Liberalisation of the Services

Sector in Malaysia

Ministry of International Trade and Industry Malaysia

19 November 2014

1

Services: Significance of services sector • Central driver of economic

growth and development.

• Provides essential infrastructure, improves efficiency and adds value.

• Knowledge-based societies are services-based societies

• Services Contribution to GDP (2013):

United State : 79.4%

Hong Kong : 93.0%

Singapore : 70.6%

Malaysia : 48.1%

Malaysia Ranking for Export and

Import • 28th Largest Exporter (29th in 2012)

• 28th Largest Importer (29th in 2012)

Source: World Trade Report 2014

3

GDP

Contribution

**Investment

(RM Billion)

Import

(RM Billion)

Export

(RM Billion)

2011 – 54.2 % 2011 – RM70.4 2011 – RM70.4 2011 – RM70.4

2012 – 54.6 % 2012 – RM117.55 2012 – RM117.55 2012 – RM 117.55

2013 – 55.2 % 2013 – RM147.6 2013 – RM140.5 2013 – RM125.4

EMPLOYMENT (‘000) (including construction services):

2012 2013

7,649.3 15,630.4

Source : DOSM

Services sector in the Malaysian Economy

Providing market access to foreign investor/ service providers

Subject to domestic regulation

What is Liberalisation ?

Services liberalisation: breaking barriers

WTO ASEAN FTAS AUTONOMOU

S

Some of the barriers:

• Foreign equity restriction

• Form of entity

• Domestic regulation

• Discriminatory condition

Attract foreign investments,

specialised expertise and high-

end technology;

Inject competitiveness and

enhance productivity;

Enhance innovation, build

capacity and upgrade skills of

workforce;

Provide predictability and

stability.

Why liberalise?

W120:

provides category

of sectors

Commitments

made across

FTAs

Business Services

Communication Services

Construction and Related Engineering

Services

Distribution Services

Education Services

Environmental Services

Financial Services

Health Related and

Social Services

Tourism and Travel Related

Services

Recreational, Cultural and

Sporting Services

Transport Services

Other Services Not Included Elsewhere

Malaysia has

committed in 12

sectors

Autonomous Liberalisation

9

• 22 Apr 2009: immediate liberalisation of 27 services sub-sectors. This

liberalisation is undertaken autonomously or unilaterally.

• On 30 June 2009, PM announced comprehensive rationalisation of the

investment guidelines administered by the Foreign Investment

Committee (FIC).

• 7 Oct 2011: During the Budget 2012, PM announced autonomous

liberalisation of 18 services sub-sectors.

* All autonomous liberalisation initiatives are carried out based on

consultations with line Ministries and agencies.

Liberalisation of Services Sector – 1st package of

Autonomous Liberalisation (22 April 2009)

10

1. Consultancy services related to installation

of hardware

2. Software implementation services

3. Data processing services

4. Database services

5. Maintenance and repair services of

computers

6. Other computer related services

7. All veterinary services

8. Welfare services delivered through

residential institutions to old person and the

handicapped

9. Welfare services delivered through

residential institutions to children

10. Child daycare services

11. Vocational rehabilitation services for the

handicapped

12. Theme park

13. Convention and exhibition centre

13. Travel agencies and tour operator services

14. Hotel and restaurant services (4&5 star hotels)

15. Food serving services (4&5 star hotels)

16. Beverage serving services (4&5 star hotels)

17. Class C freight transportation services

(private carrier license to transport own

goods)

18. Sports event promotion and organisation

services

19. Regional distribution centres

20. International procurement centres

21. Technical testing and analysis services

22. Management consulting services

23. Rental/ leasing services of ships (excludes

cabotage and offshore trades)

24. Rental of cargo vessels without crew

25. Maritime agency services

26. Vessel salvage and refloating services

The 27 services subsectors liberalised in 2009 (up to 100% foreign equity):

10

Liberalisation of Services Sector – 2nd package of

Autonomous Liberalisation (7 Oct 2011)

11

Telecommunications – ASP

International Schools

Tech & Vocational Schools

Tech & Vocational Schools – Special

Needs

Private Hospitals

Departmental & Specialty Stores

Incineration Services

Accounting /Taxation

Skills Training Centers

Courier Services

Legal Services

Private Universities

Medical Specialist Services

Dental Specialist Services

Telecommunications (NSP & NFP)

Architectural Services

Engineering Services

Quantity Surveying Services

Services Related Free Trade Agreements (FTAs)

12

Completed and/ or in Force:

Regional FTA Bilateral FTA

ASEAN-China Malaysia-Japan (MJEPA)

ASEAN-Korea Malaysia-Pakistan (MPFTA)

ASEAN-Australia/New Zealand

(AANZFTA)

Malaysia-New Zealand (MNZ)

ASEAN-India Malaysia-India (MICECA)

Malaysia-Australia (MAFTA)

On going Negotiations:

Regional FTA Bilateral FTA

ASEAN-Japan Malaysia-EU

TPP

Regional Comprehensive Economic Partnership (RCEP)

MALAYSIA’S COMMITMENTS IN BILATERAL FTAs

SECTORS

FTA

MJEPA MNZ MPFTA MICECA MAFTA

M J M NZ M P M I M A

Business services √ √ √ √ √ √ √ √ √ √

Communication services √ √ √ √ √ √ √ √ √ √

Construction and related engineering services √ √ √ √ √ √ √ √ √ √

Distribution services √ √ √ √ √ √ √

Educational services √ √ √ √ √ √ √ √ √ √

Environmental services √ √ √ √ √ √ √ √

Financial services √ √ √ √ √ √ √ √

Health related and social services √ √ √ √ √ √ √ √ √

Tourism and travel related services √ √ √ √ √ √ √ √ √ √

Recreational, cultural and sporting services √ √ √ √ √ √ √ √ √

Transport services √ √ √ √ √ √ √ √ √ √

Other services not included elsewhere √ √ √ √ √ √ √

TOTAL SUB-SECTORS OFFERED 80 181 101 109 83 94 84 64 94 104

MALAYSIA’S COMMITMENTS IN REGIONAL FTAs SECTORS FTAs

ASEAN-China ASEAN -

Korea

AANZFTA

M C M K M A NZ

Business services √ √ √ √ √ √ √

Communication services √ √ √ √ √ √ √

Construction and related engineering services √ √ √ √ √ √ √

Distribution services √ √ √ √ √

Educational services √ √ √ √ √ √ √

Environmental services √ √ √ √

Financial services √ √ √ √ √ √ √

Health related and social services √ √ √ √

Tourism and travel related services √ √ √ √ √ √ √

Recreational, cultural and sporting services √ √ √ √ √ √

Transport services √ √ √ √ √ √ √

Other services not included elsewhere √ √ √

TOTAL SUB-SECTORS OFFERED 74 110 98 132 76 99 102

15

Domestic Regulations

Coordination

Must support industry’s growth

and to keep with technology

advancement and time

Services sectors are under the

purview of various Ministries.

Skills

Transparency & Data

Insufficient human capital

and mismatched skills.

Lack of information

Challenge in data collection,

compilation and dissemination

http://myservices.miti.gov.my