Thursday, August 30, 2007
Why Invest In Malaysia?
Renowned as a stable, well-established financial hub with one of the strongest economies in Asia, Malaysia has much to offer to investors.
Malaysia is a country on the move. From a country dependent on agriculture and primary commodities in the sixties, Malaysia has today become an export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries.
The structural transformation of Malaysia's economy over the last 40 years has been spectacular. Often dubbed the "lucky country" because of its wealth of mineral resources and fertile soils, Malaysia did not rest on its laurels but took decisive steps to progress 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.
Continuous Economic Growth
Malaysia's pragmatic and flexible management approach has enabled the economy to raise its competitivenes and enhance its resilience in facing challenging circumstances. Deliberate measure has been taken to make the economy more diversified and broad-based to ensure sustainable growth. Continuous efforts have been pursuit to enhance the services sector, accelerate value-added of the manufacturing sector as well as boost the agriculture and agro-based sector as the third engine of growth. New sources of growth continue to be promoted and developed such as biotechnology, information and communications technology, halal products and Islamic finance. Indeed Malaysia is developing as a knowledge-based economy, driven by human capital, innovation and ideas.
The global environment remains challenging in 2007, as a result of a persistently high crude oil price, inflationary pressures and monetary tightening, which has resulted in higher interest rates as well as the prospects of slower growth in the second half of the year. However, Malaysia remain confident in facing these challenges to achieve a healthy growth rate for 2007, given the nation more diverse economic structure and strengthened domestic fundamentals.
Malaysia continues to enjoy healthy surplus in the external trade, low unemployment as well as strong international reserves and high national savings.
Supportive Government Policies
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
Generally, foreign investors in Malaysia's manufacturing sector can hold 100% equity in projects which export at least 80% of their production. However, effective from 17 June 2003, 100% foreign equity holding is allowed for all investments in new projects, as well as investments in expansion/diversification projects by existing companies irrespective of their level of exports.
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 10 expatriate posts, including five key posts, that is, posts that are permanently filled by foreigners.
Attractive Tax Incentives
Malaysia's company tax rate is attractive at 27% and is applicable to both resident and non-resident companies. 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
Educated Work Force
Malaysia offers investors a young, educated and productive workforce at very competitive costs. Malaysia's literacy rates are high at more than 94% and school leavers entering the job market have at least 11 years of basic education.
Malaysia offers investors a young, educated and productive workforce at costs competitive 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 at more than 94% and school leavers entering the job market have at least 11 years of basic education. In addition, labour productivity has grown steadily at more than 3.3% per annum over the last few years surpassing that of many developed countries.
High Priority on Education
Education and training are accorded high priority in national development under Malaysia's five-year development plans.
To-date, there are more than 17 public and 20 private universities and colleges, as well as various polytechnics and industrial training institutes that offer courses leading to certificate, diploma, degree and post-graduate degree qualifications. Total enrolment in public institutions of higher learning alone is projected to reach over 300,000 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 programmes on a twinning basis with overseas institutions of higher learning, while foreign universities have set up branch campuses in the country.
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 National Vocational Training Council under the Ministry of Human Resources coordinates the planning and development of a comprehensive system of vocational and industrial training programmes for all public training agencies. It also develops the National Occupational Skills Standards (NOSS) on a continuous basis. To-date, there are more than 700 standards 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.
Malaysia's persistent drive to develop and upgrade its infrastructure has resulted in one of the most well-developed infrastructure among the newly industrialising countries of Asia. 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 industrialising countries of Asia. A landmark event was the completion of Malaysia's newest and biggest airport, the Kuala Lumpur International Airport (KLIA), which opened for business in 1998. The following year, Cyberjaya, Malaysia's first intelligent city and the nucleus of the country's Multimedia Super Corridor (MSC), became a reality, complete with a multimedia university to provide a pool of knowledge workers for industries. Recently launched is Kuala Lumpur Sentral, a transportation hub integrating all major rail transport networks, including the Express Rail Link to the KLIA and Putrajaya, the government's new administrative centre.
Network of Highways
Peninsular Malaysia's network of well-maintained highways is a boon to industries. 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 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, 95% of the country's trade is by sea via Malaysia's seven international ports - Penang Port, Port Klang, Johor Port, Port of Tanjung Pelepas, Kuantan Port and Kemaman Port in Peninsular Malaysia and Bintulu Port in Sarawak. Hong Kong-based Cargonews Asia placed Port Klang and Port of Tanjung Pelepas among Asia's top ten best seaports and top ten best container terminal operators.
