Mida expects services sector to contribute 65% to GDP by 2020

The Malaysian Investment Development Authority (Mida) expects the services sector to contribute 65 percent to the Gross Domestic Product (GDP) by 2020, making it a major contributor to Malaysia's economy.

Its Deputy Chief Executive Officer 1 Datuk Phang Ah Tong said the services sector was the main component in all developed countries and always contributes the largest to the Gross National Product.

Currently, the services sector accounts for 56 percent of the country's GDP.

"We have set the target and I believe we can achieve it in less than six years in order to become a high-income nation," he said during his keynote address at a seminar on "Investment Opportunities in the Services Sector" here today.

Phang said the services sector, besides being an important industry itself, also assumed an important intermediary role in supporting businesses in all sectors of the economy.

He said in Malaysia, Mida wanted to build a services sector related to research and development or related to multinational companies to enable them to set up their global hubs here that will create high-value jobs.

"The government has embarked on the development of the services sector as part of its strategy to sustain the economic growth momentum and improve the competitiveness and resilience of the economy," he said.

For the first half of this year, a total 2,342 projects with investments amounting to RM57 billion were approved in the services sector, comprising domestic investments totalling RM49 billion and foreign investments of RM7.8 billion.

He said these approved projects were expected to create about 48,000 employment opportunities.

"In future, the services sector is expected to expand its contribution and add a new dimension to the economy," he said.

However, he said Mida also needed to look at how to maintain the manufacturing contribution to the GDP, which currently stands at about 25 percent.

He said in many developed countries, the manufacturing contribution to GDP is below 20 percent such as in the United States where the manufacturing sector only contributed about 11 to 12 percent to GDP.

"I strongly believe that manufacturing will continue to drive Malaysia's gropwth, in creating high-income jobs and high technology industry which is sustainable," he said.