Selangor Journal
Menteri Besar Dato’ Seri Amirudin Shari tabling the 2023 Selangor Budget at the Selangor State Legislative Assembly sitting, Shah Alam, on November 25, 2021. — Picture by HAFIZ OTHMAN/SELANGORKINI

Selangor remains on top as highest GDP contributor to nation as quarter threshold may soon be reached

By Jerry Choong

SHAH ALAM, April 6 — The state leads the way as the largest contributor to Malaysia’s national gross domestic product (GDP), with the possibility of reaching 25 per cent overall by 2025 with current economic trends.

MIDF Research said Selangor contributed 22.8 per cent to the national GDP in 2015, and by 2021 it contributed 24.8 per cent.

“This surpassed the 12th Malaysia Plan’s (12MP) target rate of 23.6 per cent by 2025. Steady economic expansion in Selangor while other states grow at a relatively slower pace are the factors contributing to the GDP ratio surge,” it said in its thematic report titled Exploring Opportunities in the Golden State of Malaysia, released yesterday.

Based on the compound annual growth rate (CAGR) measurement, MIDF Research said Selangor grew by +4.6 per cent per annum, against the nation’s plus three per cent per annum from 2016 to 2021.

“Prior to the Covid-19 pandemic crisis, the annual average growth rate from 2016 to 2019 for Selangor was +6.4 per cent, compared to the 11th Malaysia Plan’s (11MP) target rate of +6.9 per cent, while Malaysia registered +4.9 per cent, compared to the 11MP target range of between plus five to six per cent.

“The state economy contracted by -5.2 per cent in 2020 and recovered strongly by plus five per cent in the following year. We opine Selangor’s resiliency lies in the strength of its diversified manufacturing sector and huge consumer demand,” it said.

Similarly, MIDF Research cited the state government’s prediction of its GDP expansion by +6.5 to seven per cent per annum from 2021 to 2025, under the First Selangor Plan (RS-1), which is relatively higher than 12MP’s forecast rate of +4.7 per cent.

“If the state economy were to grow at above +6.5 per cent., we believe Selangor’s economic contribution to the national GDP will breach the 25 per cent level, against the 23.8 per cent target for 2025 under 12MP.

“RS-1 has also set a target for the state’s household median income to reach RM9,290 per month by 2025 (2019: RM8,210). Under the sustainability 2025 target, Selangor is set to reach a reduction in Greenhouse Gas (GHG) emission intensity to GDP at 35 per cent and 15 per cent water recycling rate,” it said.

To this, the research house added the RS-1 targets are crucial for the state and Malaysia, due to Selangor’s economic size. Its themes, strategies and targets will shape the new landscape for the state economy and will also be beneficial for Malaysia’s macro-economic performances and financial markets.

An aerial view of Selangor state mosque, Masjid Sultan Salahuddin Abdul Aziz Shah in the state capital, Shah Alam. — Picture by UNSPLASH

The report’s other findings include:

  • services and manufacturing are Selangor’s main anchor, with the services sector supporting over 50 per cent of the state economy since 2015, while manufacturing is the second key sector in Selangor, supporting one-third of the state economy.

 

  • Selangor’s construction, manufacturing and services sectors are the largest contributors to Malaysia economy in accordance to each sector.

 

  • One fifth of Malaysia’s total population resides in the state, which stood at 21.5 per cent in 2021 compared to 19.8 per cent in 2015, a +2.3 per cent population growth per annum.

 

  • High-skilled jobs dominate in Selangor by occupation, standing at 35.4 per cent in 2021 in comparison to 29.6 per cent nationwide during the same period. Such jobs include managers, professionals and associate professionals.

 

  • Over 20 per cent of the national employment is located in Selangor. In line with population trends, the state is the first in terms of the national employment pool, with 23.4 per cent of national employment in 2021. More than half of Selangor’s workforce is in the services sector.

 

  • Selangor’s unemployment rate constantly remains lower than the national average, which has been recorded since 2015. MIDF Research said it believes this buffers the state economy from global market uncertainties, as Selangor has minimal exposure to prices fluctuations particularly crude oil and crude palm oil prices.

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