FDI in figures

Total world FDI flow to Malaysia increased substantially in the 1990s. A large part of the capital was invested in high technology and telecommunications. Ensuingly, Malaysia's FDI flow dropped considerably in terms of US dollars, and afterwards markedly recovered in 2004. It was fairly widely spread out between the services, manufacturing and oil industries. It seems that the profits re-invested by the existing multinationals make up the main FDI in-flow. According to the authorities, Malaysia could become a foothold access to the ASEAN market and to do this, it offers foreign companies various incentives, namely the pioneer company status and tax reductions linked to investment. In 2008, FDI flow slowed down and continued to do so in 2009 because of the crisis.

The government has tried to promote FDI in the manufacturing industries aimed at export and in capital and technology-intensive industries. At the same time, it has tried to restrict investment in branches of production considered to be essential for national development such as the automobile industry, as well as in branches of production with low added value and a high intensity of manpower. The government maintains considerable discretionary powers with regard to authorizations for investment projects, which were used to put a ceiling on foreign involvement and to demand preferential agreements in technology transfers and joint-ventures.

Why you should choose to invest in Malaysia

Strong points

The main factors that make FDI attractive are:
- A liberal and transparent investment policy;
- Competitive costs;
- Rationalization of public services;
- Attractive investment incentives;
- Developed infrastructures;
- A strategic location linked to the proximity of the main Asian markets;
- Significant resources;
- Growing spending power.

Weak points

Malaysia's weak points are red tape and a shortage of qualified worker.

Government measures to motivate or restrict FDI

The Malaysian governement encourages FDI by a number of incentive mesures particularly towards industries exporting "high-tech" products and back office operations services. In 2003, the government launched a program to boost the economy, which extended the total number of years of tax exemption from 10 to 15 for "pioneer" companies and from 5 to 10 years for priority companies. Firms which benefit from the "Multimedia Super Corridor" (MSC) program have easy taxes and regulations terms.

 

In order to face the crisis, the government adopted different mesures: supporting company balance-sheets, maintaining the redistribution of the oil annuities (subsidies for basic products and the education and hospital systems, and major construction policies), strengthening of the financial system and economic liberalization. At the same time, in order to favor the transfer of technology and facilitate the influx, into the country, of qualified staff, Malaysia is looking to liberalize the expatriate employment regime in the manufacturing sector.

Bilateral investment conventions signed by Malaysia

Malaysia has negotiated bilateral FTAs at the same time as the negotiations within the framework of ASEAN, and is in talks with Japan, India, Korea, Australia, New Zealand and Pakistan. It has signed a framework agreement on trade and investment with the United States.

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.

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)