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The construction sector has experienced consistently strong growth in the past four years as the industry expanded by 11.4%, 4.7%, 18.1% and 10.1% each year from 2010 to 2013. Sector growth has surpassed GDP growth in recent years, spearheaded by the government’s Economic Transformation Programme (ETP) and public-private partnership (PPP) projects. Counterbalancing the interest shown in the more profitable high-end properties, the government has also been mindful of developing more affordable options through various government programmes. Mixed-use mega projects in Kuala Lumpur and Iskandar are expected to produce stable demand for construction services. Sustained economic expansion, a youthful and growing population and an investor-friendly market amenable to foreign and domestic investments have continued to drive Malaysia’s real estate market forward in 2013. The government is seeking to rein in residential property growth to limit broader economic damage in the event of a market downturn as well as to keep home prices affordable for the less affluent. Although investment in the residential sector is expected to remain firm within the short term, particularly with regards to mid-range projects, the market is likely to continue its correction course throughout 2014. This chapter contains interviews with Michael Yam, President, Real Estate and Housing Developers’ Association; and Mohamad Salim, Group Managing Director, MRCB.

As Malaysia aims to achieve high-income country status by 2020, the key to reaching the goal is enhancing transport infrastructure, with major investments in air and sea, road and rail currently under way. At the same time, the logistics sector remains highly competitive, with air transport in particular seeing some fierce price wars in 2013-14. The most recent census – for 2010 – confirmed a trend of expansion in the sector, with a compound annual growth rate of 4.5% in the number of transport establishments between 2003 and 2010, and a 1.5% CAGR in employment in the sector. One National Key Results Area under the Government Transformation Programme is to increase urban public transport’s share of passenger journeys from 12% currently to 40% by 2030. With heightened competition in air, major road and rail projects under way on land, and a significant boost in port capacity, the Malaysian transport sector is likely to have some significantly busier times in the years ahead. This chapter contains an interview with Jean-Bernard Levy, Chairman & CEO, Thales.

With Malaysia’s steady economic growth and expected regional surge in energy demand, the country’s oil and gas sector continues to play a key role economically, socially and strategically. Most of the country’s major oil-producing fields are in the west, with the Sabah and Sarawak basins in the east. As mature oil fields continue to decline in production, development of new fields has shifted to more technically and economically challenging areas. Expanding on past successes, Malaysia is gearing up investments in the upstream sector to cope with overall energy demand that is expected to be about 50% greater in 2040 compared to 2010 levels, according to projections by ExxonMobile. Alongside fiscal initiatives for trading, Malaysia continues to expand its liquefied natural gas (LNG) infrastructure to accommodate increasing supplies of natural gas. The country’s first floating LNG facility is currently being constructed and is expected to come online by the end of 2015. Eagerly awaited reforms in power generation should also positively affect public and private stakeholders as fuel and electricity subsidies are phased out and tender process for new plants become competitive and transparent. This chapter contains an energy viewpoint from Greg Rickford, Canadian Minister of Natural Resources.

Despite being well established in the country, insurance remains a fairly small part of Malaysia’s financial industry. According to IMF calculations the insurance sector accounts for 6% of total financial assets, and insurance assets are equal to around 15% of GDP. Insurance penetration, though improving, remains low. More foreign investment and consolidation may help, as critical mass and technology could improve products and marketing and result in a wider range of Malaysians buying insurance. More mergers can be expected, and as that happens insurance firms are likely to improve their operations and management. The insurance sector should become more like the banking sector, with a few solid and profitable players. This chapter contains an interview with Kamaludin Ahmad, CEO, Etiqa Insurace & Takaful.

As a result of government promotion, increased interest among Muslims and non-Muslims, heightened awareness of the benefits of Islamic finance and improved regulation, sharia-compliant financial products have been gaining on conventional finance. The country’s IFS sector dates back to 1969, when the government established the Pilgrims Management and Fund Board to help Malaysians pay for the Hajj. According to recent estimates, around half of all outstanding debt securities are sharia compliant, with the annual trading volume of the IFS market reaching $312.1bn. The 2013 Islamic Financial Services Act will improve regulation and supervision in the sector by giving the central bank the power to intervene in financial institutions’ operations if it feels they are endangering the financial system. The IFS sector will no doubt continue to expand rapidly. Regulation may create new challenges for some business in the sector, but it will also increase confidence in and understanding of IFS. Once the sector digests these new rules, it will likely come back stronger and in a better position to take on a larger share of conventional financial services. This chapter contains interviews with Rauf Rashid, Country Managing Partner, EY Malaysia; and Daud Vicary Abdullah, President and CEO, INCEIF.

While the possibility of loose monetary policy ending in the US raised concerns in the Malaysian markets, 2013 turned out to be a strong year for new offerings and for the benchmark index. In the first six months of 2014, nine IPOs were reported by the stock exchange. In 2013, $2.56bn was raised in IPOs. That was considerably less than in 2012, when the exchange raised $7.15bn, but up from $2.09bn in 2011. In December 2013 Bursa Malaysia upgraded its trading engine, utilising NASDAQ OMX technology. Bursa Trade Securities 2 replaced a 2008 system. The new engine is 1000 times faster in terms of trade. As in much of the region, Malaysia is facing headwinds related to changes in monetary policy in the West and the tapering of quantitative easing. Foreign investment will likely become more volatile going forward. Nevertheless, Malaysia is well positioned not only to weather any difficulties ahead, but it is in a good position to outperform. It has a well-regulated market, a strong domestic investor base, and its listed companies are well governed. This chapter contains an interview with Shahril Ridza Ridzuan, CEO, Employees Provident Fund.