2. Tertiary Sector (Service Industry)-The Key of Transforming Malaysia into Developed Country
Five Reasons for Continuing the Development of Tertiary Sector
2.1 Service Industry Introduction and Significance
Service industry not only includes foodservice and travelling that provide service production directly, but also includes transportation, storage, logistics, information transmission, IT, finance, estate, transaction, technology analysis, hydraulic engineering, environmental management, public utilities management, civil service, other service, education, hygiene, social security, social welfare, culture, sport, entertainment, public management and social organization that provide service in everywhere, which will help our lives become more convenient and comfortable.
During the colonial time in Malaysia, the UK controlled the main economy in Malaysia. At that period, Malaysia was the agriculture country that only provided and exported raw-material to the west, and then the western countries used the materials from south-east Asia to process finished goods that sold back to the east. In this way, the western countries earned a lot of profits, but the south-east Asian countries got a little bit of money.
After the independence, Malaysia controlled her economy by citizens in real. After the periods the 5-year MP, Malaysia successfully changed her main economic structure into manufacture and service industry structure. Industry 4.0 coming, the world is connected by data and information and enormous technology and finance are depended on the internet. Hence, Malaysia needs to pay immense attention to service industry.
2.2 Advanced Countries with Advanced Service Industries
(1) America
USA GDP 2010-2019 Data :
(Unit: USD Billion)
(TRADING ECONOMICS, 2019)
USA GDP from Private Services Producing Industries 2010-2019 Data:
(Unit: USD Billion)
(TRADING ECONOMICS, 2019)
Distribution of GDP in USA 2000-2017:
(statista, 2017)
As the founder of internet, America has the most advanced information technology in the world. The majority electronic intelligent devices we used are invented and developed in America Silicon Valley, so that America domains the biggest segment in information technology industry and market. Everyone’s computer is depended on Microsoft Windows, Apple OS or Linux and everyone’s smart phone is installed Android or Apple IOS that are innovated in America. In addition, the internet media and SNS we surf, such as, Youtube, Facebook, Twitter are founded in US.
According to the data displays that, USA, the No.1 ranking state in the world in nominal GDP, had 21200 billion US dollars GDP in 2019. And the United States services industry contributed 13286.3 billion US dollars to GDP that occupied around 77% in total, which shows that service industry plays the most important role in the domestic industries.
Those monopoly internet technologies company in USA sell their products and right of using around the world, which creates a massive profit for America. The internet media and SNS earn a lot of money by selling the advertisement and data-oriented, even controlled the election in different countries. It is says that the service sector in the super western country is the most significant part in the domestic production, which makes the developed country become more and more powerful.
(2) Japan
Japan GDP 2010-2019 Data:
(Unit: USD Billion)
(TRADING ECONOMICS, 2019)
Japan GDP from Services Activities 2010-2019 Data:
(Unit: JPY Billion)
(TRADING ECONOMICS, 2019)
Distribution of GDP in Japan 2010-2017
(statista, 2017)
With the economic financial aid of America, Japan rapidly restored her economy and finance and economy after the World War II. In 20th century, Japan became the newly-developing industrial country as same as Korea, Taiwan and Hong Kong during 60s to 80s, besides, Japan became the 2nd largest economies country earlier than China (2000) in the world.
Among the economic structure of Japan, Japan has one of the most advanced services industry in the world. In 2018, Japan created 5110 billion US dollars GDP and services industry contributed 21744.7 JRY billions (1238 USD billions), which shows that Japan service industry composite a main sector in domestic production.
Among two of the western and eastern advanced countries, America and Japan, service industries in those countries creates the biggest values and earns the biggest fortune. How important the service industry is.
2.3 Analysis of Malaysia Economic Structure and Service Industry in Distribution of GDP
Malaysia Economic Structure 2018
| GDP (Billion MYR) | GDP Distribution (%) | Increase/ Decrease(%) | |
| Agriculture | 955.8 | 7.8 | -0.4 |
| Mining | 969.7 | 7.9 | -1.5 |
| Manufacture | 2833.4 | 23.0 | 5.0 |
| Construction | 558.4 | 4.5 | 4.2 |
| Services | 6830.8 | 55.5 | 6.8 |
From Bank Negara Malaysia
(Economic and Commercial Office of the Embassy of the People's Republic of China in Malaysia, 2019)
Malaysia GDP 2010-2019 data
(Unit: USD Billion)
(TRADING ECONOMICS, 2019)
Malaysia GDP from Service 2010-2019 data
(Unit: MYR Million)
(TRADING ECONOMICS, 2019)
Malaysia GDP from Service 2017-2019 data
(Unit: MYR Million)
(TRADING ECONOMICS, 2019)
According to the data of Malaysia GDP, it is evident to find that service industry also has the most important position in Malaysia economy. From 2010 to 2018, distribution and contribution of service sector in Malaysia kept in engaging dramatically. In 2018, Malaysia had 370billions US dollars GDP and service industry contributed approximately 142.3billions US dollars GDP, which was 55.5% of the total GDP. Thus, service sector also has crucial position in Malaysia industry.
Although manufacture industry occupied the leading status and helped Malaysia to develop her economic structure and finance effectively for a long time, we need to focus on the new revolution of technology and new economy now. The latest trend of updating economy is investing and developing service industry.
Referring to the developed countries, Malaysia has to pay more attention to develop service industry. It is the key to transmit into developed country.
2.4 Excellent Resource Allocation with Service Industry and Pareto Optimality
Definitely, tertiary industry is the junction center station that connects with primary and secondary industry. It improves resource allocation efficiency and using ratio in society. For example, if we staying in the urban want to eat the fresh vegetables and meats produced in country sides by primary industry, we need to use transportation and storage which are provided by the tertiary industry. If we want to find a new apartment or house constructed by secondary industry, we need to consult with the estate or rent agency belongs to tertiary industry. Tertiary industry provides a great platform and abundant opportunities for Malaysian citizens to use or buy resources conveniently and effectively.
Otherwise, service industry has marvelous resource integration capability. Information technology called Big Data from tertiary sector can collect massive and analyze data from the internet, which can predict the neo trend in various domains. Thus, Malaysia can use the technology from tertiary sector to analyze the economic trend and make the best macro strategy in different places.
Pareto Efficiency and Optimality:
According to Pareto Optimality, resources are always not used in optimal way without communication. Both sides pursuit their target liberally and blindly, which leads their benefit cannot attain maximum. So, generally, tertiary sector help both sides who want to use the resource coordinate and communicate, which leads them win two stages and optimize the resource allocation.
Due to the service industry, domestic resources can be used optimality. In this way, Malaysia can facilitate sustainable environment development and improve economic development, which will make Malaysia become a developed country.
2.5 Superb Production and Effect of Service Industry from Maslow’s Hierarchy of Needs
Maslow’s Hierarchy of Needs Graphic:
According to the Maslow theory, people want to subsist in the normal society, they first need to earn physiological needs which are food, water and shelter. And they need to ensure their life security, they want the safty needs. When they can earn their own life and can be stable, they will build a family, so that they want love and belonging. When they are developing and rich enough, they will eager for esteem. And they want to be unique, they will eager for self-actualization.
In order to provide more production and service that can satisfy people and community need, the whole industries need to innovate and create, which forms a new industry- service sector. Service sector can provide vast productions and services based on manufacture and agriculture to satisfy different costumers’ needs. And because of constant innovation and customization by service industry, our countries become more advanced and our lives become more comfortable.
Hence, service industry provides better production and services for human being and lead the society make great progress. Service sector is the vital part for Malaysia developing.
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