Investment Opportunities in Malaysia

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Protection of Foreign Investment

Bilateral Investment Conventions Signed By Malaysia
Malaysia has negotiated bilateral FTAs at the same time as the negotiations within the framework of ASEAN, and is in talks with Japan, India, Korea, Australia, New Zealand and Pakistan. It has signed a framework agreement on trade and investment with the United States.
International Controversies Registered By UNCTAD
See the UNCTAD database here.
Organizations Offering Their Assistance in Case of Disagreement
ICSID , International Center for settlement of Investment Disputes
KLRCA , Kuala Lumpur Regional Center for Arbitration
Member of the Multilateral Investment Guarantee Agency

Country Comparison For the Protection of Investors

  Malaysia East Asia & Pacific United States Germany
Index of Transaction Transparency* 10.0 5.2 7.0 5.0
Index of Manager’s Responsibility** 9.0 4.5 9.0 5.0
Index of Shareholders’ Power*** 7.0 6.3 9.0 5.0
Index of Investor Protection**** 8.7 5.3 8.3 5.0

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
A majority holding interest in the capital of a company in Malaysia is legal. It is authorised up to 51% for projects exporting between 51% and 79 % of the production. Between 30% and 51% for projects exporting 20% to 50% of the production.
Obligation to Declare
The agency for the promotion of foreign investment in the country allows you to find out about the authorizations needed to set up business.
Competent Organization For the Declaration
Companies Commission of Malaysia (SSM)
Requests For Specific Authorizations
Foreign holdings are limited in radio/television broadcasting, distribution of water and electricity, banks, healthcare, hydrocarbons, the automobile industry, Stock Exchange and leasing companies. In the health sector, private hospital services require a joint venture and holdings in equity capital have a 30% ceiling.
Find Investment Service Providers in Malaysia on

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Office Real Estate and Land Ownership

Possible Temporary Solutions
Rental is possible. Consult the MIDA website for an assessment of cost, here.
The Possibility of Buying Land and Industrial and Commercial Buildings
You can buy land and buildings. Foreigners are not allowed to buy agricultural land, but they can own more than 20% of any commercial estate (there is no restriction on the number of estates).
Risk of Expropriation
The aim of the bilateral investment guarantee agreements is to do away with certain non commercial risks such as nationalization and expropriation and to authorize workers' sending money home and the repatriation of capital. Malaysia has concluded such agreements with 71 countries or groups of countries.

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Investment Aid

Forms of Aid
Direct fiscal incentives consisting of a reduction in the tax on profits for a determined length of time and indirect incentives in the form of exemption from Customs duties, sales tax and excise duties.
Privileged Domains
Direct fiscal incentives (total or partial exemption from income tax for a determined length of time) and indirect incentives (exemption from import tax, sales tax and excise duties).
Privileged Geographical Zones
The government is trying to encourage FDI in exporting manufacturing industries and in capital/ technology-intensive industries such as those of electrical and electronic equipment, biotechnology, exploitation of hydrocarbons, chemistry and multimedia.
Free Zones
There are thirteen free industrial zones (FIZ) and twelve free commercial zones (FIC); the port of Klang is both FIZ and FIC.
Organizations Which Finance
The State (finances industrial training, provides funds for the development of human resources), the Malaysia International Financial Center (MIFC) initiative, the Malaysian banking sector (Export Credit Refinancing), the Islamic Development Bank (IDB).

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Investment Opportunities

The Key Sectors of the National Economy
Malaysia exploits its many natural resources (palm oil, rubber, tin, wood, oil, natural gas), and has developed the electronics and chemical sectors.
High Potential Sectors
Biotechnologies, electronics and electricity, transport, energy, telecommunications, tourism.
Privatization Programs
In 2004 the government launched a restructuration program with a view to privatizing companies linked to the State (GLE) in the sectors of transport, energy, telecommunications, and financial services.
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Malaysia
Asian Development Bank, Procurement Plans in Asia
DgMarket, Tenders Worldwide

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Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
The government restricts investment in those branches of production deemed to be essential for national development such as the automobile industry, as well as in low added value branches of production which are labor-intensive. Foreigners have limited access to services such as financial services, professional services (legal...), accounting, architecture.
Sectors in Decline
Agriculture, mining.

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