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Unlocking Opportunities in Malaysia

Unlocking Opportunities in Malaysia

In today’s global economy, Malaysia stands out as a beacon of opportunity within the dynamic ASEAN region. With a myriad of factors such as the country’s strategic location, political stability, and diverse economy, Malaysia has emerged as a prime destination for businesses looking to expand their operations on the international scale. As a member of the Association of Southeast Asian Nations (ASEAN) region, Malaysia also serves as an indirect waypoint for foreign companies in accessing the large and growing market of the ASEAN region. As a consulting firm with our clients’ best interest in mind, Empire State is keen on unlocking such opportunities and further expand the business of our clients into the promising market of Malaysia to create the best value for our clients. Why is Empire State pushing for expansion into Malaysia? The reasonings behind Empire State’s recommendation may be summarized by the following driving factors:

1. Malaysia market potential

2. Affinity of Japanese companies for Malaysia

3. Pre-existing Malaysian members

4. Government support

Malaysia market potential

Based on the findings of the International Trade Administration (2024), the ASEAN market consists of a population over 662 million , in which over 34 million is contributed by Malaysia.

According to the CEO of Standard Chartered Malaysia, Abrar A. Anwar, the Association of Southeast Asian Nations (ASEAN) region is currently known as a rapid growing trade bloc with increasing economic and financial influence, with positive indicators that it would continue to grow and generate various business opportunities in the future (The Sun, 2022). Among the members of ASEAN, Malaysia is open to businesses in various sectors ranging from agriculture, healthcare, renewable energy, to information and communication technology (ICT). Based on the findings of the International Trade Administration (2024), the ASEAN market consists of over 662 million population in which over 34 million is contributed by Malaysia. The ASEAN market has also reported a gross domestic product (GDP) of USD 3.2 trillion, with Malaysia contributing around USD 445 billion to the figure. The country’s market potential may also be elaborated through its inflationary environment. For instance, Malaysia’s domestic inflation rate was 3.4% as captured in the March of 2023. This was significantly lower than other advanced and regional countries such as Philippines and Singapore, which have reported a domestic inflation rate of 7.6% and 5.5% respectively (Mariadas & Murthy, 2023). The moderate inflation rate of the country thus implies that Malaysia has a better inflationary environment.

Affinity of Japanese companies for Malaysia

As of 2022, Japan remained as one of the largest trading partners of Malaysia with a recorded trade volume of
USD 41.21 billion

The bilateral relationship between Japan and Malaysia has been long established since the 15thcentury with a continuous stream of Japanese residents settling in various parts of Malaysia today. This may be attributed to Malaysia’s Look East Policy (LEP) in the early 1980’s which has significantly strengthen the ties of the two countries after the country’s independence in 1957 (Lai, 2017). Based on the findings of a survey conducted by Pew Research Center (2013), around 80% of Malaysians hold a positive view of Japan and its influence, which makes Malaysia one of the most pro-Japanese countries in the world. Leveraging on these relations, Japanese companies are more likely to be successful when expanding their businesses into Malaysia. This is further supplemented by the Malaysian Investment Development Authority (MIDA) (2022), which reported that around 60% of Japanese companies operating in Malaysia have recorded a surplus in their operating profits in 2021. As of 2022, Japan remained as one of the largest trading partners of Malaysia with a recorded trade volume of USD 41.21 billion (Ignatius, 2023).

Government support

The country has reported economic success with 2,778 manufacturing projects valued at a total of MYR 91.89 billion in Japanese foreign direct investment (FDI) as of June 2023.

As mentioned earlier, Japan is one of the largest trading partners of Malaysia. In fact, the country has reported economic success with 2,778 manufacturing projects valued at a total of MYR 91.89 billion in Japanese foreign direct investment (FDI) as of June 2023 (MIDA, 2024). With that said, the Malaysian government is wellaware of the importance of FDI for the country’s economic growth and has implemented various incentives such as tax breaks, grants, and simplified regulatory procvedures to encourage business expansion in the country. For instance, any investment or relocation of manufacturing or services operations of a company that is investing a minimum of MYR 300 million and MYR 500 million is provided with the incentive of a tax exemption for 10 years and 15 years respectively as reviewed on December 2023 (PricewaterhouseCoopers, 2023). Hence, it is strategic for businesses, especially those in the manufacturing sector to expand their operations into Malaysia as they are supported by the country’s New Industrial Master Plan 2030 (NIMP 2030) which aims to bring the country’s manufacturing industry competitive on a global level (HSBC, 2023).

Pre-existing Malaysian members

The foundation of Malaysia’s economic growth centers around the country’s diverse, well-educated, and multilingual workforce.

The foundation of Malaysia’s economic growth centers around the country’s diverse, well-educated, and multilingual workforce (MIDA, 2024). With demand for bilingual and multilingual professionals on the rise to address the needs of international business and communication, the country has become an attractive destination for businesses looking to expand their operations internationally as the country features a pool of talents that are well-versed in multiple languages from different cultural backgrounds (Han & Embong, 2024). This ensures smooth crosscultural communication and interactions within a business, which facilitates the operational processes of an international company. As a consulting firm, Empire State acts as a pioneer for Japanese companies in understanding the Malaysia market through analyzing macro trends of the market. Empire State has also established a diverse workforce in Malaysia via the acquisition of talents from various cultural backgrounds to gain a better understanding into the local market of Malaysia. It is believed that through the acquisition of local talents, Empire State may provide more thorough consultation sessions supported by specialized insights limited to locals to ultimately create the best customer value for our clients.

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