Investment in Malaysia

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Why Malaysia?

 

A Dynamic Business Environment

Malaysia, strategically located in the heart of South East Asia, offers a cost-competitive location for investors intending to set up offshore operations for the manufacturing of advanced technological products for regional and international markets.

Supported by a market-oriented economy and pro-business Government policies, Malaysia offers investors a dynamic and vibrant business environment with the ideal prerequisites for growth and profits. Malaysia’s key strengths include well-developed infrastructure and productive workforce. A politically stable country with a well-developed legal system, Malaysia also provides attractive incentives for investors.

Advancing with Technology

Technological advancement has become an integral part of Malaysia’s growth as an industrialized nation. With the help of technology, Malaysia is steadfast in providing for the modern day requirements of investment companies based in the country.

Malaysia is one of the most technologically developed countries amongst industrializing nations in the ASEAN region. The nation’s persistent drive to engage modern technologies proves to be a great advantage to manufacturers in Malaysia.

Well-Developed Infrastructure

Infrastructure in Malaysia is designed to serve the business community; it is one of the best in Asia. The are many reason that make Malaysia and ideal springboard into the Asia-Pacific market. Some of those being well-maintained highways, the five international airports, the seven international seaports, and a telecommunications network that is comprised of digital and fiber optic technology.

Industries in Malaysia are predominantly located in over 500 industrial estates and Free Zones developed throughout the country. These zones are categorized as export processing zones, which cater to the requirements of export-oriented industries. There are also specialized parks that have been developed to cater to the needs of specific industries.

Human Resources

One of Malaysia’s greatest assets is it’s human resources. The workforce here is young, educated and productive, proving to be one of the best in the region. The Government’s emphasis on human resource development ensures the continuous supply of manpower to meet the needs of the expanding manufacturing and services sectors.

Towards the Economy of Tomorrow

As a result of perceptive foresight, strategic planning, and abundant resources, Malaysia offers investors a wide spectrum of investment opportunities. The technologically-inclined economy of Malaysia is proven through the country’s involvement in advanced electronics manufacturing, R&D, biotechnology, photonics, logistics, design, innovation and a highly automated manufacturing sector, to name a few. The Government’s objective is also to make Malaysia a hub for other value chain activities, such as R&D, design and development (D&D), procurement, logistics, distribution and marketing, business support services and shared services.

A Heaven for Foreign Companies

The conducive business environment in Malaysia has made the country one of the world’s top investment destinations for offshore manufacturing operations. Malaysia has, to date, attracted more than 5,000 foreign companies from more than 40 countries to establish their operations in the country. Many of them have also expanded and diversified their operations in the country, reflecting their confidence in Malaysia as a site for their business ventures.

Competitiveness Ranking

The Malaysian Government continues to ensure that, the country remains an attractive business destination for investments. Malaysia’s aspiration to achieve a high-income economy by 2020 has led the country to double it’s efforts to attract investments and drive productivity and innovation through political, economics and regulatory reforms. These efforts have received worldwide recognition through improved rankings in reports by various international institutions.

 

 

The Global Competitiveness Report

The Global Competitiveness Report 2015-2016, released by the Switzerland-based World Economic Forum, ranked Malaysia 18th out of 140 economies compared to 20th position out of 144 countries previously.

 

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World Bank Report of Doing Business

The focus of the World Bank Doing Business 2016 Report (DB 2016) is on the quality of regulations. Based on the improved measurement that focuses on regulatory quality and efficiency, Malaysia is ranked 18th out of 189 economies joining the world’s top 10 percent easiest to do business economies.

 

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World Competitiveness Yearbook

In the recent World Competitiveness Yearbook 2015 (WCY) compiled by Switzerland based Institute for Management Development (IMD), Malaysia retained its ranking among the top 15 nations. Although we were ranked 14th from 12th previously, remaining in the top 15 globally among the most competitive nations indicates our economy’s resilience and competitiveness.

 

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Supportive Government Policies

A major factor that has attracted investors to Malaysia is the government’s commitment to maintain a business environment that provides companies with the opportunities for growth and profits.

