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Malaysia welcomes and actively invites foreign investment. It offers a combination of incentives for foreign investors without restriction on the repatriation of capital and profits. There is a well develop infrastructure of support service and facilities and labour force that is priced relatively lower than in developed countries, young and capable of being trained to high levels of productivity.
10 reasons to invest in Malaysia
1) Economic strength
Malaysia is blessed with an abundant array of resources such as crude oil, natural gas, tin, timber, palm oil and rubber. She has a GDP growth of 6.0% in 2014, Gross National Savings of 30.9% of GNI, Per capita income of RM34,123 (USD10,426), an Unemployment rate of 2.9% and Inflation (CPI) of 3.2%. The Malaysian government is actively engage in policies and initiatives that are business friendly, driving the country towards a manufacturing-based export-driven economy which is supported by high technology, knowledge-based and capital intensive industries.
2) Supportive Government Policies
Many of the largest corporations and investors that have made Malaysia a safe haven for their capital and investments have found that the government consistently maintains its commitment towards a business environment that is supportive for business and spurs growth, opportunities and profits.
This Malaysian government consistently obtains feedback from the business community through various channels of consultation such as government-private sector dialogues which have contributed to the formulation of government policies that which concerns them.
Here are some examples of such policies:
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
A foreign company in the manufacturing sector with foreign paid-up capital of US$2 million and above is allowed up to 10 expatriate posts where certain skills are not available in Malaysia. This also includes 5 key posts which are permanently filled by foreigners.
Attractive Tax Incentives
Malaysia offers an attractive tax incentive where the corporate tax rate is 25% and the maximum individual tax rate is 26%. The country also offers a wide range of tax incentives for manufacturing projects under the Promotion of Investment Act 1986 and the Income Tax Act 1967.
Here are some of the main incentives:
- Pioneer Status
- Investment Tax Allowance
- Reinvestment Allowance
- Incentives for High Technology Industries
- Incentives for Strategic Projects
- Incentives for the Setting-up of International/Regional Service-based Operations.
3) Developed Infrastructure
Malaysia has one of the most well developed infrastructure among the newly industrializing countries of Asia. The government’s persistent drive to develop and upgrade its infrastructure has made Malaysia a top choice for foreign investments.
- Network of Highways – Peninsular Malaysia’s network of well-maintained highways link major growth centers to seaports and airports throughout the peninsular and provide provide an efficient means of transportation of goods.
- Efficient Seaports – More than 90% of the country’s trade is by sea via the country’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 equipped with modern facilities.
- Developed Industrial Parks – There are 200 industrial estates or parks and 18 Free Industrial Zones (FIZs) which are developed throughout the country by state governments as well as private developers to meet demand for industries in Malaysia. Free Industrial Zones are export processing zones which have been developed to cater to the needs of export-oriented industries. Companies operating in these zones are allowed duty free imports of raw material, components, parts, machinery and equipment directly required in the manufacturing process. Companies that operates in areas which has no Free Industrial Zones can get Licensed Manufacturing Warehouses (LMWs) which enjoys facilities similar to those accorded by the establishment in Free Industrial Zones.
- Specialized Parks – These parks have been developed to cater to the needs of specific industries that are technology intensive and R&D activities. The Technology Park Malaysia in Bukit Jalil, Kuala Lumpur is among the world’s most advanced and comprehensive centres for R&D by knowledge based industries. Another such park is the Kulim Hi-Tech Park in the northern state of Kedah which is a fully integrated high technology park which is a self contained township with a shopping centre, a hospital, educational institutions and recreational facilities.
4) High-Tech Telecommunication
Malaysia is connected 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. Medium and High-end technologies such as IDSL, IP, VPN and ATM are being extensively deployed throughout the countries to support the increasing demand for bandwidth. The country uses the latest digital and fiber optics technology and provides high quality telecommunications services at competitive prices.
5) A vibrant business environment
All major international companies in the world can attest to the vibrant business environment in Malaysia. The government’s supportive policies, market oriented economy and large local business community that is ready to do business with international corporations have made the country one of the top manufacturing and export base companies destination of choice.
Here are some of the major reasons that supports and help foreign companies flourish:
- Highly competitive manufacturing and export base
- K-Economy allows companies to do business in an environment geared towards information technology.
