MALAYSIA KLEMS PRODUCTIVITY PERFORMANCE Mazlina Shafii Wan Fazlin

MALAYSIA KLEMS: PRODUCTIVITY PERFORMANCE Mazlina Shafi’i Wan Fazlin Nadia Wan Osman Malaysia Productivity Corporation THE 2 N D ASIA KLEMS DATABASE MANAGEMENT WORKSHOP 17 OCTOBER 2014

Malaysia KLEMS Team The project is lead by the Malaysia Productivity Corporation (MPC). • Data Development Team: • MPC • Department of Statistics Malaysia • Economic Planning Unit, Prime Minister’s Department • Technical committee – data validation: • Key expert, MPC, Department of Statistics, Economic Planning Unit and stakeholders.

Objectives of Malaysia KLEMS Project • To investigate the sources of economic growth of Malaysia at industry level. • To develop a database on productivity by 30 industries with a breakdown into contributions from capital, labour, energy, materials and service inputs as well as total factor productivity. • Coverage over the period of 2000 -2010 • To conduct a number of analytical research projects in areas of: • analysis of productivity, industry structures, technology and innovation at the sectoral and industrial level. • labour markets and skills. • technological progress and innovation. • link to productivity research using firm level databases. • Industry benchmark among KLEMS practicing countries.

1. Output (Value Added) • Source of data: National Account Data from the Department of Statistics, Malaysia (www. statistics. gov. my) • Time period: 2001 -2010 • Data from National Account was grouped into KLEMS-30 industries (sectors 31 and 32 in Asia KLEMS manual is not available).

Share of Value Added by Main Economic Sectors Malaysia's Industrial Structure: 2001 -2010

Share of Value Added by Industry Code 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Industry Agriculture Mining and Quarrying Food Products, Beverage & Tobacco Textiles, Leather & Footware Wood & Products of Wood & Cork Paper & Paper Products, Printing & Publishing Coke, Refined Petroleum Products & Nuclear Fuel Chemicals & Chemical Products Rubber & Plastic Products Other Non-Metallic Mineral Products Basic Metals & Fabricated Metal Products Machinery Electrical & Optical Equipment Transport Equipment Other Manufacturing & Recycling Electricity, Gas & Water Supply Construction Sale, Maintenance & Repair of Motor Vehicles Wholesale Trade & Commission Trade Retail Trade, Repair of Household Goods Hotels & Restaurants Transport & Storage Post & Telecommunications Financial Intermediation Real Estate Activities Renting of M&Eq and Other Business Activities Public Admin & Defense; Compulsory Social Security Education (private) Health & Social Works (private) Other Community, Social & Personal Services 2001 -2005 8. 58 14. 10 2. 53 0. 70 0. 76 0. 71 3. 00 2. 45 1. 60 0. 77 1. 75 0. 80 8. 64 2. 87 0. 58 2. 59 3. 35 2. 09 5. 36 3. 89 2. 15 3. 68 2. 99 7. 47 4. 22 2. 96 6. 45 0. 55 0. 60 1. 17 2006 -2010 % Share 7. 91 11. 15 2. 61 0. 52 0. 68 0. 76 3. 13 2. 80 1. 41 0. 82 1. 99 0. 74 7. 48 2. 63 0. 56 2. 55 2. 94 1. 89 5. 84 5. 48 2. 32 3. 66 3. 37 8. 48 3. 92 3. 56 7. 05 0. 68 0. 70 1. 11 2001 -2010 8. 24 12. 63 2. 57 0. 61 0. 72 0. 73 3. 07 2. 63 1. 51 0. 79 1. 87 0. 77 8. 06 2. 75 0. 57 2. 57 3. 14 1. 99 5. 60 4. 68 2. 24 3. 67 3. 18 7. 97 4. 07 3. 26 6. 75 0. 62 0. 65 1. 14

Growth of Value Added by Main Economic Sectors 2001 -2005 Malaysia Agriculture Mining Manufacturing Construction Services 4. 63 3. 13 2. 43 4. 41 1. 00 5. 38 2006 -2010 2001 -2010 Growth Rate (%) 4. 38 4. 51 2. 65 2. 89 -1. 72 0. 36 2. 57 3. 49 5. 74 3. 37 6. 94 6. 16

Growth of Value Added by Main Economic Sectors: 2001 -2010

Methodology 2. LABOUR ACCOUNT Approach by Jorgenson, Gollop and Fraumeni was used to estimate changes in labour quality. In this way, aggregation takes into account the changing composition of labour force. This variable indicates the labour services per hour worked. It is measured as the difference in growth of labour service and hours worked.

