Investing in Malaysia as a Foreigner

A strong economy, a welcoming administration, a well-educated workforce, and well-developed infrastructure have quietly converted Malaysia into a desirable investment destination for international investors. Many have invested in Malaysia through setting up companies in the country.

There are several reasons why a foreign investor might choose to invest in Malaysia through incorporation of a company.

The government of Malaysia has sought to position Malaysia as a gateway to the Association of Southeast Asian Nations (ASEAN) market by offering various incentives and tax reductions to foreign investors.

The government of Malaysia has also put in place an economic program that aims to create millions of jobs in Malaysia which in turn will attract foreign investment especially in strategic sectors such as Agriculture, Tourism, biotechnology, information and communications technology, and multimedia.

As such, with a Strategic Location, Great Investment Infrastructure and a Supportive Government, Malaysia makes a great destination for Foreign Investors.

There are four primary investment types from which an investor in Malaysia may choose from. An investor ought to select the type of investment to be made by analysing the characteristics, risks, and benefits associated with each type, then selecting an investment type which best suits the current circumstances. The types of investments which one may choose are:

Any foreign investor in Malaysia must have a well-crafted plan for the investments to be made. The investor must plan how much is to be spent, in what areas the money is to be invested, and the risks which would be involved. Taxation, Legal Matters, Licensing, Investment Sectors, and Investment Plans are among the most important points to be considered by any foreign investor.

Some factors to take into account:

So far, we have talked about the upsides of investing with Malaysia. We will now take an objective view regarding the cons of Investing in Malaysia, weighing certain drawbacks that you may face in your investment journey.

Furthermore, the country’s regional, racial, and religious disparities as well as political and electoral issues have also put the country’s fiscal stability at risk.

Thus, both sociopolitical and monetary policy risks are associated with investing in Malaysia.

One of the areas in which a foreign investor may choose to invest in Malaysia is the stock market. Most foreigners in Malaysia do so through the use of exchange-traded funds (ETFs). ETFs provide diversification because it is easy to buy and sell them on international stock exchanges.

Real estate is also a very lucrative investment area in Malaysia. The real estate market in Malaysia has been going through a period of much growth. This has in turn made real estate investment a common form of investment for foreign investors. However, foreign investors in this area must be wary of several risks. The Malaysian government’s attempts to reduce the cost of housing in Malaysia has sometimes led to a property glut. There are also relatively few publicly-traded real estate trusts from which investors may select.

Malaysia’s abundant natural resources such as wood, natural gas, palm oil, and rubber have also created opportunities for investment. This is with regards to having close to 60% of Malaysia’s land being covered by forest.

However, some areas have fewer opportunities for foreigners who plan to invest because the government restricts investment in branches of production which it considers to be necessary for national development, such as the automobile industry. Foreigners also have limited access to investment in industries such as professional services and financial services.

As an investor yourself, do take into account the above considerations before making your move.

There are several methods by which foreign investment in Malaysia is protected. Among these are the 71 bilateral investment conventions signed by Malaysia, the assistance of the International Center for Settlement of Investment Disputes (ICSID), Malaysia’s membership of the Multilateral Investment Guarantee Agency, and the services provided by the Kuala Lumpur Regional Centre for Arbitration (KLRCA). These organisations and entities do much to ensure that all foreign investment in Malaysia is conducted in a legal manner while also being adequately protected by the law.