Globally Competitive Business Environment

MalaysianBusinessMalaysia’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. Malaysia’s rapid move towards the knowledge-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).

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 have established their presence in the region. The commercial banks, investment banks and Islamic banks are mojor 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 mobilising 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 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. To-date, more than 2,700 offshore companies have commence  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.

Local Vendors

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.

Facts and Figures

Malaysia possesses a stable environmental climate with very little threat of natural disasters such as hurricanes, earthquakes and floods. The country’s infrastructure as well as the support from the government, makes it a very conducive location for being a regional hub.

Security

According to the Global Peace Index 2012, Malaysia is ranked at 20th, even above Singapore at 23rd. Malaysia is also ahead of countries like Poland (24th) and ranked way higher than among the APAC nations such as Indonesia (63rd), China (89th), Thailand (126th), Philippines (133rd) and India (142nd).

Indicators include:
• Level of safety and security in society
• Extent of domestic or international conflict
• Degree of militarization
*Global Peace Index, Institute for Economics and Peace 2012

Who really PROTECTS INVESTORS? It’s Malaysia, ranked 4th in the world, ahead of Australia (53), Brazil (70), China (88),Japan (15), the UK (9) and the US (5).
*Doing Business, 2011

Efficient Practices

In the Connectivity Scorecard 2010 for RESOURCE and EFFICIENCY DRIVEN ECONOMIES, a measure of the effective use of ICT infrastructure and education improve efficiency, Malaysia is ranked first ahead of Brazil (6), China (17), India (21), Indonesia (20), the Philippines (19), Thailand (12) and Vietnam (15).
*The Connectivity Scorecard, 2010

Out of 58 economies, Malaysia is ranked 9th for GOVERNMENT EFFICIENCY, ahead of countries such as China (25), Indonesia (23), Japan (37), The Netherlands (17), the Philippines (31), South Korea (26) and Thailand (18).
*IMD Business School, 2011

When it comes to REGULATORY SUPPORT FOR BUSINESS, Malaysia is ranked 2nd, ahead of Brazil, China, India, Indonesia, the Philippines, Russia and Thailand.
*IMD Business School, 2011

Global Competitiveness

According to the World Bank’s Doing Business Report 2014, Malaysia has surged to 6th spot, among 189 countries ahead of economies such as South Korea (7th), Norway (9th), United Kingdom (10th), Australia (11th) and Finland (12th).

*World Bank Doing Business 2014 Data

According to the World Economic Forum (WEF) Global Competitiveness Report 2013-2014, Malaysia is positioned at number 24th, ahead of countries like Brunei (26th), Thailand (37th) and Indonesia (38th).

The Global Competitive Index is based on 12 Pillars:

  • Basic Requirements: Institutions, Infrastructure, Macroeconomic environment, Health & primary education
  • Efficiency Enhancers: Higher education & training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size
  • Innovation and Sophistication Factors: Business sophistication, innovation

*WEF The Global Competitiveness Report 2013

According to The World Competitiveness Yearbook (WCY) 2012 survey compiled by Institute of Management Development (IMD), Malaysia is ranked at 14th in the world. Malaysia is well ahead of countries like China (23rd), Thailand (30th), India (35th), Indonesia (42nd), Philippines (43rd) and Brazil (46th).

The survey covers four main factors:

  • Economic performance
  • Business efficiency
  • Government efficiency
  • Infrastructure

*Institute for Management Development (IMD) 2012

Economic Growth

According to IDC 2012, the Malaysian economy is forecasted to grow between 4.5% and 5.5% in 2013.

  • Singapore’s economy is expected to grow at 3.9% in 2013 (MAS, 2012).
  • Poland’s economy is expected to grow at at 1.5% in 2013.
  • Brazil’s GDP growth was forecasted in the region of 1.0%.
  • Mexico’s economy is expected to grow at 3.5% in 2013.

*IDC 2012

Government Support

According to the Global Competitiveness Report 2012-2013, Malaysia’s government services for improved business performance is ranked at 4th. Malaysia is ranked ahead of Indonesia (21st), China 32nd), Philippines (51st), Thailand (58th), India (75th) and Brazil (79th).