Legal Market Overview
With a surge of COVID-19 cases in spring and summer 2021, Malaysia’s economy remains stagnant; although the country’s state of emergency came to an end in July 2021, economic recovery is some way off. The result is the continuation of last year’s trends, with a reduction in IPOs and difficulties with financing and cash flow for many companies. There has been a corresponding growth in insolvency and restructuring, leading to debt and asset recovery cases. Islamic and Syariah-compliant financial products are, however, seeing growth, with bonds and debt financial products eating into the share of conventionally financed debt instruments.
The increase in disputes due to pandemic-related delays – particularly prominent in the construction industry – has carried over from last year, as has the proliferation of force majeure insurance and reinsurance litigation. The defaults that were anticipated last year have started to materialise, with domestic aviation and the oil industries particularly hard hit. Oil and gas have started to recover, but projects and developments which were paused or fell through because of the pandemic have yet to restart. When more ambitious projects are able to proceed, however, renewable energy looks likely to take a more central place in the energy market.
TMT is a rare economic bright spot, with plenty of work created by the country’s 5G roll-out and envisaged national network. This is planned to launch in Kuala Lumpur by the end of 2021, in major cities in Penang, Johor, Selangor, Sabah and Sarawak by 2022, and in smaller cities and rural areas from 2023 onwards. Cryptocurrencies and fintech more generally continue to be growth areas. The Central Bank of Malaysia is opening up digital banking licenses, which will allow successful license applicants to reach the underbanked, generally rural, segment of the population.
The legal landscape remains largely unchanged, with firms such as Skrine, Adnan Sundra & Low, Shearn Delamore & Co and Christopher & Lee Ong prominent across commercial, corporate and banking work, although boutique firms are becoming more prominent in some of the practice areas, particularly in dispute resolution.