Public spending, stronger exports and rising capital investment caused Malaysia’s economy to accelerate 5.6 per cent year-on-year in the third quarter of 2002, its fastest quarterly growth in two years. Boasting a gross domestic product (GDP) that is among the best in the Asia-Pacific region, Malaysia’s Central Bank Negara recently said that Malaysia is on track to record at least 4 per cent growth in 2002, while the government still has room to give a boost if the economy starts to flag.

Economic growth is expected to be as strong or stronger when results are announced for the fourth quarter of 2002. The latest figures put Malaysia among the best-performing Asian Tiger economies, second only to South Korea, which achieved third quarter growth of 5.8 per cent.

Bank Negara expects GDP growth to hold up in early 2003, though much will depend on external influences, particularly any slowdown in the US economy or the outbreak of war in Iraq. The us is Malaysia’s single largest trading partner, buying one fifth of its exports each year, and is also its biggest source of foreign direct investment.

However, some economists are worried that growth is already too dependent on the government. Private consumption is slowing down, in fact, but is being compensated for by a pick-up in public-sector spending. How government spending can continue at its current level is the question causing most concern.

The manufacturing sector, which accounts for 80 per cent of exports and a third of GDP, expanded by 7.3 per cent in the year between the third quarters of 2001 and 2002. Exports were up 14 per cent in that quarter compared with the same period in 2001; manufacturing exports were up 12.7 per cent and commodities up 22.2 per cent.

Malaysia is benefiting from increasing exports to East Asia, especially China. In the third quarter 2002, exports to China were up nearly 44 per cent. Services (55 per cent of the economy) grew 3.4 per cent. Economists say financial and business services probably dragged down overall growth, as tourism, communications and transport should have all shown healthy growth.

In spite of the Central Bank’s upbeat assessment, Malaysia’s employment market, in particular in the manufacturing and the financial sectors, continues to face problems.

Electronics is Malaysia’s largest export industry. Competition from low-cost electronics production centres elsewhere in Asia is a problem, as a number of foreign electronics manufacturers have started to move low-end production out of Malaysia to factories in China, causing job losses at some Malaysian electronics plants.

"Electronics factories are closing and moving to China because of the cost factor. But this is not really affecting accounting people," commented Manpower recruitment consultant, Azura Hariri. "The hotel business is ok, except for the smaller ones. There is a reduction in tourists coming here because of Bali bombing and terrorism worries, but there is not much impact."

The accounting sector has suffered more than most. The restructuring of Malaysia’s banking sector is the main problem, and not any effect of the manufacturing slowdown, where production line cuts account for most job losses. Malaysia was badly hit by the Asian economic crisis in 1997. Since then, the government has urged the finance and banking sector to consolidate and reduce the number of smaller, weaker institutions.

"A lot of companies are merging, especially banks," Hariri said, "This started in the last two years. There is a lot of accounting involved in banking. Banks have branches and these were consolidated in each town. There has been a lot of retrenchment after the mergers."

Bank mergers and resulting accounting job losses have caused accounting salaries to drop owing to an oversupply of retrenched accounting staff. In addition, some employers have converted some full-time posts to contract positions.

"When banks are merging they still need people for reconciliation and other tasks. So people are not leaving accounting, but they are changing from full-time to contract positions," Hariri said, "Banks are using contract staff after merging as there is a lot to be done to integrate the businesses… but they do not need these people full time."

Areas where accounting employment has been most affected by the mergers are the Klang Valley, Johore and Penang. The Klang Valley includes the capital Kuala Lumpur and is Malaysia’s most economically developed region. Johore, next to Singapore, in the south of Peninsular Malaysia, and Penang, in the north on the Peninsular west coast, are the two other most developed regions. Salaries in Johore are about the same as in Kuala Lumpur because of its proximity to Singapore; salaries in Penang are a little lower.

"Contract staff are mostly overqualified. They are being paid below what they should get," Hariri said. "Experienced accounting technicians in their late 20s and early 30s are still in demand, but before they were earning about 3,000 Ringgit (about £477) a month, depending on their skills… this has reduced to 2,500 to 2,800."

With the Bank Negara’s upbeat assessment and hopes for a recovery in the Kuala Lumpur stock market in 2003, optimism has grown that the employment market could begin to look up, though an improvement in accounting opportunities could be slower to materialise.

"We are seeing lots of jobs in engineering and pharmaceuticals. it and call centre businesses are improving too; but not really accounting," Hariri said, "The problem is that there are too many accounting students in the market as accounting is still very popular to study. Maybe it is because of the prestige of working for foreign companies."

In brief: Malaysia

Malaysia comprises 13 states and two federal territories spread across the Peninsula Malaysia and the north and west coasts of Borneo. Its population is about 22.2 million. It is a constitutional monarchy - every five years, a new king is drawn from among the hereditary state rulers. The present king, Tuanku Syed Sirajuddin, is the Raja of Perlis, Malaysia’s smallest state. The Prime Minister is Mahatir Mohamed.

History: The area was initially peopled by immigrants from the north and from India, and gradually developed as a trading post. Its conversion to Islam began in the 14th century and it became officially Muslim in 1455, by which time it was blossoming as the trading empire of Malacca. In 1511, Malacca fell to the Portuguese and later to the Dutch and then the British. It was occupied by Japan from 1942-45. British rule was restored in 1945, but Malaysia became independent soon afterwards, in 1957.

David Hayes is a freelance journalist

AT, March 2003, page 28-29