KUALA LUMPUR, July 26 — Malaysia’s Gross Fixed Capital Formation (GFCF), the second largest component of gross domestic product (GDP) with 20.9 per cent share to the total economy, contracted 14.5 per cent to RM281.1 billion (constant prices) last year as compared to 2019, the Department of Statistics Malaysia (DoSM) said.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the contraction was mainly due to the Covid-19 pandemic which affected the investment of fixed assets for all economic activities. 

"The decline in 2020 was the biggest contraction recorded since the 1998 Asian Financial Crisis in which GFCF declined 43 per cent,” he said in a statement today.

He said the scenario of declining GFCF was also experienced by major economies and regional countries including Singapore, Thailand and Indonesia.

Mohd Uzir said the continuous reduction in fixed assets investment might lead to a lower production capacity in the future and subsequently distort the growth of potential output. 

"By kind of economic activity, GFCF in services sector contracted to 12.5 per cent compared with 1.6 per cent in the preceding year,” he said.

He said the contraction was influenced by transportation and storage and information and communication which declined 24.9 per cent and negative 10.9 per cent in finance, insurance, real estate and business services.

"GFCF in the manufacturing sector dropped by 17.1 per cent against a decline of 10 per cent in the previous year,” he said.

He said the sluggish performance of the sector was attributed by petroleum, chemical, rubber and plastic products which dropped 24.4 per cent.

Mohd Uzir said electrical, electronic and optical products and transport equipment also weighed down the overall performance of the manufacturing sector by contracting 17.2 per cent. 

He said non-metallic mineral products, basic metal and fabricated metal products and textiles and wood products contracted 15.1 per cent and 7.8 per cent, respectively.

"In 2020, GFCF for mining and quarrying declined by 25.4 per cent from a decrease of 9.3 per cent in the preceding year,” he said.

"Construction sector also went down 2.2 per cent, steeper than the decline of 1.3 per cent recorded in the previous year, while agriculture sector contracted 8.8 per cent against 0.1 per cent in 2019 due to the weakened performance in all sub-sectors,” he said.

Meanwhile, he said by type of assets, structure remained as the major contributor to GFCF with a share of 55.9 per cent, declining 18.3 per cent in 2020 compared to the previous year.

He said information and communications technology (ICT) equipment and other machinery and equipment dropped to 8.9 per cent, while Intellectual property products grew marginally at 0.6 per cent.

On the other hand, he said the private sector continued to be the main contributor to GFCF with a share of 74.9 per cent, a decline of 11.9 per cent as compared to the preceding year.

He said the public sector, which contributed 25.1 per cent, also showed a similar downward trend, recording a further decrease of 21.3 per cent in 2020.

"Services and manufacturing activities were the main contributors in GFCF of private sector. The share of services activity stepped up to 62.9 per cent while manufacturing activity retained its position as the second contributor with a share of 20.9 per cent.

"The remaining activities made up 16.2 per cent of the total GFCF of the private sector,” he said. 

He said GFCF of the public sector was largely dominated by services with the highest share of 80.6 per cent, followed by mining and quarrying and manufacturing activities at 10.7 per cent and 7.9 per cent share respectively.

He added that the recovery trend of GFCF is expected to start in 2021. — Bernama