In 2015, Selangor contributed 22.8% to the national GDP. After half a decade, the contribution rate has increased to 24.8% by 2021. This surpassed the 12th Malaysia Plan target rate of 23.6% by 2025. Steady economic expansion in Selangor while other states grow at relatively slower pace is the factor contributing to the GDP ratio surge. Since 2016, GDP growth in Selangor outperformed national economic growth.
Using CAGR measurement, the golden state of Malaysia grew by +4.6% per annum against Malaysia’s +3% per annum for
the period 2016-2021. Prior to Covid-19 pandemic crisis, the annual average growth rate of 2016-2019 for Selangor was
+6.4% (11MP target rate: +6.9%) while Malaysia registered +4.9% (11MP target range +5~6%). The state economy
contracted by -5.2% in 2020 and recovered strongly by +5% in the following year. We opine resiliency of the state economy
lies on the strength of its diversified manufacturing sector and huge consumer demand.
Selangor is top in the construction, manufacturing, and services sectors. The uptick in Selangor’s economic contribution to
Malaysia is in line with its strong key sectors. The construction, manufacturing, and services sectors are the largest contributor to Malaysia’s economy in accordance with each sector. Selangor’s manufacturing constituted about 32% in 2021 (2015: 28.8%) of national factory output, the highest ever recorded. Construction in the state represented 34.3% in 2021
(2015: 30.1%). Selangor’s services sector contributed 25.9% in 2021 (2015: 25.5%). Selangor ranked 8th with a 5% national contribution in the agriculture sector, which improved from 4.2% in 2015. As for the mining sector, more than 95% of the national output is produced in Sabah, Sarawak, and out-of-state areas.
Envisioning a smart, liveable, and prosperous state by 2025. RS-1 is a development plan for the state of Selangor to chart its path toward achieving a smart, liveable, and prosperous state for the next five years from 2021. The blueprint has four strategic themes (1) Economy, (2) Social, (3) Sustainability, and (4) Governance with 261 initiatives. Under Theme-1 Economy, there are nine focus sectors including ports & logistics and aerospace. Carey Island development and Selangor International Aero Park in Subang are among game changers set in the development plan under the first theme. Under Theme-2 Social, there are six focus areas including affordable housing.
Rumah Selangorku Program: Rumah Idaman & Harapan to be included. Under Theme-3 Sustainability, there are five focus
areas among others low carbon state, water management, and resilience & disaster management. Among strategies under
sustainability is to develop GHG inventory & low carbon cities capacity building for every local authority and integrated solid-waste management center with a waste-to-energy treatment plant.
Selangor’s GDP is set to expand by +6.5~7% per annum in 2021-2025. Under the RS-1, the state government of Selangor predicts the average annual growth rate for the period of 2021-2025 is +6.5~7% per annum. The forecast rate is much
higher than 12MP’s forecast rate of +4.7%. If the state’s economy were to grow at above +6.5%, research house MIDF believes the state economic contribution to national GDP to breach the 25% level, against 23.8% in 2025 target under 12MP. RS-1 also set a target for household median income in Selangor to reach RM9,290 per month by 2025 (2019: RM8,210). Under Sustainability 2025 target, the state is set to reach a reduction in Greenhouse Gas (GHG) emission intensity to GDP at 35% and 15% water recycling rate.
The house opines the RS-1 targets are crucial for the state as well as Malaysia due to the golden state’s economic size. The
themes, strategies, and targets will shape the new landscape for the state economy and be beneficial for Malaysia’s
macroeconomic performances and financial market.