Data Source Data Variables by gender, education and No. of Employees age total man hours work salaries and wages Sample 30 industries according to Asia KLEMS categories Period 2000 -2012 • Data used in the study are taken from the preliminary version of the Malaysia-KLEMS database, which is constructed in close cooperation with the Department of Statistical Malaysia (DOSM) and Economic Planning Unit (EPU). • The main sources of data are from various official publications such as National Accounts Statistics (NAS), Input-Output tables, Annual Industries Survey (AIS), Household Income Survey (HIS), Labour Force Survey (LFS), and Salary and Wages Survey (SWS) and supplemented by many unpublished sources documents provided by the DOSM for the Malaysia-KLEMS project.

Labour Quantity Growth by Main Economic Sector, 2001 -2012 (%) 12. 0 Labour Share by Main Economic Sector, 2001 -2012 (%) 10. 0 8. 0 6. 0 4. 0 2006 -2010 es Se rv ic ct io ru st on C uf a an M 2001 -2005 n g ct ur in g in in M tu ric ul Ag M al ay si a -2. 0 re 0. 0 2011 -2012 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2001 -2005 Agriculture Mining 2006 -2010 Construction Labour Quality Index by Main Economic Sector, 2001 -2012 Malaysia Agriculture Mining Manufacturing Construction Services 2001 -2005 1. 087 1. 063 0. 953 0. 995 1. 026 0. 966 2006 -2010 1. 176 1. 137 1. 126 1. 009 1. 115 0. 894 2011 -2012 1. 197 1. 149 1. 182 0. 988 1. 133 0. 868 2011 -2012 Manufacturing Services

Share of Labour: Skilled and Unskilled by Industries, 2001 -2012 (%) Industry Category 2001 -2005 2006 -2010 2011 -2012 unskilled 12. 34 12. 84 12. 72 Malaysia skilled 87. 66 87. 16 87. 28 50. 90 48. 76 45. 75 Agriculture, Hunting, unskilled Forestry & Fishing skilled 49. 10 51. 24 54. 25 unskilled 7. 87 6. 62 3. 08 Mining & Quarrying skilled 92. 13 93. 38 96. 92 unskilled 16. 46 15. 43 15. 26 Food Products, Beverages & Tobacco skilled 83. 54 84. 57 84. 74 Textiles, Textiles unskilled 19. 38 16. 82 12. 72 Products, Leather & Footwear skilled 80. 62 83. 18 87. 28 unskilled 28. 45 29. 04 36. 60 Wood & Products of Wood & Cork skilled 71. 55 70. 96 63. 40 unskilled 5. 65 5. 54 5. 99 Pulp, Paper Products, Printing & Publishing skilled 94. 35 94. 46 94. 01 1. 99 1. 59 0. 68 Coke, Refined Petroleum unskilled Products & Nuclear Fuel skilled 98. 01 98. 41 99. 32 4. 29 4. 02 6. 68 Chemicals & Chemical unskilled Products skilled 95. 71 95. 98 93. 32 unskilled 11. 25 11. 66 22. 19 Rubber & Plastics Products skilled 88. 75 88. 34 77. 81 unskilled 13. 88 13. 54 16. 48 Other Non-Metallic Mineral Products skilled 86. 12 86. 46 83. 52 unskilled 10. 58 11. 33 12. 63 Basic Metals & Fabricated Metal Products skilled 89. 42 88. 67 87. 37 Machinery, NEC E&E Transport Equipment unskilled unskilled 5. 51 94. 49 3. 52 96. 48 93. 52 5. 27 94. 73 3. 32 96. 68 6. 63 93. 37 7. 38 92. 62 6. 56 93. 44 5. 58 94. 42 Industry Category unskilled Manufacturing NEC; Recycling skilled unskilled Electricity, Gas & Water Supply skilled unskilled Construction skilled Sale, Maintenance & Repair of unskilled Motor Vehicles & Motorcycles skilled Wholesale Trade & unskilled Commission Trade, Except of Motor Vehicles & Motorcycles skilled Retail Trade, Except of Motor unskilled Vehicles & Motorcycles; Repair of Household Goods skilled unskilled Hotels & Restaurants skilled unskilled Transport & Storage skilled unskilled Post & Telecommunications skilled unskilled Financial Intermediation skilled unskilled Real Estate Activities skilled Renting of M&Eq & Other Business Activities unskilled Public Admin & Defense; Compulsory Social Security skilled unskilled Education skilled unskilled Health & Social Works skilled Other Community, Social & unskilled Personal Services skilled 2001 -2005 2006 -2010 2011 -2012 14. 54 14. 05 14. 04 85. 46 85. 95 85. 96 13. 83 13. 54 12. 19 86. 17 86. 46 87. 81 20. 52 19. 40 16. 87 79. 48 80. 60 83. 13 9. 94 9. 73 10. 06 90. 27 89. 94 6. 87 6. 98 4. 86 93. 13 93. 02 95. 14 13. 96 12. 59 9. 00 86. 04 18. 46 81. 54 14. 42 85. 58 2. 39 97. 61 0. 54 99. 46 4. 32 95. 68 87. 41 17. 97 82. 03 13. 63 86. 37 2. 21 97. 79 0. 39 99. 61 3. 88 96. 12 91. 00 17. 72 82. 28 11. 58 88. 42 0. 53 99. 47 0. 32 99. 68 4. 17 95. 83 6. 06 93. 94 3. 72 5. 94 94. 06 3. 26 6. 56 93. 44 2. 75 96. 28 1. 07 98. 93 2. 58 97. 42 10. 65 89. 35 96. 74 0. 95 99. 05 2. 29 97. 71 9. 56 90. 44 97. 25 0. 56 99. 44 1. 83 98. 17 8. 23 91. 77

