Services sector looking bright in 2023
12 Oct 2022
The services sector is expected to expand by 5% next year, benefitting from the sustained domestic demand despite moderate global economic growth.
According to the Economic Outlook 2023 report, the growth will continue to be mainly driven by subsectors such as wholesale and retail trade, real estate and business services, ICT, transportation and storage, food and beverages, and accommodation.
“The wholesale and retail subsectors are expected to remain the key contributor to the services sector with a growth rate of 3.4%, following the expansion in the retail segment, particularly due to wider usage of e-commerce and rapid transition to digitalisation,” the report stated.
It further noted that the government aims to create a cashless society ecosystem throughout the country, especially in rural areas via the Retail Sector Digitisation Initiative Programme.
This programme will provide additional incentives for the growth of the wholesale and retail segments.
The anticipated improvement in disposable income following better prospects in the labour market will spur the growth of the motor vehicles subsector.
Furthermore, the report provided that the motor vehicles segment is projected to support the subsector with the introduction of models with attractive sales packages.
In the meantime, it is reported that the real estate and business services subsector is forecast to expand by 6.6% with the business services segment, leading to growth of the subsector.
The real estate and business services segment is expected to increase next year, especially in the services, manufacturing and construction sectors.
This is possibly due to the higher demand for professional services, particularly engineering, legal and accounting in line with expansionary economic activities.
Similarly, the real estate segment is projected to rise, backed by a stronger housing market and rental activities following higher house ownerships and tenancies, which include among others, government initiatives under the Malaysia Premium Visa Programme and i-MILIKI.
The report continued to explain that the information and communication subsector is likely to expand by 4.6%, mainly driven by the increasing digital adoption across all economic sectors.
“Phase 2 of the Jalinan Digital Negara (Jendela) is expected to boost digital connectivity through the utilisation of Fixed Wireless Access and other fit-for-purpose technologies, thus enabling the country to further address the digital divide,” it revealed.
In this regard, Digital Nasional Bhd aims to extend the 5G cellular network coverage to 80% of the nation’s populated areas by 2024.
On the matter of workers, it is found that high-quality respective resource countries had eased the hiring and mobility of their workers to the country.
It is also mentioned in the report that the number of registered low-skilled foreign workers has increased by 12.5% reaching 1.2 million persons as at end-August 2022 compared to 1.1 million persons in the same period last year.
At the moment, it is reported that foreign workers were sourced mainly from Bangladesh with a share of 33.6%, followed by Indonesia (28.5%) and Nepal (14.8%), largely employed in manufacturing (35.3%), construction (23.2%) and services (14.1%) sectors.
Moreover, in the report, the number of expatriates increased by 5.5% to 86,023 persons at end-June 2022 compared to 81,529 in June last year.
The majority of expatriates were from India (21.2%), China (16.5%) and Japan (8.4%), and mainly hired in the services (52.8%), IT (38.4%) and construction (3.3%) sectors.
Finally, the report said the hiring of low-skilled foreign workers remained low at 7.3% of total employment and is still within the allowable threshold of below 15% of total employment.
Source: The Malaysian Reserve