From Site Selection magazine, September 2009

The Malaysia
You Should Know
've visited Malaysia three times in the past couple of years and must say that it's rapidly becoming one of my favorite places on earth.
Malaysia buildings captured at night

      Certainly, Malaysia offers spectacular landscapes and beaches for tourists, but I've visited with an eye toward other attractions: What's the country like as an investment location for Western corporate executives? I confess to having been surprised and impressed from the outset.
      Most of us have heard of Malaysia, but what do we really know about it? Not many of us are aware that Malaysia's cost of living is 67 percent lower than in Singapore, the country's rich, developed, micro-neighbor to the south. And many an executive has been delighted to learn that Malaysia doesn't tax remittances by ex-pats, making the comparative cost of living even more attractive.
      Kuala Lumpur is a culturally diverse, booming capital, laced through with modern infrastructure and transportation systems, starting with one of the world's newest and best organized international airports. In the country as a whole, infrastructure is designed to serve the business community. It sports one of the best telecommunications networks in Asia, as well as five international airports (all with air-cargo facilities), well-maintained highways and seven international seaports.
      Johor Baru, Malaysia's southernmost and second-largest city, is a beautiful, robust, master-planned city nestled amongst rainforests, with palm-lined promenades and exciting new developments focused on attracting foreign investment. I toured the development of Nusajaya, in Johor Baru, and commented on the luxurious homes they were building within a "live and work" community. My guide dismissed them, saying "those are just the villas – the nice homes are further on." They put my own humble house to shame, extravagant proof of the lifestyle afforded by the low cost of living.
Malaysia Skyline

      Malaysia has been affected by the global recession, of course, but aggressive action and planning by the government have helped the country to weather the storm far better than most of its neighbors. GDP is expected to contract by 1 percent in 2009, compared to an expected contraction of 8.8 percent in Singapore and 7.1 percent in Thailand.
      In 2003, to bolster Malaysia's investment climate, the decidedly pro-business government liberalized equity holdings in all manufacturing projects. This liberalization allows foreign investors to hold 100 percent of the equity in all investments in new projects, including expansions of existing operations, irrespective of the level of exports and without any product/activity excluded. Non-residents may invest in Malaysia freely – there are no restrictions on the repatriation of capital, profits and income earned from Malaysia, including salaries, wages, royalties, commissions, fees, rentals, interest, profits or dividends.
Malaysia today is home to more than 5,000
foreign companies from over 40 countries.

      In April 2009, the government announced the liberalization of 27 sub-sectors within the services sector, including health and social service, tourism, transport, business services and computer-related services. Additional liberalization measures were announced by the Prime Minister on June 30, 2009. De-regulation of Foreign Investment Committee guidelines for fund management and stock brokering were also central to this plan.
      Says Rob Denman, CEO of London-based Pathfinder Business, "Any impression that Malaysia is not open to investment and business would be shattered on the drive in from the international airport. As you pass gleaming glass buildings topped with some of the biggest global brand names, you would understand that it may be new for you, but not new for all."
      Malaysia today is home to more than 5,000 foreign companies from over 40 countries, and many of these success stories from the U.S., Europe, Asia and Australia have over the years expanded and diversified their operations. Some of the government's key industry targets include high-end electronic products, biotechnology, aerospace and aviation services, machinery and equipment, medical devices, pharmaceuticals and alternative energy sources.
      Besides attracting direct manufacturing facilities, Malaysia is also actively promoting related activities such as regional hubs, which include operational headquarters, international procurement centers, regional distribution centers, regional offices and representative offices. And Malaysia is fast becoming an important location for foreign companies in the oil and gas industry to establish their regional headquarters.
      The workforce in Malaysia tends to be multi-lingual – most people speak three or more languages, with English being the common thread. The Department of Skills Development (DSD), which replaced the National Vocational Training Council (NVTC) in September of 2006, was established to coordinate Malaysia's vocational and industrial training strategy in keeping with the country's technological and economic development needs. The DSD coordinates all public and private training institutions and identifies future vocational and industrial training needs with an eye towards maintaining a highly-skilled work force able to adapt to an increasingly competitive marketplace. Access to skilled labor always ranks as one of the chief concerns for corporate site selectors, and the Malaysian government, keenly aware of this, has taken the appropriate steps to ensure their workers have the necessary skills to compete in the global marketplace.
      The number of languages spoken by the average Malaysian has always humbled me a bit (the cab drivers in Malaysia speak better English than the ones in New York!). That English is so commonly spoken is a testament, I believe, to the success of the government programs. A friend of mine, Wan Hashim, a Director with the Malaysian Industrial Development Authority (MIDA), once said to me, "It's simple – if we want to compete globally, we have to speak English. It's the standard language of business."
      Rob Denman points out that Malaysia is focused on "improving the corporate governance environment so more of the systems you may expect in your home market are in place. It has 13 universities so the challenge of talent is also being addressed, and the country is open to discussions on developing the right work force for any major investor." He goes on to add, "Indonesia has a larger internal market but lags far behind in infrastructure development, the Philippines has a strong U.S. link through history but has no land corridor to China, and Thailand is still struggling to find stability, so if you are looking for a business environment in Southeast Asia where you can access the benefits without too many risks then Malaysia is worth considering."
      My job with Site Selection takes me all over the world. I have seen places of unimaginable beauty and places scary enough to convince me my boss was punishing me for something. Malaysia ranks among the former, and it's a genuine pleasure to visit each and every time. If Malaysia isn't already on your short-list of prospective investment locales, I suggest you pay a visit. You may come away quite pleased. You will certainly come away surprised.

