Malaysia: Business in Malaysia

Aired July 2006

Located in Southeast Asia, Malaysia consists of two geographical regions divided by the South China Sea.

The country is a federation of 13 states, covering a total land area of just over 115,000 square miles, or slightly larger than the state of New Mexico.

Malaysia's central location in the Asia Pacific region makes her an ideal gateway to Asia.

A centre of trade for centuries, Malaysia today is one of the most pleasant, hassle-free countries in Southeast Asia.

It's buoyant and wealthy, with one of the highest standards of living in the region, and has undergone tremendous growth and prosperity in the last 2 decades.

The capital Kuala Lumpur is an Asian tiger that roars. In almost 150 years, it has grown into a bustling city of almost two million people. It's a modern Asian landscape of gleaming skyscrapers that still preserves the essence of its roots.

Malaysia’s rapid growth over the past 20 years has been financed and sustained by high domestic savings and by large inflows of foreign direct investment, attracted by the country’s well-developed infrastructure, capable administration and well-educated workforce.

For the years 2006 to 2010, the government has developed its Ninth Malaysia Plan to provide support for continued strong economic outcome. The plan covers proposed government projects, investments and policies for all sectors of the Malaysian economy and society.

The country aims to become a fully developed nation by 2020.

BANKING AND FINANCE

The banking and finance sector in Malaysia is robust and dynamic.

The fixed exchange rate regime was abandoned in July 2005 in favour of a managed floating system.

Malaysia also wants to position itself as an international Islamic banking hub. Islamic banking is based on Syariah principles and does not allow the paying or receiving of interest, and promotes profit sharing.

The Securities Commission also introduced several measures as part of the on-going exercise to ensure the growth and orderly development of the capital and securities market.

The overall thrust is to create a strong, resilient and competitive financial sector that will provide the catalyst for higher growth in the economy. In the future, efforts will be focused on strengthening and maintaining the financial sector’s stability.

TRADE AND INDUSTRY

Over the last 30 years Malaysia has industrialised rapidly, transforming itself from an agricultural economy into an economy dominated by manufacturing and services. The sector accounts for 85% of gross export earnings on average.

The implementation of the country's first national car project by Proton in 1985 was an important step towards the development of an integrated motor vehicle industry.

With the rapid development of the motor vehicle assembly and manufacturing industry in Malaysia, the value of component parts and accessories manufactured in the country totalled over $1.4 billion in 2004.

Malaysia ranks as the 10th largest exporter of furniture in the world, and the third in Asia, with exports to more than 160 countries. In 2004, exports were worth $1.5 billion.

With the challenges from globalisation and liberalisation, Malaysian furniture manufacturers have given greater emphasis to the finishing, design and production of higher quality products coupled with local branding, mostly for the export market.

Malaysia is one of the world's 12 mega biodiversity centres with abundant natural resources in flora, fauna and marine ecosystems. The government is interested in using these vast resources to develop a vibrant biotechnology sector in the local economy. They are committed to promoting efforts that will result in joint-ventures and collaborations between local and foreign parties to undertake research and development activities.

In order to diversify the country's sources of growth, the government continues to promote the development of Malaysia's resource-based industries, and welcomes foreign partnership.

In addition to fiscal incentives which are currently available for promoted products and activities, the government has further fine-tuned the incentives to promote specific activities within the industry, while continuing to expand the sector.

ENERGY

Petroleum and natural gas, which were discovered in oilfields offshore have contributed much to the Malaysian economy. In 2004 Malaysia was ranked 24th in terms of world oil reserves and 13th for gas.

Petronas, Malaysia's petroleum giant, was established to develop the country's oil and gas resources. Currently, overseas operations, including international exploration and production, make up nearly one-third of Petronas’ revenue.

In 2005, the government revealed that Malaysia's oil and condensate reserves stood at 5.3 billion barrels, and that the country ranked among the top 5 LNG producers in the world.

It is predicted that at current production rates, Malaysia will be able to produce oil for another 18 years and gas for another 35.

The provision of facilities and services supporting the petroleum and gas industries is an activity that is already undertaken by local group EPIC.

Port management of an all-weather port on the eastern shore of Malaysia is part of the group activities. One of the deepest seaports in Malaysia, its multipurpose berth provides port facilities to various industries to handle different types of cargo.

In addition to warehouse and storage facilities, the group is also involved in other technical and manufacturing service activities including fabrication, engineering works and equipment testing and inspection.

INFRASTRUCTURE AND ICT

Malaysia's persistent drive to develop and upgrade its society has resulted in one of the most comprehensive infrastructure developments among the newly industrialising countries of Asia.

Information and communications technology development plays a crucial role in the government's plans and policies for the economy.

In 1996, Malaysia launched a program called Vision 2020 - a plan to build a fully developed, knowledge-rich society by the year 2020. Vision 2020 will be achieved through the development of the ICT sector and the use of ICT to increase global competitiveness.

As of 2003, an estimated 1,000 foreign companies, including technology manufacturers, data centers and communication-related industries have a presence in Malaysia.

The growing economy has created a demand for skilled professionals in the ICT sector. To address this issue, the Malaysian government is investing in a high-quality, comprehensive education system designed to meet the demands of the competitive global economy.

Malaysia is an excellent example of a developing nation with a government that recognizes the benefits of using ICT to promote economic growth and increase the quality of living.

TOURISM

Tourism is an important sector of Malaysia’s economy – it’s the 2nd highest GDP contributor after the energy sector.

Malaysia offers its visitors a unique opportunity to experience the rich diversity in culture and heritage, and also to experience some of the most pristine natural wonders.

The multi-ethnic and multi-faith nature of Malaysia’s society is an attraction in itself. The evolution of the country into a cultural melting pot is evident everywhere.

Coinciding with the country’s 50th year of independence in 2007, there will be a third edition of the Visit Malaysia Year campaign. Visit Malaysia Year 2007 is expected to increase the number of tourist arrivals to the country to 20 million.

Malaysia’s rainforests far outdate those of South America and Africa. One of the country’s largest rainforest park is Taman Negara.

Preserving the natural heritage and keeping the forest in its innate form is part of the country’s efforts at eco-tourism. The revenue brought in by this major tourist activity has in turn supported local governments in preserving their natural heritage, in particular the rainforests.

Some of the country’s best-kept secrets are the enchanting dive sites around the many islands. Malaysia’s coastline offers a tremendous amount of oceanic bio-diversity.

With a comprehensive development plan for progress already in place, and a vibrant economy that continues to grow, Malaysia has great potential for successful investment opportunities.