Labour Quantity Growth: Skilled and Unskilled by Industries, 2001 -2012 (%) Industry Malaysia Agriculture, Hunting, Forestry & Fishing Mining & Quarrying Food Products, Beverages & Tobacco Textiles, Textiles Products, Leather & Footwear Wood & Products of Wood & Cork Pulp, Paper Products, Printing & Publishing Coke, Refined Petroleum Products & Nuclear Fuel Chemicals & Chemical Products Rubber & Plastics Products Other Non-Metallic Mineral Products Basic Metals & Fabricated Metal Products Machinery, NEC E&E Transport Equipment Manufacturing NEC; Recycling 2001 -2005 2006 -2010 2011 -2012 Unskilled Skilled -0. 04 -0. 16 -0. 02 4. 11 2. 35 3. 50 -0. 70 -1. 21 2. 57 1. 05 3. 06 -0. 05 0. 97 0. 12 8. 11 8. 29 5. 17 0. 48 -0. 30 0. 56 6. 93 0. 89 2. 47 -1. 08 -0. 89 0. 39 0. 23 -1. 28 2. 89 -0. 75 -1. 39 0. 38 0. 23 -2. 99 1. 55 0. 02 -0. 38 0. 17 2. 49 0. 76 3. 55 0. 19 -0. 18 0. 03 17. 33 2. 18 4. 72 -0. 55 0. 12 0. 22 2. 52 1. 13 4. 58 0. 38 -0. 49 0. 56 5. 70 -3. 09 2. 98 -0. 15 -0. 53 0. 56 3. 59 -2. 49 3. 93 -0. 21 -0. 44 0. 52 0. 82 1. 65 2. 97 0. 06 0. 10 -0. 09 0. 49 3. 07 4. 27 -0. 34 -0. 22 0. 16 -3. 66 -0. 93 3. 12 0. 05 0. 26 0. 19 5. 04 2. 92 3. 11 -0. 51 -0. 33 0. 38 0. 05 0. 37 2. 36 Industry Electricity, Gas & Water Supply Construction Sale, Maintenance & Repair of Motor Vehicles & Motorcycles Wholesale Trade & Com. Trade, Except of Motor Vehicles & Motorcycles Retail T. , Except of Motor Vehicles & Motorcycles; Repair of Household Goods Hotels & Restaurants Transport & Storage Post & Telecom. Financial Intermediation Real Estate Activities Renting of Machinery & Equipment & Other Business Activities Public Admin & Def. ; Compulsory Social Security Education Health & Social Works Other Community, Social & Personal Services 2001 -2005 2006 -2010 2011 -2012 Unskilled Skilled 0. 08 -0. 95 0. 29 4. 43 1. 69 3. 69 0. 58 0. 03 0. 53 5. 48 2. 57 3. 02 2. 34 -0. 04 -0. 57 20. 28 1. 90 -4. 05 -0. 23 -0. 04 -1. 95 2. 91 -0. 32 -0. 45 -0. 34 -0. 75 1. 60 2. 03 18. 28 0. 10 0. 54 -1. 47 4. 98 4. 99 -7. 31 0. 35 -0. 01 -0. 19 6. 98 2. 29 -1. 50 -0. 16 0. 08 0. 03 0. 66 2. 88 5. 20 -0. 04 -0. 03 0. 00 3. 35 2. 30 4. 42 -0. 68 0. 27 0. 14 -3. 14 8. 88 3. 32 1. 26 0. 40 -0. 12 14. 22 4. 06 -0. 16 -0. 07 -0. 29 0. 06 5. 31 2. 26 4. 81 0. 03 -0. 06 0. 01 5. 62 3. 64 1. 70 0. 14 -0. 09 -0. 07 9. 09 5. 62 -0. 33 -0. 81 -0. 14 -0. 43 0. 81 5. 21 -6. 37

