With the first month of 2025 behind us, it’s clear that this will be a year of transitions and strategic decisions for many sectors in Malaysia. While some industries are poised for expansion, others must navigate uncertainties like regulatory changes, economic shifts, and global competition.

Here’s a breakdown of the key sectors to watch this year.

Sectors Poised for Growth

Construction: Mega Projects Fuel Expansion

Malaysia’s construction sector is set for another strong year, thanks to major infrastructure projects and a booming data centre industry. Government-backed initiatives like the West Ipoh Span Expressway, Penang Airport expansion, and the Sarawak deep-sea port are injecting billions into the industry. At the same time, private investments in data centres, renewable energy facilities, and high-tech industrial parks are driving record demand for construction services.

With policy uncertainties settling and a clearer long-term infrastructure plan, local and international firms are aggressively securing contracts. The sector is also seeing more Malaysian companies expanding overseas, securing lucrative projects beyond national borders. As a result, 2025 is shaping up to be a golden year for construction, offering steady work and long-term growth opportunities.

Power & Renewable Energy: A Bright Year Ahead

Malaysia’s electricity demand continues to rise, largely due to the rapid expansion of data centres and industrial facilities. In 2024, electricity consumption grew 7.3% year-on-year, and this upward trend is expected to continue. To meet demand, Tenaga Nasional Bhd (TNB) is investing heavily in transmission and distribution upgrades, while private sector players are aggressively expanding the country’s solar and wind energy projects.

The government’s Large-Scale Solar 5 (LSS5) program and the Corporate Green Power Programme are set to drive record investments in clean energy. Lower solar panel prices are also making renewable projects more viable. With sustainability becoming a priority, the power and utilities sector is set to thrive, providing stable and long-term business opportunities.

Property: A Resilient Market with Strong Demand

The property market is gaining momentum, fueled by rising demand for industrial and residential developments. With fewer overhang units and increasing buyer confidence, developers are launching more affordable and landed housing projects. Johor, in particular, is expected to see high demand due to its economic ties with Singapore, boosted by the Johor-Singapore Special Economic Zone and the RTS Link project.

On the industrial side, warehouses, logistics hubs, and data centre real estate are driving new investment. Developers with significant industrial landholdings are well-positioned to benefit from Malaysia’s growing role as a hub for tech and e-commerce operations. With demand strong across multiple segments, the property sector is expected to remain a key driver of economic growth in 2025.

Healthcare: Rising Demand Despite Regulatory Concerns

Malaysia’s healthcare sector is expected to grow due to an ageing population, increasing medical tourism, and rising demand for private healthcare. Private hospitals are expanding capacity to meet this demand, while pharmaceutical companies, especially those specializing in generic drugs, are set to benefit from the government’s push for more affordable healthcare solutions.

However, the potential implementation of the Diagnosis-Related Group (DRG) pricing system may put pressure on private hospitals by capping treatment costs. While this could impact revenue, strong demand for healthcare services is likely to offset regulatory pressures, ensuring continued growth for the industry.

Sectors Facing Challenges

Oil & Gas: Market Uncertainty and Aging Fleets

The oil and gas sector faces a challenging year, with oil prices expected to drop from US$90 per barrel in 2024 to around US$76–US$80 in 2025. This decline, combined with Petronas scaling back capital expenditure, is creating uncertainty for local O&G companies. Offshore projects will continue, particularly in deepwater exploration, but investments in new infrastructure may slow.

Additionally, many offshore support vessels (OSVs) are reaching the end of their operational lifespan, forcing companies to decide between costly refurbishments or expensive fleet renewals. While some firms with younger fleets are well-positioned, overall, the sector is expected to remain volatile and selective in growth.

Automotive: Sales Cooling After Record Highs

Malaysia’s automotive sector is coming off three consecutive years of record-breaking sales, but growth is expected to moderate in 2025. With backlog orders nearly cleared, sales are likely to return to normal levels, especially in the mid-to-high-end segments. Rising inflation and potential fuel subsidy reforms could also impact affordability for consumers.

Another challenge comes from Chinese electric vehicle (EV) brands, which are expanding aggressively in Malaysia, increasing competition for local automakers. While hybrid and EV adoption is expected to rise, traditional vehicle sales may struggle to maintain 2024’s momentum. The sector is entering a transition phase where the industries must adapt to changing consumer preferences and technological shifts.

Aviation: High Demand but Costly Disruptions

Passenger travel has finally returned to pre-pandemic levels, and Malaysia’s aviation sector is expected to benefit from increased international tourism in 2025. However, the industry is facing major supply chain disruptions, including delays in new aircraft deliveries and shortages of essential spare parts.

These challenges are pushing up maintenance costs and limiting fleet expansion, even as demand for flights continues to grow. Airlines may struggle with profitability, as ticket prices may not rise fast enough to cover increasing operational expenses. While international travel demand is strong, the aviation sector must navigate logistical and financial hurdles to maintain growth.

Consumer Sector: Spending Power vs. Rising Costs

Malaysia’s consumer sector faces a mixed outlook in 2025. On the positive side, higher wages and a strong job market are boosting spending power, while an increase in tourist arrivals is expected to support retail and hospitality businesses. However, rising costs of living and higher operating expenses for the industries may limit overall sector growth.

Retailers, food manufacturers, and other consumer goods companies are likely to face margin pressures, as businesses struggle to balance price increases with consumer affordability. While essential goods and strong brands will continue to perform well, discretionary spending may remain cautious as consumers adjust to economic uncertainties and cost pressures.

Tech & Semiconductors: AI Growth vs. Global Uncertainties

The tech industry remains a tale of two stories; while AI-driven businesses and data centre expansions are driving demand for high-performance computing components, the outsourced semiconductor assembly and testing (OSAT) segment faces continued slowdowns and pricing pressures.

Global economic uncertainties and weak consumer electronics demand in China could further impact Malaysia’s semiconductor exports. While companies involved in AI infrastructure and cloud computing are expected to thrive, traditional semiconductor manufacturers may experience a slower recovery. Businesses in this sector will need to pivot towards high-value, AI-focused markets to stay competitive.

Final Takeaway: A Year of Opportunity and Change

2025 is set to be a dynamic year, with both risks and rewards across different sectors. While some sectors may need to adjust their strategies, others are positioned for steady growth. The key for businesses will be to stay informed, stay adaptable, and seize opportunities as they arise.

Source: here

Hiring Expats? You’ll Need to Provide 3 Paid Internships for Locals
SMEs, Don’t Let E-Invoicing Scare You! Here’s How to Switch Like a Pro