- Large pool of young, educated and trainable workforce.
- English is widely used in business which facilitates foreign investors communications with local personnel and vendors.
- Legal and accounting practices derived from British system.
- The third best destination in the world for outsourcing activities after India and China according to A.T Kearney’s 2009 Global Service Location Index (GLSI)
- Various Chamber of Commerce and Industry and trade association made up of corporations from different countries. Examples of such organizations are:
- Malaysian International Chamber of Commerce and Industry (MICCI)
- Federation of Malaysian Manufacturers (FMM)
- The Japanese Chamber of Trade and Industry (JACTIM)
- American-Malaysian Chamber of Commerce (AMCHAM)
- Malaysian-American Electronics Industry (MAEI) Group
- Local Vendors – Malaysia has a large pool of ancillary and supporting industries vendors that are highly competent and competitive.
6) Developed financial facilities
Malaysia offers a well developed financial and banking sector with domestic and foreign commercial banks servicing businesses throughout the country. The country has also emerged as the forefront in the development of Islamic Finance with a comprehensive and vibrant Islamic Financial System which includes Islamic Banking, Islamic Capital Market, Takaful and Retakaful, and Islamic Interbank Money Market. Export based companies can use the credit facilities, insurance covers and guarantees offered by Export-Import Bank of Malaysia (EXIM Bank).
Malaysia has also established the Labuan International Business and Financial Centre (Labuan IBFC) whereby companies in Labuan enjoys minimal taxes as well as confidentiality with 2700 offshore companies commencing operations in Labuan which includes offshore banks, trust companies and insurance related companies.
7) Joint-venture partners in Malaysia
Malaysia boast many large and successful companies which has been involved in trade internationally and in regional markets. Foreign investors that are seeking joint-venture partners in Malaysia will be able to find suitable companies that matches their needs to expand and grow their businesses in the country. There are government agencies such as MIDA – Malaysian Investment Development Authority that also assists foreign investors in business match-making to start joint venture projects or to undertake contract manufacturing.
8) Quality of life
Expatriates have always enjoyed a great quality of life in Malaysia. Many have made the country their permanent home and it is one of the most friendly and hospitable places in the world to work and live in. Malaysian are known for their warm and friendly people who welcomes and accepts foreigners into their life.
Here are some of the great things that expatriates enjoy in Malaysia:
- Warm and welcoming communities
- Uniform temperatures throughout the year allowing light and comfortable clothing
- Safe and comfortable living environment with 21st century amenities
- Great healthcare and medical facilities
- Excellent educational institutions
- World-class recreational and sports facilities
- Comfortable Housing from 3-bedroom condominiums to luxury bungalows in posh neighborhood for relatively low prices.
- International schools
- Unlimited adventure – Malaysia offers a rich diversity of culture among its people that is both intriguing and exciting to explore along with many activities ranging from scuba diving, to cave exploring, or a game of golf or just relaxing at one of the many beautiful beaches in the country.
- Shopping – from international brands to local crafts and artifacts, expats will have unlimited choices to spoil their families and loved ones.
9) Political stability
Malaysia has throughout its history since its formation enjoyed a politically stable environment which is conducive for business and investment. Its government is led by a democratically elected coalition Government which is fully committed to develop its economy. To date, more than 5000 foreign companies from 40 countries have established their operation in the country, and many have expanded and diversified their operations here. This truly reflects their confidence in Malaysia as part of their business plans.
10) Strong investor protection
Malaysia has implemented many investor protection policies which has boosted foreign investor’s confidence in doing business here. The country was placed 5th ranking in the world on the World Bank’s Doing Business 2015 investor protection index. Malaysia has taken measures to ensure the security of foreign investments by signing Investment Guarantee Agreements (IGA) with 58 countries which include members of the Association of Southeast Asian Nations (ASEAN) and the Organization of Islamic Cooperation (OIC). This agreement protects foreign companies against nationalization and expropriation, ensure prompt and adequate compensation in the event of nationalization or expropriation, and free transfer of profits, capital and other fees. The country has also established the Kuala Lumpur Regional Centre for Arbitration in 1978 which provides an efficient and confidential system for the settlement of trade, commerce and investment disputes within the region.