THE SERVICES SECTOR
Suria KLCC forms part of a 40-hectare development located in Kuala Lumpur. It was awarded the International Real Estate Federation (FIABCI) Prix d’Excellence for the retail category in 2004.
The services or tertiary sector can be divided into three categories which coordinate the activities of the primary (agriculture and mining) and secondary (manufacturing and construction) sectors. The services sector ensures that goods produced by each of the other sectors reach consumers.
The first category, producer or intermediate services, comprises distribution (transport, storage and communications) and production activities (insurance, real estate, finance, professional and business services). Transport (roads, air, rail and sea) includes traditional services whereas communication (telecommunications, post and information) encompasses newer services.
The second category, public sector services, encapsulates activities such as public administration and utilities. This involves the provision of health, education, defence and security as well as gas, water and electricity.
The third category is final services; this includes hotels, restaurants and the wholesale and retail trade.
Since the late 1960s, the services sector has been the single largest contributor to the country’s GDP. In 2005, this sector formed 58.1 per cent of GDP, and 51.0 per cent of the total work force was engaged in the provision of services. Growth of 5.8 per cent was recorded within this sector in 2005, driven by higher consumer spending amidst rising disposable incomes, higher tourist arrivals and increased trade-related activities. Areas of new growth include private education and private healthcare services (see ‘Health and education’), Islamic financial services (see ‘Islamic financial services’), shared services and outsourcing, and supply chain management, which includes the development of operational headquarters, regional distribution centres, international procurement centres and IT services. In the 2006 Budget, it was announced that a Health Tourism Unit will be established under the Ministry of Health to improve the quality of health services and to attract more foreigners to seek private health services here.
As the services sector contains a varied number of sub-sectors which fall under the purview of various ministries and agencies, the Malaysian Industrial Development Authority (MIDA) has been given the responsibility for coordinating the non-financial services sectors in addition to the manufacturing sectors. There is still great potential to expand the services sector to the level in developed countries where it typically accounts for more than 70 per cent of the GDP.