Business-Friendly Environment
Malaysia is recognized globally for its business-friendly environment, ranking favorably in prominent indices. It achieved the 12th position in the World Bank's Ease of Doing Business report (2020), the 24th position in the Index of Economic Freedom for the world's freest economies, and the 27th position in the Global Competitiveness Report (2019) for the world's most competitive economies. Malaysia's commitment to protecting minority shareholders adds to its appeal.
Strategic Location and Trade Connectivity
Situated in the Asia Pacific rim, Malaysia provides access to the ASEAN Community, comprising a staggering 667.3 million people. Its strategic location makes it an ideal hub for sea route trading, featuring multiple seaports.
Robust Free Trade Agreements
Malaysia has firmly established itself through various bilateral and regional free trade agreements. These agreements include partnerships with numerous countries, along with active participation in the ASEAN Free Trade Agreement (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), effective since January 1st, 2022. These agreements offer tariff reductions, facilitate import/export procedures, and provide investor-friendly provisions. Regional agreements with entities like ASEAN-China, ASEAN-India, and ASEAN-Japan further enhance market access and trade advantages.
Established Electrical & Electronics (E&E) Sector
Malaysia holds a prominent position in the global semiconductor industry, accounting for 7% of the total global semiconductor trade. The E&E sector significantly contributed to Malaysia's total exports, reaching RM593 billion in 2022, constituting 38% of the nation's total export volume. It plays a pivotal role in Malaysia's External Trade Surplus, contributing 78% to a surplus of RM255 billion. Employing approximately 590,000 Malaysians, this sector indirectly supports millions more across various industries. Malaysia continues to attract substantial investments, totaling RM148 billion in 2021, comprising 76% of Malaysia's total investment in the manufacturing sector. Despite global market fluctuations, Malaysia remains a compelling destination for E&E companies, with significant investments of RM186.2 billion since January 2020. Ongoing semiconductor policy developments in the US add complexity to the industry, prompting thorough assessments and mitigation strategies by E&E companies worldwide.
Automotive & Transportation
Malaysia's automotive sub-sector, a key economic contributor, employed 710,000 individuals and contributed nearly RM30 billion to the GDP in 2022. Despite challenges like the global microchip shortage, the sector recorded a remarkable 45.8% increase in motor vehicle production to 702,275 units. Recognizing the sector's importance and the need for sustainable semiconductor production, MIDA encourages foreign investments, particularly in electronics and semiconductors. Malaysia's commitment to sustainability, outlined in the 12MP and the National Automotive Policy (NAP) 2020, presents opportunities for foreign investors in the growing Energy Efficient Vehicles (xEV) ecosystem, supported by initiatives like the Low Carbon Mobility Blueprint (LCMB) and the National Energy Policy (NEP), positioning Malaysia as a regional hub for high-value E&E parts and components in the evolving electric vehicle landscape.
High-tech machinery and equipment (M&E) sector
With over 85% of companies being SMEs, Malaysia provides a skilled workforce and tailored solutions, exporting primarily to ASEAN countries, the USA, and China. The sector is poised for growth, with a projected global M&E industry value of RM19.8 trillion by 2023 and an expected 10.1% annual increase in Malaysia from 2023 to 2027, making it an enticing prospect for foreign investors, especially in semiconductor manufacturing M&E and EV battery production M&E. Malaysia's expertise in back-end semiconductor manufacturing and the booming EV battery market further enhance its appeal, with a diverse industry categorization offering versatility for foreign investors seeking opportunities across various sectors.
Life Science & Medical Technology
Malaysia's scientific and measuring equipment industry, a key player in healthcare and research, is driven by advancements that enhance research efficiency. Focused on the medical devices sub-sector, with over 290 businesses, Malaysia is an attractive investment destination for advanced medical devices. With a projected domestic medical devices market of $2 billion in 2022, growing at a CAGR of 7.5%, the country imports 95% of its medical devices. Demonstrating commitment to healthcare reforms, Malaysia's total healthcare expenditure is forecasted to exceed RM69.2 billion by 2025. The industry, valued at $39.4 billion in 2021, is expected to grow at a CAGR of 5.5% from 2022 to 2027, driven by the demand for accurate diagnostics and pandemic risk mitigation solutions.
Cost-Effective Energy and a Highly Skilled Workforce
Investing in Malaysia presents a compelling proposition, featuring cost-effective and stable energy supply, including green electricity programs tailored for industrial use. Coupled with a highly skilled and competitively priced workforce, businesses can achieve operational efficiency while remaining environmentally responsible. Government support and specialized training institutions ensure your workforce is adaptable and industry-ready, making Malaysia an attractive destination for foreign companies seeking economic and sustainable growth.
Multilingual Advantage
Malaysia is a linguistically diverse nation with Malay as the official language. English, Mandarin, and Tamil are widely spoken, facilitating seamless business communication. Most Malaysians, particularly the younger generation, are proficient in multiple languages.
Favorable Tax Regime
Malaysia offers highly competitive corporate tax rates, making it an attractive destination for investors.. The standard Corporate Income Tax (CIT) rate is set at 24% for both resident and non-resident companies.
Investment Guarantee Agreements
Malaysia has entered into multiple Investment Guarantee Agreements (IGA), also known as Promotion and Protection of Investment Agreements. These agreements provide additional safeguards and incentives for investors.