After its 2018 elections, Malaysians have much to look forward to. How has the new government inspired its people’s hope of advancing Malaysia’s economy to the next level?
After a watershed political change of Prime Minister and ruling party, Malaysians are hopeful for more positive developments, and experts share their confidence: with the change in government, the International Monetary Fund (IMF) believes the Malaysian economy would show resilience and become a strong investment choice.
Since the economy’s public debt continues to decline, the new government is expected to focus on raising revenues rather than achieving goals through cuts in public spending. Malaysia’s economy grew by 5.8% in 2017, and is currently en-route to becoming a high-income country by 2020, according to the IMF. World Bank vice-president for East Asia and Pacific, Victoria Kwakwa, also echoed similar views, stating that Malaysia’s economy was well-diversified and in a good position for growth.
The country’s economic growth is driven by a strong demand for electronics items, which has led to investment in manufacturing sectors (both domestic and export-focused activities). This growth is also driven by improved labour market conditions and wage growth, and higher capital investment (both public and private). In its five year plan (2016-2020), the government focuses on increasing productivity and promoting innovation in Malaysia’s industries.
The Malaysian insurance market recently underwent regulatory changes regarding foreign ownership rules. This was done so as to boost the domestic insurance market and drive innovation. During 2016–2017, the Malaysian government liberalised both motor and fire insurance segments to allow insurers to introduce new products at competitive market rates. To boost innovation, the Malaysian central bank issued the FinTech Regulatory Sandbox Framework where companies/start-ups would be allowed to develop technology related to the financial sector (including insurtech) in an environment with less regulatory constraint. As per EY, the insurance market is expected to grow by 15% compounded annual growth rate from 2015–2020.
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