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Malaysia – Investing in ASEAN’s Melting Pot

COUNTRY FACTSHEET MALAYSIA


1. COUNTRY INTRODUCTION:

Country Profiles - MalaysiaFor centuries, Malaysia has profited from its location on a trade crossroads between the East and West, a tradition that carries into the 21st century. Geographically blessed, peninsular Malaysia stretches the length of the Strait of Malacca, one of the most economically and politically important shipping lanes in the world. Malaysia has leveraged its strategic location to become one of the largest producers and exporters of tin, rubber and palm oil. Malaysia has been able to transform its economy from overdependence on raw materials and agriculture to become a relatively high-tech, competitive nation. Services and manufacturing now account for nearly 75 percent of GDP, while agriculture only accounts for less than 10 percent, according to the World Bank. Malaysia’s level of economic development drives both consumer and business demand for products and services. Its consumers, though price sensitive, are accustomed to several decades of strong growth. Thus, they are attracted to and are familiar with international branded products, better education, quality healthcare products and services, as well as ecological lifestyle offerings.
The World Bank classifies Malaysia as an upper-middle income nation, and Malaysia is attempting to achieve high-income status by 2020. Malaysia aims at moving farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. Malaysia’s “Economic Transformation Program” (ETP) is a series of projects and policy measures intended to accelerate the country’s economic growth. The government has also taken steps to liberalise some service sub-sectors, and is continuing efforts to boost domestic demand and reduce the economy’s dependence on exports. Nevertheless, exports – particularly of electronics, oil and gas, palm oil and rubber – remain a significant driver of the economy. Gross exports of goods and services constitute more than 80% of GDP, with 15.8% of Malaysia’s exports going to China, its top trading partner. China’s weakened demand and falling global commodity prices have slowed Malaysia’s prospects for economic growth. In 2015 and 2016 Malaysia’s currency, the ringgit, faced downward pressure due to declining exports and strained government finances.

 

2. KEY ECONOMIC DATA:

Population: 30.95 million
GDP (Current US$): US$ 302.7 billion / EUR 285.9 billion1
GDP (Current US$, per capita): US$ 9,546.00 / EUR 9,017
GDP (PPP): US$ 863.8 billion / EUR 815.2 billion
GDP (PPP, per capita): US$ 27,200.00 / EUR 25,692
Real GDP Growth: 4.3% year-on-year
Consumer Price Index (CPI): 2.0%
Labour Force: 14.77 million
Unemployment Rate: 3.3%
Main Industries: Rubber and oil palm processing and manufacturing, petroleum and natural gas production, light manufacturing, pharmaceuticals, medical technology, electronics and semiconductors, timber processing, agriculture processing, logging
Main Exports: Palm oil, petroleum and liquefied natural gas, palm oil, rubber, wood and wood products, textiles, chemicals, solar panels, semiconductors and electronic equipment.
Exports Partners: Singapore 13.9%, China 13%, Japan 9.5%, US 9.4%, Thailand 5.7%, Hong Kong 4.7%, India 4.1% (2015)
Main Imports: Electronics, machinery, petroleum products, plastics, vehicles, iron and steel products, chemicals.
Imports Partners: China 18.8%, Singapore 12%, US 8.1%, Japan 7.8%, Thailand 6.1%, South Korea 4.5%, Indonesia 4.5% (2015)
Currency: Malaysian ringgit (MYR)
Ethnic groups: Malay 50.1%, Chinese 22.6%, indigenous 11.8%, Indian 6.7%, other 0.7%, non-citizens 8.2% (2010)
Religions: Muslim (official) 61.3%, Buddhist 19.8%, Christian 9.2%, Hindu 6.3%, Confucianism, Taoism, other traditional Chinese religions 1.3%, other 0.4%, none 0.8%, unspecified 1%
Languages: Bahasa Malaysia (official), English, Chinese (Cantonese, Mandarin, Hokkien, Hakka, Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi, Thai
Literacy Rate: 94.6%

 

3. BUSINESS ENVIRONMENT:

Malaysia‘s political and economic stability with a well-developed legal system, prudent and pragmatic investor-friendly business policies, cost-productive workforce, developed infrastructure comparable to that of any Western country and a host of other amenities, makes this country an enticing place for investors. The Malaysian economy enjoys a clear competitive advantage in producing and processing primary products, mostly due to an abundance of natural resources together with a world class transport and telecommunications infrastructure. Malaysia also offers a low-cost business environment, high skill levels, and relatively low salary costs for qualified professionals and executives. The lifestyle, climate, educational opportunities and the availability of a pool of multilingual professionals competent in English and the major Asian languages (i.e. Chinese, Indian, Malay, and Indonesian) are key advantages. Malaysia has also introduced favourable tax laws and incentives to encourage foreign investment, particularly into added-value industries such as research and development, information and communications, biotechnology, healthcare, education and industrial related technology.
Challenges include Malaysia’s protectionism in certain industries such as the automotive and agriculture industry sectors. Malaysia also shields domestic industries by imposing higher duty rates and excessive excise taxes, and uses a system of import permits or licenses to reduce imports in protected and strategic sectors. Government restrictions hamper foreign involvement in several areas, including government procurement contracts, financial, business, and professional services and telecommunications. In many cases, it is imperative to have a local partner, usually a Bumiputra (ethnic Malay-owned) company, to effectively compete in the market.

 

4. MARKET OPPORTUNITIES:

Through the Economic Transformation Program (ETP), the Malaysian government remains committed to reaching high-income status by the year 2020. This initiative includes a commitment to attracting investment in “National Key Economic Areas” (NKEA) and a commitment to improving Malaysia’s infrastructure, especially its transportation infrastructure in East Malaysia (Sabah and Sarawak).

 

5. SOURCES:

Country Introduction & Key Economic Data:

The World Factbook: https://www.cia.gov/library/publications/the-world-factbook/geos/my.html
Statistical information: http://unctadstat.unctad.org/CountryProfile/GeneralProfile/en-GB/458/index.html
Economist Intelligence Unit Country Reports: http://country.eiu.com/malaysia
Knoema “World Data Atlas”: https://knoema.com/atlas/Malaysia

Business Environment & Market Opportunities:

Malaysia Commercial Guide: http://2016.export.gov/malaysia/doingbusinessinmalaysia/index.asp
Malaysia investment laws: https://www.export.gov/article?id=Malaysia-openness-to-foreign-investment

International Rankings:

IFC/World Bank “Doing Business” Report 2017 – Ranked 23 / 191
http://www.doingbusiness.org/~/media/wbg/doingbusiness/documents/profiles/country/mys.pdf
Transparency International “Corruption Perception Index” – Ranked 55 / 176:
http://www.transparency.org/country/MYS
World Economic Form – Global Competitiveness Report (2016/2017) – Ranked 25 / 138: http://reports.weforum.org/global-competitiveness-index/country-profiles/#economy=MYS

 

Whilst ABP is not yet present in Malaysia, we are ready to support in Malaysia – with our local partners – in the areas of market research and business development, as well as in the fields of corporate governance, compliance assessments, negotiations and alternative dispute resolution.

 

Useful Links:

https://country.eiu.com/malaysia

https://www.cia.gov/library/publications/the-world-factbook/geos/my.html

http://www.adb.org/publications/malaysia-fact-sheet

http://www.worldbank.org/en/country/malaysia

http://www.asidnet.org/web/

http://cpi.transparency.org/cpi2013/results/

http://www.weforum.org/reports/global-competitiveness-report-2013-2014

 

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