Abstract:
Nowadays, the structural of Malaysia economic have a better level based on the
perfonnance percent of GDP at 6. 7 percent. According to the Economic Report and
Bank Negara Report, the service sector plays an important role to generate the
economic growth. However, before the service sector becomes the main important
sector for Malaysia, it has been facing the non-stabilization of growing due to world
economic crisis and the dependence of Malaysia economic to other sectors. In Ninth
Malaysia Plan, the focus of economy Malaysia have shifted to service sector from
manufacture sector because the great ability of the service sector in lead the economy.
Based on the situation, the aim of this research is to analyze the productivity of service
sector growth utilized two different analysis. First the productivity comparison between
service sector to the whole economy. Second, the productivity between all the sub
sectors of service sector. The Malmquist index represent two main component that
define the technical efficiency (CU) and technology efficiency (TC) from the year 1995 to
2007. The result shows; first, the productivity index of service sectors increase within the
year 2005 to 2007 even though the whole economic productivity decrease. Second,
before 2004 the productivity level of service sectors are fluctuate. However from year
2005 to 2007 the productivity perfonnance of transportation, finance and utility sub
sectors increase. The empirical evidence shows that the technology efficiency is better
than the technical efficiency. The finding represents that modem technology has driven
the productivity of service sector. As a conclution, this research able to provide an
empirical evidence of the expansion path of the service sectors especially in the
development of service sectors to the economic growth. The service sector able to
achieve the vision 2020 with one condition, productivity must come first.
