Business Monitor International


Malaysia Business Forecast Report

Published 23 April 2014

  • 55 pages
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  • Includes 3 free updated quarterly reports
 
$1,195.00
Malaysia Business Forecast Report

Core Views

  • Malaysia's once-bloated current account surplus is coming under pressure from a combination of income account outflows and a dwindling trade surplus. We expect the narrowing of the surplus to continue, forecasting it to come in at 2.5% of GDP in 2014 and 1.6% in 2015. However, the risks are weighted to the downside, with the emergence of a current account deficit over the next few years increasingly likely.

  • Over recent years Malaysia's fiscal accounts have exhibited some worrying trends, with spending rising as a share of GDP, subsidy spending rising as a share of total spending, and indirect tax revenues declining. Going forward we are optimistic that these trends will be halted as subsidy spending is reduced and a Goods & Services Tax (GST) is implemented, which should help stabilise Malaysia's debt metrics and support private sector real GDP growth.

  • Bank Negara Malaysia (BNM) will find itself under increasing pressure to hike interest rates over the coming months as consumer price inflation (CPI) pressures mount following the reduction of fuel and electricity subsidies. However, we expect the central bank to maintain the policy rate at 3.00% amid growing disinflationary signs emanating from weakening money supply growth, which should see CPI pressures ease in H214.

Major Forecast Changes

  • We have revised down Malaysia's current account surplus for 2014 and 2015, forecasting it to come in at 2.5% of GDP in 2014 and 1.6% in 2015, rather than the 3.5% and 2.7% previously expected. Even with these revisions, the risks are weighted to the downside as the pickup in domestic investment activity and the still-wide consolidated public deficit pose risks of a current account deficit over the coming years.

Key Risks To Outlook

  • Malaysia's economic outlook remains vulnerable to external shocks. This is compounded by increased public spending on welfare subsidies in recent years. We caution that the government's failure to address its fiscal...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Political Outlook
8
An Increasingly Tight Race For The Barisan Nasional
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
10
Race Relations Still Cloud The Horizon
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Weak Exports Becoming An Increasing Risk To Growth
14
TABLE: ECONOMIC ACTIVITY
14
Monetary Policy
16
BNM To Favour Neutral Stance
16
TABLE: MONETARY POLICY
16
Balance Of Payments
17
Volatile Capital Flows A Major Risk To The Economy
17
TABLE: CURRENT ACCOUNT
18
Fiscal Policy
19
Mixed Election Outcome A Risk To Fiscal Outlook
19
TABLE: FISCAL POLICY
20
Chapter 3: 10-Year Forecast
23
The Malaysian Economy To 2022
23
Investment-Driven Growth In The 2010s
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Risks To Outlook
25
Chapter 4: Business Environment
27
SWOT Analysis
27
BMI Business Environment Risk Ratings
27
Business Environment Story
28
Improving Business Environment Positive For Long-Term Investment
28
Business Environment Outlook
30
Institutions
30
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
30
TABLE: BMI LEGAL FRAMEWORK RATING
31
Infrastructure
32
TABLE: LABOUR FORCE QUALITY
32
TABLE: ASIA - ANNUAL FDI INFLOWS
33
Market Orientation
34
TABLE: TRADE AND INVESTMENT RATINGS
34
TABLE: TOP EXPORT DESTINATIONS (US$MN)
35
Operational Risk
36
Chapter 5: Key Sectors
37
Autos
37
TABLE: MALAYSIA AUTOS PRODUCTION, 2011-2017
38
TABLE: MALAYSIA AUTOS SALES FORECAST 2010-2017
39
TABLE: MALAYSIA AUTOS TRADE, 2010-2017
40
Food & Drink
41
TABLE: MGR SALES BY FORMAT - HISTORICAL DATA & FORECASTS, 2010-2017
42
Other Key Sectors
45
TABLE: INFRASTRUCTURE SECTOR KEY INDICATORS
45
TABLE: PHARMA SECTOR KEY INDICATORS
45
TABLE: TELECOMS SECTOR KEY INDICATORS
45
TABLE: DEFENCE AND SECURITY SECTOR KEY INDICATORS
46
TABLE: FREIGHT SECTOR KEY INDICATORS
46
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Growth May Be Turning The Corner
47
TABLE: GLOBAL ASSUMPTIONS
47
TABLE: DEVELOPED STATES, REAL GDP GROWTH FORECASTS
48
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%)
48
TABLE: EMERGING MARKETS, REAL GDP GROWTH FORECASTS
49

The Malaysia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Malaysia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Malaysia's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Malaysia's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Malaysia's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Malaysia, including currency volatility, the commodity price boom and protectionist policies.

The Malaysia Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Malaysia economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Malaysia through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Malaysia Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Malaysia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Malaysia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Malaysia over the next 5-years?

BMI's Malaysia country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Malaysia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Malaysia.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Malaysia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Malaysia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Malaysia, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Malaysia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Malaysia will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Malaysia's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express