Annual Report 2017

105 D E L I V E R I N G V A L U E CONSTRUCTION & BUSINESS SERVICES In MATRADE, the Business Services Unit is subsumed under a broader section called Construction and Business Services which include: • Professional Services (legal, accounting, architectural, engineering, urban planning) • Other Business Services (advertising, management technical consulting, and technical consulting) • Educational Services • Distribution Services (specifically franchising) • Financial Services Key Potentials The services sector has become an increasingly important driver of Malaysia’s economic growth as well as being a significant contributor to its national gross domestic product (GDP). In 2017, the services sector contributed 54.4% to the country’s GDP (2016: 54.3%) and is targeted to reach 56.5% come 2020. The major services components in 2017 were travel, transport and other business services which accounted for 77.8% (2016: 78.7%) of exports of services and 68.2% (2016: 70.6%) of imports of services. Malaysia’s total services trade continued to expand to RM341.1 billion in 2017 (2016: RM314.1 billion), of which exports of services accounted for RM159.2 billion, a 7.8% increase from the previous year. This growth was largely supported by the increase of exports of travel, transport and other business services. On the contrary, imports of services grew 9.3% to RM182.0 billion outpacing exports. Its larger increase relative to exports in 2017 resulted in the widening trade deficit from RM18.9 billion in the previous year to RM22.8 billion in 2017. Malaysia’s services deficit was mainly due to the engagement of foreign service providers in transport, Business Services Snapshot Major components of Malaysia’s services trade are travel, transport, construction, other business services and telecommunications, computer and information services. insurance as well as construction for various mega projects. Despite this, there is potential for export growth in the following services sectors: • Other business services (architectural, engineering, legal, consultancies). • Construction (infrastructure, residential and commercial projects). • Financial services (global business services and fees for financial transactions, especially for sukuk bonds). • Transport (passenger services, transport services segment such as freight services, port and airport services relating to the procurement of services by shippers/carriers for their operation). Exports of construction services was RM4.07 billion in 2017, a slight decrease of 1.6% fromRM4.14 billion in 2016. Imports of construction services however surged 37.9% to RM16.85 billion due to several mega projects in 2017, resulting in a deficit of RM12.78 billion for the year. Exports of the research and development services increased 19.5% to record RM1.7 billion, while payments for these services grew 1% to RM900 million. As the exports grew faster than imports, surplus for research and development services rose to RM800 million as compared to RM500 million in 2016. Exports and imports of professional and management consulting services recorded a double-digit growth of 19.1% and 20%, respectively. Meanwhile, exports of technical, trade-related and other business edged up by 0.7% to RM14.9 billion while imports of this component declined 20.7% to RM20.7 billion. As the imports dropped from RM26.1 billion to RM20.7 billion, the deficit narrowed to RM5.8 billion (2016: deficit of RM11.3 billion). Major services components in 2017 were travel, transport and other business services which accounted for 77.8% of exports of services Exports of services increased 7.8% to RM159.2 billion