Malaysia can be likened to two contrasting countries in one, cleaved into parts by the South China Sea. While the northern peninsula is full of bustling cities, the island of Borneo is rich in biodiversity. An upper-middle income country with a highly open, free trade economy, Malaysia is one of 13 countries in the world to have recorded an average economic growth of more than 7% annually for 25 years or more by 2015. Malaysia has nearly eradicated poverty, with 0.3% of the population living under USD 1.9 a day (2014).

The Malaysian economy relies heavily on foreign migrant workers. According to official statistics, there were more than 1.6 million migrant workers in Malaysia by the end of July 2012, accounting for almost one third of the total labour force in the country.

A founding member of the Association of Southeast Asian Nations (ASEAN), the country has developed peaceful and neutral relations with its neighbouring countries with strong emphasis on security and stability of Southeast Asia.

Malaysia’s relatively young demography with the median age of 28.2 presents a strong potential to increase labour productivity and innovation for sustained development. Access to quality education, social protection, labour force participation of women and older persons and healthcare are regarded critical factors in Malaysia’s pursuit of inclusive growth.

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Malaysia’s Fact File

World Giving Index Rank

2016
22 10 in 2015
  • 57%giving money
  • 33%volunteering time
  • 48%helping a stranger

Population

2016
30.95 million

GDP (PPP)

2016
863.2 billion World Rank 28

Poverty

2009
3.8%

Per capita GDP (PPP)

2016
USD 27,267 World Rank 46

Global Competitiveness Index

2016
25 18 in 2015

Number of Millionaires

2016
31,000 0.1 % of population

Source: CIA, Charities Aid Foundation (CAF, 2016), Credit Suisse (2016), OECD (2016), World Economic Forum (WEF, 2016), World Bank (2017)

Economic Context for Investors

  • Favourable
  • Moderately favourable
  • Unfavourable
Factors Index Score/Rank Description
GDP Growth 2016
Index Score/Rank
4.3%
GDP growth was moderate at 4.3% in 2016. In 2017, the Malaysian economy is projected to grow between 4.5 to 5%.
Governance 2015
Index Score/Rank
0.4
Malaysia ranked above 68% of all the countries in the 2015 World Bank’s Worldwide Governance Indicators.
Consumer Market 2015
Index Score/Rank
USD 381 billion
Consumer spending in Malaysia increased by 6% from 2014 to 2015. Purchasing power of the people in Malaysia is one of the highest in Asia.
Labour Force 2016
Index Score/Rank
15 million
The national workforce increased by 2.6% from 2015 to 2016. Nearly three-quarters of the Malaysian labour force was low-skilled as of 2010.
Infrastructure 2016
Index Score/Rank
5.4
Malaysia ranked 24 of 138 for infrastructure in the 2016 WEF’s Global Competitiveness ranking. Malaysia’s persistent drive to develop and upgrade its infrastructure has resulted in one of the most well developed infrastructure among the newly industrialising countries of Asia.
Financial Access 2014
Index Score/Rank
81% of the population
Financial access increased by 22% from 2011 to 2014. Malaysia recognises the importance of financial inclusion as a strategy towards sustainable long-term growth.
Digital Access 2015
Index Score/Rank
71% of the population
Internet penetration increased by 12% from 2014 to 2015. Malaysia had 144 mobilecellular subscriptions per 100 inhabitants in 2015.
Ease of Doing Business 2016
Index Score/Rank
23/190
Malaysia’s Ease of Doing Business rank slightly moved from 22 in 2015 to 23 in 2016. Malaysia’s attractive business environment and market potential are due to widespread English usage, relaxed foreign exchange, ability to repatriate capital and profits, a well-established legal framework and good infrastructure.
  • Favourable
  • Moderately favourable
  • Unfavourable

SDG Dashboard

Malaysia maintains a good track record in healthcare and sanitation. Under-5 mortality has been reduced to 7 cases per 1000 births (2014), while 97% of the population has access to improved water. Education presents a success story as well — the primary school enrolment rate was 98% and adult literacy rate was 94.6% as of 2015.

The Eleventh Malaysia Plan for the period 2016-2020 identifies six ‘game changers’ – innovative approaches that will lead to economic development and inclusive growth, namely: (i) unlocking the potential of productivity, (ii) uplifting the bottom 40% households towards a middle-class society, (iii) enabling industry-led technical and vocational education and training, (iv) embarking on green growth, (v) translating innovation to wealth, and (vi) investing in competitive cities.

