2024 AlixPartners Malaysia Leadership Forum: Navigating shifts to a new growth model

We recently hosted our annual flagship advisory services event, the Malaysia Leadership Forum in Kuala Lumpur, where we brought industry executives and thought leaders together for an informal dinner and facilitated conversation on a range of pressing enterprise performance issues.  

Themed “Capitalize on Uncertainty”, this year’s event delved deeper into how Malaysian companies can push the envelope by driving radical performance improvement, chart a bolder course, and future-proof their relevance.  During the keynote speech, Renzo Viegas, Board Member at Astro, Manulife, and other companies, shed light on how Malaysia can carry on the robust momentum built in 2024 into next year and beyond. 

Malaysia’s growth opportunities and challenges

Malaysian GDP has been growing at 2.4% CAGR over the last five years amidst the weakening global economy. A number of initiatives have been put in place as key economic growth engines for the nation, including making FDI attractive with tax incentives / streamlined regulations, building digital infrastructure, doubling up on the semi-conductor sector and boosting small / medium scale businesses (Figure 1).

Figure 1: Five key priority initiatives to raise GDP  

While Malaysia’s GDP growth currently trails behind that of other ASEAN countries, Malaysia is riding on strong tailwinds into 2025 as one of the expected beneficiaries of the China+1 developments - particularly, in the high-complexity manufacturing sector. An AlixPartners survey of more than 90 supply chain and procurement leaders in APAC suggested a significant interest in shifting 30-50% volumes of sourcing from China over the next two years to ASEAN countries including Malaysia.

However, Malaysia still faces several key hurdles. It will need to future-proof its manufacturing advantage and therefore need to “re-industrialize” itself, harnessing new technologies such as Industry 4.0. There is also a need to create the right ecosystem for startups / small and medium businesses to thrive. Malaysia has disproportionately fewer unicorns compared to other ASEAN members. Finally, the need for growing digital and new economy skillsets at scale is just too important to ignore (Figure 2).

Figure 2: Malaysia's key economic challenges 

Driving sustainable and long-term growth 

The event included two panel discussions with focuses on the key themes 
below (Figure 3).

Figure 3:  Key themes for sustained growth

Four distinguished industry leaders and practitioners joined the first panel discussion, moderated by Sai Tunuguntla, Partner & Managing Director, Southeast Asia Leader of Enterprise Performance Improvement and APAC TMT at AlixPartners. The panelists were:

• AFIZULAZHA ABDULLAH - Chief Enterprise Business Officer at CelcomDigi
• GREG SHEEN - Group CIO at Access World
• ALAN TAN - Chief Economist at Affin Bank Berhad
• Dr. LIM LIAN HOON, Partner and Managing Director at AlixPartners

The panel created a sense of urgency to grow domestic demand and for “reindustrializing” the manufacturing sector. Particularly, given that the domestic demand and manufacturing contribution to GDP is driven largely by SMEs, there is a need to enable access to Industry 4.0 technologies and help digitalize their operations. There was a good debate on why skill readiness is important to enable digital transformation and that the problem of supply and demand imbalances has yet to be resolved even within Kuala Lumpur. The panel also discussed the gap in technology enablement services with dominant SIs in the market and hyperscalers focusing on profitable large corporations. This is an opportunity for bellwether local companies to step in and figure out a viable model to serve the SMEs.  

The second panel emphasized that risk management requires transparent financial reporting and the addressing of tech-related disruption. It was moderated by Eddie Lam, Partner and Managing Director at AlixPartners, who was joined by the following group:

• IRWIN MOHD EUSOFF - Group Chief Corporate Strategy and Sustainability Officer at Affin Group
• CHARI TVT - Board Member and Chairman of the Board Governance and Risk Committee at UEM Sunrise Berhad
• RESHMI KHURANA - Partner and Managing Director at AlixPartners

The panel was in alignment that AI and digitization can improve business transparency and decision-making.  Geopolitical shifts, including U.S. trade policies and rising protectionism, may affect Malaysia's export-driven economy through tariffs and sanctions, requiring businesses to adapt to global uncertainties and changing power dynamics. The panel also discussed that to secure FDI and to ensure sustainable growth, Malaysian companies must balance innovation with environmental impacts, as emerging technologies like AI increase energy consumption. Financial regulators now assess climate and transition risks, focusing on industries' resilience to environmental challenges.

Key takeaways

Malaysia’s ASEAN neighbours are growing GDP at a much faster clip - 4.7% on average. Legacy strengths in manufacturing will be challenged as countries such as Vietnam, Korea, and others are embracing new technologies more holistically. It presents an opportunity for Malaysian industry to drive growth with focus on domestic demand and empowering the SME segment.

Companies in key sectors such as manufacturing will need to “re-industrialize themselves” – i.e. harness next generation technologies such as Industry 4.0 and drive changes to their operating models. 

Read our insights from the recent Indonesia Leadership Forum: