out of 183 countries

in Transparency Internationals Corruption Perceptions Index 2011, although anti-corruption

efforts have been reinforced since 2008.

The Malaysian government has gradually liberalised its investment laws and introduced

incentives for investors in targeted sectors such as electronics and green energy but still

maintains some foreign ownership limits. Malaysia has a relatively low tax level, as its total taxrate as a percentage of total company profits was 24.5% according to the Doing Business 2013

report, significantly lower than the East Asia & Pacific average of 34.5%. Driven by a positive

economic outlook and favourable investment conditions, foreign direct investment (FDI) inflows

to Malaysia surged to RM36.6 billion (US$12.0 billion) or 4.2% of total GDP in 2011.

Nevertheless, investors in Malaysia are facing higher labour costs and skills shortage problems.

The average hourly wage in the manufacturing sector grew by 19.2% in real terms during 2006-

2011.

Malaysia aims to become a high-income country and a developed digital economy by 2020.

Government spending on education increased from 5.7% of total GDP in 2006 to 7.5% in 2011.

The household possession rate of broadband Internet enabled computer rose to 57.8% in 2011,

up from 11.7% in 2006. Total expenditure on research and development (R&D), however,remained relatively low at 0.6% of total GDP in 2011. Backed by rising disposable incomes and


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positive consumer confidence, per capita consumer expenditure is forecast to expand at an

annual average rate of 3.4% in real terms during 2012-2020.

OPERATING ENVIRONMENT

Continuous reforms for a competitive business environment

Malaysia has maintained a business-friendly environment and ranked as the easiest

country to get credit and the fourth most effective economy in terms of protecting

investorsrights out of 185 countries in the WorldBanks Ease of Doing Business 2013

report.

Malaysia ranked 12th out of 185 countries in the World Banks Ease of Doing Business 2013

report, a ranking lower than South Korea (8th) but higher than Japan (24th). The country

continues to be the easiest country in the world to get credit thanks to a supportive financial

sector and a wide availability of credit information. However, despite some recent improvements,

Malaysia still ranks relatively low in the category Dealing with Construction Permits (96th out

of 185 countries in the Doing Business 2013 report). For example, a company must complete

37.0 procedures to build a warehouse in Malaysia, compared to the East Asia & Pacific averageof 17.0 procedures.

Malaysias ranking in the 2013 report represents an upgrade of two positions from its 2012

ranking (out of 183 countries). This is mainly thanks to the countrys reforms to speed up the

process of getting construction permits and registering a property. For example, Malaysia

successfully reduced time needed for registering a property from 48.0 days in the 2012 Doing

Business report to 14.0 days in the 2013 report. As a result, Malaysias ranking in the category

Registering Property improved significantly from a 62nd position in the 2012 report to a 33rd

position in the 2013 report. Nevertheless, there was a significant downgrade in the category

Starting a Business for Malaysia, from 42nd position in the 2012 report to a 54th position in

the 2013 report. This was, however, mainly due to stronger reforms undertaken by other

countries rather than a deterioration ofMalaysias regulatory environment for starting a

business.

Malaysias economy has posted healthy growth rates since 2010 as a result of a booming

commodity-export sector, government stimulus spending and strong domestic consumption. Its

real GDP growth rate is forecast to rise to 5.4% in 2012, up from 5.1% in 2011. It is set to fall

slightly to 4.7% in 2013. Under its Economic Transition Plan (ETP), an initiative launched by the

Malaysian government in 2010 to turn Malaysia into a high-income economy by the year 2020,

the government commits to invest heavily in the countrys infrastructure while continuing to

reform the countrys business environment. Business confidence, therefore, has been positive

amid the countrys positive economic outlook.

Chart 1 Ease of Doing Business Ranking 2012 - 2013


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Ranking out of 185 countries

Source: Doing Business, World BankNote: (1) Regulations in Doing Business 2013 are measured from June

2011 until June 2012. The data for all sets of indicators in Doing Business 2013 are from June 2011 until

June 2012 (except for paying taxes data which refers to JanuaryDecember 2011). (2) Rankings are based

on data sets across 185 countries. (3) Doing Business presents quantitative indicators on business

regulations and the protection of property rights that can be compared across 185 economies. A high ranking

means the regulatory environment is conducive to the operation of business.

