RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/92
5 November 2001
(01-5355)
Trade Policy Review Body Original:  English
TRADE POLICY REVIEW
MALAYSIA
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Malaysia is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Malaysia.Malaysia WT/TPR/G/92
Page 3
CONTENTS
Page
I. ECONOMIC DEVELOPMENT 5II. TRADE POLICY DEVELOPMENTS 6
1. Overview 6
2. ASEAN 7
3. Tariffs 8
4. Standards 8
5. Sanitary and Phytosanitary 96. Copyright Act 97. Layout-Designs of Integrated Circuits 9
8. Industrial Designs 9
9. Patent 9
10. Trademarks 911. Geographical Indications 9
III. SECTORAL POLICIES 10
1. Productivity Performance of Malaysia 10
2. Financial Services Sector 10
3. The Financial Sector Masterplan (FSMP) 114. Capital Market Sector 115. Exchange Control Rule 116. Measures on investment 127. Communications and Multimedia Services 13
8. Agricultural Sector 13
IV. FUTURE DIRECTION AND STRATEGY 13Malaysia WT/TPR/G/92
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I. ECONOMIC DEVELOPMENT
1. With an average growth rate of 7.8% per annum, the period 1991-1997 witnessed the
continuation of rapid economic progress, which started in the mid-1980’s.  Due to the financial crisis,
Malaysia's GDP contracted by 7.4% in 1998.  However, the economy quickly recovered in the second
quarter of 1999 leading to an average growth rate of 7.2% during the 1999-2000 period.
2. The quick recovery can be attributed to the Government’s efforts, beginning mid-1998, in
easing monetary policy and providing fiscal stimulus to reactivate domestic demand, and the strong
growth in exports registered in 1999 and 2000.  The per capita income in current terms, which
declined in 1998 rebounded to RM 13,359 in 2000, higher than the pre-crisis level of RM 11,234
(US$4, 493) in 1996 though, in US$ terms it recorded a lower value of US$ 3,515.
3. The unemployment rate averaged at 2.9% for the 1997 to 2000 period with the highest level
of 3.3% in 1998, and the lowest at 2.5% in 1997.  The inflationary rate based on the consumer price
index was maintained at an average of 3.1%, with the highest record of 5.3% in 1998 and the lowest
at 1.6% in 2000.
4. The manufacturing and services sectors together contributed the major portion of the total
GDP increasing from 81.8% in 1997 to 83.7% in 1998, to 85.1% in 1999 and to 86.1% in 2000.  Themanufacturing sector’s contribution ranged from  27.9% to 33.4% while the services sector’s
contribution ranged from 51.9% to 55.8% for the same period.  The agricultural sector’s contribution
to the economy was consistently above 9% except in 2000 with a decline to 8.4%.  The construction
sector saw a declining contribution from 4.8% in 1997 to 3.3% in 2000.
5. During the period, the domestic investment based on approved projects dropped sharply to
RM 4.7 billion in 1999 from a high RM 14.3 billion in 1997 and RM 13.2 billion in 1998 before
bouncing back to RM 13.7 billion in 2000.  However FDI remained strong at RM 11.4 billion in 1997,RM 13.0 billion in 1998, RM 12.2 billion in 1999 and RM 19.8 billion in 2000.
6. Domestic investment for the period 1997-2000 was mainly in seven sectors namely petroleum
products (including petrochemicals), electronics and electrical products, basic metal products, natural
gas, chemicals and chemical products, transport equipment and non-metallic mineral products.  These
seven industries together accounted for 76% of total domestic investment in approved manufacturingprojects during the period 1997-2000.
7. After registering exports of US$77.3 billion in 1997, Malaysia’s exports fell by 7.2% to
US$71.8 billion in 1998.  However, exports grew by 1.6% and 17% in 1999 and 2000 respectively
mainly because of sustained demand for electrical and electronic goods.  The share of primary
commodity exports declined largely due to lowe r prices and lower export volume for palm oil.
Nevertheless, higher prices of crude petroleum and LNG helped to offset export growth in this sector.
The imports followed the same trend for the period recording a negative 26% in 1998, an increase by
12.9% in 1999 and a further increase by 34.4% in 2000.  The decline of imports in 1998 can be
attributed largely to slowdown in business activities,  deferment of major infrastructure projects and
weak consumer demand.  Import items that registered declines were machinery and equipment,transport equipment and iron and steel products.  In 2000, Malaysia was ranked the 18
th largest
exporter and 18th largest importer in world trade.
