Contents

1.0 Introduction..................................................................................................... 2
2.0 Environmental Analysis Of Malaysia................................................................3
2.1 Economic Analysis of Malaysia.....................................................................3
2.2 Cultural Analysis of Malaysia........................................................................3
2.3 Technology Analysis of Malaysia...................................................................4
3.0 Business Issues................................................................................................ 5
4.0 Referencing...................................................................................................... 9

1.0 Introduction
Malaysia is a multi-ethnic, multicultural and multilingual society. It is a fast growing
state-oriented and newly-industrialised economy with liberal market policies aimed
at promoting trade, entrepreneurship and industrial and economic development.
Initiatives undertaken by the government and the private sector are investor-centric
and business-friendly with the primary aim of encouraging market development. This
has transformed Malaysia into one of the most dynamic business environments in
South East Asia.
Malaysia has a mixed economy with active participation in business by both the
private and public sector. Although traditionally a commodities-led economy,
services have contributed to the country's recent economic growth and now
comprise the largest sector of the economy. Primary economic activities in Malaysia
include manufacturing, export trade, services, tourism, and commodities such as
petroleum, palm oil, natural rubber and timber. Information technology is also a
growing industry.
Despite being adversely affected by the economic crisis, the economy contracted by
1.7 per cent in 2009, the economy quickly recovered, experiencing positive growth
rates in the years following; furthermore, growth is expected to remain resilient in
2015/16.
The major trading partners of Malaysia are United States, Singapore, Japan, People's
Republic of China, Thailand, Hong Kong, South Korea Germany, and Indonesia.
While this guide makes reference to some of the most common issues investors
might face, it must be noted that certain industries, such as the financial services
sector, are subject to special regulations. For the avoidance of doubt, the content of
this guide shall not be construed as, and is not meant to constitute, professional
advice.

2.0 Environmental Analysis Of Malaysia

The official name for Malaysia is the Federation of Malaysia which is a form of
federated constitutional monarchy under the Supreme Head of State of Malaysia, His
Majesty, the Yang di-Pertuan Agong. The Yang di-Pertuan Agong will elect who is the
becoming Prime Minister and with the Prime Minster advice, also elect the

cabinets.As the constitutional monarch is concern, the Yang di-Pertuan Agong will
holds office for five years after being elected by the conference of Rulers. A few
political parties can be found in Malaysia but the main political party is the National
Front (Barisan National). It is a multiracial party which consists of 14 parties with the
largest being the United Malays National Organization (UMNO). As for the House of
Representatives (Dewan Rakyat), they have 192 members and are the legislative
authority of Malaysia. These representatives are elected by popular vote for the
terms of five years .

2.1 Economic Analysis of Malaysia

In year 2016, it is believed that the ringgit is expected to weaken against the US
dollar as macroeconomic conditions in Malaysia deteriorate. The exchange rate
against the US dollar has been erratic in recent months might be caused by the
fluctuations in the US dollar. A weaker ringgit might help the US trade
competitiveness.
For foreign investors to enter the Malaysian market, there are some incentives given
by the Malaysian government. According to 'Bernama (2008), Malaysian government
continue to give tax relief to enhance private investors, incentives to attract foreign
direct investments as well as provide more funds to boost regional economic
corridors despite tough economic conditions.' Since that Harvard University is a US
brand University, they could get tax relief and some incentives from the Malaysian
government upon investing in the country. 'Bernama (2008) also stated that the
government has allocated an additional RM300 million under the Strategic
Investment Fund to further strengthen private investment.

2.2 Cultural Analysis of Malaysia

Malaysia represents a unique fusion of Malay, Indian and Chinese traditions, creating
a multicultural and pluralistic nation that has its character strongly rooted in social
harmony, religion and pride in its ancestral background. Today, Malaysia offers a
unique blend of old traditional culture and new technological innovations. Since
Malaysia is a multicultural nation with different races and religion around the corner.
In Malaysia, the official language of Malaysia is Bahasa Malaysia but English is very
widely spoken by the nations. There are other major languages as well that are being
used in the country such as Chinese language and Tamil language. The other part of
Malaysian uniqueness is that most of the Malaysian can speak more than one
languages and many others dialects too.
2.3 Technology Analysis of Malaysia
Malaysia is an emerging Asian economy aspiring to move towards a technologydriven and high-tech production-base pattern of development. In fact, Malaysia has
been categorized in a group of countries that has the potential to develop their own
technology.
The well use of information technology in a business enables to smooth an
organization. Currently, the country has various types of facilities for communication.
They have telecommunication facilities such as telephones, fax and emails in the
country. The advance in telecommunication can save the cost of travelling. For
instance, if meeting is needed, staff can use video conferencing as their tools to
communicate instead of taking a plane and travel for 10 hours just for a day
meeting.