Malaysia ranked 25th out of 144 countries in the World Economic Forums Global

Competitiveness Index 2012, down by four positions compared to the 2011 ranking (out of 142

countries) as other economies improved to move ahead in the rankings. With a supportive

financial sector and business-friendly institutional framework, Malaysia scored better than some

other countries in the region including Thailand (38th) and Indonesia (50th) in the 2012

rankings.

Since the introduction of a new Anti-Corruption Bill and a Malaysian Anti-Corruption Agency(MACC) in 2008, efforts to combat corruption have increased in Malaysia. For example, the

government has made use of electronic data-based procurement to make the processes more

transparent and speeded up the trial processes for corruption cases. Nevertheless, corruption

remains a concern in Malaysia, which is most prevalent in institutions such as the police and

political parties. Malaysia ranked 60th out of 183 countries in Transparency Internationals

Corruption Perceptions Index 2011, ranking lower than South Korea (43rd) but higher than

Indonesia (100th).

Chart 2 Global Competitiveness Index in Selected Countries 2012 2013

Ranking out 144 countries


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Source: World Economic ForumNote: The Global Competitiveness Index measures the microeconomic and

macroeconomic foundations of national competitiveness, taking into account 12 subjects - Institutions,

Infrastructure, Macroeconomic stability, Health and primary education, Higher education and training, Goods

market efficiency, Labour market efficiency, Financial market sophistication, Technological readiness, Market

size, Business sophistication and Innovation.

GOVERNMENT REGULATION AND TRADING ACROSS BORDERS

Strong incentives for investments in targeted sectors but restrictions remain in some

others

Malaysias FDI inflows reached RM36.6 billion (US$12.0 billion) or 4.2% of total GDP

in 2011, compared to 2.8% in Thailand and 0.4% in South Korea.

The Malaysian government generally pursues a pro-investment policy and since 2009 has made

efforts to liberalise and remove restrictions in investment laws in order to attract FDI. For

example, it reduced the Bumiputra-equity requirement the share of ownership for Malaysias

indigenous group for new listings of foreign owned corporations from 30.0% to 12.5% in 2009.

The government also removed foreign ownership limits for 27 services subsectors in the sameyear. However, limits and restrictions still exist in some sectors such as finance,

telecommunications and logistics. For instance, foreign investors can own only up to 70.0% of

domestic Islamic banks and 30.0% of domestic conventional banks. Also, the Malaysian

government still holds significant stakes in a number of companies through its government-

linked investment corporations.

Under its ETP initiative, the Malaysian government actively encourages investment in targeted

industries such as electronics, medical devices, green energy, machinery and equipment, oil and

gas, and transportation equipment. Investors in these sectors can enjoy incentives ranging from

tax and regulatory exemptions to public service commitments. Thanks to its reform efforts and

a positive economic outlook, Malaysia has seen growing inflows of FDI since 2009. In 2011, the

country attracted RM36.6 billion (US$12.0 billion) of FDI inflows, accounting for 4.2% of total

GDP in the year, compared to 3.7% recorded in 2010. The level of FDI outflows has been higher

than inflows as it reached RM46.7 billion (US$15.3 billion) in 2011, representing a real growth

of 5.4% over 2010. Since the 2000s Malaysian companies have increased their investments

abroad, especially to regional economies such as Vietnam, Cambodia, China and India.

Malaysia has a developed infrastructure including highways, railways, seaports, airports and

industrial parks, thus creating favourable conditions for businesses. The country ranked 29th

out of 144 countries in the category Quality of overall infrastructuresub-category of the World

Economic Forums Global Competitiveness 2012 rankings. Following Malaysias 10th Plan for the

period 2011-2015, the government will spend a total of RM2.7 billion (US$0.9 billion) to build

and upgrade the countrys infrastructure in order to enhance trade efficiency and logistics

systems.

Malaysia pursues open trade policies and maintains strong trade relations with other countries in

order to support the countrys trade-dependent economy (total exports accounted for 78.8% of

total GDP in 2011). The country has free trade agreements (FTAs) with Japan, Pakistan, New

Zealand, India, China and Australia as well as some other FTAs under the Association of

Southeast Asia Nations (ASEAN).