8. Concerning balance of payments, external reserves rose to US$30.9 billion at end 1999,
equivalent to 5.9 months of retained imports.  However, external reserves declined to US$29.9 billion
at end 2000, equivalent to 4.5 months of retained imports, largely due to a narrowing merchandize
surplus balance as growth in imports outpaced the growth in exports.  In addition, despite theWT/TPR/G/92 Trade Policy Review
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Government continuing to maintain a fiscal stimulus for year 2000, the fiscal deficit remained
sustainable at 6.3% of GNP.
9. Malaysia introduced selective exchange control measures on 1 September 1998 to restore
stability to the financial markets and the economy.  The stability accorded by the controls has enabled
the country to accelerate the restructuring of the financial and corporate sector.  At present, the only
remaining rules affecting short-term inflows are m easures preventing the internationalization of the
Ringgit.
II. TRADE POLICY DEVELOPMENTS
1. Overview
10. Malaysia's foreign trade is conducted within the framework of a free enterprise system.  The
conduct of the two-way trade is completely in the hands of the private sector.
11. Since manufactures continue to be the mainstay of exports, measures were taken to transform
the sector into a resilient, broad-based and internationally competitive sector.  Two new strategies
were introduced:
Manufacturing Plus-plus Strategy encompassing:
(a) moving along the value chain from assembly-based and low value-added activities
towards higher value-added activities;  and
(b) shifting the whole value chain to a higher  level through productivity-driven growth.
Cluster-based Industrial Development with emphasis on:
(c) development of competitive industry clusters through integration of key industries,
suppliers, supporting industries, critical supporting business services, requisite
infrastructure and institutions;  and
(d) generating backward and forward linkages, domestic spin-offs and value added, and
development of domestic SMIs.
12. During the period under review, Malaysia became a party to the Information Technology
Agreement, the 1997 Agreement on Basic Telecommunications Services and the Financial Services
Agreement of 1997.
13. Malaysia continued to comply with all WTO requirements.  In the area of trading rules such
as anti-dumping, countervailing measures, subsidies, safeguards, rules of origin, pre-shipment
inspection, technical barriers to trade, customs valuation and import licensing, Malaysia had complied
with notification requirements.
14. Malaysia has also complied with the TRIPS Agreement following the enactment of new
legislation, namely the Layout-Designs of Integrated Circuits Act 2000 as well as amendments to thePatents Act 1983,Trade Marks Act 1976, the Copyright Act 1987 and the Industrial Designs Act
1996.
15. Amendments were also made to the Malaysian Countervailing Duty and Anti-Dumping Act
1993 to be in conformity with the WTO Anti-Dumping and the Subsidies and CountervailingMalaysia WT/TPR/G/92
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Agreements.  National standards, control, inspection and approval procedures continue to be
developed based on relevant international standards.
2. ASEAN
16. In December 1997 the ASEAN Vision 2020 was issued to commit the region towards closer
cohesion and economic integration by, among other measures, fully implementing the ASEAN Free
Trade Area and accelerating the liberalization of trade in services.
17. Further in 1998 AFTA was accelerated from 2003 to 2002 with some flexibility for the
original six members of ASEAN targeting:
(a) 90% of the tariff lines at 0-5% duty rate in the year 2001;  and
(b) 100% of the tariff lines at 0-5% duty rate in the year 2002, with flexibility given to
some products.
18. The average CEPT tariff rate for ten ASEAN countries was down to 4.43% in 2000.  It is
expected that the average CEPT rate will be 3.96% by year end 2001.
19. Overall, Malaysia is on track in fulfillin g its commitments in AFTA.  Malaysia has
transferred 96% of its products into the CEPT Scheme, of which:
(a) 90% is already at duties of 0-5%;  and
(b) 60% with nil duties.
20. Only 2.5% of the products are still in the Temporary Exclusion List (TEL).  This comprises
218 tariff lines on CBU/CKD passenger cars and commercial vehicles.  Malaysia has obtained the
agreement of other ASEAN members to delay the transfer of these products into the CEPT Scheme
until 2005.
21. Malaysia has only 0.79% of its products in the Sensitive List, involving 83 tariff lines of
unprocessed agricultural products such as poultry, swine, tropical fruits, vegetables, tobacco, tea,coffee, sugar and rice.
