Malaysia

With Malaysia’s economy expected to post growth of just above 5% in 2013, investors expect further increases in lending to the private sector. While rising household debt remains a concern in the medium term, domestic bank capitalisation leaves some room for further growth in their portfolios.

The government has vowed to expand the Malaysian vocational education system to help bridge the widening gap between the demand for skilled labour and the available pool of trained workers.

With interest rates in developed countries at record lows, many investors are looking for better returns in emerging markets, including Malaysia, where sound macroeconomic fundamentals and attractive yields are driving demand for sovereign debt. The May 5 re-election of the business-friendly Barisan Nasional (BN) party is likely to raise further the profile of South-east Asia’s largest bond market.

Having been ranked the friendliest country for Muslim holidaymakers for the third year running, Malaysia has confirmed its position as a premier halal tourism destination. However, its position – and the revenue that comes with it – could be challenged by regional rivals seeking to cash in on the lucrative market.

Following the launch of Malaysia’s first long-term evolution (LTE) mobile telephone network in January, this year should see a rush to market as major operators look to expand their data earnings. The rollout of new technologies and products offered by telecoms firms in Malaysia is in line with growth in the region, which has ambitions to become a global leader in mobile broadband access.

While a fiercely fought general election could send ripples through Malaysia’s economy in the next few months, the country otherwise looks set for another year of solid growth on the back of strong domestic demand and higher private investment driven by a number of public sector initiatives.