  • No Poverty
  • Zero Hunger
  • Good Health and Well-Being
  • Quality Education
  • Gender Equality
  • Clean Water and Sanitation
  • Affordable and Clean Energy
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
  • Reduced Inequalities
  • Sustainable Cities and Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life Below Water
  • Life On Land
  • Peace, Justice and Strong Institutions
  • Partnerships for the Goals
  • Sustainable Development Goals

Source: sdgindex.org (2016)

Government Focus on Development Gaps

Focus Area SDG Goals Gap Government Focus
Climate action
SDG Goals
  • Climate Action
  • Life Below Water
  • Life On Land
Gap
CO2 emissions per capita were at 8.03 metric tonnes in 2013 as compared to Thailand at 4.49 and Indonesia at 1.91 metric tonnes. World Risk report 2016 ranked Malaysia 86 out of 171 countries, placing it in the ‘high exposure’ category to climate change.
Government Focus
Malaysia plans to reduce greenhouse gas emissions intensity by 45% by 2030 relative to the 2005 levels.13 The Eleventh Malaysia Plan 2016-2020 focuses on green growth, sustainable consumption and production, conserving natural resources and strengthening resilience against climate change.
Labour productivity
SDG Goals
  • No Poverty
  • Decent Work and Economic Growth
  • Industry, Innovation and Infrastructure
Gap
Malaysia needs 50% skilled labour but only has 28% skilled labour among 14.8 million workers in the country. There are 634,136 SMEs as against 17,803 large firms, however SMEs’ gross output value contribution was 29% compared to 72% by large firms.
Government Focus
The Eleventh Malaysia Plan 2016-2020 sets a productivity growth target of 3.7% per year, well above the 2% average growth recorded from 2011 to 2015. The Plan also has programmes to enhance SME productivity, ease the environment for business and strengthen human capital.
Social security
SDG Goals
  • Good Health and Well-Being
  • Sustainable Cities and Communities
Gap
Although the median age is 28.2, senior citizens aged 60 years and above make up 9% of the country’s 30.95 million population, and that is expected to rise sharply over the next 14 years from 2017.
Government Focus
In 2017, the government has allocated USD 97.5 million to senior citizens, including USD 69 monthly as living allowance and pocket money. In addition, 8 senior citizen activity centres are being established.

Social Economy

Malaysia’s social economy is in early stages of growth, nurtured by the government and enablers.

There are 5827 NGOs and 100 SEs in Malaysia.

Category Factor Rating Description
SPOs
Factor
Legislative environment
half SEs can adopt both for-profit and non-profit structures, which are well-defined in the Malaysian laws.
SPOs
Factor
Government support for SEs
three-quarter The government develops the SE sector primarily through MaGIC and AIM, offering significant support through the Social Outcome Fund, incubation, seed funding, access to networks and mentorship. Application for government grants, however, is a time consuming process.
SPOs
Factor
SEs across sectors
quarter SEs are presently active in community development, with some organisations emerging in education, youth engagement, environment, and sustainable lifestyle.
SPOs
Factor
Presence, size, and maturity of SEs
half There were about 100 SEs as of 2015. SEs are a nascent phenomenon, with a growing presence spurred by youth and business professionals passionate to make a difference.
Investors
Factor
Philanthropic contributions
half Local foundations and HNWIs are actively engaged in philanthropy through zakat. MNCs lead in adopting venture philanthropy approaches and supporting SEs.
Investors
Factor
Presence of social investors
quarter There are two impact investors in Malaysia: Omidyar Network and Leapfrog Investments. The majority of the current funding for SEs however is through donations, government grants, or CSR initiatives.
Investors
Factor
Corporate sector
half CSR is led by MNCs and large corporations such as Petronas. Bursa Malaysia has been a major driver of corporate sustainability.
Enablers
Factor
Incubators, accelerators, and capacity-builders
half The presence of enablers is expanding. Incubators and accelerators: MyHarapan, iCUBE, MaGIC, Cradle Fund Bhd Capacity builders: MaGIC, MyHarapan, British Council, Social Enterprise Alliance, Cradle Fund Bhd
Enablers
Factor
Networks and platforms
half MaGIC, MyHarapan, British Council, Social Enterprise Alliance and AVPN are some of the most notable ecosystem builders. CSR platforms such as the Institute of Corporate Responsibility (ICR) and Bursa Malaysia are bringing organisations together around CSR.
Enablers
Factor
Knowledge and research
quarter AIM and MaGIC have published a few publications on the Malaysian social economy.
Enablers
Factor
Partnerships
half Examples of partnerships include MaGIC and AIM with social investors, Petronas and state government agencies and the Malaysia Collective Impact Initiative (MCII).
Enablers
Factor
Impact Measurement
three-quarter AIM has developed the Social Impact Measurement Tool as a uniform method for the private sector and SPOs to outline, measure, track and report the impact of their initiatives.

partnership Partnership Opportunity

Demand, Supply and Support Ecosystem in Malaysia

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Social Investment Landscape in Asia

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