Broker: UOB Kay Hian
Date of Report: Friday, 01 August 2025

Malaysia’s 13th Malaysia Plan: Transforming Into a High-Tech, High-Growth Economy — Key Sectors, Stocks, and Opportunities Ahead

Introduction: 13MP to Drive Malaysia’s Economic Transformation

Malaysia has set its sights on becoming a high-tech, high value-added economy with the unveiling of the 13th Malaysia Plan (13MP) for 2026-2030. Tabled by Prime Minister Anwar Ibrahim, this ambitious plan seeks to foster balanced domestic development, deeper global integration, and social empowerment. Despite current market uncertainties, UOB Kay Hian foresees a market recovery in the second half of 2025, spurred by improved tariff clarity and renewed risk-on sentiment.

Macroeconomic Targets and Strategic Pillars of 13MP

The 13MP is structured around the MADANI Economic Framework, which emphasizes raising the ceiling (expanding economic opportunities), lifting the floor (enhancing inclusivity), and strengthening good governance. This holistic approach is underpinned by four core pillars:

• Enhancing economic diversity
• Improving social mobility
• Accelerating public service reforms
• Boosting well-being and environmental sustainability

Key macroeconomic targets for 2026-2030 include:

• GDP growth: 4.5-5.5% per annum
• GNI per capita: RM77,200, surpassing the high-income threshold
• Fiscal deficit: Below 3% of GDP
• Average household income: RM12,000 (up from RM10,065 in 12MP)
• Compensation of employees: 40% of GDP by 2030 (currently 33.1%)
• Unemployment rate: 3% by 2030
• Development allocation: RM430 billion (up from RM415 billion in 12MP)
• 1.2 million new jobs targeted (700k in manufacturing, 500k in digital economy)

Key Focus Areas Under 13MP

Sectoral Impact Analysis

Banks

• The introduction of a mandatory build-then-sell (BTS) model could temporarily slow sector loan growth and interest income by delaying mortgage disbursements. Real estate loans currently make up just 5% of sector loans, compared to 38% for mortgages.
• Larger developers may turn to bond financing, limiting upside for bank lending. However, increased project financing could boost banks’ fee income.
• Gradual implementation of BTS, with a risk-sharing mechanism, could ultimately be net positive for banks over the long term as project financing and fee income rise.

Construction

• Infrastructure remains a government priority, with major projects underway: ECRL, Gemas-Johor Baru Double Track, Johor Baru E-ART, Penang LRT, and the RTS Link to Singapore.
• The Trans Borneo Railway study may enhance connectivity between Sabah, Sarawak, and Kalimantan.
• 2,800 km of rural roads will be upgraded, and RM67 billion is allocated to the education sector for new schools and upgrades.
• These measures reinforce strong public infrastructure spending and sector growth prospects.

Consumer (Tobacco & Breweries)

• The pro-health tax on sugary drinks will expand to include tobacco, vapour, e-cigarettes, and alcohol.
• The cost increase may be passed to consumers, but consumption could fall as sentiment remains subdued.
• The precise impact is unclear due to limited details on calculation methods.

Property

• Support for housing affordability and first-time buyers, with a commitment to deliver 1 million affordable homes.
• Flexible financing options: tiered interest rates, longer tenures, and new schemes for the elderly.
• Affordable housing players such as Lagenda, Mah Sing, and Matrix are poised to benefit.
• The shift to a BTS model with risk-sharing marks a structural industry change, requiring higher upfront capital for developers and delaying revenue recognition until project completion. This could strain cash flow and increase gearing.
• Further clarity and legislative amendments are needed before enforcement. The policy is currently neutral in impact, as it remains in early development.

Renewable Energy

• Solar EPCC players will benefit from the National Energy Transition Roadmap (NETR), targeting 35% renewable energy share by 2030 (currently 29%).
• Large-scale solar projects totaling up to 2GW and battery energy storage system (BESS) initiatives are expected; LSS6 and BESS bidding anticipated in 2H25.
• The government is expanding waste-to-energy (WTE) generation, with 18 potential sites identified and new facilities in the pipeline.
• FIT 2.0 awards for biogas, biomass, and small hydropower reinforce the renewable energy commitment. Nuclear energy integration remains under study, with current efforts focusing on public awareness and safety.

Technology

• The plan aims to make Malaysia a regional hub for digital technology manufacturing, with broad-based AI adoption in manufacturing, agriculture, healthcare, education, finance, security, housing, and public services.
• AI and big data analytics will modernize public administration, improve transparency, and enhance decision-making.
• Initiatives align with NIMP 2030, NSS, and Silicon Vision, including partnerships with ARM Holdings, potentially triggering a transformative effect across the semiconductor value chain encompassing IC design, equipment manufacturing, OSAT providers, and EMS players.

Financial Performance Review: 12MP vs 13MP Targets

Sectoral GDP Growth Projections (2015 Prices)

Top Stock Picks and Their Analysis

Market Outlook and Tactical Opportunities

The FBMKLCI is trading at 1,513, near its assessed bottom. UOB Kay Hian’s end-2025 target is 1,620, implying -1.0SD PE (14.9x 2025F). With the worst of US policy threats behind and an undemanding 14.0x 2025F PE (-2.25SD), no changes are recommended to the top picks.
Market recovery is anticipated in 2H25 as risk-on sentiment improves with tariff clarity. Tactical trading opportunities are seen in:

• EMS: VS, SKP, NationGate
• OSAT/SPE: Inari, Greatec, NE, Coraza, OXB

Most of these are trading at -0.5SD to -1SD below their 7-year mean PE.

Conclusion: 13MP Sets the Stage for a New Era

13MP positions Malaysia on a transformative path toward a high-tech, high-value, and inclusive economy. With robust sectoral strategies, strong infrastructure commitments, and targeted reforms, the country is primed for sustainable growth and global competitiveness. Investors should closely monitor sectoral developments and capitalize on opportunities in key stocks and industries poised to benefit from Malaysia’s next growth cycle.