Malaysia has more than a few ingredients for it to become a truly developed nation. After independence in 1957, the Malaysian GDP grew at an average of 6.5% per annum for about 50 years. Now a newly industrialised market economy, it is ranked the third- largest in Southeast Asia and 33rd-largest in the world. According to a recent HSBC report, Malaysia will become the world’s 21st largest economy by 2050, with a GDP of $1.2 trillion and a GDP per capita of $29,247.
Like other countries in Southeast Asia, Malaysia, which has a population of 33.5 million, has a rapidly evolving payments landscape and has recently enjoyed accelerated e-commerce growth, driven largely by high mobile penetration rates, which rose to 78% in 2020. Naturally, Malaysians favour mobile payments, with usage hitting 40% last year, dwarfing that of neighbouring countries like Singapore (26%) which has an extremely developed payments infrastructure. The number of mobile banking payments also soared by 125% in 2020 following the initiation of the Movement Control Order (MCO) to curb the spread of Covid-19, which lent to the immense growth of its digital economy.
Bank Negara Malaysia, the country’s central bank, introduced important regulatory changes last year to facilitate the entry of digital finance players, including putting together a new policy framework around eKYC to expedite the digital onboarding of customers. It also plans to issue five new digital banking licences in Q1 2022 with the overarching goal of supporting the country’s underserved and unserved market segments, and is actively assessing the potential value proposition of a CBDC.
As part of its short-term economic recovery plan aimed at encouraging consumers, the Malaysian government introduced ePENJANA to promote contactless payments via selected e-wallets, including Boost, GrabPay and the Touch ‘n Go e-wallet, offer RM 50 worth of credit to over 15 million e-wallet users in the country and encouraging many more to make the switch from transacting in cash.
The digitalisation of payments has seen a meteoric rise in Malaysia in the last five years, and it is likely to be a harbinger for further innovation and development to come.