If there is one thing that we can be sure of when talking about the security market in almost any country in Asia, it is that the growth is rapid. The more important question, therefore, is about which of the countries are expanding faster than the others and at what rate. Malaysia, with its infrastructure projects, is
If there is one thing that we can be sure of when talking about the security market in almost any country in Asia, it is that the growth is rapid. The more important question, therefore, is about which of the countries are expanding faster than the others and at what rate. Malaysia, with its infrastructure projects, is certainly one of the fastest growing Asian markets for the security industry.
According to Janesta Woon, Country Manager for Malaysia at Robert Bosch, Malaysia is gearing up its protection and security measures. An IHS report showed that the security industry in Southeast Asia is predicted to grow at double digits on a year on year basis.
“We believe that Malaysia will continue to grow well given the huge focus on global security, rising defense spending and technological advances feeding demand for smart security products,” Woon said.
Other major companies in the region agree. Simon Weng, Country Manager for Dahua Security Malaysia, said that the security industry in Malaysia is developing rapidly. Although the government related projects are affected by political factors, Dahua still estimates growth in market share compared to last year.
Quantifying the growth estimates
Of course, taking such a general approach to prospects based on the perceived needs is not quite sufficient from a practical business perspective. More concrete facts are required to take strategic decisions. For instance, the public perception is that break-ins are common in Malaysia and this is supported by a Malaysia 2018 Crime Safety Report issued by OSAC (United States Department of State, Bureau of Diplomatic Security) that states “residential break-ins are common, and single-family homes are most frequently targeted.”
Statistics from other sources support these. According to Michael Chan Yee Keen, Executive Director at Stratel, agencies like Numbeo depict Malaysia as the most dangerous country in Southeast Asia with the highest crime rate for the past three consecutive years. The latest data for mid-year 2018 places Malaysia at the 20th position worldwide, followed by Cambodia at 32, Vietnam at 35, Thailand at 44, Indonesia at 53, the Philippines at 69 and Singapore at 115.
“Based on interactions with our network of more than 1,200 dealers, installers and system integrators, the market has a projected annual compounded growth rate of between 10 to 20 percent,” Chan Yee Keen said. “As one of the leading wholesale distributor of security products in the ASEAN region, our company grew by about 40 percent last year and this year we are on pace to improve by another 15 to 20 percent. Despite strong economic headwinds (U.S.-China trade war, deferment/cancellation of projects, high national debt), growth has been possible due to fears of break-ins with a fair number of developers around the region specifying intruder alarm systems as standard with their developments.”
Economic and political headwinds that Chan Yee Keen refers to are a matter of concern for other market players as well. Woon pointed out that the climate of uncertainty from the global economic and political environment could pose some risks to the stability and growth of the market. Adding to this are domestic political challenges.
“The next year will be challenging as there could be additional elements to temper consumerism such as the impending budget in November 2018 that warns of austerity and sacrifice,” Chan Yee Keen added. “We are cautiously optimistic to be able to sustain present revenue levels with targeted growth in line with market growth.” Verghese Thirumala, MD of Maxitulin, gave similar thoughts as he talked about the political climate, although he remains quite optimistic about the prospects towards the second half of 2019. While that would be a safe take on the future of the market, a closer look at the reasons for growth will help understand the potential better.
Factors driving the market
With a new government at the helm in the country, all eyes are on its performance. Huckel Zheng, Director at Hikvision Malaysia, indicated that the initiatives from the government will be a key deciding factor in growth.
“As predicted, the new government will invest more in civil facilities and national infrastructure construction,” Zheng said. “The digital transformation of the government or public sectors will also facilitate the market development. There could be a significant increase in demand in the consumer market for the concept of ‘DIY camera' and ‘smart home' which becomes more and more popular, so we think the consumer market will be also another main factor to drive the market growth.”
Woon too said that there are many factors at play which are likely to drive growth in Malaysia. Firstly, the government initiatives enhancing security aspects in public areas will drive the demand for security products. There appears to be an increase in public awareness about the need to have security systems as a preventive measure.
“Secondly, the rapidly developing property market, particularly in mixed developments and residential verticals is a strong contribution to the country's growth,” she continued. “Last but not least, the global IoT and smart cities trends and government initiatives have caused a paradigm shift in the adoption of new technology. Smart city projects require smart products which utilize the IoT environment to improve government services as well as infrastructure. These initiatives increase the need for more solution-based products.”
Chan Yee Keen gave a slightly different opinion on the matter. According to him, a key driver to economic growth will be strong customer purchase sentiments that equate to positive household spending. Consumers will have to navigate higher exchange rates that could lead to costlier goods, higher interest rates that could dwindle disposable income, as well as a number of upcoming tax initiatives that could impact personal and corporate disposable income. So how customers deal with this challenge will be decisive in determining growth.
"Malaysian economic growth is expected to be slower as the government reviews public spending to improve its fiscal deficit,” he said. “This has already led to a number of reported job redundancies which could have a strong ripple effect into the Malaysian economy next year. Instead of spending money, consumers may adopt a defensive stance and reduce gearing and expenditure.”