According to the World Banks Ease of Doing Business 2013 report, Malaysia performed better

than many countries in the Asia Pacific region in the category Trading across Borders, ranking

11th out of 185 economies. The average time taken to export in Malaysia was 11.0 days, much

faster than the East Asia & Pacific average of 21.0 days. The time taken to import was even

shorter with 8.0 days, compared to the East Asia & Pacific average of 22.0 days. It took 5.0

documents to export and 6.0 documents to import. The average cost to export a container

stood at US$435, remarkably lower than the East Asia & Pacific average of US$923 while the


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cost to import a container stood at US$420, compared to the East Asia & Pacific average of

US$958.

Chart 3 FDI Intensity and FDI Flows 2006-2011

US$ billion / % of GDP

Source: Euromonitor International from International Monetary Fund (IMF), International Financial Statistics

and World Economic Outlook/UN/UNCTAD/national statistics.Note: FDI refers to foreign direct investment.

TAX ENVIRONMENT

Relatively low tax rates

Malaysia was placed 15th out of 185 economies in the categoryPayingTaxes

according to the Doing Business 2013 report, a ranking lower than Hong Kong (4th)

but much higher than Indonesia (131st).

Malaysia has implemented a number of major tax reforms including the introduction of a single-

tier system in 2008 which made the countrys tax system more simple and business-friendly.

According to the Doing Business 2013 report, the total time taken for an enterprise to prepare,

file and pay its taxes and contributions in Malaysia was 133 hours per year, higher than in

Singapore with 82.0 hours but much lower than East Asia & Pacific average of 209 hours.

The corporate income tax in Malaysia stood at 25.0% in 2012, remaining unchanged since 2009.

Small and medium sized enterprises (those with a capital of RM2.5 million (US$0.8 million) or

less) are subject to more favourable tax rates at 20.0% for the first RM500,000 (US$161,290)

of taxable income and 25.0% for the rest.

The total tax rate as percentage of total company profits was 24.5% for Malaysia according to

the Doing Business 2013 report, lower than most countries in the region including Singapore

(27.6%) and Thailand (37.6%). The country levies a sales tax similar to value-added tax (10.0%

as of 2012) and services tax on certain goods and services. The implementation of the proposed

Goods and Services Tax (GST), which will replace the existing sales and service tax, has been

put on hold since 2010 for further review by the government. Labour taxes and contributions

were 15.6% of commercial profits according to Doing Business 2013, compared to the East Asia

& Pacific average of 10.9%.

With the existence of an informal sector, tax evasion does occur in Malaysia. According to the

countrys Inland Revenue Board (IRB), about 20.0% ofMalaysias tax payers fail to submit their

return forms to the IRB each year. The IRB has therefore planned to strengthen the collection of

tax revenue by launching criminal investigations against tax evaders in 2013 in addition to thecurrent civil remedies available.


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Chart 4 Total Tax Rate and Number of Hours to Prepare, File Returns and Pay Taxes in

Selected Countries 2011

% of total profits / hours per year

Source: Doing Business, World BankNote: (1) Total tax rate measures the amount of taxes and mandatory

contributions payable by the business in the second year of operation, expressed as a share of commercial

profits. The taxes included are profit or corporate income tax, social security contributions and other labour

taxes paid by the employer, property taxes, turnover taxes and other small taxes (such as municipal fees

and vehicle and fuel taxes). (2) Doing Business paying taxes data refers to JanuaryDecember 2011.

TECHNOLOGICAL INNOVATION

Ambitious plans to become a digital economy

Malaysias expenditure on research and development (R&D) remains relatively low at

0.6% of total GDP in 2011, which may pose a challenge to the countrys goal to have a

developed digital economy by 2020.

Malaysia has a fast-growing information and communications technology (ICT) industry, driven

by market liberalisation and strong government policy. Recognising the role of ICT in its

economy, the government of Malaysia has since 2011 launched a national programme called

DigitalMalaysiawhich aims to increase ICT penetration and advance Malaysia into a

developed digital economy by 2020. Being based on a public-private partnership model, the

programme is expected to generate RM31.1 billion (US$10.0 billion) worth of investments in key

projects such as e-payments, cloud computing, e-education and e-commerce. A shortage of

skilled labour, however, poses a challenge to the development ofMalaysias ICT sector.