Labour Quality Index by Industries, 2001 -2012 Industry Malaysia Agriculture, Hunting, Forestry & Fishing Mining & Quarrying Food Products, Beverages & Tobacco Textiles, Textiles Products, Leather & Footwear Wood & Products of Wood & Cork Pulp, Paper Products, Printing & Publishing Coke, Refined Petroleum Products & Nuclear Fuel Chemicals & Chemical Products Rubber & Plastics Products Other Non-Metallic Mineral Products Basic Metals & Fabricated Metal Products Machinery, NEC 2001 1. 028 2002 1. 065 2003 1. 092 2004 1. 117 2005 1. 134 2006 1. 146 2007 1. 157 2008 1. 172 2009 1. 212 2010 1. 193 2011 1. 203 2012 1. 192 1. 020 1. 040 1. 061 1. 091 1. 104 1. 113 1. 126 1. 143 1. 159 1. 146 1. 150 1. 149 0. 884 0. 845 0. 836 1. 102 1. 100 1. 088 1. 081 1. 211 1. 151 1. 186 1. 177 1. 031 1. 056 1. 077 1. 028 1. 082 1. 135 1. 151 1. 179 1. 245 1. 211 1. 229 1. 208 1. 050 1. 099 1. 121 1. 170 1. 180 1. 201 1. 199 1. 209 1. 221 1. 224 1. 219 1. 204 1. 059 1. 061 1. 103 1. 087 1. 122 1. 193 1. 162 1. 273 1. 244 1. 246 1. 251 1. 040 1. 111 1. 069 1. 149 1. 115 1. 170 1. 231 1. 240 1. 272 1. 256 1. 262 1. 259 1. 154 1. 077 1. 250 1. 474 1. 318 1. 431 1. 333 1. 446 1. 354 1. 404 1. 384 1. 079 1. 069 1. 016 1. 025 1. 104 1. 114 1. 183 1. 228 1. 304 1. 268 1. 287 1. 283 1. 016 1. 037 1. 107 1. 083 1. 145 1. 149 1. 188 1. 194 1. 331 1. 289 1. 302 1. 301 1. 101 1. 013 1. 173 1. 130 0. 993 1. 080 1. 155 1. 168 1. 176 1. 178 1. 174 1. 178 1. 042 1. 137 1. 117 1. 085 1. 154 1. 201 1. 236 1. 237 1. 268 1. 255 1. 259 1. 258 1. 010 1. 047 1. 027 1. 078 1. 025 1. 194 1. 188 1. 085 1. 268 1. 152 1. 211 1. 201 E&E 1. 160 1. 158 1. 218 1. 240 1. 350 1. 377 1. 410 1. 442 1. 532 1. 480 1. 503 1. 496 1. 019 1. 119 1. 088 1. 178 1. 128 1. 139 1. 203 1. 210 1. 287 1. 241 1. 261 1. 255 1. 098 1. 110 1. 150 1. 217 1. 273 1. 290 1. 371 1. 335 1. 352 1. 339 1. 342 Transport Equipment Manufacturing NEC; Recycling