Besides telecommunication, Malaysia is also advance in transportation. They have

transportation like planes, cars, trucks and other kinds of transportation available in
the country that can bring one from places to places.

3.0 Business Issues

Malaysia as the third largest economy in ASEAN is also a trade hub with geostrategic
nexus. It is also the largest and fourth largest trading partner of China and United
State. Malaysia is also negotiating to join into the Trans-Pacific Partnership free trade
agreement.
Malaysia is a leading exporter of electrical appliances, electronic parts and
components, palm oil and natural gas. It shows strong trade performance despite
economic uncertainties and supply chain disruptions. The major category of imports
includes electronics and electrical goods, chemical and chemical products,
machinery, applicances and parts.

Diagram 3.1 shows the portion of export and import of Malaysia.

Foreign Direct Investment in Malaysia increased by 15,000 MYR million in the first
quarter of 2016, accelerating from a downwardly revised 12,200 MYR million in the
December quarter 2015. It is the largest figure since the fourth quarter of 2012. In
the March quarter 2015, foreign direct investment in the Southeast Asian economy
came in at 9,888 MYR million. In the December quarter of 2014, the country's
registered a 9,766 MYR million of foreign direct investment. Foreign Direct
Investment in Malaysia averaged 14837.74 MYR Million from 2008 until 2015,
reaching an all time high of 37325 MYR Million in the fourth quarter of 2011 and a
record low of 5121 MYR Million in the fourth quarter of 2009. Foreign Direct
Investment in Malaysia is reported by the Department of Statistics Malaysia.

Diagram 3.2 shows the growth of FDI in Malaysia from year 2013 to 2016

The opportunities and threats for investing in Malaysia has been summarized as
follow:
Opportunities:
1. Malaysia is moving up the value chain of industries and is currently focusing on
attracting high-technology, high value-added, knowledge-based and skill-intensive
industries, incorporating activities such as design, research and development.
2. Some of the biggest opportunities could lie in the provision of services like
healthcare, eco-tourism, and education. Prime Minister Najib is liberalizing a number
of service sectors and reducing affirmative action policies in ways that should create
more opportunities for foreign investors and also reduce red tape. The government is
also pushing to develop the local capital market. Malaysia is already the worlds
largest market for sukuk, the Islamic equivalent of bonds.
3. As a member of ASEAN and a country that has signed a free-trade pact with China,
Malaysia has the potential to be used as a base to produce goods and services sold
in other, larger but more difficult markets in the region. If Kuala Lumpur can also sign

free-trade pacts with India and Muslim countries in the Middle East, its potential role
as a base to promote certain kinds of business would be even larger.
4. The recent push to cooperate more with Singapore economically could create new
business opportunities in both countries, especially if there is a better interfacing of
key institutions in the two countries.
5. Alongside a number of government incentives for investment, Malaysia offers the
following competitive advantages for investors:

Political and economic stability

A number of liberalisation programmes welcoming more foreign investment
across a large number of sectors

An highly developed transport and telecommunications infrastructure

A skilled labour force with relatively low wage costs

Fully- developed industrial parks, including free industrial zones, technology

parks and Multimedia Super Corridor

The Labuan International Business and Financial Centre offering an attractive

offshore location for financial services activities

Threats:
1. There is a risk that hard-line elements in the dominant political party, UMNO,
might instigate or trigger a political crisis if they lose at the next general election.
This would have negative economic implications.
2. Religious and ethnic tensions have the potential to cause social and political
instability. Advocates of Malay entitlements also have the potential to slow
government reform policies by threatening a Malay backlash.
3. Government-linked entities and local companies with strong political connections
can crowd out other private sector players, including foreign investors, and have
advantages in how big government contracts are awarded and development plans
are focused.
4. The political opposition, if it were to win the next general elections, might be
unable to stay united or to implement social and economic policies that enable
Malaysia to progress on to developed-country status. The main policy uniting the
opposition is their desire to topple the existing government. The actual governing
capabilities of the opposition are untested and therefore a cause of uncertainty.

4.0 Referencing
1. http://www.focus-economics.com/countries/malaysia
2. https://www.gov.uk/government/publications/overseas-business-riskmalaysia/overseas-business-risk-malaysia#political
3. http://www.bmiresearch.com/malaysia
4. Edmund, G. (2007) Politics in Malaysia: The Malay dimension. Edited by Edmund
Terence Gomez. United Kingdom: Routledge.