This commitment is seen in the government’s constant efforts to obtain feedback from the business community through channels of consultation such as regular government-private sector dialogues.

These allow the various business communities to air their views and to contribute towards the formulation of government policies which concern them.

 

Liberal Equity Policy

Since June 2003, foreign investors could hold 100% of the equity in all investments in new projects, as well as investments in expansion / diversification projects by existing companies irrespective of the level of exports and without excluding any product or activity.

 

Employment of Expatriates

Foreign companies in the manufacturing sector are allowed to employ expatriates where certain skills not available in Malaysia. A company with foreign paid-up capital of US$2 million and above will be allowed up to ten expatriate positions. Five of these ten positions are “key spots”, that are permanently filled by foreigners.

 

Attractive Tax Incentives

The corporate tax rate is 25% and the maximum individual tax rate 26%. Malaysia also offers a wide range of tax incentives for manufacturing projects under the Promotion of Investments Act 1986 and the Income Tax Act 1967.

The main incentives are the Pioneer Status, Investment Tax Allowance, Reinvestment Allowance, Incentives for High Technology Industries and Incentives for Strategic Projects and Incentives for the Setting-up of International/ Regional Service-based Operations.

 

Developed Infrastructure

The greatest advantage to manufacturers in Malaysia has been the nation’s persistent drive to develop and upgrade its infrastructure. Over the years, these investments have paid off and serious bottlenecks have been avoided. Today, Malaysia infrastructure is some of the most modern and developed amongst newly industrializing Asian countries.

Kuala Lumpur Sentral is one of the latest developments to showcase Malaysia’s outstanding infrastructure. KL Sentral is a modern transportation hub that integrates all major rail networks throughout the area while also functioning as a futuristic self-contained city. The transport facilities offered are on par with the best the world over.

 

Highway Network

Peninsular Malaysia’s network of well-maintained highways benefits the country’s industries utilizing them. These highways link major growth centres to seaports and airports throughout the peninsula and provide an efficient means of transportation for goods. To complement these highways, a rail line from Kuala Lumpur to Bangkok known as the Asean Rail Express (ARX) has been started. The goal is to expand it to become the Trans-Asia Rail Link that will include countries close to Malaysia: Singapore, Vietnam, Cambodia, Laos, Myanmar, and some South of China.

 

Efficient Seaports

International trade, especially seaborne trade, has traditionally been the lifeblood of Malaysia. Today, more than 90% of the country’s trade is by sea via Malaysia’s seven international ports namely Penang Port, Port Klang, Johor Port, Port of Tanjung Pelepas, Kuantan Port and Kemaman Port in Peninsular Malaysia and Bintulu Port in Sarawak. All these ports are equipped with modern facilities. Bintulu Port handles liquefied natural gas.

In tandem with the expansion of the economy and trade, ports in the country registered impressive growth in recent years. Two of the ports; Port Klang and the Port of Tanjung Pelepas(PTP), are ranked among the top 20 container ports in the world. Port Klang has been made the national load centre and the transshipment centre. Whereas the Port of Tanjung Pelepas has been recognised as a regional transshipment hub.

 

International Airports

Malaysia’s central location in the Asia Pacific region makes it an ideal gateway to Asia. Air cargo facilities in the seven international airports around the country are well-developed to receive passenger and cargo planes. Malaysia’s biggest airport, the KLIA, has a handling capacity of 40 million passengers and more than 1.2 million tons of cargo per year. Cargo import and export procedures are fully automated at the KLIA to cut down delivery time.

 

Developed Industrial Parks

Industries in Malaysia are mainly located in more than 500 industrial estates, or parks, and 18 Free Industrial Zones (FIZs). New sites that are fully equipped with modern infrastructure (roads, electricity, water, and telecommunications) are continuously being developed by state governments and private developers to meet demand.

FIZs are export processing zones which have been developed to cater to the needs of export-oriented industries. Companies in FIZs are allowed duty free imports on raw materials, components, parts, machinery, and equipment that are directly required in the manufacturing process. In areas where FIZs are not available, companies can set up Licensed Manufacturing Warehouses (LMWs) that benefit from the FIZ duty laws.

