1

Country spotlight: Malaysia


Malaysia
Country Domestic demand stands resilient
despite external headwinds
overview Household spending is on the rise, in tandem with
employment and wages. As a result, domestic
demand will drive economic growth in the market.
However, investments in Malaysian digital companies
decline to the lowest levels in years, in line with
regional and global trends, suggesting slower growth
in the near term for the digital economy.
Return of tourism to
uplift economic growth
While tourism levels have been slower to recover, the
pace of recovery is expected to accelerate and is
likely to exceed government targets by year end.
Outbound travel demand remains elevated, providing
support for continued recovery and near-term growth
in the digital travel industry. Online transport services
like ride-hailing are also benefiting from the trend.
2
The return to offline routines has not
shaken up sticky digital behaviours
Foot traffic in shopping malls has recovered or, in
some areas, even exceeded pre-pandemic levels. The
food and beverage industry is experiencing a similar
uptick. But even with this resurgence, Malaysian
consumers have held onto the habits that make their
lives easier, like e-commerce and food delivery.
Digital payments continues
to be a focus area
Cash is no longer king in Malaysia as QR codes and
other forms of digital payments become ubiquitous.
The government has supported e-wallet adoption,
distributing benefits to lower-income communities
through e-wallets. Other digital financial services such
as lending, insurance, and investment have also seen
increased adoption, driven by local and regional
pure-play fintechs and financial institutions.
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Malaysia

Online travel recovery drives the digital economy to $23B in 2023,

and e-commerce acceleration required to hit ~$30B by 2025

Overall digital economy E-commerce Transport & food

Transport Food
GMV ($B) CAGR 10%
~5
4% -4% 13%
36% 16%
~25 4
3 3
16
13 13 13 2

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030
14%

7%
16% 45-70 Online travel Online media

30 28%
14%
22 23 4% 7%
19 49% ~10
~5
148% 7 4
4 3 3 3
3
1

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Source: Bain analysis

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Malaysia

Kuala Lumpur leads in digital participation; gaps widen beyond Selangor

Low retail High retail Low drop-off High drop- off

E-commerce: Demand1 demand demand E-commerce: Supply2 density density

2023 indexed search volume per capita 2023, drop-off points per capita

Kuala Lumpur Kuala Lumpur

Notes: (1) Indication of how much e-commerce demand there is, calculated based on the e-commerce-related search volume, indexed to census population
per province, indexed at the country level; (2) Indication of the e-commerce fulfillment coverage, calculated based concentration of courier, delivery,
freight forwarding, mailing, and shipping services within provinces, indexed at country level.
Source: Google internal data, MY, Jan-Jul 2022 vs Jan-Jul 2023; Province GDP & Population; Google Maps data, MY, as of September 2023; WorldPop &
Landscan Population; Bain Analysis
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Malaysia

DFS continues its upward trend, largely supported by

the government’s push for digital payments adoption
CAGR

Digital payments Digital lending Digital insurance Digital wealth

GTV1 ($B) Loan book balance2 ($B) APE & GWP3 ($B) AUM4 ($B)

12%

9%
24%
~330 ~60 ~1.5 ~80
22%
27% 35%
207 22%
165 25% 14%
152 35% 61%
123 0.7 40%
16 19
10 0.4 0.5
6 8 0.3 5 7 10

2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030 2021 2022 2023 2025 2030

Notes: (1) Gross transaction value (GTV) for digital payments includes the value of credit, debit, prepaid card, account-to-account (A2A), and e-wallet
transactions; (2) Loan book balance for digital lending includes end-of-year balance for consumer loans (excluding credit card and mortgage) and
SME loans; (3) APE & GWP for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;
(4) Assets under management (AUM) for digital wealth includes end-of-year mutual fund AUM balance. Source: Bain analysis
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Malaysia

HVUs spend 5.3X vs non-HVUs; even distribution of HVU demographics

HVU Non-HVU

HVU composition1 by demographic2 (%) HVU vs non-HVU online spend Change in spend (%)
3
Based on total online spend per user Based on average online vertical spend per user Averaged across verticals3 per user

Gaming 13.4X
40 40
35
Travel 5.5X
24 20 19 16
5 Streaming 5.5X
Affluent Metro Young digital On a
mainstream natives budget
Groceries 5.1X

HVU composition1 by geography (%) Transport 5.0X 44 45

3
Based on total online spend per user
Food delivery 4.4X 31
29
E-commerce 3.8X
64
55
45
36 5.3X
weighted average4
Metro Non-metro Increased spend over Intend to increase spend
past 12 months over next 12 months
Notes: HVU = high value users. (1) Average composition across SEA; (2) Affluent = High income; Metro mainstream = Age 30 and above & medium income;
Young digital natives = Age 18-29 & medium income; On budget = low income; (3) Excludes digital financial services (DFS). (4) Based on aggregate HVU user
spend / aggregate non-HVU user spend, across all 7 categories.
Source: Google-commissioned Kantar e-Conomy SEA consumer survey, ID, MY, PH, SG, TH, VN, 2023, online survey among 18-64 internet users and digital
economy spenders, 10/08/2023 - 01/09/2023 (n=1,300 Malaysia) Question S7, S3, A2, A5, A7: “Which of the following best describes your regular monthly
household income situation before tax?” “In what region / area do you live?” “Please estimate how much you think you spend online in an average month across
the below digital activities.” “Comparing this year to the previous year, how has your spend for the following digital behaviours changed?” “Thinking about the
upcoming year, how do you think your spend for the following digital behaviours will change?”
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Malaysia

Funding declines across the board, including in previously

popular sectors like e-commerce and DFS
1.1
Private funding value ($B)
0.9

Nascent sectors1 0.6

0.5 0.5
Travel
0.4
Transport & food

Digital media 0.2

E-commerce

DFS

2019 2020 2021 2022 H1 2022 H2 2022 H1 2023

Deal count 147 202 236 159 77 82 47

Note: (1) Nascent sectors include categories that are still relatively nascent in SEA such as enterprise, healthtech, edtech, deeptech/AI,
Web3/crypto, property, automotive, etc.
Source: Bain analysis