Malaysia: Investing

FDI in Figures

Global FDI inflows into Malaysia increased a lot in the 1990's, but the net flows of FDI have been negative since 2006, this is a reflect of the policies encouraging the internationalization of companies and the mistrust of investors regarding the profit repatriation earned by foreign enterprises. It seems that the re-investment of profits from the existing multinationals, which are already installed in Malaysia, constitutes the essential components of the FDI income.  The authorities want to make of Malaysia a foothold access to the ASEAN market and in order to promote this, the country offers various incentives to foreign companies, notably the status of pioneer company and tax reductions associated to the investment.  The country benefits from a high-skilled and English speaking workforce.  However, the government maintains a large discretionary power for authorizing investment projects and uses it to obtain the maximum profit from foreign participation and demands agreements that are advantageous in matters of transferring technologies or creating joint ventures.

Why You Should Choose to Invest in Malaysia

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

Guaranteed.

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.

 

Learn more about Foreign Investment in Malaysia on Globaltrade.net, the Directory for International Trade Service Providers.

 

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.

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).

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

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.

Finding Assistance For Further Information

Investment Aid Agency

Malaysian Industrial Development Authority (MIDA)

Other Useful Resources

National Chamber of Commerce and Industry of Malaysia
SME Info
Companies Commission of Malaysia (SSM)

Doing Business Guides

Guide to doing business in Malaysia
Malaysia Commercial Guide 2010 - Buy USA

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