OECD Services Trade Restrictiveness Index (STRI)

MALAYSIA – 2022

Key findings
• The 2022 STRI of Malaysia is high compared to other countries in the STRI sample,
indicating a relatively closed regulatory environment for trade in services.
• The regulatory environment for services trade has been relatively stable in recent years.
• Accounting and auditing services are the least trade restrictive compared to the sectoral
sample average while legal services are the most restrictive.

Recommendation
• Open and well-regulated services markets are essential to facilitate economic recovery,
strengthen resilience to future shocks, and promote a more sustainable trading system. To
ensure that the benefits of open markets and a rules-based international trading system are
preserved, policy makers should focus on minimising barriers that increase trade costs for
services providers, weaken the gains from digital transformation and undermine
competitiveness.

The 2022 STRI of Malaysia is relatively high compared to other countries in the STRI sample, indicating
a relatively closed regulatory environment for trade in services (Figure 1).

Figure 1. Average STRI across countries, 2022

0 0 STRI Average

0.5
0 0
0.4 0 0
0 0
0.3 0 0
0 0
0.2
0 0
0.1 0 0
0 0
0
FIN
LTU
IRL

ITA
JPN

NZL

ZAF

ISL
DEU

ISR

IND

IDN
TUR
GBR
NLD

VNM
CZE

LVA

DNK

FRA
CHL

ESP

COL

AUS
USA

SVK

LUX
PER

CAN

SWE

CHE
SGP

KOR

SVN

GRC
CHN
MYS

RUS
THA
CRI

EST
PRT

AUT

BRA
MEX
HUN

NOR
POL

BEL

KAZ
OECD

Note: The STRI indices take values between zero and one, one being the most restrictive. The STRI database records measures on a Most
Favoured Nation basis. Air transport and road freight cover only commercial establishment (with accompanying movement of people). The
indices are based on laws and regulations in force on 31 October 2022. The STRI regulatory database covers the 38 OECD Members,
Brazil, China, India, Indonesia, Kazakhstan, Malaysia, Peru, Russia, Singapore, South Africa, Thailand and Viet Nam.The statistical data
for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without
prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Source: OECD (2022). STRI and TiVA databases.

The score is explained mainly by the general regulation that affects the economy horizontally. For

http://oe.cd/stri stri.contact@oecd.org @OECDtrade February 2023

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example, residency requirements for the board of directors, limitations on the acquisition and use of
land by foreigners and limitations on cross-border transfer of personal data. In public procurement, local
tenderers enjoy some preferences. At the sector specific level, foreign equity restrictions apply in
several sectors such as legal services and broadcasting services.

The regulatory environment for services in Malaysia is relatively stable (Figure 2). Improvements in
administrative procedures to obtain business visas have been identified since 2017.

Figure 2. Evolution of STRI indices by sector in Malaysia

Services Trade Restrictiveness Index, percentage change over the period 2014-2018, 2018-2021 and 2021-2022
% 2014-2018 2018-2021 2021-2022
45
35
25
15
5
-5
-15
-25
-35
-45

Construction
Telecommunication

Broadcasting

Insurance
Air transport
Sound recording

Courier services
Road freight transport

Customs brokerage
Distribution services

Accounting services
Freight-forwarding

Legal services

Commercial banking

Architecture services
Rail freight transport

Cargo-handling
Computer services

Motion pictures

Maritime transport

Storage and warehouse

Engineering services
Digital network Logistics and related services Market bridging and Physical
supporting services infrastructure
services

Source: OECD (2022). STRI database.

Accounting services, commercial banking, logistics strage and warehouse services and courier services
are the sectors with the lowest score relative to the average STRI across all countries (Figure 3).
Architecture services, telecommunications, distribution services and legal services are the sectors with
the highest score relative to the average STRI across all countries.

Figure 3. Sectoral breakdown - The least and most restricted sectors in Malaysia
STRI score World average
1 1
0.9 0.9
0.8 0.8
0.7 0.7
0.6 0.6
0.5 0.5
0.4 0.4
0.3 0.3
0.2 0.2
0.1 0.1
0 0
Accounting Commercial Storage and Courier services Architecture Tele- Distribution Legal services
services banking warehouse services communication services
Least restrictive Most restrictive
Note: Selection was made based on how far the sectors' score were from the world average score, as a percentage difference
i.e. (STRIcountry, sector - STRIworld average, sector) / STRIworld average, sector
Source: OECD (2022). STRI database.

Accounting services are the least restricted in Malaysia compared to Asia-Pacific. The composition of
the scores indicates that restrictions on movement of people have had an impact compared to other
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countries. The measures that contributed to this score include residency requirements and local
examination requirements for foreign professionals. Legal services are the most restricted services
sector in Malaysia. Restrictions on foreign entity are significant compared to best performers.
Foreigners are not allowed to establish law firms or representative offices in Malaysia for domestic
law, and foreign professionals need to requalify locally to practice Malaysian law (Figure 4).

Figure 4. Malaysia compared to Asia-Pacific and World's best performers

Restriction on foreign entry Restrictions on movement of people Other discriminatory measures
Barriers to competition Regulatory transparency
Least restricted in Malaysia - Accounting services Most restricted in Malaysia - Legal services
1 1
0.9 Asia-Pacific 0.9 Asia-Pacific
0.8 0.8
0.7 0.7
0.6 0.6
0.5 0.5
0.4 0.4
0.3 0.3
0.2 0.2
0.1 0.1
0 0
MYS JPN AUS NZL SGP 1 MYS AUS KAZ NZL ISR
1
0.9 World 0.9 World
0.8 0.8
0.7 0.7
0.6 0.6
0.5 0.5
0.4 0.4
0.3 0.3
0.2 0.2
0.1 0.1
0 0
MYS ZAF CHL JPN CZE MYS ZAF CRI AUS LVA
Asia-Pacific Africa Americas Asia-Pacific Europe Asia-Pacific Africa Americas Asia-Pacific Europe
Source: OECD (2022). STRI database.

Recent policy changes

In August 2022, the Government Procurement Method was published which increases the value of
procurement with tender from above RM200,000 to above RM500,000. The implementation of eVisas
has been gradually extended to different countries over time, and in November 2021 it was extended
to all countries.

More information
» Access all country notes, sector notes, and interactive STRI tools at http://oe.cd/stri
» Read more about services trade policies and their impacts in Services Trade Policies and the Global
Economy
» Contact the OECD Trade and Agriculture Directorate with your questions at stri.contact@oecd.org
» More information about measuring the regulatory environment for services trade in the APEC region:
https://apecservicesindex.org/
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