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IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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United States International Trade Commission (USITC)

Working Paper

An Overview and Examination of the Malaysian Service Sector
No. ID-21
by Lisa Alejandro, Jennifer Baumert Powell, Samantha Brady, and Isaac Wohl, Office of Industries;
November 2010
http://usitc.gov/publications/332/working_papers/ID-21.pdf

[full-text, 45 pages]

ABSTRACT

The service sector is a rapidly growing component of Malaysia’s economy. In 2008, the last year for which

data are available, it expanded 7.2 percent to $96.9 billion and employed over half of the country’s

workforce. Growth in the Malaysian service sector is largely a product of government policies that promote

service industries, including tax benefits and investment, as well as specialization in niche service industries

that cater to Islamic consumers. In April 2009, the government eliminated or eased ethnic-Malay equity

requirements in 27 service industries in an effort to further increase service industries’ contribution to the

Malaysian economy.

The growing global competitiveness of Malaysia’s service sector is reflected in steady growth in trade

volumes. Malaysia’s cross-border trade in services increased at an average annual rate of 15 percent to

$60.6 billion from 2004 through 2008, accounting for 13 percent of total Malaysian cross-border trade and

about 1 percent of global services trade in 2008. While the United States maintains a surplus in cross-border

services trade with Malaysia;1 its imports from Malaysia in this sector grew faster than the corresponding

exports from 2004 through 2008. In 2008, U.S. cross-border services exports to Malaysia totaled $2.0 billion,

while services imports from Malaysia totaled $1.3 billion. Intangible intellectual property and tourism services

account for the largest shares of U.S. services exports to Malaysia.

Quantitative analysis suggests that the existence of nontariff measures continues to inhibit foreign

participation in Malaysian service industries. While Malaysia has made significant efforts to liberalize certain

service industries, Commission staff analysis indicates that further liberalization could increase Malaysia’s

yearly services imports from the rest of the world by as much as $2.6 billion.

1

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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       
E-mail: smb6@cornell.edu                  
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