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