KUALA LUMPUR (Nov 2): The Malaysian services sector is projected to grow 5.9% year-on-year (y-o-y) in 2019, reflecting expansion across all subsectors, according to the Ministry of Finance's (MoF) Economic Report 2018/19, titled Fiscal Outlook 2019 .

The MoF reported that the sector grew 6.5% y-o-y during the first half of 2018, led by the wholesale and retail trade, finance and insurance, information and communication, as well as food and beverages and accommodation subsectors.

"Accounting for about 55% of GDP (gross domestic product), the growth in the services sector is projected to grow 6.3% and 5.9% in 2018 and 2019, respectively," MoF said in the report.

Leading all the other subsectors, the information and communication subsector is projected to increase 8.1% in 2018 and 8% in 2019, mainly due to higher usage of broadband services and smart applications.

"The implementation of the Mandatory Standard on Access Pricing is expected to reduce broadband prices and improve service quality, benefiting consumers and boosting growth of the subsector," MoF said.

In tandem with aggressive promotional activities for Visit Malaysia 2020, the food & beverages and accommodation subsector is projected to expand 6.9% in 2019 — but slower than the estimated strong 8.1% growth in 2018 — mainly supported by domestic tourism activities and increased patronage of restaurants.

The wholesale and retail trade subsector is expected to grow at 7% and 6.3% in 2018 and 2019, respectively. MoF said this is in line with higher consumption activities, mainly due to the three-month zero-rating of the goods and services tax, and upward revision of the minimum wage.

"In addition, growth of the subsector will be supported by higher sales via e-commerce platforms," it added.

The finance and insurance subsector is anticipated to grow at a moderately slower pace of 5.3% in 2019, compared to an estimated growth of 5.5% in 2018. MoF said the slower estimated growth takes into account the expected lower fee-based income in the subsector.