RFID in Malaysia – Tracing the ROI

Published: 7 Jun 2010

By Richard Sebastian, Industry Analyst, Asia Pacific Electronics & Security, Frost & Sullivan.

Economic Outlook Malaysia

2008 and 2009 have been sluggish years for the Malaysian economy and follows similar performance as its Asian and global counterparts are echoing the world economic crisis that hit the financial markets during these periods. During this time, the Malaysian economy witnessed a shrinking real GDP growth of 1.5 percent from 2007 to 2008, and for the first time in over a decade, the country experienced negative GDP growth of 2.3 percent in 2009. Buoyed by the various stimulus packages introduced by Governments globally plus overall improvement in the economy in the rest of Asia, Malaysia is expected to ride through this period and return to positive GDP growth of 5.5 percent.

GDP Growth (Malaysia), 2007 - 2010

On a similar front, the Malaysian stock market experienced a significant drop in overall market capitalization value of roughly 41.8 percent from the end of 2007 to 2008 periods, though it partially recovered approximately 30.7 percent of its value by the end of the 2009 period. The overall market capitalization value is expected to remain the same, the very least echoing a positive outlook in the Malaysian real GDP growth.

Domestic Market Capitalization (Malaysia), 2007 - 2010

Local RFID Performance

The last 12 to 24 months has seen strong traction for RFID in the Malaysian market. Unlike much of the other electronics market that also witnessed a decrease in demand during the economic crisis period, RFID followed regional trends to see continuous growth in the 2008 to 2009 periods. Many companies involved in the RFID value chain were able to maintain their profit margins and continued to experience growth during the economic slowdown. RFID's unique ability to be a 'step change' technology whereby it's ability to increase operational efficiency at a rapid pace instead of an incremental level ensures this market to be largely unaffected by economic downturn.

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