Labour Quality Index by Industries, 2001 -2012 Industry Electricity, Gas & Water Supply Construction Sale, Maintenance & Repair of Motor Vehicles 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1. 061 1. 107 1. 139 1. 133 1. 170 1. 213 1. 204 1. 255 1. 201 1. 240 1. 225 1. 238 0. 985 1. 029 1. 006 1. 056 1. 095 1. 092 1. 125 1. 136 1. 129 1. 132 1. 135 0. 913 0. 922 0. 968 0. 958 0. 993 0. 981 1. 008 1. 007 1. 010 1. 005 1. 008 1. 007 Wholesale Trade & Commission Trade 1. 047 1. 088 1. 097 1. 055 1. 119 1. 135 1. 124 1. 125 1. 136 1. 133 1. 131 1. 136 Retail Trade, Repair of Household Goods 1. 020 1. 059 1. 085 1. 099 1. 103 1. 093 1. 115 1. 125 1. 124 1. 119 1. 152 0. 994 1. 031 1. 030 1. 056 1. 073 1. 074 1. 105 1. 090 1. 113 1. 108 1. 105 1. 103 1. 058 1. 068 1. 097 1. 105 1. 113 1. 135 1. 137 1. 139 1. 168 1. 153 1. 158 1. 412 1. 306 1. 545 1. 536 1. 485 1. 392 1. 525 1. 507 1. 478 1. 486 1. 492 1. 498 1. 169 1. 136 1. 240 1. 246 1. 289 1. 342 1. 364 1. 328 1. 400 1. 368 1. 382 1. 379 1. 253 1. 175 1. 228 1. 257 1. 319 1. 278 1. 276 1. 117 1. 184 1. 149 1. 160 1. 154 0. 942 0. 995 0. 992 1. 011 1. 027 1. 008 0. 991 0. 988 1. 053 1. 024 1. 030 1. 023 1. 039 1. 086 1. 099 1. 131 1. 137 1. 153 1. 161 1. 170 1. 181 1. 174 1. 179 1. 180 0. 990 1. 003 1. 030 1. 068 1. 054 1. 066 1. 073 1. 078 1. 103 1. 096 0. 978 1. 011 1. 050 1. 114 1. 173 1. 238 1. 273 1. 275 1. 334 1. 310 1. 312 1. 295 1. 050 1. 057 1. 068 1. 085 1. 095 1. 108 1. 091 1. 168 1. 174 1. 181 1. 152 Hotels & Restaurants Transport & Storage Post & Telecommunications Financial Intermediation Real Estate Activities Renting of M&Eq & Other Business Activities Public Admin & Defense; Compulsory Social Security Education Health & Social Works Other Community, Social & Personal Services

3. CAPITAL ACCOUNT Methodology Capital stock measurement is using the Perpetual Inventory Method, capital stock (A) is defined as a weighted sum of past investments with weights given by the relative efficiencies of capital goods at different ages according to (industry subscripts are suppressed for convenience) with Ak, t , the capital stock for a particular asset type k at time t, θk, τ, the efficiency of a capital good of age t relative to the efficiency of a new capital good and Ik t−τ , the investment in period t-τ. Hence with a given constant rate of depreciation δ, different for each asset type, θt = (1−δ )t and it follows that the capital stock of a particular asset k at time t, Ak, t is given by:

Methodology (continue) For the aggregation of capital services over the different asset types it is assumed that aggregate services are a translog function of the services of individual assets. It is further assumed that the flow of capital services for each asset type is proportional to its stock, independent of time. Hence the corresponding index of capital input K is a translog quantity index of individual assets in a particular industry given by: Where the weights are given by the average share of each component in the value of capital compensation and with the price of capital.

