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In this page: FDI in Figures | Why You Should Choose to Invest in Malaysia | Procedures Relative to Foreign Investment | Investment Opportunities


FDI in Figures

According to the UNCTAD 2013 World Investment Report, Malaysia is the fifth largest recipient of FDI inflows in East and Southeast Asia. In 2013, FDI flows exceeded their previous record levels of 2011, reaching 38.8b RM. The benefits were felt by the manufacturing, services and energy sectors.

The authorities want to make Malaysia into a gate to the ASEAN market and 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.


Country Comparison For the Protection of Investors

  Malaysia East Asia & Pacific United States Germany
Index of Transaction Transparency* 10.0 5.0 7.0 5.0
Index of Manager’s Responsibility** 9.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 8.7 5.4 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 12,19810,07412,306
FDI Stock (million USD) 115,064132,400144,705
Performance Index*, Ranking on 181 Economies 36--
Potential Index**, Ranking on 177 Economies 26--
Number of Greenfield Investments*** 190181144
FDI Inwards (in % of GFCF****) 18.912.915.3
FDI Stock (in % of GDP) 39.843.446.3

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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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 government encourages FDI by a number of incentive measures 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 measures: 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.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
A majority holding interest in the capital of a company in Malaysia is legal. It is authorized 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, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Malaysian Industrial Development Authority (MIDA)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Malaysia
Asian Development Bank, Procurement Plans in Asia
DgMarket, Tenders Worldwide
Other Useful Resources
National Chamber of Commerce and Industry of Malaysia
SME Info
Companies Commission of Malaysia (SSM)

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Learn more about Investing in Malaysia on, the Directory for International Trade Service Providers.

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Last Updates: February 2015