Market Competitive Intensity (MCI): Malaysia

Datamonitor's MCI Index offers a robust framework for measuring the development of utility Market Competitive Intensity. The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.

Report Highlights
MCI scores are calculated using two different methods. The first, the simple weighted average (additive) measure shows overall competitive intensity. The second, the multiplicative method, is more complex. It prevents markets with an overly wide spread of underlying raw scores from exerting undue influence over, or skewing, the final result.

Liberalisation, energy pricing issues and environmental concerns will remain key drivers of gas and power market dynamics throughout the MCI forecast period.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor's MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 3
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: market framework, supplier push, customer pull 3
The MCI Index measures the development of 20 diverse Asia Pacific gas and power markets 4
The MCI Index assesses markets in December 2007, and on July 1, 2010, in addition to driving a market switching forecast 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two differing overall MCI scores are calculated to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for your organization 6
Context: The Malaysian gas and power markets remain at the development stage 7
The Malaysian power market slips down one place during our forecast period 7
Development in the Malaysian score remains minimal during the forecast period 8
Power MCI: Competitive intensity is limited throughout the power value chain 9
Aside from the regulatory score, Market Framework scores are minimal 9
Effectiveness of regulator [2007: 7/10 2010: 7.5 /10] 9
The Malaysian government established an Energy Commission (EC) in 2001, which regulates the electricity supply laws and other related matters. The EC is under the Ministry of Energy, Water, and Communications which arguably undermines its independence and autonomy in relation to the Badawi government. 9
While the government has encouraged wholesale market competition, but transmission and distribution are still under a monopolistic structure. Similarly, the government retains tight control over generation, albeit through corporate entities. We do not expect any significant developments towards a more effective regulator over the forecast period. 9
Ease of third party access [2007: 1/10 2010: 1/10] 9
Unbundling is not currently on the political horizon in Malaysia, with third party access remaining highly limited. Competition in the wholesale and retail sector remains at a formative stage, but we do not expect to see any meaningful moves towards unbundling over the forecast period. 9
Effectiveness of balancing and data transfer [2007: 2.5/10 2010: 3.5/10] 10
The current nature of the market means that the balancing regime remain rudimentary and largely ineffective., 10
Supplier Push metrics have significant room for development 10
Wholesale market fragmentation [2007: 5/10 2010: 5.5/10] 10
Retail market fragmentation [2007: 1/10 2010: 1/10] 10
Traded market maturity [2007: 1/10 2010: 1/10] 10
Consumer Pull metrics remain very much at the bottom end of the scale 10
Access to market information and assistance [2007: 2/10 2010: 2.5/10] 10
Consumer representation [2007: 3/10 2010: 3.5/10] 10
Propensity to switch [2007: 0/10 2010: 0/10] 10
Gas MCI: All of Malaysia's gas market scores remain in the bottom half of the scale 11
Other than the regulatory metric, Market Framework scores are currently at zero 11
Effectiveness of regulator [2007: 4/10 2010: 4/10] 11
Ease of third party access [2007:0/10 2010: 1/10] 11
Effectiveness of balancing and data transfer [2007: 0/10 2010: 1/10] 12
There is no balancing regime in the Malaysian gas market at present. 12
Competition in the wholesale and retail markets is absent, resulting in low Supplier Push scores 12
Wholesale market fragmentation [2007: 2/10 2010: 2.5/10] 12
Retail market fragmentation [2007: 0.5/10 2010: 1/10] 12
Customer Pull metrics remain low 12
Access to market information and assistance [2007: 1/10 2010: 1.5/10] 12
Consumer representation [2007: 2/10 2010: 2.5/10] 12
Propensity to switch [2007: 0/10 2010: 0/10] 12
Outlook: : Major reforms will be needed in order to catalyze competitive intensity 13
MCI Scores 14
APPENDIX 17
Definitions 17
Ask the analyst 22
LIST OF TABLES
Table 1: Market Competitive Intensity, Malaysia 2007-10 14
Table 2: MCI additive, Asia Pacific 2007-2010 15
Table 3: MCI multiplicative, Asia Pacific 2007-2010 16
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Table 1: Market Competitive Intensity, Malaysia 2007-10 14
Table 2: MCI additive, Asia Pacific 2007-2010 15
Table 3: MCI multiplicative, Asia Pacific 2007-2010 16
Figure 1: MCI assessment scale 3
Figure 2: MCI assessment framework 3
Figure 3: MCI market coverage 4
Figure 4: MCI scales 5
Figure 5: MCI Applications 6
Figure 6: Asia Pacific power Market Competitive Intensity, 2007-10 7
Figure 7: Asia Pacific gas Market Competitive Intensity, 2007-10 8
Figure 8: Power Market Competitive Intensity Index, Malaysia 9
Figure 9: Gas Market Competitive Intensity, Malaysia 11
Figure 10: Market Competitive Intensity, Malaysia 13
Figure 11: Scale for MCI assessment, effectiveness of regulator 17
Figure 12: Scale for MCI assessment, ease of third party access 18
Figure 13: Scale for MCI assessment, effectiveness of balancing and data transfer 18
Figure 14: Scale for MCI assessment, wholesale market fragmentation 19
Figure 15: Scale for MCI assessment, retail market fragmentation 19
Figure 16: Scale for MCI assessment, traded market maturity 20
Figure 17: Scale for MCI assessment, access to market information and assistance 20
Figure 18: Scale for MCI assessment, consumer representation 21
Figure 19: Scale for MCI assessment, propensity to switch 21
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