While this article is aimed at those interested in doing business in Malaysia, it is not designed to present an in-depth analysis of investment and exporting opportunities for UK companies. It does however give an overview of some of the favourable conditions that exist within the country together with some of the supporting data drawn from a range of authoritative sources.
There are good economic reasons why UK exporters and investors should choose Malaysia, a High Growth Market, as a country to do business in. It has an ethnically diverse population of 28.3 million (2009 estimate) living within an area of around 127.355 square miles. GDP (2008) was US$528.8 billion and annual growth in 2010 is expected to be around the 5.7% mark (World Bank estimate). Malaysia is number 34 in the list of the UK’s top 50 trading partners with a 2010 (YtD) export value of £933 million. In 2009 Malaysia was the UK’s second largest Southeast Asian export market after Singapore.
Foreign Direct Investment in Malaysia
Malaysia is an influential member of the Association of Southeast Asian Nations (ASEAN), a member of the WTO since 1995, and designated by UK Trade and Investment (UKTI) a “High Growth Market.” As such Malaysia offers exceptional opportunities for British exporters and investors.
ASEAN member states are:
- Brunei Darussalam
- Cambodia
- Indonesia
- Lao PDR
- Malaysia
- Myanmar
- Philippines
- Singapore
- Vietnam
Like a number of its neighbours, Malaysia suffered during the world economic downturn and its government was forced to introduce a number of economic stimuli in order to reverse the trend. Around £12 billion was pumped into the economy, bank interest rates were lowered, and other financial and banking reforms were put in place. The most significant change, however, was the introduction of Malaysia’s New Economic Order (NEM).
Malaysia’s New Economic Order
Philip Schellekens, a senior World Bank economist, outlined the New Economic Order this way. He made the point that Malaysia needed to refocus from quantity to quality driven growth and that more reliance must be placed on private sector initiatives with bottom up decisions being taken.
Schellekens argued that Malaysia should take advantage of emerging Asian and Middle Eastern markets and that foreign talent, including the Diaspora, should be welcomed as a means of raising standards in the workforce. In conclusion he said, "The New Economic Model demonstrates the clear recognition that Malaysia needs to introduce deep-reaching structural reforms to boost growth …”
UK Trade and Investment also acknowledge that the New Economic Model has allowed a liberalisation of the service sector and enabled more foreign investment in the economy. UKTI said Malaysia, “Must move up the value chain in response to the economic challenge posed by China and other low-cost manufacturing economies in the immediate region.”
World Bank – Doing Business in Malaysia
Malaysia is rated (2011) number 21 (out of 183 economies) of the World Bank’s “Ease of Doing Business” table. Other ratings include:
- Starting a business – number 113
- Trading across borders – number 37
- Dealing with construction permits – number 108
- Getting credit – number 1
- Paying taxes – number 23
While some of these rankings are encouraging, the numbers highlight the need for the Malaysian government to do more.
The World Bank also makes an interesting comparison, in terms of ease of doing business, with some of its Southeast Asian neighbours:
- Singapore – number 1
- Hong Kong – number 2
- Korea – number 16
- Japan – number 18
- Malaysia – number 21
- Taiwan – number 33
- China – number 79
These figures are drawn from World Bank publication, Malaysia: Doing Business 2011, which presents a in-depth statistical analysis of a number of procedures which companies must negotiate before trading in Malaysia. It is necessary reading for all UK businesses looking for a foothold in the country.
UK Trade and Investment has identified a number of key market sectors “of opportunity” for UK business:
- Aerospace
- Construction and Green Buildings
- Education and Training
- Financial and Business Related Services
- Healthcare
- ICT
- Oil and Gas
UKTI also offers British companies, with an interest in exporting to or investing in Malaysia, a range of basic support mechanisms including:
- How to do Business in Malaysia
- Preparing to Export to Malaysia
- How to Set-up or Invest in Malaysia
The above information, along with an array of other helpful advice, can be found on the UK Trade and Investment: Malaysia website.
Sources:
World Trade Organisation, Malaysia and the WTO, site accessed 8 February 2011
UK Foreign and Commonwealth Office, Malaysia country information, site accessed 8 February 2011
World Bank, Malaysia: Doing Business in Malaysia 2011, site accessed 8 February 2011
UKTI, Malaysia: market information, site accessed 8 February 2011
Schellekens P, What is New in Malaysia’s New Economic Model, World Bank Blogs, site accessed 8 February 2011
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