22. There are 0.68% products or 53 tariff lines in the General Exception List (GE) involving
mainly alcoholic beverages and weapons.  The CEPT Agreement allows the exclusion of these
products from tariff concession for moral, health and security reasons.
23. ASEAN signed a Framework Agreement on the ASEAN Investment Area (AIA) in
October 1998.  The AIA is aimed at establishing ASEAN as a competitive investment area by 2010,
with a liberal and transparent investment environmen t, and to contribute toward achieving free flow of
investment in the region by 2020.  The AIA covers all direct investments in the manufacturing,
agriculture, fishery, forestry and mining and services incidental to these sectors.  The AIA is being
implemented under three programmes namely:  investment cooperation and facilitation;  promotionand awareness;  and investment liberalization.
24. The Framework Agreement on Mutual Recogni tion Arrangements was signed in 1998 to
further facilitate trade.WT/TPR/G/92 Trade Policy Review
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3. Tariffs
25. Malaysia has abolished/reduced import duties on 69 tariff lines in 1997 and 74 tariff lines in 1998
mainly on food products, textiles, raw materials for manufacturing, and heavy machinery.  In 1999,
Malaysia reduced tariffs on 40 ITA products.
26. In 2000, tariffs on 81 products were abolished whilst tariffs were reduced on 460 items.  The
items comprised ITA products, food products, paper products, woven fabrics, footwear, sewing machinesand petroleum products.
27. As a result, the number of tariff lines with nil duty has increased to 57.1% in 1998, 59.51% in
1999 and 58.53% in 2000, compared with 13% in 1993.  The simple applied average import duty rate
(based on ad valorem  duties) was 9.3% in 1998, 9.45% in 1999 and 9.18% in 2000.  The trade
weighted average is 3.3% in 1998, 3.33% in 1999 and 2.99% in 2000.
4. Standards
28. Malaysia’s policy objectives for establishing standards and technical regulations for food
safety, is primarily, to protect the public against health hazard and fraud in the preparation, sale and
use of food.  The establishment of such standards are to ensure food is processed, stored and handled
in a sanitary manner, to ensure that all food sold is free from contamination and non-permittedadditives, in compliance with the required standard and, are labelled and advertised properly,
adequately and are not misleading.
29. The Malaysian standards and technical regulations under the Food Regulations 1985 have
been amended from time to time as an on-going exercise to harmonise with Codex standards as far as
possible.
30. Malaysia has developed 678 new and revised standards during the period under review.
Malaysia currently has 2,584 national standards.  The number of compulsory standards is less than1%.
31. SIRIM QAS Sdn Berhad is the authority that grants certificates of conformity for goods
satisfying technical specifications.  This organization is a certification body wholly owned by the
government.  The Ministry of Health Malaysia is the authority on food safety.  Health Certificates are
issued based on the requirements of importing countries.  Food manufactured, imported, and sold inMalaysia are subject to technical regulations and quality control.
32. Goods, which are subject to technical regulations, are:
(a) Road transport equipment (Road Transport rules);
(b) Fire safety and protection equipment (Uniform Building bye laws);
(c) Electrical products and accessories (Electrical regulations under act);
(d) Consumer safety products;  and
(e) Telecommunications equipment.Malaysia WT/TPR/G/92
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5. Sanitary and Phytosanitary
33. SPS matters are not governed by a single SPS Act. SPS matters come under the purview of a
number of Acts such as Animal Ordinance 195 3, Animal Importation Order1962, Plant Quarantine
Act 1976 and Plant Quarantine Regulations 1981.  Action is being undertaken to review and update
the existing legislations.
6. Copyright Act
34. The Copyright Act of 1987 was amended in 1997 to facilitate the development of the
information technology industries under the Multimedia Super Corridor project.  The 1997
amendment was made effective in 1 April 1999.  The Act was again amended in May 2000 to fulfill
obligation under the TRIPs Agreement.
7. Layout-Designs of Integrated Circuits
35. The Layout-Designs of Integrated Circuits Act 2000, was enforced on 15 August 2000.  The
duration of protection is ten years from the date the layout-design is first commercially exploited in
Malaysia or elsewhere.  Not withstanding this, the protection granted shall lapse 15 years after the
date the layout design is created.
8. Industrial Designs
36. The protection of registered industrial designs in Malaysia is governed by the Industrial
Design Act 1996 and the Industrial Designs Regulations 1999 enforced effectively on
1 September 1999.  The enacted act complies with all the TRIPS obligations under WTO.
9. Patent
37. Patents protection in Malaysia is governed by the Patents Act 1983 and the Patents
Regulations 1986.  Malaysia has amended the Patents Act 1983 in the year 2000 to comply with
TRIPS requirement.
