Successfully investing in Malaysia

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last updated on June 5, 2019

 

​​How do you assess the current economic situation in Malaysia?

The economic indicators are more positive than expected. The Malaysian economy grew by 4.7 per cent in 2018. It is generally assumed that the positive trend will continue in 2019, and that the economy will continue to grow by around 5 per cent. Further economic indicators point to a stable economy: inflation is less than 1 per cent; the trade balance surplus in 2018 was more than 7 billion Euros. With an unemployment rate of around 3 per cent, full employment de facto prevails. This in turn drives domestic demand.

 

How would you describe the investment climate in Malaysia? Which sectors offer the largest potential?

The investment climate in Malaysia is and remains positive for quite a number of reasons. The legal provisions regarding the admissibility of foreign direct investment are very liberal. Only a few strategic sectors are still affected by restrictions. The country is in fact actively seeking investors. Government agencies accompany foreign investors in their projects. Many approval procedures are bundled and issued by only one competent authority. In addition, there are still attractive tax incentives for companies bringing new know-how and technology into the country.

 

Malaysia is more and more seen as an alternative to China when it comes to diversifying a company's supply chain. Malaysia's membership in the ASEAN community also plays a relevant role, as the country has the potential to be a stepping stone into the entire ASEAN economic area.

 

Malaysia is traditionally known for a well-established industrial sector. Besides the predominant manufacturing industry, high-tech, electronics and green technology such as PV panels do also deserve to be mentioned. Further noteworthy sectors are the remarkably well developing telecommunications industry as well as retail trade.

 

What challenges do German companies face during their business ventures into Malaysia?

Malaysia offers the potential investor an investment-friendly and not over-regulated legal framework. Nevertheless, the regulations and procedures are characterized by British Common Law, which significantly differs from continental European legal systems, calling for competent professional advice.

 

Malaysia may also be perceived as demanding in the intercultural field: individual population groups follow their own individual customs. This applies to the Malay-Muslim majority, but also to the ethnic Chinese and Indian minorities. Here, too, a thorough preparation definitely pays off.      

  

In 2019, Malaysia will become a partner country of the International Tourism Exchange Berlin (ITB). What possible impact will this partnership have on Malaysian-German economic relations?

Malaysia has a lot to offer in terms of tourism - from beautiful beaches to UNESCO World Heritage sites - and is unjustly overshadowed in this area by neighbors such as Thailand, Singapore and Indonesia (especially Bali). The partnership will certainly boost the well-developed Malaysian tourism industry, hopefully also moving the country more into international focus: with regard to both, tourism and potential investments.
 

How do you expect Malaysia to further develop?

Malaysia is developing into an industrial nation that will have to take the leap into the independence of the currently still flowing oil and gas revenues within a few decades from now.

These will have to be replaced by a strong industrial and services sector.

 

The change in government performed in 2018 – being the first in over 60 years – did not result in the political instability predicted by some voices. On the contrary, the new government has taken a whole series of confidence-building measures to directly appeal not only to voters, but also to investors. These measures include, for example, speeding up the repayment of input tax.

 

Malaysia is thus most likely to remain a liberal and stable democracy over the next few years, offering potential investors an investment-friendly climate.


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