KUALA LUMPUR: They form the top 10 per cent of businesses in Malaysia productivity-wise. They are considered to be highly efficient and more importantly, pay their employees nearly three times the national median wage.They span across industries and all types of formal businesses operating in the country, ranging from small enterprises to large corporations.But a recent World Bank report revealed that Malaysia’s “frontier firms” are, however, failing to scale or absorb the broader workforce - a stagnation cited as one factor in the country's sluggish wage growth.This then raises the question as to why Malaysia’s most capable engines of growth are failing to actively scale up. The core issue, economist Sedek Jantan of IPP Financial Advisers told CNA, is that the broader business ecosystem is not allocating capital, talent, and market opportunities to these firms efficiently enough.“In more competitive and dynamic economies, productive firms naturally absorb larger market shares, attract stronger financing flows and scale more rapidly. “In Malaysia, this process remains constrained by structural frictions such as regulatory complexity, uneven competition dynamics, financing limitations and slower business reallocation mechanisms,” he said.
Malaysia’s wage growth lags behind GDP as ‘top firms are not scaling’ – what gives?
A World Bank report in May found that Malaysia’s wage growth since 2010 has lagged behind its gross domestic product (GDP) growth in part because top firms in the country are not scaling up.
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