      Adam Jones-Kelley is vice president of Site Selection magazine.

Ready to Grow
Kulim Hi-Tech Park is expanding to make room for its industrial tenants to do the same.
olid support from Malaysia's government is keeping development of the 4,032-acre Kulim Hi-Tech Park in the northern state of Kedah on schedule. Twenty-one manufacturing and 37 supporting companies employ 16,000 workers, making the region an economic success story despite global recessionary forces at play. Opened in 1996, Kulim Hi-Tech Park (KHTP) is a key component in the government's plan to make Malaysia fully industrialized by 2020.
First Solar's new, 100-acre manufacturing plant
First Solar's new, 100-acre manufacturing plant

      New park features in 2009 include the three-story KHTP Business Center 2 for data centers, office and R& amp;D operations, as well as housing, new retail outlets, an international school, and safety and security enhancements.
      "Our park's tenants are very concerned about safety and security with respect to their goods, properties and people," says Kulim Technology Park Corp. President Muhamed Sobri Osman. "A CCTV surveillance system is installed at strategic spots and monitored 24 hours per day by our security personnel at our centralized command centre. We also have a patrol car that backs up routine patrolling by the HKTP Police Department." Also, a new HAZMAT vehicle has joined the park's fire and rescue resources.
      Education infrastructure is key to any location's ability to attract industrial investment, and KHTP is no exception. The park has higher-education programs both on-site and nearby.
      "In our park, we have a polytechnic and UniKL-MSI with about 3,000 students each," says Osman. "These institutions offer two- or three-year electrical and mechanical engineering courses.
With our long-term plan of smart collaborations with industry and specific universities, we are aiming to provide KHTP with a ready pool of knowledge and skilled work force. Our current collaborations link us to University Science Malaysia, the Northern University of Malaysia and University Malaysia Perlis, all within a short driving distance of KHTP."

Expanding Horizons

      Meanwhile, several park tenants have recently completed expansions, including Intel, Fuji Electric Malaysia, Infineon and Schenker Logistics. First Solar's 100-acre facility is now operational, and other tenants plan to commence expansion activity when economic circumstances improve.
      Three Industrial Zones are now occupied in the park, and a fourth is taking shape with the acquisition of 500 more acres of palm oil estate land.
      "After this, we still have another 10,000 acres that we can acquire and develop," says Osman. "That is why when companies choose KHTP as their manufacturing site, they will be able to easily plan their next expansion in the near or medium term. Most importantly, despite their expansions, we ensure that the green environment in KHTP is continually conserved."

This investment profile was prepared under the auspices of the Malaysian Industrial Development Authority ( and Kulim Hi-Tech Park (

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