Port Klang's central location and the government's emphasis on making the port a national and regional hub has resulted in an increasing volume of cargo.Port Klang recorded 4.5 million twenty-foot equivalent units (TEUs) for 2002, which ranks it the top 11th in the world. Port Klang's Westport has excellent deep water facilities which allow the world's largest ships to dock without any difficulty. Malaysia's newest port, the Port of Tanjung Pelepas (PTP), at the southern tip of Peninsular Malaysia, commenced operations in late 1999. With the location of Maersk-Sealand's and Evergreen's transhipment facilities at PTP, the port is expected to achieve an annual cargo volume of 2.5 million TEUs in 2003. Another port, Kuantan Port on the east coast of Peninsular Malaysia, is also undergoing a 30-year expansion to meet increasing throughput from the massive petrochemical complex along the Kertih-Gebeng corridor. Besides the physical infrastructure being in place, the electronic data interchange (EDI) in Port Klang, Penang Port and Johor Port has allowed speedy clearance of cargo with the electronic transfer of documentation.
Malaysia's central location in the Asia Pacific region makes her an ideal gateway to Asia. Air cargo facilities are well-developed in the five international airports - the Kuala Lumpur International Airport (KLIA), Penang International Airport and Langkawi International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak. Malaysia's biggest airport, the KLIA, located 50 kilometres south of Malaysia's federal capital of Kuala Lumpur, has an initial capacity of 25 million passengers and 650,000 tonnes of cargo per year. Cargo import and export procedures are fully automated at the KLIA to cut down delivery time. Within a short span of two years since its opening, the KLIA was ranked number one for overall business passenger satisfaction* in an International Air Transport Association (AITA) survey.
Developed Industrial Parks
Industries in Malaysia are mainly located in over 200 industrial estates or parks and 13 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.
Specialised 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 cater to technology-intensive industries and R&D activities. TPM is among the world's most advanced and comprehensive centres for R&D by knowledge based industries. Spanning 300 hectares (750 acres), its first phase comprises 12 state-of-the-art buildings with specific functions. 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. Besides providing one of the best infrastructure there is for high technology manufacturing and R&D, the Park’s Masterplan also emphasizes on the quality of life within a self-contained township. Amenities incorporated in the plan include a shopping centre, a hospital, educational institutions and recreational facilities. Phase 1 of its Industrial Zone is fully leased while there are still some limited prime industrial land in Phase 2 to host interested companies.
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 facilities.There are also four internet service providers and five cellular service operators providing services nationwide.
Malaysia is linked to the rest of the world through various fibre 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.
Malaysia's telecommunications network has seen impressive expansion and upgrading during the past decade following the successful privatisation of its Telecommunications Department. The latest digital and fibre optics technology is being used to provide high quality telecommunication services at competitive prices.
A Vibrant Business Environment
Malaysia's market-oriented economy, supportive government policies and a large local business community that is ready to do business with international corporations have made Malaysia a highly competitive manufacturing and export base. 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. In addition, 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.
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 oganisations are invaluable sources for general business information, advice and assistance, and complement the role of government agencies such as MIDA. The major organisations, 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 wish to establish a presence in the region. Besides the commercial banks, merchant banks, finance companies and industrial finance institutions are major sources of credit to the industrial sector in Malaysia. Exporters in Malaysia can also take advantage of the credit facilities offered by the Export-Import Bank of Malaysia Berhad (Exim Bank), while another institution, Malaysia Export Credit Insurance Berhad (MECIB), offers export insurance cover and guarantees. To complement Malaysia's financial system, the government has established an international offshore financial centre (IOFC) 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 started their operations in Labuan. These include offshore banks, trust companies, and insurance and insurance related companies. The Labuan Offshore Financial Services Authority (LOFSA) is the agency which promotes and develops Labuan as an IOFC.
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 programmes, 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.
Joint-Venture Partners in Malaysia
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.
Quality of Life
Malaysia is among the most friendly and hospitable places in the world to work and live in, while Malaysians are warm, friendly people who easily accept foreigners into their circle of friends.
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 civilisations - 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 RM2,700 - 8,500 (US$762-2,398) for a furnished 3-bedroom condominium in the suburbs of Kuala Lumpur to RM10,000 - 28,000 (US$2,821-7,900) for a luxury bungalow in the posh neighbourhood of Kenny Hills 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 Johor, Kelantan, Melaka, Negri 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.
With the wide range of foodstuffs and consumer products available in the supermarkets and departmental stores, expatriate wives will find Malaysia a home-away-from-home. Establishments in Malaysia cater for every taste and budget and range from shopping malls to hypermarkets to 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, and expatriates usually not only take back with them fond memories of their stay but also many a collector's item as well .
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 many an exciting weekend at Malaysia's national parks with their magnificent rivers and mountains. Or fly to one of the many island retreats for snorkelling and scuba diving. Or drive for a game of golf in a cool hill resort. 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. A not-to-be-missed attraction in the federal capital of Kuala Lumpur is the Petronas Twin Towers, the world's tallest building, where one can enjoy world-class performances in the acoustically-perfect Petronas Philharmonic Hall.