Population (2020)1: 32.4 million
GDP (2020)2: US$ 336.7 billion
World Bank “Ease of Doing Business” Rank (2020): 12
Bilateral Trade with Singapore (2020): S$103 billion
Trading Partner Rank (2020): 2
Malaysia is one of Southeast Asia’s economic powerhouse and ranked fifth in terms of GDP. In the last decade, it experienced an average annual GDP growth of approximately 5.2%3. According to the IMD World Competitiveness Yearbook, Malaysia was ranked the second most developed and competitive economy within Southeast Asia and 25th globally in 2020.
Malaysia’s continued growth is largely spurred by its business-friendly environment. It was ranked 12th globally on Ease of Doing Business by World Bank Group in 2020, and boosts numerous government incentives and policies to attract foreign direct investments (FDIs), particularly in sectors such as Manufacturing and Information and Communications Technology (ICT).
In spite of the pandemic, World Bank Group has projected Malaysia’s GDP to be 5.8% and 4.5% in 2022 and 2023 respectively. As of 2020, Malaysia records a Gross National Income (GNI) per capita of US$10,5804 and is on track to achieving the target of becoming a high-income economy by 2024.
1 Department of Statistics Malaysia, 2020
2 Department of Statistics Malaysia, 2020
3 The World Bank, 2020
4 The World Bank, 2020: Malaysia GNI per capita, Atlas method (current US$)
Malaysia and Singapore has close bilateral ties due to its close geographical proximity and accessibility between the countries. It is Singapore’s second largest trading partner, with Singapore always being in the top three sources of foreign direct investments (FDIs) into Malaysia. As member states of ASEAN, trade between Singapore and Malaysia enjoys tariff-free arrangements attributed to the ASEAN Trade in Goods Arrangement (ATIGA), ASEAN Framework on Services (AFAS) and the ASEAN Comprehensive Investment Agreement (ACIA). Singapore and Malaysia are also part of the newly introduced Regional Comprehensive Economic Partnerships (RCEP), which aims to build on existing bilateral ASEAN agreements with Australia, China, Japan, Republic of Korea and New Zealand.
With the close geographical proximity and accessibility to Singapore, it is also not surprising that Malaysia and Singapore are also culturally similar. The high volume of daily commutes for both work and leisure have allowed Malaysians and Singaporeans to gain familiarity with the ins and outs of the respective countries. As a result, many Malaysian business have outposts in Singapore, while Singapore businesses have also tapped on Malaysia as a first port of call for landing beyond domestic soil.
Termed “the fifth Asian Tiger” through the 1980s and early 1990s, Malaysia’s strategic geographical position along the Straits of Melaka and abundance of natural resources in tin, oil and natural gas have spurred the country’s early success in commodity trading. Led by two decades of the Mahathir Administration, Malaysia successfully diversified towards manufacturing activities, particularly in electrical and electronics products. The shift spearheaded an industrialisation drive which contributed to more than two decades of strong economic growth. Strong economic foundations have propelled Malaysia’s economy forward in the early 1990s and continue to maintain the country’s competitive edge amid political flux in the recent years.
Malaysia also has a relatively young and educated population, with a median age of 29 and adult literacy rate at 94.9%5. The population is digitally-savvy, with a smartphone penetration rate of 88%6 in 2020, the second highest in Southeast Asia. These attributes position the market favourably for both foreign and homegrown consumer brands.
With a young and educated workforce, Malaysia is also well-positioned to attract investment, particularly among foreign firms looking to expand operations in Manufacturing and Services.
5 The World Bank Data, 2018: Malaysia Literacy rate, adult total (% of people ages 15 and above)
6 We Are Social and Hootsuite – Digital 2019 Malaysia Report Survey