Malaysia is in its most radical transformation as it battles to achieve Vision 2020. The transformation is visible on the political front, the public sector, and among Malaysian business entities.
Malaysia, strategically located in the heart of Southeast Asia, offers a cost – competitive location for investors intending to set up offshore operations for the manufacture of advanced technological products for regional and international markets. It offers investors a dynamic and vibrant business environment with the ideal prerequisites for growth and profits. Malaysia’s key strengths include a well – developed infrastructure and a productive workforce. A politically stable country with a well – developed legal system, Malaysia also provides attractive incentives for investors. Supported by a market – oriented economy and pro – business Government policies.
The Guide to Malaysia by MDBC member Leisure Guide Publishing.
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 investor 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.
Infrastructure in Malaysia is designed to serve the business community; it is one of the best in Asia. Telecommunications network served by digital and fiber optic technology, five international airports (all with air – cargo facilities), well – maintained highways, and seven international seaports make Malaysia an ideal springboard to the Asia – Pacific market.
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.
One of Malaysia’s greatest assets is her 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.
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.
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.
Government policies that maintain a business environment with opportunities for growth and profits have made Malaysia an attractive manufacturing and export base in the region. The private sector in Malaysia has become partners with the public sector in achieving the nation’s development objectives. 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 2003, foreign investors have been able to hold 100% of the equity in all investments in new projects, as well as investments in expansion / diversification projects by existing companies regardless of the level of exports and without excluding any product or activity.
The Malaysian Government continues to ensure that the country remains an attractive business destination for investments. In our aspiration to achieve a high – income economy by 2020, we are doubling our efforts to attract investments and drive productivity and innovation through political, economic, and regulatory reforms. These efforts have received worldwide recognition through improved rankings in reports by various international institutions.
EMPLOYMENT OF EXPATRIATES
Foreign companies in the manufacturing sector are allowed to employ expatriates where certain skills are not available in Malaysia. A company with foreign paid – up capital of US $2 million and above will be allowed up to 10 expatriate posts, including five key posts (Posts that are permanently filled by foreigners).
In 1993, the Human Resource Department 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 coordinates the setting up of all public and private training institutions, evaluates the demand for existing and future skills, identifies future vocational and industrial training needs and will continue to develop standards under the National Occupation Skills Standards (NOSS).
Besides the increasing number of public training institutions such as technical schools, polytechnics, industrial training institutes, and skills development centers 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.
ATTRACTIVE TAX INCENTIVES
The corporate tax rate is 25% and the maximum individual tax rate is 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.
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, and accountancy, allowing them to adapt easily to an international corporate environment. English is widely used in Malaysia, especially in business, thus facilitating 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).
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 banks, investment banks, 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 and 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 cover 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 Center (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. To – date, more than 2,700 offshore companies have commenced operations in Labuan. These include offshore banks, trust companies, and insurance 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.
HARMONIOUS INDUSTRIAL RELATIONS
Industrial relations in the country are harmonious with minimal trade disputes that result in strikes. Malaysia’s labor 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.
Over the last three decades, Malaysia has developed a large pool of ancillary and supporting industries that was initiated 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 with some even penetrating export markets.
Most large Malaysian companies have been involved in trade and industry for generations, and 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.
Specialized parks have been developed in Malaysia to cater to the needs of specific industries. Examples of these parks are the Technology Park Malaysia 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.
DEVELOPED INDUSTRIAL PARKS
Industries in Malaysia are mainly located in over 500 industrial estates or parks and18 Free Industrial Zones (FIZs) developed throughout the country. New sites, fully equipped with infrastructure facilities such as roads, electricity and water supplies, and telecommunications, are continuously being developed by state governments as well as 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 of raw materials, components, parts, machinery and equipment directly required in the manufacturing process. In areas where FIZs are not available, companies can set up Licensed Manufacturing Warehouses (LMWs) which are accorded facilities similar to those enjoyed by establishments in FIZs.
HI – TECH TELECOMMUNICATIONS
Malaysia’s telecommunications network has seen impressive expansion and upgrading during 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.
AN EDUCATED WORKFORCE
Education and training are accorded high priority in national development under Malaysia’s five – year development plans. To date, there are 20 public and 53 private universities and as well as more than 500 colleges, polytechnics and industrial training institutes that offer courses leading to a certificate, diploma, degree, and post – graduate degree qualifications.
Total enrolment in public institutions of higher learning alone is projected to reach over 500,000 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 in Malaysia offer degree programs on a twinning basis with overseas institutions of higher learning, while foreign universities have set up branch campuses in the country. Educational institutions in Malaysia generate a large pool of professionals with a degree and postgraduate qualifications.
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 can boast of having one of the most well – developed infrastructure among the newly industrializing countries of Asia.
The development of Kuala Lumpur Sentral, a futuristic self – contained city, providing the perfect live, work, and play environment. A modern transportation hub integrating all major rail transport networks, including the Express Rail Link to KLIA and Putrajaya, the government’s new administrative center. The transport facilities offered are on par with the best the world over.
NETWORK OF HIGHWAYS
Peninsular Malaysia’s network of well – maintained highways is a boon to industries. These highways link major growth centers to seaports and airports throughout the peninsular and provide an efficient means of transportation for goods. To complement these highways, a Kuala Lumpur – Bangkok – Kuala Lumpur containerised service known as the ASEAN Rail Express (ARX) has been initiated with the aim of expanding it to become the Trans – Asia Rail Link that will include Singapore, Vietnam, Cambodia, Laos, and Myanmar before ending up in Kunming, China.
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 of these ports are equipped with modern facilities. Bintulu Port handles liquified natural gas.
In tandem with the expansion of the economy and trade, ports in the country have 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 center and the transshipment center, whereas PTP has been recognized as a regional transshipment hub.
Malaysia’s central location in the Asia Pacific region makes her an ideal gateway to Asia. Air cargo facilities are well – developed in the six international airports – The Kuala Lumpur International Airport (KLIA), Penang International Airport, Langkawi International Airport, and Senai International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak.
Malaysia’s biggest airport – KLIA, surrounded by four main cities – Kuala Lumpur, Shah Alam, Seremban, and Melaka, has a capacity of handling 40 million passengers and more than 1.2 million tonnes of cargo per year. Cargo import and export procedures are fully automated to cut down delivery time.
Malaysia is among the most friendly and hospitable places in the world to work and live in. In addition, the country’s tropical climate with its uniform temperatures allows light, comfortable clothing throughout the year. Expatriates and their families will enjoy a safe and comfortable living environment with 21st century amenities, good healthcare and medical facilities, excellent educational institutions, and world – class recreational and sports facilities – at costs much lower than in their own 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 potpourri of race and culture has enabled Malaysians to speak at least two, and even three languages – Malay (the national language), English, and their own mother tongue. Living in such a cosmopolitan environment, Malaysians are warm, friendly people who easily accept foreigners into their circle of friends.
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 RM 2,500 – RM 3,800 for a furnished 3 – bedroom condominium in the suburbs of Kuala Lumpur, to approximately RM 15,000 for a luxury bungalow in a posh neighborhood nearer to the city.
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 Selangor, Johor, Kedah, 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.
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 an exciting weekend at Malaysia’s national parks with their magnificent rivers and mountains, fly to one of the many island retreats for snorkeling and scuba diving, or drive for a game of golf in a cool hill resort. For people who prefer the 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.