A panel of experts on Malaysia’s economy and investment climate introduced the range of investment opportunities in the country at a Chamber webinar on 10 June.
“Hong Kong enterprises looking to explore the vast ASEAN market for investment and sourcing should consider Malaysia as a gateway,” said Yap Wei Sin, Consul General of Malaysia. “We have set up a special China investment channel to speed up investments from the Mainland, Hong Kong and Macao.”
Yap said that Hong Kong was Malaysia’s seventh largest trading partner in 2019, with total trade reaching US$20 billion.
Malaysia has become an attractive investment destination in recent years. Since 2010, and prior to the pandemic, its economy had seen a healthy growth of 5.4% per year on average.
Trade Commissioner Noor Ezzwanee said that the Malaysian government was keen to attract foreign investment to drive the country’s digital transformation in the manufacturing and services sector, and was offering a range of incentives.
She explained that, on top of existing incentives such as income tax exemptions and investment tax allowance, the government had recently announced a two-day fast track approval for investment projects, and zero tax for 15 years for new companies investing in the country’s manufacturing sector with fixed assets of more than RM500 million (around HK$900 million).
“We welcome investment in high technology, capital-intensive and knowledge-driven manufacturing,” she said. “On the services side, Hong Kong companies can bring in their extensive experience in ICT, e-commerce, logistics, and education and training.”
Maybank Chief Economist Suhaimi Bin Ilias, speaking from Kuala Lumpur, said that the Government had rolled out two rounds of economic stimulus packages in March and June in response to the pandemic, totaling over RM300 billion. He was confident that these would help stabilize the country’s economy as early as the first quarter of 2021.
“We are going through the motions of recession, but we are also coming off lockdown lows as the government is easing border controls,” he said. “Ultimately, recovery is a function of reopening and restarting the economy, and Malaysia’s continued open-door policy to foreign investors, with the recently announced investment incentives, should stimulate investment and propel its recovery.”
Another factor that could contribute to Malaysia’s recovery is its growing consumer market. As one of Asia’s wealthiest emerging economies, Malaysia’s GDP per capita ranks third within ASEAN, behind only Singapore and Brunei. Around 60% of the population are classified as middle income, and the country is expected to achieve its transition into a high-income economy by 2024. This has helped boost demand for oil and gas equipment, medical equipment and high-end lifestyle products.
Setting up a company in Malaysia is simple and straightforward, said JC Legal Principal Janice Chew, but requires a resident director – one with a principal place of residence in the country. The minimum monthly wage in the country, at RM1,200, remains competitive given the high standard of the young, multilingual and educated workforce.
There may be some hurdles for foreign investors in adapting to the Malaysian market. “Get to know the culture, and get to know more Malaysian people to understand the nuances of doing business in this country,” Chew advised.
Regarding this issue, Consul General Yap added: “Companies looking to invest in Malaysia should seek suitable local partners such as distributors and agents to facilitate their entry.”
Also speaking at the event, Nick Siew, Associate Director of Hartamas Real Estate Hong Kong, introduced Malaysia’s real estate market. He said that, given the stagnant property market for the past five years, and with the ringgit at a 10-year low, Malaysian real estate was attracting more overseas investors. He advised companies looking to set up an office in Malaysia to consider the variety of locations available.
“If you are trying to sell a product in Malaysia, you would probably set up near Alibaba, which is located in Bangsar South [in Kuala Lumpur], or Shoppy near Singapore.”
He also introduced the Malaysia My Second Home programme, known as MM2H, which is popular among Hong Kong residents.
“The scheme offers a 10-year renewable visa that allows MM2H visa holders to travel freely to the country, register a company without a local director, bring their children and parents, and enjoy income tax exemptions under Malaysia’s double taxation treaty with Hong Kong,” Siew explained, adding that the country does not experience major natural disaster such as earthquakes or typhoons.
“All these conditions help Malaysia secure its position among the top ten retirement destinations in the world.”