business in malaysia

Thriving Business in Malaysia

Doing Business in Malaysia is neither an easy feat nor a difficult ordeal as it is rich in natural resources, bi-lateral ties with neighboring countries and great business leaders. Malaysia ranks 18th in the upper-income economy from a survey in 2012 and World Economic Forum competitiveness ranking of 21st. Thanks to plenty of business resources that could help ensure that entrepreneurs are on the right track to starting and making it a big business in Malaysia. Is Malaysia gearing on being an industrious challenger or does she depend solely on her natural resources? Let’s look at the businesses in Malaysia that helped her build a reputation as the Asian Tiger once upon a time.

Thriving Business in Malaysia

When we look at the industries that are thriving in Malaysia, no doubt the usual majors are in Banking, Telecommunication, Oil & Gas, Plantation, Construction & Manufacturing shape most parts of the country. Malaysia has also been bullish on ensuring that Tourism plays a part by introducing new funds to boost foreign participation in various industries. With investments made down south in the Peninsular via the Iskandar Development plans, it is crafted to draw good business in Malaysia from its neighbor, Singapore. Iskandar Development is all about Johor enticing Singapore with luxuriously affordable real estate, state of the art facilities and business opportunities. Other direct foreign investments come in forms of manufacturing such as Electric & Electronics, Petrochemicals & Oleo-chemicals, Food & Agro processing and Biotechnology.

So what exactly should one look out for when planning on doing business in Malaysia?

Robert Levitt from Levitt Capital Management LLCRobert Levitt, an investment firm, has been investing clients’ bucks in Malaysia and he sees Malaysia as a small populated country that has the ability to be part of the new Asian economic growth engine and is becoming increasingly important to investors.

Malaysian businesses are now beginning to garner new investments elsewhere and certainly Malaysians and foreign companies or entrepreneurs are just waiting to join the bandwagon of business opportunities based on where the facilities and avenues are provided. Most would rely on local & foreign direct investments (FDI) as the compass to do business in Malaysia. In order for Malaysia to be a high-income economy by year 2020, an estimate of RM 1,311 billion of investments – estimates by the Performance Management and Delivery Unit (PEMANDU) – is required and most of it, in the services & manufacturing sector. That’s a whole lot required in a short span of 7 – 8 years. Though Malaysia has been pacing at an average RM 135 billion per year (of which about 60% are from local investments), it will still fall short of the required target, despite ignoring any unforeseen circumstances that might occur. FDI will need to continue to grow to bring that boost required by 2020. So here’s a chart on the split of Malaysia’s investment in 2011 & 2012.

Business in Malaysia

Diving into Malaysia’s 2012 investments, the services streams has strongly overtaken the manufacturing streams at RM 117.6 billion. The Government has thus opened up a number of important services sub-sectors to foreign participation in order to accelerate the growth of the services industry. Allowing foreigners to own businesses in Malaysia or in partnership with locals can help to upgrade the skills of Malaysians and also assist them to establish business links overseas.

Business in Malaysia

The ASEAN commitments have also required Malaysia to progressively open up the domestic services market to participation from other ASEAN countries. The targets and timelines we follow are according to the blueprint mapped out to establish the ASEAN Economic Community by 2015. To date, Malaysia has made liberalization commitments in 96 services sub-sectors between 49-70 per cent ASEAN equity.

Business in Malaysia

And below, a chart on where the money went in sub-sectors, with an obvious huge decline in the E&E and Basic Metal sectors. Business in Malaysia

Perhaps then it would be clearer to see that doing business in Malaysia within the coming years had swung to the services sector as Malaysia relaxes on foreign participation whilst the manufacturing sector moves to another form of growth such as new technologies.

The largest professional services firm, Price Waterhouse Cooper (PWC) analyses that Malaysia still has weaknesses despite its growth, in that dealing business in Malaysia still deals with the politically connected. Lessons to be learnt or risk losing out to China, Vietnam or Indonesia in the race for foreign investment.

Just maybe, Malaysia might stand a chance to return as the Asian Tiger once again by learning from strategic South Korean economy.

Images found on: http://www.mida.gov.my/env3/uploads/PerformanceReport/2012/MIPR2012_ENG.pdf