KL shedding the old image and becoming a model cosmopolitan

KL’s economy was one of the 7 states that outpaced the national GDP growth of 5.9% in 2017

By NG MIN SHEN / Pic By TMR

The Federal Territory of Kuala Lumpur will celebrate it 45th birthday tomorrow.  Established on Feb 1, 1974, Kuala Lumpur (KL) is the nation’s capital and largest city.

Covering an area of 243 sq km, KL serves as a melting pot of culture, industrialisation, finance, commerce and technological advancements, while supporting an estimated population of 1.73 million.

It doesn’t come as a surprise then that KL’s economy was one of the seven states that outpaced the national GDP growth of 5.9% in 2017.

According to the Department of Statistics Malaysia’s figures, KL — including the country’s administrative centre of Putrajaya — registered a GDP growth of 7.4% in 2017, up from 5.9% in 2016.

(The Federal Territories comprise three territories — KL, Putrajaya and Labuan — governed directly by the federal government.)

Import duty was the highest contributor to KL’s economy with a 44.6% growth during the year, while the mining and quarrying sector tied with construction for second place with 12.8% growth each.

Construction, in particular, was underpinned by residential buildings, civil engineering and special trade. The services sector placed third with a 6.6% growth versus 5.5% in 2016, supported by wholesale and retail trade, finance and insurance, communication and professional sub-segments, followed by the manufacturing sector with a 1.2% growth.

The 7.4% growth is largely driven by the fact that KL is the the country’s financial services hub, which encompasses commercial, Islamic, as well as insurance and takaful providers.

There are presently 10 major ban-king groups in the country, the largest of which is Malayan Banking Bhd — also the fourth-largest lender in South-East Asia. Banks also constitute a large portion of the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) and are often seen as relatively safe blue chips for equity investors.

The local stock exchange, Bursa Malaysia Bhd, is also headquartered in KL, as well as regulatory bodies such as Bank Negara Malaysia (BNM) and the Securities Commission Malaysia.

Signalling steady growth for KL’s financial services, BNM, in a recent monetary policy statement, said domestic financial markets have remained resilient despite bouts of volatility due to global developments, with financial institutions operating with strong capital and liquidity buffers.

The central bank also said in its Financial Stability Review for the first half of 2018 (1H18) that excess liquidity maintained by the banking system stood at RM156.2 billion, while excess total capital buffers amounted to RM135.9 billion.

Popular tourist destinations include KL’s oldest mosque, the historic Sultan Abdul Samad Jamek Mosque (Pic by Muhd Amin Naharul/TMR)

Several major global lenders and investment banks are also present in KL, such as Citibank, UK lender HSBC Holdings plc, US-based JPMorgan Chase & Co and China Construction Bank Corp. The world’s largest Islamic bank, Saudi Arabia’s Al-Rajhi Banking & Investment Corp, also has a subsidiary in KL, as well as Kuwait’s second-biggest lender, Kuwait Finance House KSC.

Together with domestic players, these banks not only keep the financial system in Malaysia afloat, but also provide a myriad of clerical, non-clerical and executive jobs to support low unemployment rates within the capital.

With Greater KL — the area also known as the Klang Valley — housing an urban agglomeration of 7.25 million people, the need for a comprehensive road system in addition to fast, reliable and efficient public transportation has become increasingly pressing in recent years.

Visitors often comment on the abundance of personal cars on the many flyovers overlapping famous roads such as Jalan Ampang, Jalan Bukit Bintang, Jalan Loke Yew, Jalan P Ramlee, Jalan Raja Chulan and Jalan Sultan Ismail, at times likening the capital to images of futuristic cities seen in western films.

Major highways in the Klang Valley include the Federal Highway, the Kuala-Lumpur Seremban Expressway (E37), the Mahameru Highway, the Duta-Ulu Klang Expressway, the New Klang Valley Expressway and the New Pantai Expressway.

Public transportation in the city also continues to evolve, now including modes such as bus, rail and taxi. Contractors continue to bid for projects under the Light Rail Transit Line 3 (LRT3) and the Mass Rapid Transit Line 2 (MRT2), two major upcoming railway lines set to enhance connectivity to and from the capital.

As a result of the growing demand for public transportation, highways and commercial real estate, the construction sector in KL has enjoyed several years of growth, leading to the rise of a number of major construction companies such as Gamuda Bhd, Malaysian Resources Corp Bhd, George Kent (M) Bhd and WCT Holdings Bhd that have also become major constituents on the FBM KLCI.

Real estate — both commercial and residential — is another major economic driver for the capital.

The majority of Malaysia’s biggest firms are headquartered in KL, while many foreign corporations and multinational companies’ regional offices are also based in the city.

Healthcare providers have mushroomed in recent years to cater to the growing demand from an ageing population. Developers are rushing to build serviced apartments and mixed developments, particularly transit-oriented ones, as these are most popular due to ease of living.

Knight Frank Malaysia in its 1H18 Malaysia Real Estate Highlights report said it expects greater demand for office space in established and upcoming decentralised office locations going forward, attributed to completed and ongoing rail infrastructure within Greater KL.

It also said it continues to see active enquiries and leasing activities from co-working operators exploring new locations or expansion in prime office buildings, along with the increasing popularity of flexible working spaces.

Education providers are also a boon to KL’s property scene and economy at large as awareness of the importance of education grows, drawing many from outside of KL and the country to come to the capital.

One, though, must not forget the importance of KL to the country’s tourism sector. Tourism is one of the biggest and most important sector with the capital ranked 10th in Euromonitor International’s Top 100 City Destinations 2017.

This is hardly unsurprising given the abundance of shopping, enormous gastronomic varieties, cultural diversities and relatively low costs due to a friendly local currency.

Popular tourist destinations include the Petronas Twin Towers, Petaling Street, the Bukit Bintang shopping district, Central Market, the Sultan Abdul Samad Jamek Mosque, and the KL Bird Park. Entertainment hotspots are aplenty for partygoers who often seek out Marini’s on 57, Skybar at Traders’ Hotel, Zouk and many others.

Many major global hotel chains also have operations in KL, such as Mandarin Oriental, the Westin, Ritz-Carlton, JW Marriott and Hilton. Homegrown hotels such as the Majestic Hotel KL are major attractions for tourists.

Malaysia’s economy is anticipated to continue on a steady growth this year on strong fundamentals, liquid financial markets and continued interest from foreign investors.

KL is set to benefit from all these push factors. Its strategic location, well-educated and multilingual urbanites, ease of transportation and connectivity to the world at large aid the splendour of KL.

As Malaysia sets out to reclaim its Asian Tiger title, there’s no doubt that KL will play a huge role in driving the country to greater heights as the world watches the rebirth of a nation led by a new administration, supported by vast natural supplies and a wealth of young talent.