Malaysia sees productivity growth of 1.8% in 2021
Malaysia’s productivity growth rebounded to 1.8% last year, equivalent to RM90,697 (£16,800) per person, according to Deputy International Trade and Industry Minister Lim Ban Hong.
He said 2021 showed “a tremendous awakening from the slow economic bumps encountered due to the impact of the pandemic” – even though the country has not yet to return to its pre-pandemic productivity levels.
The Productivity Nexus – representing Malaysia’s main economic sectors – rebounded to an average of 3.3% in 2021 from -5.1% in 2020, he said. “All the sub-sectors registered a positive growth except for retail, food & beverage, tourism and professional services.
“The electrical and electronics (E&E) sub-sector registered the highest annual productivity growth of 12% due to the increasing global demand for E&E components,” he said at the launch of the Productivity Report 2022 and Subsector Productivity Reports.
Lim said that the chemicals and chemical products, and machinery and equipment sub-sectors, recorded “a tremendous increase in productivity growth” at 10.3% and 9% respectively.
“This is a driving factors for us to boost the nation’s productivity, targeted growth at an average of 3.6% annually, from 2021 to 2025 as stated in the 12th Malaysia Plan.
“2022 began with a promise of higher productivity, which encourages more potential investors, traders, and businesses to operate in Malaysia. Hence, we are on the right track to economic recovery,” he said.
The Organisation for Economic Co-operation and Development (OECD) recently projected that Malaysia’s economy would grow by 6.1% in 2022, boosting the country’s exports and domestic demands, encouraged by benefits gained from the government’s support.
Lim said the OECD’s forecast is in line with the country’s Ministry of Finance’s projection that gross domestic product (GDP) would grow 5.5%–6.5% in 2022.
“The projection is based on potential improvement in global trade, balanced commodity prices, more vibrant economic activities, and improvement in consumer and business sentiments,” he said.
“The transition into the endemic phase and relaxations of the Covid-19 standard operating procedures further enhance the positivism. Alongside, MPC is optimistic that the country will achieve the target of 3.6% productivity growth this year,” he said.
Lim added that to achieve higher productivity growth, the country needs to focus on four key productivity drivers – talent, technology, the business environment and subsidy.
He said: “The Academy of Factory (AiF) and e-Shared Prosperity Organisation (eSPO) Certificate of Acknowledgement Programmes are ongoing initiatives to ensure the Malaysian workforce is ready to weather the current and future economy.
“The AiF programme has trained and placed 200 local [people] in selected industries. On the other hand, for eSPO, a total of 30,526 organisations have been recognised for successful practices… through productivity initiatives.”
Lim said digital transformation was “crucial to boost the country’s productivity and competitiveness”, highlighting MPC’s signature ‘Go BIG with Digital’, which “advocates the need for mindset transformation among leaders”.
Tax break for vehicles set to end
The vehicle sales tax exemption will end on 30 June 2022 as planned, Malaysia’s Finance Minister Zafrul Abdul Aziz has said.
However, he said those buyers who bought their vehicle during the tax holiday period have until 31 March 2023 to register it with the Road Transport Department (JPJ).
This was because 264,000 vehicles purchased during this sales tax exemption period have yet to be fully built, mainly due to the worldwide microchip shortage.
“The extension of this vehicle registration period is a mid-point solution to balance the interests of consumers and national tax revenue which needs to be re-enhanced post-pandemic to ensure the welfare of the people and the economic well-being of the country continues to be preserved,” said Zafrul.
The government introduced the full sales tax exemption on passenger vehicles, including MPVs and SUVs, in June 2020 to support the automotive sector throughy the pandemic.
To date, a total of 868,422 units of vehicles have been sold and consumers have saved sales tax exemption amounting to RM4.7bn (£871m).