The early success had formed the base for Malaysia’s corporate sector to flourish over the years
By SHAHEERA AZNAM SHAH
Malaysia’s economy has come a long way from the colonial-era businesses established under British rule.
Prior to independence, the British had promoted policies which saw the country become the hub for the plantation of pepper, rubber, tobacco, oil palm, as well as the mining of tin. These commodities became the country’s main exports then.
Thousands of acres of our expansive forests were felled in Malaya and British North Borneo to make way for the plantation and mining of these commodities to meet the demand from the West.
The rubber tree was introduced from Brazil in the 1870s and made Malaya then one of the world’s largest exporters.
Industrialisation in the West also increased the demand for tin, putting the country on the global map for the much needed resources. Rubber and tin also provided the bulk of revenues to the British.
The British rule had set up much of the country’s economic platform since independence.
Malaysia, however, has moved from being a low-income agrarian economy to a country with a diversified economy beyond the primary commodities.
Since the 1970s, Malaysia began to imitate the four biggest Asian economies — South Korea, Taiwan, Singapore and Hong Kong.
Malaysia had progressed from being highly dependent on mining and agriculture products, to manufacturing and industrialisation.
The early success had formed the base for Malaysia’s corporate sector to flourish over the years.
Malaysia’s Biggest Firms Post Independence
Petroliam Nasional Bhd (Petronas), which was founded in 1974, has become the pride of the nation. In 2014, Petronas was ranked 69th of the biggest companies as listed in the Fortune 500 with a revenue of RM329.14 billion.
The Financial Times had regarded Petronas as one of the “new seven sisters”, the most influential and mainly state-owned national oil and gas companies from countries outside the Organisation for Economic Cooperation and Development.
Meanwhile, the banking sector has played a key part in supporting the country’s growth since independence.
The size of the banking sector has increased to RM1.5 trillion and provides the financial stability to support the growth of the economy.
In 2016, the banking sector contributed 4.7% to Malaysia’s gross domestic product. The country’s banking sector holds a total market capitalisation of about RM371.36 billion.
The jewel in the crown is Malayan Banking Bhd (Maybank). It has a total asset of RM640 billion and a market capitalisation of RM107.23 billion, making it the largest bank in the country. This year, Maybank was ranked at 398th in Forbes’ Global 2000 list of influential companies. Twelve other local companies made it into the list.
Maybank controls 18.4% of the market share in Malaysia’s financing market. Its profits and revenue have risen more than 30% since 2011, largely due to a strong loan growth. Last year, it reached record earnings of RM7.52 billion compared to RM6.74 billion posted in 2016.
Another local company that has raised Malaysia’s name on the global stage is Top Glove Corp Bhd, a rubber glove manufacturer that was founded in 1991.
It started out as a modest business venture with only a single factory. It manufactures a wide range of latex gloves including latex examination powdered gloves, nitrile examination gloves, surgical gloves and other related products.
Today, Top Glove has emerged as the world’s largest glove manufacturer, clinching 25% of the global market share. It boasts 27 factories with 464 production lines and a capacity of 42 billion gloves per annum.
Top Glove is aiming to secure 30% of the world market share by 2020. Listed in Malaysia and Singapore, Top Glove has a market capitalisation of RM13.77 billion. Other glove and rubber product makers have also helped to make Malaysia a key exporter, including Hartalega Holdings Bhd and Kossan Rubber Industries Bhd.
Palm Oil Power
One of the industries that Malaysia can be proud of is its palm oil industry, which accounts for 39% of the world’s production and 44% of the world’s exports.
Malaysia is now the second-largest producer of palm oil in the world after Indonesia.
Among the companies which helped put Malaysia on the palm oil map is Sime Darby Plantation Bhd.
As at March 2018, its total annual crude palm oil production capacity reached approximately 1.2 million metric tonnes. In 2017, its revenue stood at RM3.4 billion.
Sime Darby Plantation has a total market capitalisation of RM36.2 billion, while Malaysia’s primary industry has a market capitalisation of RM288.4 billion. Other planters like IOI Corp Bhd and FGV Holdings Bhd have also helped turn the country into a powerhouse producer of palm oil and related products.
The other company which had put Malaysia on the world map in the automotive sector then was Perusahaan Otomobil Nasional Bhd or Proton. (Now known as Proton Holdings Bhd.)
Incorporated in May 1983, Proton — when it was launched — symbolised the country’s move to high-tech industries and heavy equipment. Proton launched its first car, the Proton Saga, in July 1985 and since then millions of cars have rolled down its assembly line.