Malaysia ranked 29th out of 142 countries in the World Economic Forums Network Readiness

Index (NRI) in 2012. The NRI measures the propensity for countries to exploit the opportunities

offered by information and communications technology. With this ranking, Malaysia scored

better than China (51st) but lower than South Korea (12th). In 2011, the share of household

possession of mobile phones and broadband Internet enabled computers rose to 93.6% and

57.8% of all households respectively, significantly up from 79.1% and 11.7% in 2006. The roll-

out of a National Broadband Network (NBN) which provides fibre-based high-speed broadband

connection since 2011 will give a further boost to ICT usage in Malaysia.

Total expenditure on R&D in Malaysia reached RM5.4 billion (US$1.8 billion) in 2011,

representing a growth of 26.4% in real terms over 2006. The share of total R&D expenditure to

total GDP, however, remained unchanged at 0.6% since 2006. With this R&D expenditure level,

Malaysia fell significantly behind the newly industrialised economies in the region such as

Singapore and Taiwan where total expenditure on R&D made up 2.7% and 2.9% of total GDP

respectively in 2011. Business enterprise funds had the largest contribution towards total

expenditure on R&D so far, making up 85.8% of all R&D expenditure in 2011, whilst


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government funds comprised only 4.2%. Under its investment laws, Malaysia provides a range

of incentives to companies which provide R&D services to Malaysia including for example, a five-

year income tax exemption.

Chart 5 Total Expenditure on R&D by Category 2006-2011

% of total expenditure on R&D

Source: Euromonitor International from EUROSTAT, UNESCONote: R&D refers to research and development.

LABOUR AND EDUCATION

Flexible labour market

During 2006-2011, Malaysias average hourly wage in the manufacturing sector grew

by 19.2% in real terms, resulting in higher costs for businesses.

Adult literacy rates in Malaysia have increased steadily to reach 93.5% of the total population

aged 15+ in 2011, up from 91.5% in 2006. As part of efforts to transform Malaysia into a

knowledge-based economy, the government has prioritised education, as government spending

on education grew at an annual average rate of 11.3% in real terms during 2006-2011 to reach

RM66.2 billion (US$21.6 billion) by the end of the period. The share of government expenditure

to total GDP also increased accordingly from 5.7% in 2006 to 7.5% in 2011.

The number of students in higher education was 1.0 million in 2011, up from 0.7 million in 2006.

There were 216,334 graduates in all programmes in Malaysia in 2011, an increase of 2.5% over

2006. The discipline with by far the highest number of graduates was Social Sciences, Business

and Law with 65,773 graduates (31.2% of the total number of graduates) in 2011, partly due to

higher wage levels associated with these professions, while the lowest number was graduates in

Agriculture with 2,321 (0.2% of the total number of graduates).

Despite the increases in the number of higher education students and graduates, Malaysia

continues to face a severe shortage of skilled labour, especially in the countrys key sectors such

as ICT, financial services, energy and construction. This has been due to a braindrainproblem

as well as a mismatch between the knowledge provided by education institutions and market

demand. Each year, thousands of Malaysian graduates and professionals move to other

countries such as Australia and Singapore in search of better work opportunities. Malaysias

growth potential, therefore, is currently hindered by a lack of skilled labour.


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Chart 6 Number of Higher Education Students and Adult Literacy Rate 2006-2011

000 / % of population aged 15+

Source: Euromonitor International from UNESCO/national statistics.

The total economically active population in Malaysia was 12.6 million in 2011, of which 3.0%

were unemployed. The countrys unemployment rate was therefore relatively low compared to

some other countries in the Southeast Asia region such as Indonesia (6.6% in 2011) and the

Philippines (7.0% in 2011). Malaysias youth has the highest rate of unemployment, the 20-24

age group was by far the largest in 2011 at 36.7% of the total unemployed population. This

partly reflects the mismatch of education quality and labour market demand.

In 2011, the Trade, Motor Vehicles and Personal and Household Goods Repair, Hotels and

Restaurants sector employed the largest proportion of the population (24.1%). The Community,

Education, Health, Social, Personal Services, Public Admin and Defence sector saw the biggest

increase in employment, from 17.0% of total employed population in 2006 to 18.6% in 2011.

During the same period, employment in the Agriculture, Hunting, Forestry and Fishing sectordeclined the fastest from 14.6% to 13.8% of total employed population. This is because the

agriculture sector has lost its importance in Malaysias economy which is moving towards higher

value-added manufacturing and services.