 

Specialised Parks

Specialized parks have been developed in Malaysia to cater to the needs of specific industries. Examples of these parks are the Technology Park Malaysia (TPM) in Bukit Jalil, Kuala Lumpur and the Kulim Hi-Tech Park in the northern state of Kedah which caters to technology-intensive industries and R&D activities. TPM is among the world’s most advanced and comprehensive centers for R&D by knowledge based industries.

To the North is the sprawling 1,450-hectare (3,580-acre) Kulim Hi-Tech Park, the country’s first, fully-integrated high technology park. Aside from boasting one of the best infrastructure systems, the Park’s Masterplan also emphasizes on the quality of life within a self-contained township. Amenities incorporated in the plan include a shopping center, a hospital, educational institutions, and recreational facilities.

 

Hi-Tech Telecommunications

Malaysia’s telecommunications network has seen impressive expansion and upgrading over the past decade following the successful privatization of its Telecommunications Department. The latest digital and fiber optics technology is being used to provide high quality telecommunication services at competitive prices.

Under the Equal Access Regime, telephone subscribers in Malaysia can choose from five network service providers for a full range of local, domestic, and international services encompassing voice and data usage. There are also six internet service providers, five telco’s, and other network services supporting a full range of domestic and international services .

Malaysia is linked to the rest of the world through various fiber optics and satellite consortia such as FLAG, SE-MA-WE, APCN, China-US, Japanese-US, Measat and Intelsat. To support the increasing demand for bandwidth, medium and high-end technologies such as IDSL, IP, VPN and ATM are being extensively deployed throughout the country.

An Educated Workforce

Malaysia offers investors a young, educated, and productive workforce at costs that compete with other countries in Asia.

Backed by the government’s continued support of human resource development in all sectors, the quality of Malaysia’s workforce is one of the best in the region. Literacy levels are high and (graduates) entering the job market have at least 11 years of basic education.

 

High Priority on Education

Education and training are given high priority in national development under Malaysia’s five-year development plans.

To date, there are 20 public and 21 private universities. Malaysia also boasts an abundant amount of other colleges, polytechnics, and industrial training institutes. These platforms offer courses leading to certifications, diplomas, bachelors and post-graduate degrees.

Total enrollment in public institutions of higher learning is projected to reach over 350,000 with more than half in the science and technical disciplines.

The private sector has also set up educational institutions to supplement the government’s efforts to generate a larger pool of professionals and semi-professionals. Among these are institutions of higher learning set up by large corporations such as Telekom Malaysia Berhad, Tenaga Nasional Berhad and Petronas which provide degree-level courses. Various private colleges work with international institutions to offer special degree programs, while some foreign universities have setup their own branches to seize Malaysia’s educational opportunity. Educational institutions in Malaysia generate a large pool of professionals with undergraduate and post-graduate degrees.

 

Industrial Training

In 1993, the Human Resource Development Fund (HRDF) was launched by the government to encourage training, retraining and skills upgrading in the private sector. Employers in the manufacturing and service sectors who contribute to this fund are eligible to apply for grants to defray or subsidise the costs incurred in training and retraining their workforce.

The Department of Skills Development (DSD), formerly known as the National Vocational Training Council under the Ministry of Human Resources, has many responsibilities. Some examples are: coordinating the setup of all public and private training institutions, evaluating the demand for existing and future skills, identifying future vocational and industrial training needs, and continuing to develop standards under the National Occupational Skills Standards (NOSS). To date, there are more than 700 certified standards which covers certificate, diploma and advanced diploma qualifications.

Besides the increasing number of public training institutions such as technical schools, polytechnics, industrial training institutes and skills development centres to meet the growing requirements of the industrial sector, collaborative efforts between the Malaysian government, enterprises and foreign governments have resulted in the establishment of several advanced skills training institutes such as the German-Malaysian Institute, Malaysia France Institute, Japan Malaysia Technical Institute, British Malaysia Institute and Malaysian Spanish Institute.

