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How Will Malaysia’s Latest “11th Malaysia Plan” For Its Economy Affect These Singapore-Listed Companies?

Just last week, the Malaysian Government had announced its second five-year plan – the “11th Malaysia Plan” – which shared how the country is going to achieve its objective of being a developed nation by 2020.

The plan details the different areas of Malaysia’s economy that the government plans to focus on. With many Singapore-listed companies having significant business operations in Malaysia, how might the 11th Malaysia Plan affect them?

The key objectives

There are many different aspects to the 11th Malaysia Plan, but the ones that are more relevant for businesses would be the government’s plan to improve productivity and increase exports to offset the country’s trade deficit.

On that front, companies such as Silverlake Axis Ltd (SGX: 5CP) and Riverstone Holdings Limited (SGX: AP4) might be businesses that can help Malaysia on its quest.

Silverlake Axis is a software and e-solutions provider for many major financial services institutions in Malaysia and in the region. With the company’s suite of products and services helping its customers tackle the digital economy in a more efficient manner, Silverlake Axis can play an important role in helping to improve productivity in many different companies in Malaysia within the financial sector and more.

Meanwhile, Riverstone is a Malaysia-based manufacturer and exporter of natural rubber and nitrile gloves (and a very profitable one at that). Given Malaysia’s status as the largest producer and exporter of rubber gloves in the world and the government’s aim to boost exports, the rubber glove manufacturing industry may yet get to enjoy a significant tailwind.

Beyond pushing for higher levels of productivity and more exports, Malaysia’s government is also expecting the growth of private consumption to be driving the country’s growth towards developed nation status.

In light of that, companies which depend on consumer spending in the country like Eu Yan Sang International Ltd (SGX: E02) and Courts Asia Ltd (SGX: RE2) may stand to benefit.

The former is a retailer of Traditional Chinese Medicine (TCM) products and had depended on Malaysia for more than a quarter of its revenue in its fiscal year ended 30 June 2014. Courts Asia meanwhile, runs its Courts-branded retail outlets that stocks electrical, home-furnishing, and information technology products; Malaysia had contributed to nearly a third of the firm’s revenue in the year through 31 March 2014.

Foolish Summary

Malaysia is currently the second most advanced nation in Southeast Asia in terms of its GDP per capita. With its government’s plans to become a fully developed nation by 2020, the prospects for businesses operating there should look brighter in general.

That said, it’s important to draw a distinction between a country’s economic growth and an individual company’s future prospects in that country. After all, a rising tide can’t lift a chronically leaking boat – it’s still important to consider the strengths and weaknesses of each individual company even if the firm might have significant exposure to Malaysia and might thus possibly benefit from the 11th Malaysia Plan.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.