10. Trademarks
38. Trademarks protection in Malaysia is governed by the Trade Marks Act 1976 and the Trade
Marks Regulations 1997, which provides effective and adequate protection for registered trademarks
in Malaysia.  In 1994, the Trade Marks Act 1976 was amended by the Trade Marks (Amendments)
Act 1994 which came into force on 1 December 1997 by virtue of the implementation of the TradeMarks Regulations 1997.
39. The Act was last amended in May 2000 to comply with Malaysia’s obligations under the
TRIPS Agreement.  The amendments seek to provide protection for well-known marks and to comply
with requirement on border measures under the Ag reement.  The amendments came into force on
1 August 2001.
11. Geographical Indications
40. The Geographical Indications Act 2000 came into force on 15 August 2001.  The Act
provides protection for goods following the name of the place where a given quality, reputation or
other characteristics of the goods is essentially attributable to their geographical origin.  The period of
protection is 10 years, which is renewable for a period of every 10 years thereafter.WT/TPR/G/92 Trade Policy Review
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III. SECTORAL POLICIES
1. Productivity Performance of Malaysia
41. Malaysia’s productivity grew at an average rate of 5.7% during 1996-97 before slowing down
in 1998.  However, it increased from 3.9% in 1999 to 6.1% in 2000.  The increase in productivity had
impacted the growth in output  to grow from 5.6% in 1999 to 8.5% in 2000.  This growth in
productivity was mainly due to the contribution by the manufacturing sector.
2. Financial Services Sector
42. Malaysia is committed to gradual and progressive liberalisation of the financial services
sector.  Given the existing high level of foreign presence in the domestic banking and insurance
sectors, further liberalization would be undertaken at a pace that is commensurate with the capacity of
the financial system to absorb changes without destabi lizing implications as well as to ensure that it is
in line with the needs of the domestic economy.
43. In line with this approach, Malaysia has made substantial commitments to liberalize the
financial sector under the General Agreement on Trade in Services (GATS) which has been ratified
on 29 January 1999.  The offers in market access in the banking and insurance sectors bind the
Government to maintain the current policies affe cting foreign participation.  New foreign equity
participation in the existing banks and insurance companies is permitted, subject to an aggregate
foreign equity limit of 30%.  In the case of stoc k-broking and financial leasing companies, foreign
equity limit has been increased to 49% from 30%, effective 1 July 2000.
(i) Banking Sector
44. During the period under review, measures were taken to further strengthen the resilience of
the banking sector.  The most significant was the consolidation process of the domestic banking
institutions introduced in 1999 to rationalize and consolidate a total of 54 domestic bankinginstitutions into 10 banking groups.  The merger process was an important step towards strengthening
the banking system to meet future challenges  arising from a more liberalized environment.
45. A number of measures were also introduced to enhance the efficiency and promote
competition in the banking system.  These measures include allowing banking institutions to
outsource their non-core banking activities to third party service providers as well as allowingbanking institutions to offer internet banking servic es.  Domestic banking institutions were allowed to
offer a full range of banking products and services over the internet from June 2000.  Locally
incorporated foreign banks were allowed to offer communicative internet banking services from
January 2001 and transactional internet banking services starting from 1 January 2002.
(ii) Insurance Sector
46. In the insurance sector, a number of measures were taken to further liberalize the sector.  The
most significant concession made by Malaysia at the end of the extended negotiations in the financial
services sector in 1997 was to increase the foreign equity limit in the insurance companies to 51%
under certain conditions, from 30% in 1993 and 49% in 1995.  In addition, Malaysia has also issued
all seven new licences for general reinsurance as committed, as well as one new licence for lifereinsurance as part of the commitment to issue six new licences by 2005.Malaysia WT/TPR/G/92
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(iii) Offshore Financial Sector
47. In July 1999, offshore banks and offshore investment in Labuan were allowed to provide
medium- to long-term financing denominated in Malaysian Ringgit to specific groups of resident-
controlled companies.  This was an autonomous liberalization of Malaysia's financial services
commitment, which hitherto limited these offshore  banks to lend only in foreign currencies.