Malaysia has a relatively flexible labour market which allows employers to give trial periods and

impose no limits on short-term employment contracts. According to the World Banks

EmployingWorkersreport 2013, the average severance pay for dismissing a worker due to

redundancy in Malaysia was 17.2 weeks, remarkably less costly than in Indonesia (57.8 weeks),

for example.

The average hourly wage in the manufacturing sector in 2011 in Malaysia was RM13.4 (US$4.4),

lower than in Singapore (US$17.4) but higher than in Thailand (US$1.6). During 2006-2011,

Malaysias average hourly wage in the manufacturing sector increased by 19.2% in real terms,among the highest rates in the region, driven by rising living standards and workersdemand.

In an effort to protect low-income workers, the government of Malaysia introduced in May 2012

for the first time a minimum wage law which stipulates a minimum salary of RM900 (US$290)

per month for private sector workers in Peninsular Malaysia and RM800 (US$258) for workers in

Sabah and Sarawak. Rising labour costs will result in a higher cost of doing business in Malaysia.

In 2011, Malaysias labour productivity reached US$23,316 per person employed, representing

a robust growth of 49.5% over the 2006. Amid the global economic crisis of 2008-2009, labour

productivity in Malaysia contracted by 14.9% year-on-year in 2009 but it has increased

impressively again at 13.5% in 2010 and 13.1% in 2011 as a result of the countrys strong

economic recovery. Nevertheless, Malaysias labour productivity remains lower than in South

Korea where the figure was US$41,321 per person employed in 2011.

Chart 7 Employment by Industry 2011


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% of total

Source: Euromonitor International from International Labour OrganisationNote: Undefinedsectorsrefers to

activities not adequately defined elsewhere in the other categories.

CONSUMER LANDSCAPE

Consumer spending increasing owing to positive economic prospects

Young adults (aged 18-29) are the major driver ofMalaysias consumer market as

they made up 21.5% of total population in 2011.

Consumer confidence has been high in Malaysia since 2009 owing to the countrys strong

economic growth and positive job prospects. As a result, total consumer expenditure rose to

RM452 billion (US$148 billion) in 2011 while per capita consumer expenditure reached

RM15,846 (US$5,178), representing a real growth of 6.0% over 2010. Backed by Malaysias

healthy economic growth, per capita consumer expenditure is forecast to expand at an annual

average rate of 3.4% in real terms during 2012-2020 to reach RM21,948 (US$7,099) in real

terms by 2020.

In 2011, the proportion of spending on discretionary items in per capita terms (everything

except spending on food and non-alcoholic beverages and housing) was 69.8% of total

consumer expenditure, remarkably higher than 54.2% in 2006. Although discretionary spending

is increasing, Malaysian consumers still spent most on food and non-alcoholic beverages, at19.8% of total consumer expenditure in 2011.

Per capita annual disposable income stood at RM16,011 (US$5,232) in 2011, an increase of

33.3% in real terms over 2006. With this income level, Malaysian consumers earn on average

more than their Chinese counterparts (US$3,061 in 2011) but less than South Koreans

(US$12,453). The savings ratio stood at 8.5% of per capita annual disposable income in 2011, a

level that has gradually declined since 2006 when it was 9.0%, as a result of improved

consumer confidence.

Young adults (those aged 18-29) are the largest consumer segment in 2011, totalling 6.1

million or 21.5% ofMalaysias total population in the year. By 2020, however, middle youth

adults (those aged 30-44) will overtake young adults to become the most dominant consumer

segment as it is forecast to account for 22.3% of total population by then. Driven by risingdisposable income and rapid urbanisation, Malaysias consumer landscape provides significant


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opportunities for consumer businesses in a wide range of sectors, especially discretionary goods

and services such as household durables, transport, communications and leisure. In the medium

and long term, elderly consumers will grow in importance as the population is ageing at an

accelerating pace. This will create new opportunities for businesses in sectors such as health

goods and medical services.

Chart 8 Consumer Expenditure by Type 2000-2020

US$ per capita

Source: Euromonitor International from National statistical offices/OECD/EurostatNote: (1) Data for all years

is in fixed constant US$; 2015 and 2020 data refer to forecasts. (2) Other goods and services refers to

consumer expenditure on Alcoholic Beverages and Tobacco, Clothing and Footwear, Household Goods and

Services, Health Goods and Medical Services, Transport, Communications, Leisure and Recreation, Education,

Hotels and Catering and Miscellaneous Goods and Services.

Malaysia Labour Datafile

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