Data Source Data Variables Net Capital Stock by asset types (Constant and Current) Rate of return Depreciation rate Deflator Data Source Department of Statistics, Malaysia Bank Negara Malaysia (Adjusted by MPC) Asia KLEMS Manual Department od Statistics Malaysia Sample 30 industries according to Asia KLEMS categories Period 2000 -2011

Capital Services Growth by Main Economic Sector, 2001 -2010 (%) Capital Share by Main Economic Sector, 2001 -2010 (%)

Sector Contribution to Aggregate Capital Services 2001 -2010 2001 -2005 2006 -2010 IT Non-IT Total Agriculture 2. 01 3. 64 3. 62 2. 9 3. 8 1. 07 3. 42 3. 38 Mining 1. 34 13. 03 12. 89 2. 1 10. 1 0. 57 15. 93 15. 71 Construction 1. 23 1. 31 0. 9 1. 4 1. 57 1. 24 Manufacturing 15. 32 20. 11 20. 05 19. 9 21. 2 10. 77 19. 06 18. 94 Services 80. 10 61. 91 62. 14 74. 17 63. 46 63. 56 86. 02 60. 36 60. 72 Growth of Capital Services 2001 -2010 2001 -2005 2006 -2010 IT Non-IT Total Malaysia 13. 00 7. 51 7. 56 15. 70 7. 74 7. 80 10. 30 7. 29 7. 32 Agriculture 7. 56 5. 37 5. 38 21. 71 6. 07 6. 15 -6. 60 4. 67 4. 61 Mining 14. 55 14. 69 37. 88 12. 56 12. 58 -8. 78 16. 81 16. 80 Construction 25. 09 5. 04 5. 20 23. 00 3. 44 3. 52 27. 17 6. 65 6. 89 Manufacturing 7. 76 5. 71 5. 72 13. 12 8. 93 8. 96 2. 40 2. 49 2. 48 Services 13. 87 6. 76 6. 84 15. 81 6. 79 6. 88 11. 94 6. 73 6. 80

Growth in IT Capital Services, 2001 -2010 Note: All values are average annual growth rate IT Capital Services Share, 2001 -2010 Note: All values are average annual share

Industry Contribution to Aggregate Capital Services, 2001 -2010 Sectors Agriculture Mining and Quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical product Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; recycling Electricity, Gas and Water Construction Sale, Maintenance & Repair of Motor Vehicles Wholesale Trade & Commission Trade Retail Trade & Repair of Household Good Hotels & Restaurants Transport & Storage Post & Telecommunications Financial Intermediation Real Estate Activities Renting of M&Eq & Other Business Activities Public Admin & Defense; Compulsory Social Security Education Health & Social Works Other Community, Social & Personal Services IT 2. 01 1. 34 0. 72 0. 38 0. 76 0. 57 0. 55 1. 23 0. 15 1. 09 0. 74 7. 06 1. 53 0. 18 4. 03 1. 23 0. 50 1. 54 1. 31 0. 65 16. 56 14. 40 15. 79 8. 06 6. 51 5. 75 1. 26 1. 39 2. 34 Non-IT 3. 64 13. 03 1. 49 0. 88 1. 04 1. 01 1. 97 1. 55 0. 97 0. 78 1. 61 0. 64 6. 72 1. 17 0. 26 8. 71 1. 31 0. 57 1. 55 1. 29 0. 65 9. 54 9. 21 2. 34 1. 18 0. 95 24. 98 0. 23 0. 26 0. 45 Total 3. 62 12. 89 1. 48 0. 88 1. 04 1. 01 1. 95 1. 54 0. 97 0. 77 1. 60 0. 64 6. 72 1. 18 0. 26 8. 65 1. 31 0. 57 1. 55 1. 29 0. 66 9. 63 9. 28 2. 49 1. 25 1. 02 24. 76 0. 24 0. 27 0. 47