3. The Financial Sector Masterplan (FSMP)
48. The blueprint for the development of an effective, competitive, resilient and dynamic
financial sector in the next 10 years is laid out in the Financial Sector Masterplan (FSMP), which has
been launched on 1 April 2001 and will be implemented in three phases.
49. The present focus of Phase I is to enhance the capacity of the domestic financial institutions
to enable them to face greater competition in a more liberalized environment in the future.  In
addition, the regulatory and institutional infrastructure would also be further enhanced to promote
stability, while a more efficient consumer protection framework would be instituted.  Gradual
deregulation and liberalization of the domestic financial sector will be introduced in Phases II and III.
In Phase II, measures will be introduced to liberalize restrictions on incumbent foreign banks while
consideration will be given in Phase III to introducing new foreign competition.
4. Capital Market Sector
50. In the securities industry, various measures were also undertaken to ensure an effective
regulatory framework and efficient operation of the stock market.  The capital market sector has also
witnessed a significant amount of change and development over the last few years given the rapidly
changing domestic and international environment.  To this end, the Capital Market Masterplan was
announced in April this year that aimed to:
(a) Provide a comprehensive vision and programme for development of the Malaysian
capital market going forward;
(b) Formulate a framework for an orderly and effective sequencing of further
deregulation and liberalization;  and
(c) Identify and map the direction for the strategic positioning of the Malaysian capital
market both domestically and externally.
5. Exchange Control Rule
51. The introduction of the selective exchange control measures on 1 September 1998 was critical
in restoring stability to the financial markets and the economy.  The stability accorded by the controls
has enabled the country to accelerate the restructuring of the financial and corporate sector.  The
controls were implemented pragmatically.
52. The major changes introduced in 1999 were:
(a) Measures to replace the 12-month Holding Rule on 15 February 1999.  As economic
conditions stabilized, the rule requiring non-residents to hold their principal sum of
portfolio investment for at least 12 months in Malaysia was relaxed.  Capital and
profits of portfolio investors were allowed to be taken out of the country at any time,subject only to the payment of a levy of between 10% and 30% upon repatriation;WT/TPR/G/92 Trade Policy Review
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(b) Standardization of the Levy System on 21 September 1999.  With the lapse of the
12-month rule on 1 September 1999, there are no controls on portfolio transactions of
non-residents except for a flat 10% levy on profits repatriated.  The principal sum
brought in is permitted to be freely repatriated out of Malaysia at any time without
being subject to levy.  On 2 May 2001, the 10% profit levy was lifted;  and
(c) Simplification of Travellers’ Declaration Form (TDF) on 15 May 1999.  Residents
and non-resident travellers continue to be required to declare whether they are
carrying currencies (notes and travellers’ cheques) within the permitted limit of the
equivalent of RM 10,000, but need to only state the exact amounts only if they exceed
the limit.
53. Measures that continue to be applicable:
(a) Approval required for transfer of funds between external accounts, and for the use of
ringgit balances for other than permitted purposes;
(b) All settlement of exports and imports to be made in foreign currency;
(c) With effect from 1 October 1998, travellers are allowed to import or export ringgit
currency notes of not more than RM 1,000 per person.  There are no limits on theimport of foreign currencies by resident and non-resident travellers;
(d) FDI transactions remained unaffected and are completely free.  There are no controls
on:
(i) Repatriation of rental income from property investment, dividend, interest,
fees and commissions;
(ii) Repatriation of proceeds from sale of investments in immovable property
(both principal capital and profits) is not subject to levy;
(e) The exchange rate for the ringgit remains fixed at US$1 = RM 3.80.
54. Malaysia remains committed to the market mechanism and the trend towards liberalization.
But the benefits of the market can only be realized in an environment of stable and efficient financial
markets.
6. Measures on Investment
55. Malaysia continues to maintain a liberal investment regime which is characterized by liberal
foreign equity ownership policies especially in the manufacturing sector.  Effective from
31 July 1998, the equity policy for the manufacturing sector has been further relaxed to allow both
foreign and local investors to hold 100% equity irrespective of the level of exports, in respect of new
investment, expansion or diversification projects, with the exception of specific activities andproducts where Malaysian companies have the capabilities and expertise.  These activities and
products are paper packaging, plastic packaging (bottles, films, sheets and bags), plastic injection
moulded components, metal stamping and metal fabrication, wire harness, printing, steel service
centres and bakery products (bread, buns, cakes, croissants, baguettes, tarts, puffs and other pastries
except biscuits).  For these activities and products, the prevailing specific equity guidelines areapplicable.  Projects that have been approved under this relaxation policy would not be required toMalaysia WT/TPR/G/92
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restructure their equity after the period.  Freedom of ownership has also been assured for multimedia
or IT located in the Multimedia Super Corridor (MSC).
