Malaysia Country Profile

An Expert's View about Business Environment in Malaysia

Last updated: 13 Feb 2012

Malaysia- the sparkling gem of South-East Asia

Malaysia is a country with a rich and long history, situated in the heart of South East Asia and consists of two separated regions. The western peninsula- where most multinationals and factories are based- is 650km away from the eastern part. The eastern part consists of the federal states Sarawak and Sabah.
The country has actively diversified its economy in recent decades from depending solely on exportation of raw materials to extending its manufacturing, tourism and services industries. 
Currently, the technology sector is the fastest growing industry in Malaysia and is quickly becoming one of the global leaders in this field.

Malaysia’s resistance in a global economic crisis
Until the first half of 2008, Malaysia had a constant economic growth with an average of 6%. In 2009 the growth rate dropped 1.7% due to the global crisis.
Thanks to a budgetary stimulus plan the crisis in Malaysia was softened. However due to the fact that the public debt has highly increased, the budgetary deficit has also increased. By implementing a progressive revision of subventions to decrease expenditures, the government’s brave objective is to decrease the budgetary deficit to 3% of the gross domestic product by 2015.
Although the GNP per capita is 6,146 USD, their purchasing power is one the highest in Asia. In addition to the high living standards, Malaysia also has a low unemployment rate. According to the new economic model the main objective is to double the income per head of the population by 2020. With its main export countries being China, Japan and the United States (all three countries having significant demand for foreign exports), it is set to continue on its path of achieving it objective.

Leading industries and markets in Malaysia
The membership of big international organizations is significant for Malaysia, like Association of South East-Asian Nations (ASEAN), the United Nations, World Trade Organization and the Commonwealth of Nations. Being a member of these trade compliances facilitates the trade between key nations that hold many opportunities for Malaysia’s main exports.
Malaysia has good and reliable means to transport goods by sea and on land and is – therefore partly- very open to foreign trade which represents more than 50% of the GDP.
The total import of goods and services in 2010 was 196,773 million USD and the total export of goods and services 231,279 million USD. The latter increased with 24.24% in comparison with 2009.
One of the most important export products of Malaysia is rubber. Also tin, rice, cacao, palm oil, pepper and pineapple have a high export percentage. As a result of these strong exports, agriculture in the country employs about 15% of the population.
With the manufacturing industry representing around 30% of the GDP, Malaysia is already one of the main world producers of electrical goods and appliances and semi conductor devices. The country also currently has the aspiration to be the main world producer of high-tech products –which also includes software. This is a brave aspiration; however they are proving to be moving in the right direction despite the global crisis of recent years.

Trading with success in Malaysia
When doing business in Malaysia, it is important to know and understand their business culture. Malaysians appreciate courtesy and mutual trust. Moreover, they also often develop their personal relations over a meal and appreciate gifts, but gifts are not essential. Finally it is crucial to know how to be patient in your business dealings, because the Malaysians need to feel comfortable and trust in you before entering a committed business transaction and/or relationship.
With a thorough command of the business culture, many foreigners can successfully invest in Malaysia and reap many rewards. Factors that make foreign direct investment in Malaysia appealing are –among other things- a transparent and liberal investment policy, competitive costs and growing purchasing power. The drawback is red tape and the shortage of qualified workers. The three countries that have the highest percentage of FDI in Malaysia are Singapore, United States and Japan with 17.1%, 12.2% and 12.1% respectively. 
The government of Malaysia encourages foreign direct investment, but they have set up a number of rules. These rules in particular are targeted towards high tech production companies. Back in 2003, the government created a program to give the economy a boost. This shortly includes an extension of 5 more years of tax exemption for pioneering- and priority companies. Companies who benefit from this so called Multimedia Super Corridor program have easy tax regulations.

Use for your business in Malaysia.

More resources can be found on doing business in Malaysia on
You will find 83 market analyses to understand the main business opportunities in Malaysia, 17 business tip articles on how to import/export in Malaysia, and many qualified service providers such as lawyers, export consultants, customs brokers etc.,

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Posted: 10 January 2012, last updated 13 February 2012

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