 

Harmonious Industrial Relations

Industrial relations in the country are harmonious with minimal trade disputes that result in strikes. Malaysia’s labour laws safeguard the interests and spell out the rights and responsibilities of employers and employees, thus providing a legal framework for the orderly conduct of industrial relations in the country.

Vibrant Business Environment

A market-oriented economy and government policies that provide businesses with the opportunity for growth and profits, have made Malaysia a highly competitive manufacturing and export base. Malaysia’s rapid move towards the k-economy allows companies to do business in an environment that is geared towards information technology.

One of Malaysia’s major pull factors is its large pool of young, educated, and trainable workforce. Many of Malaysia’s university graduates are trained overseas in fields such as engineering, accountant, allowing them to adapt easily to an international corporate environment. English is widely used in Malaysia, especially in business. This simplifies the investor’s communication with local personnel and suppliers.

The country’s legal and accounting practices derived from the British system are familiar to most international companies. In addition, Malaysia retained its position as the third best destination in the world for outsourcing activities, after India and China, according to A.T. Kearney’s 2009 Global Services Location Index (GLSI).

 

Chambers of Commerce and Industry

Newcomers to Malaysia’s business scene will feel at home with the presence of the various chambers of commerce and trade associations made up of corporations from different countries. These organizations are invaluable sources for general business information, advice, and assistance. They compliment the role of government agencies such as MIDA.

The major organizations, are the Malaysian International Chamber of Commerce and Industry (MICCI), Federation of Malaysian Manufacturers (FMM), the Japanese Chamber of Trade and Industry (JACTIM), and American-Malaysian Chamber of Commerce (AMCHAM), as well as several trade associations such as the Malaysian-American Electronics Industry (MAEI) Group.

 

Developed Financial Facilities

A well-developed financial and banking sector has enhanced Malaysia’s position as a dynamic export base in Asia. Sophisticated financial facilities are available through domestic and foreign commercial banks and their nationwide network of branches. There are also representative offices of several foreign banks that have established their presence in the region. The commercial, investment, and Islamic banks are major sources of financing to support economic activities in Malaysia.

The non-bank financial intermediaries, comprising development financial institutions, provident and pension fund insurance companies, and Takaful operators complement the banking institutions in mobilizing savings and meeting the financial needs of the economy.

Malaysia has also emerged at the forefront in the development of Islamic finance. It has a comprehensive and vibrant Islamic financial system which includes Islamic Banking, Islamic Capital Market, Takaful and Retakaful, and Islamic Interbank Money Market.

Exporters in Malaysia can also take advantage of the credit facilities, export insurance coverage and guarantees, offered by the Export-Import Bank of Malaysia Berhad (EXIM Bank). To complement Malaysia’s financial system, the government has established the Labuan International Business and Financial Centre (Labuan IBFC) on the island of Labuan located off the north-west coast of Borneo.

Companies in Labuan enjoy minimal taxes as well as confidentiality. Today, more than 2,700 offshore companies have started operations in Labuan. These include offshore banks, trust companies, and insurance related companies. The Labuan Financial Services Authority (Labuan FSA) is a one-stop body that spearheads and coordinates the development of Labuan IBFC.

 

Local Vendors

Over the last three decades, Malaysia has developed a large pool of ancillary and supporting industries. They were started with the entry of MNCs into the country. These MNCs, especially those which pursued active vendor development programs, have contributed greatly towards the development of local small-and-medium scale industries (SMIs) that are highly competent and competitive. Some of these SMIs beginning to penetrate some export markets.

 

Joint-Venture Partners in Malaysia

Most large Malaysian companies have been involved in trade and industry for generations. Many have excelled in international and regional markets. Thus, foreign investors seeking joint-venture partners in Malaysia will be able to select from a wide range of companies to find one that matches their needs. MIDA also assists foreign investors in business match-making to start joint-venture projects or to undertake contract manufacturing.

Economic Strength

Making Transformation Happen

Malaysia has progressed from an economy dependent on agriculture and primary commodities to a manufacturing-based, export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries. To move the country forward, the Government has crafted a framework comprise of four pillars to drive the change.

