With a unique history in Asia including colonisation, religious and ethnic diversity and a communist revolt, Malaysia is now a model stable democracy and economy in Asia. Volker Friedrich, Asian Insiders Partner in Malaysia presents a strong case for taking a closer look at the benefits of business and investment in Malaysia.
Malaysia is located on the Malay Peninsula between Singapore and Thailand as well as sharing parts of the island of Borneo and with a population of just over 32 million people. The official language is Malay but English is widely spoken however the country is a peaceful multi-ethnic and multi-religious society. Malaysia is blessed with diverse landscapes from tropical beaches and rainforests to mountainous regions, as well as its rich cultural heritage and modern cities such as Kuala Lumpur – the capital with its iconic twin towers.
Business and investment in Malaysia is attractive for several reasons:
- Strategic location: Malaysia is strategically located at the crossroads of Asia, making it an ideal hub for businesses looking to tap into the wider Southeast Asian market. Malaysia is also well-connected to major markets in Asia and the rest of the world, which makes it an attractive location for companies looking to establish a regional base.
- Strong economy: Malaysia has a diversified and rapidly growing economy, with a high level of economic stability. The country has a well-developed infrastructure and a highly skilled workforce, making it attractive for businesses looking to establish operations in Southeast Asia.
- Favourable business environment: Malaysia has a favourable business environment, with a stable political climate, low levels of corruption, and a supportive government that offers tax incentives and relaxed regulations for foreign investors. Malaysia has a well-established legal system, which provides protection for business interests and intellectual property rights.
- Diverse culture and language: Malaysia is a culturally diverse country, with a large population of English-speaking people, which makes it attractive for multinational companies looking to establish operations in Southeast Asia. The country has a multi-lingual and multi-ethnic population, which provides a ready market for companies looking to tap into the wider Southeast Asian region.
Some of the larger international investors in Malaysia include:
- Royal Dutch Shell: A major player in the oil and gas sector, Royal Dutch Shell has been operating in Malaysia for over 100 years.
- Procter & Gamble: A leading consumer goods company, Procter & Gamble has been manufacturing and distributing products in Malaysia for over 50 years.
- Toyota: The Japanese automotive manufacturer Toyota has been operating in Malaysia for over 50 years with a significant presence in the country’s automotive industry.
- Intel: The American technology company Intel has been operating in Malaysia for over 30 years and plays a major role in the country’s electronics and semiconductor sector.
- Samsung: The South Korean electronics giant Samsung has a large manufacturing presence in Malaysia, with operations in the electronics and semiconductor sector.
- BASF from Germany has made Malaysia a strategic hub for all their downstream investment.
- Infineon, the digital controller from Germany is continuing to build up the production capacity in the state of Melakka.
- B.Braun also from Germany has a production line for medical equipment in Penang and employs around 10,000 people.
These are just a few examples of the many international companies that have invested in Malaysia.
In 2021 Malaysia enjoyed a nominal GDP of around $388 billion, making it the 40th largest economy in the world. The Malaysian economy is dominated by the services sector, which accounts for over 55% of the country’s GDP, followed by the manufacturing sector at 26%, then the agriculture sector at 9%. The remaining 10% primarily reflects the the mining and construction sectors.
In recent years Malaysia has experienced steady economic growth at around 4 – 5% The country has a highly developed and diversified economy, with strong trade and investment ties with countries in the Asia-Pacific region, as well as with Europe and the United States. The government has implemented various economic reforms and initiatives aimed at boosting Malaysia’s competitiveness while attracting foreign investment.
European countries that have invested in Malaysia include:
- United Kingdom: The UK has been a significant investor in Malaysia for many years, particularly in the financial services, and oil & gas sectors.
- Germany: German companies have invested in a range of sectors in Malaysia, including automotive manufacturing, chemicals, and machinery.
- Netherlands: Dutch companies have invested in various sectors in Malaysia, including chemicals, logistics, and renewable energy.
- France: French companies have invested in the automotive, cosmetics, and food and beverage sectors in Malaysia.
- Switzerland: Swiss companies have invested in a range of sectors in Malaysia, including pharmaceuticals, watchmaking, and financial services.
The cost of doing business in Malaysia is generally lower than in many European countries due to factors such as lower labour costs, lower tax rates as well as lower costs for raw materials and infrastructure. However the actual cost of doing business will depend on factors such as the specific industry and location and may be higher in some cases. We recommend conducting a cost analysis to determine the specific costs in conducting business in a particular region.
Malaysia has a national development plan, The Malaysia Plan that outlines the government’s vision and strategy for the country’s development. The latest plan, The Malaysia Plan 2030, outlines the country’s vision and aspirations for the future and presents a roadmap for achieving them.
The main objectives of Malaysia Plan 2030 include:
- Achieving high-income status: to transform Malaysia into a high-income economy by 2030.
- Enhancing competitiveness: to improve the country’s competitiveness through innovation and productivity.
- Strengthening inclusiveness: to create a more inclusive society by reducing inequality and ensuring that all Malaysians have equal access to opportunities.
- Ensuring sustainability: to ensure that Malaysia’s development is sustainable, both economically and environmentally.
- Promoting innovation: to promote innovation and entrepreneurship in key sectors such as technology, education, and health.
The Malaysia Plan 2030 is a comprehensive and ambitious plan that seeks to transform Malaysia into a developed nation by 2030. It aims to achieve this through a combination of economic, social, and environmental reforms, as well as increased investment in key sectors such as infrastructure, education, and technology. This works to create an environment where foreign investment, innovation and engagement is welcomed by the Malaysian government and workforce.
Asian Insiders has years of experience in Malaysia and offers insight, understanding and fast-track, assured engagement in the market. For a no-obligation call, please contact Managing Partner, Jari Hietala: jari.hietala(at)asianinsiders.com or Volker Friedrich, Malaysia Partner: volker.friedrich(at)asianinsiders.com