Average Growth of Capital Services by Industries, 2001 -2010 Sectors Agriculture Mining and Quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical product Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; recycling Electricity, Gas and Water Construction Sale, Maintenance & Repair of Motor Vehicles Wholesale Trade & Commission Trade Retail Trade & Repair of Household Good Hotels & Restaurants Transport & Storage Post & Telecommunications Financial Intermediation Real Estate Activities Renting of M&Eq & Other Business Activities Public Admin & Defense; Compulsory Social Security Education Health & Social Works Other Community, Social & Personal Services IT 7. 56 14. 55 1. 12 -1. 10 -6. 43 2. 12 -1. 00 17. 08 9. 61 13. 95 16. 66 9. 87 7. 19 4. 14 10. 08 -12. 20 25. 09 22. 10 26. 48 28. 57 27. 52 18. 30 20. 32 10. 23 7. 41 12. 00 12. 48 24. 26 25. 00 18. 38 Non-IT 5. 37 14. 69 9. 34 -1. 62 1. 21 5. 82 9. 75 7. 84 5. 75 1. 42 4. 76 5. 59 4. 85 11. 11 7. 67 6. 90 5. 04 -0. 73 3. 77 5. 79 4. 80 3. 21 4. 78 4. 80 1. 90 6. 61 10. 09 10. 53 11. 09 4. 50 Total 5. 38 14. 69 9. 32 -1. 62 1. 19 5. 79 9. 71 7. 90 5. 79 1. 48 4. 85 5. 62 4. 87 11. 02 7. 69 6. 86 5. 20 -0. 59 3. 90 5. 93 4. 94 3. 42 4. 97 5. 12 2. 23 6. 93 10. 09 11. 12 11. 67 5. 08

4. Total Factor Productivity (TFP) Methodology The sources of VA growth can be expressed as: VA growth = Con. K + Con. L + TFP and the inputs can be further detail as: VA growth = Con. KIT + Con. KNONIT + Con. LSK + Con. LUNSK + TFP Compute for 1. The whole economy 2. Main Economic Sectors i) Agriculture ii) Mining iii) Construction iv) Selected Manufacturing & Services industries Data Sources Value Added Data refer to real GDP obtained from National Account Data from the Department of Statistics, Malaysia (www. statistics. gov. my) for the period 2000 - 2012

Source of Malaysia’s Value Added Growth (%)

Source of Value Added Growth by Main Economic Sectors and Selected Industries (%) Agriculture Mining Construction Manufacturing - E&E

Source of Value Added Growth by Main Economic Sectors and Selected Industries (%) Manufacturing - Chemical Manufacturing - Food Manufacturing – Transport Equipment Services - Retail

Source of Value Added Growth by Main Economic Sectors and Selected Industries (%) Services - Transport & Storage Services - Financial Intermediation

Source of Value Added Growth by Main Economic Sectors and Selected Industries, 2001 -2010 (%) Malaysia Agriculture Mining Construction Manufacturing - E&E - Chemicals - Food - Transport Eq Services - Retail - Transport & Storage - Financial intermediation Value Added Capital Labour TFP 4. 51 2. 89 0. 36 3. 37 2. 71 1. 11 8. 74 0. 83 1. 46 0. 81 0. 49 3. 65 0. 34 0. 97 -8. 87 -1. 12 0. 54 6. 77 6. 03 5. 72 2. 60 3. 85 3. 81 5. 45 0. 06 1. 09 2. 38 2. 23 -2. 12 1. 84 -0. 15 -1. 95 8. 77 4. 06 7. 33 0. 72 0. 01 0. 97 1. 65 1. 28 3. 01 6. 40 2. 78 3. 35

ISSUES & CHALLENGES Capital Inputs • Agriculture and mining are important sectors to Malaysia thus assets incorporate biological assets and mineral exploration. • However, assets not including Land which is important to Agriculture & Real Estate. Labour Inputs • For labour, even though services sector recorded the largest share in labour, the quality index of the sector was smaller than the other main sectors. Furthermore, services sector has more than 85% of skilled labour in the sector. MPC contribution • Development of - Capital services & Assets for land. - Labour quality

Future Task 1. IO Calculation: 2000 -2011 2. Add land estimates 3. Use actual rate of return 4. New national account with R&D, IO 2010 5. 1990 -2012 with new IO 2010 structure 6. More assets class • • Telecommunication equipment (ICT) R&D (intangible)

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