56. The policy on entry of key managerial and technical personnel for the purpose of investment
is liberal.  Key or permanent posts are granted to foreign investors upon fulfilment of a set of
established criteria.  There is unrestricted employment and entry of foreign knowledge workers in the
MSC.
57. Malaysia's readiness to conclude investment gu arantee agreements (IGAs) with other countries
reflects the commitment to protect the interests of  foreign investments.  As of October 2001, 69 IGAs
(additional 15 since the last TPRM) has been sign ed.  The IGAs would ensure protection against
expropriation, nationalization, and allow for the free tran sfer of capital, profits and other fees, as well as
to provide for the settlement of investment di sputes under the International Convention on the
Settlement of Investment Disputes (ICSID).  (ICSID is not the only body for Dispute Settlement
Mechanism.  The Kuala Lumpur Regional Centre for Arbitration under the auspices of the Asian-
African Legal Consultative Committee an d UNCITRAL – United Nations Commission on
International Trade Law are some examples of bodies involved in Dispute Settlement Mechanism).
58. In recognition of the contribution of investment  to economic growth and the well being of the
people, Malaysia will continually work towards improving regulations on investment, with a view to
facilitate and further liberalize the investment regime.  The investment facilitation function has also
been improved through institutional enhancements to provide assistance to existing investors as well
as the new investors in the smooth implementation of their projects.
7. Communications and Multimedia Services
59. In July 1998, the Communications and Multimedia Act and the Communications and Multimedia
Commission Act were enacted.  These two Acts addressed the convergence of legislation onbroadcasting, computing and telecommunications.  It came into force on 1 April 1999.
60. Five additional Internet Service Providers licences were issued in June 1998 bringing the total to
seven.
8. Agricultural Sector
61. In 1999, Malaysia launched the Third National Agricultural Policy (NAP3), 1998 – 2010. The
third round of agricultural policy review and formulation was undertaken to address new and
emerging challenges facing the development of the agricultural sector in Malaysia.  One of the major
challenges faced by Malaysian agriculture is the ‘liberalization challenge’.  The NAP3 sets the stage
for Malaysian agriculture to be more market-driven and commercially-oriented to face the challenges
posed by trade liberalization and globalization.  Productivity and efficiency gains as well as increasingcompetitiveness are the prime objectives of the Policy.
IV. FUTURE DIRECTION AND STRATEGY
62. The strategies adopted will aim at providing sustainable economic growth, developing
economic resilience as well as increasing productivity and international competitiveness.  The private
sector is expected to lead the economic growth with the public sector providing a supportive andfacilitative environment in enhancing the business sector.
63. In pursuing an internationally competitive economy, the macroeconomic strategies would
include:WT/TPR/G/92 Trade Policy Review
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(i) adopting sound macroeconomic management to create a conducive business
environment;
(ii) strengthening the governance and resilience of the financial and corporate
sectors;
(iii) developing a knowledge-based economy;
(iv) accelerating the development of growth and promoted sectors;
(v) strengthening domestic investment through SMEs and MNCs;  and
(vi) attracting quality FDI associated with high technology, R&D and market
access.
64. Policy initiatives will focus on manufacturing and the services sectors that are expected to be
the major contributors to growth.  Notwithstanding the recent developments in the internationalpolitical arena, the manufacturing sector is expected to grow at an average rate of 8.9% per annum
with its share to GDP increasing to 35.8% by 2005.  E&E, the main contributor to the manufacturing
sector, is expected to focus on shifting towards higher technology and value added consumer and
industrial products.
65. The services sector is expected to grow by 7.7% and finance, insurance, real estate and
business services sub-sectors are expected to spearhead this growth.  The consolidation and
restructuring of these sub-sectors and greater e-commerce use are expected to further contribute to
these sub-sectors.
66. In international trade, exports are expected to grow at an average rate of 7.9% per annum.
With China's entry into the WTO as well as though regional trading arrangements such as AFTA and
bilateral initiatives, better market access opportunities will be created for Malaysian products.
67. The prospects for growth will need to take into  account the challenges of a more liberalized
global economy and rapid technological transformation that will require greater effort and resilience
to attain the targets of Vision 2020.
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