While Malaysia’s security industry doesn’t display high-growth characteristics like its neighbors such as the Philippines or Vietnam, it is still a growing market amid heightened awareness over security. Government spending and private investment, meanwhile, are the twin engines that drive growth. In terms of econom
While Malaysia's security industry doesn't display high-growth characteristics like its neighbors such as the Philippines or Vietnam, it is still a growing market amid heightened awareness over security. Government spending and private investment, meanwhile, are the twin engines that drive growth.
In terms of economic growth, Malaysia's GDP is expected to rise more moderately compared to other Asian economies. The World Bank, for example, forecasts that the country's GDP will grow 4.9 percent this year, compared to 7 percent for Laos, 6.9 percent for both the Philippines and Cambodia, and 6.3 percent for Vietnam.
Meanwhile, Malaysia vendors and distributors' assessment of their own performance ranges from cautious optimism to outright bullishness, citing growth is expected to be single- to double-digit.
“Unlike Vietnam or the Philippines, we've already past the booming stage. It's just that we're keeping our own pace while seeking steady growth. It's not a big-margin growth, but at least it's not moving downward,” said Brian Lee, Regional Business Development Manager at MicroEngine Technology, a manufacturer of access control products.
According to Malaysia's security players, concerns over crime and acts of terrorism are still a main driver for investment in security. “I think people are getting more and more concerned about security. When people have a more stable life, they would think more about security,” said Chee Kok Man, MD of IndelFe, a distributor of GIGABYTE-branded products.
Government Spending
Government projects still account for a main source of income for security players. Among the different types of infrastructure projects, metro is now gaining traction. Of note, the MY Rapid Transit (MRT) is a proposed three-line Mass Rapid Transit system linking Kuala Lumpur and Klang Valley. According to the web portal KL City Guide, the first line of this project is the Sungai Buloh-Kajang Line (SBK Line), which is expected to be completed by 2017.
According to the security companies, metro and other government projects open new opportunities for them. “Now we're concentrating a lot on the LRT and MRT projects. That's our expertise. We've been involved in metro projects in China since the mid-2000s. We want to replicate that success here in Malaysia,” said John Davies, MD of TDSi. “Most metro systems are part of that country's critical mass infrastructure, and unfortunately in the world we live in, critical mass infrastructure is always a potential target for terrorists, so there's a need to secure access to the operations side of critical mass infrastructure.”
Other than metro, other government projects have also been cited as drivers for security growth. “Safe city is gaining momentum in Malaysia and will trigger car parking, road surveillance and other applications,” said Ken Zhuang, Country Manager at Dahua Technology. “The safe city market will be booming in two to three years and the driver is definitely there.”
Private Investment
In terms of private investment, various sectors are seeing investment from local and foreign investors alike. One of the major sectors that is especially booming is the real estate sector. “Private investment is picking up, especially in property development, and this triggers demands for smart home and analytics solutions that we can sell to customers,” said Chuan Wei Yiaw, Director at CMC Solutions, a value-added distributor of ACTi, EnGenius, Honeywell and AxxonSoft, among others. “This is one area that's really growing.”
Another booming sector is manufacturing. “I think there's a lot of higher-tech manufacturing that is starting to come to Malaysia. Just as Shenzhen has become a factory for Hong Kong businesses, I think the infrastructure that the Malaysian government is putting in Johor will make it the factory for Singapore,” Davies said. “Whenever there are factories put in place, it's not just access control. Factories will also need time attendance and employee monitoring capability.”