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Key Highlights of the Services Sector in 2022
RM157.1 bil
Total Approved Investments
3,644
Approved Projects
63,534
Job Opportunities
Paradigm Shift Towards Antifragility
Despite unprecedented challenges, Malaysia’s services sector emerged stronger as the main pillar of the nation’s economic growth, accounting for 65% of total approved investments from local and international investors. Entrenched digitalisation had paved the way for a fully-fledged digital economy, a catalyst commonly identified as the key marker for business success.
Paradigm shift towards antifragile ecosystem is further empowered by the National Investment Policy’s (NIP) focus on sustainability in terms of robust, high-value investment with potential to accelerate the nation’s growth. Devised to streamline all national policies related to investment, the NIP guides MIDA’s promotion to attract investment into the digital economy with innovation as the backbone for further economic complexity.
Malaysia: The Catalyst for Global Growth
With digital advancement underpinning growth across the subsectors, investment in information and communications, distributive trade, health, and R&D, takes the lion share.
As MNCs began to reorient their business to be closer to their target market, and supply chain outside their traditional home territory, Malaysia, located in the heart of Southeast Asia, presents an attractive proposition for these MNCs with its availability of global talent, competitive costs, as well as access to ASEAN markets and multiple bilateral trade partners.
Ingenious approach towards investments brings about leaner hub structure models focused on strategic and innovative business functions. So, instead of operating a command centre, the new breed of regional headquarters will serve as dynamic collaboration hubs, connecting professionals from cross-functional departments by infusing digital expertise on interactive solutions.
In efforts to become a knowledge-based economy, MIDA actively promotes participation from businesses into providing a higher value-add services. As such, MIDA gladly invites you to capitalise on the growing potentials of the key subsectors. Get in touch and begin your investment journey today.
Investing in Greener Malaysia for the Future
Green investments vary in interpretation. The IMF defines them as investments reducing emissions without majorly impacting non-energy goods. An OECD paper categorises them within broader themes like socially responsible, ESG, and sustainable investment.
Malaysia has incentivised green technology through tax benefits since 2001. The National Low Carbon Aspiration 2040, part of the National Energy Policy 2022-2040, outlines nine targets to cut CO2 emissions in line with the goal of net-zero GHG emissions by 2050. The 12MP underscores Malaysia’s commitment to becoming a net-zero carbon emission country by 2050.
Net-zero emissions means no GHG release, offset by removal. A WWF-BCG study shows Malaysia’s 2050 net-zero goal requires RM350-RM400 billion investments.
The Government provides incentives for green technology investments, including supportive regulations for transitioning to a green economy.
Companies are prompted to invest in RE sources (solar, biomass, etc.) and green technology. Energy efficiency, green building, data centers, and waste management also require investments.
MIDA continues to encourage investments in green technology projects, aiming for leadership in growth sectors like renewable energy, energy storage, circular economy, and low carbon mobility. This aligns with the 12MP, NIA, National Energy Transition Roadmap (NETR) and the New Industrial Master Plan (NIMP) 2030 emphasising RE and EE for sustainability.
Ultimately, transitioning to sustainability and achieving Malaysia’s net-zero commitment by 2050 brings substantial benefits, including economic growth and increased job opportunities.
Pathways to Net Zero Emissions
Green technology investments are the most feasible pathways to net-zero emissions and include the following:
Generation of electricity without emissions from renewable sources such as hydro and solar combined with advanced electricity storage
Production of electric-powered vehicles and equipment instead of fossil fuels
Adoption of energy efficient technologies and processes to reduce energy consumption and minimise waste production
Making the Most of Malaysia’s Emerging Carbon Market and Low-Carbon Economy
Developed nations globally take significant steps against climate change, enacting measures through conventions like Kyoto Protocol, Paris Agreement, SDGs, UNFCCC, COP26 & COP27. In 2020, Malaysia’s contribution to CO2 emissions was under 0.8%, yet it targets net-zero emissions by 2050 and a 45% GDP CO2 intensity reduction by 2030, supported by carbon pricing.
Malaysia’s stock exchange, Bursa Malaysia, launched a voluntary carbon market (VCM) to support carbon goals. Biomass resources offer opportunities, while local carbon services are essential. Malaysia plans ETS and carbon tax implementation as part of the 2020-2030 sustainability plan.
The EU’s Carbon Border Adjustment Mechanism (CBAM) impacts exports, with risks for Malaysia-EU trade. Eco-friendly production and ESG compliance yield economic benefits. Malaysia aims to lead in ESG investments, emphasizing circular economy and more; prospective investors can consult MIDA’s Sustainability Division.
Carbon Pricing Instruments
The New Industrial Master Plan 2023 (NIMP 2023) recognizes the urgency of climate change and the need for Malaysia to transition to a low-carbon economy. The NIMP 2023 anticipated that carbon pricing is a key market-based instrument to reduce greenhouse gas emissions and accelerate the transition to a low-carbon economy. Government is committed to implementing a carbon tax in Malaysia. The carbon tax is expected to be implemented in phases, with the first phase being implemented in 2025.
The implementation of a carbon tax in Malaysia will send a strong signal to businesses and individuals that the government is serious about reducing greenhouse gas emissions. The implementation of a carbon tax in Malaysia is a positive step towards addressing climate change. The initiative is hoped to reduce greenhouse gas emissions, accelerate the transition to a low-carbon economy, as well as to give for job creation. In addition, these initiatives will complement and further strengthen the 12MP highlights of the government’s plan for a carbon tax within its 2021-2025 phase.
An emission trading scheme (ETS) enforces emission limits in sectors via ‘cap and trade’. Entities emitting below the baseline earn credits tradable with high emitters. Credits’ demand and supply dictate the carbon price. The ETS spurs efficiency, renewable energy adoption, and supply chain decarbonization.
