Business services growth on track, records 102% of KPI target

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Malaysia’s services sector is growing from strength to strength.

By T.K. Tamby

Malaysia’s services sector is one of the country’s fastest growing sectors, and the world is beginning to take note of it.

While it forms only a small portion of the Malaysian economy at 3.9% of Gross National Income (GNI) (2012: RM36.4 billion), the sector is expanding rapidly at an annual rate of 7.9%.

In an effort to further accelerate this growth, six entry point projects (EPPs) under the National Key Economic Area (NKEA) are being implemented and these are expected to generate GNI of up to RM78.7 billion by 2020.

These EPPs cover maintenance, repair and overhaul (MRO) services, shared services and outsourcing, data centres, green technology, pure-play engineering services as well as shipbuilding and ship repair.

According to the 2013 Economic Transformation Programme (ETP) Annual Report, these business services EPPs achieved 102% of their KPI targets for 2013.

During a media conference to announce the commendable achievements in the business services sector, the Minister-in-charge, Dato’ Sri Richard Riot Anak Jaem (pic – photo credit: PETRONAS), who is also the Minister of Human Resources, said that the EPPs have helped Malaysia established itself and gain recognition globally for services offered.

“Malaysia has also been recognised as one of the leading hubs for aircraft MRO services in the Asia Pacific region,” he said.

Among the key achievements for the EPPs are as follows:

a) Aerospace giant Airbus selected Malaysia as the location for one of its global customer service centres. According to the Chief Executive Officer for Airbus Customer Services Sdn bhd, Raymond Lim, the service centre in Malaysia would service the Middle East, South East Asia, Australia, New Zealand and Korea: “Asia Pacific is a high growth area for Airbus and having centres in this region allows for closer proximity with its client base here.” Launched in October last year, the centre provides specialised major aircraft and engineering service and, according to Lim, will be sourcing for talents and components locally.

b) Swiss-based aviation components and MRO specialist, SR Technics, picked Malaysia as its hub for the region.

c) For the data centre sector, Malaysia ranks 16th in the 2013 Data Centre Risk Index by Cushman and Wakefield, up three positions from 2012. This EPP is on track to establish a world-class data centre hub in Malaysia in a bid to capture a significant share of the global data centre market, which is projected to grow to US$3.4billion (RM11 billion) in 2014. In 2013, the top 10 local operators in Malaysia had built over one million sq ft of data centre space.

According to Dato’ Sri Richard, these EPPs are expected to generate knowledge-intensive jobs that are key to Malaysia’s aspiration of becoming a high income nation. For example, Airbus’ customer service centres will create jobs for 140 engineers while SR Technics will create over 200 jobs.

Shared services and outsourcing companies such as AIG, Chartis, IBM and AIA have created more than 10,000 new knowledge-intensive jobs in IT, finance, accounting, human resources and payroll services. This EPP has created close to 3,000 new jobs just in the first quarter of 2014.

Key targets for this NKEA in 2014

  1. Realising RM2 billion investments for green technology initiatives
  2. RM400 million approved in loan value under the Green Technology financing scheme
  3. 25% revenue growth in data centre services
  4. 15% revenue growth in overseas sales for the shared services and outsourcing sector
  5. Hire 224 new specialist consultant engineers in pure-play engineering services

The NTT MSC Rimba Digital data centre… Malaysia ranks 16th in the 2013 Data Centre Risk Index by Cushman and Wakefield, up three spots from 2012.

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