The New Economic Model (NEM) is to be achieved through an Economic Transformation Program (ETP). The ETP is a key pillar to propelling  Malaysia into being an advanced nation, with inclusiveness and sustainability in line with goals set forth in Vision 2020. The ETP will be driven by eight Strategic Reforms Initiatives (SRIs) which will form the basis of the relevant policy measures.

Three other pillars have been launched over the past year. They are the 1Malaysia, the Government Transformation Program (GTP) to strengthen public services in the National Key Results Areas (NKRAs) and the 10th Malaysia Plan 2011-2015, the economic blueprint that will set the tone of the whole country development over the next five years. It contains the new policy directions, strategies and programs all targeted at enabling Malaysia to emerge as a developed high-income nation.

Quality of Life

Malaysia is among the most friendly and hospitable places in the world to work and live in. In addition, the country’s consistently warm, tropical climate allows light, comfortable clothing throughout the year.

Expatriates and their families will enjoy a safe, comfortable living environment. The lifestyle includes 21st century amenities, great healthcare and medical facilities, excellent educational institutions, and world-class recreational and sports facilities. All these come at a lower cost than the many of the expats home countries.

One of the country’s most distinctive features is its rich diversity of cultures, a heritage derived from its racial mix of some of the world’s oldest civilizations – Malay, Chinese and Indian. This melting pot of race and culture has enabled Malaysians to speak at least two, and even three, languages – Malay (the national language), English, and their own native dialect. Living in such a cosmopolitan environment, Malaysians are warm, friendly people who easily accept foreigners into their circle of friends.

Comfortable Housing

There is a wide selection of comfortable housing in Malaysia. According to a survey on expatriate living costs by the Malaysian International Chamber of Commerce & Industry, monthly rentals for accommodation can range from as low as RM2,500 – 3,800 for a furnished 3-bedroom condominium in the suburbs of Kuala Lumpur, to approximately RM15,000 for a luxury bungalow in a posh neighborhood closer to the city.

International Schools

There are over 30 international schools registered with the Ministry of Education. These schools are located in the federal territories of Kuala Lumpur and Labuan, and in the states of Johor, Kelantan, Melaka, Negeri Sembilan, Pahang, Penang, Perak, Sabah and Sarawak.

They include American and British style international schools as well as French, German, Japanese and Taiwanese schools that have facilities for pre-school to college education.

An Unsurpassed Lifestyle

Life in Malaysia is an adventure. The year-long warm and sunny climate offers an unsurpassed lifestyle, especially for people who love the outdoors. Families can spend almost every weekend at Malaysia’s national parks with their magnificent rivers and mountains. If mountains and rivers are not your thing, the oceans surrounding Malaysia are perfect for snorkeling and SCUBA diving. If you like golfing in the tropics, you will find a plethora of course options available from high in the mountains to lower in the city.

For people who prefer to be indoors, they can shop-until-they-drop in ultra-modern shopping complexes that offer the latest in designer fashions, leather goods, and electronic items at very competitive prices.

Shopping

With the wide range of foodstuffs and consumer products available in the supermarkets and departmental stores, expats will find Malaysia a home-away-from-home. Establishments in Malaysia cater for every taste, budget, and price range. This is possible with the different style of markets like shopping malls, hypermarkets, and specialty stores. A novelty for expatriates is the pasar malam, or night market, where hawker stalls sell almost anything – from fresh fruits and vegetables to clothing and shoes.

Malaysia is also a treasure chest of artifacts and antiques. Expats will usually take some of these back home as a reminder of the experiences they had while here. Some antique collectors might even find a treasure or two buried among the stores.

When thinking about dining, Malaysia is one of the countries in the world where a family can afford to eat out almost everyday of the week. Depending on one’s budget, the choice of eating places can range from posh hotels and chic sidewalk cafes to fastfood joints and hawker stalls. No one ever gets bored from the limitless variety of cuisines available.

A not-to-be-missed attraction in the federal capital of Kuala Lumpur is the Petronas Twin Towers where one can enjoy world-class performances in the acoustically-perfect Petronas Philharmonic Hall.