Whilst there are many countries that may be considered to be amongst the most popular destinations for both local and foreign investment, few are as underrated as Malaysia in Southeast Asia.
After all, this nation is one of the few to experience rapid growth in terms of its gross domestic product (GDP) in recent times, with this having peaked at 5.6% last year. This achievement shines like a beacon in the current global economy, which according to most economic experts is heading for a potential recession in 2020.
In this company, we’ll look at how multinational companies can benefit from investing in Malaysia, whilst asking what local rules they’ll need to adhere to to accomplish this goal.
Foreign direct investment and Malaysia – a marriage made in heaven?
Make no mistake; Malaysia is a destination that’s ripe for foreign direct investment (FDI), which is defined as a financial commitment made by a company or individual from one country in the business interests in another.
There are several reasons for this; but the key attraction remains the strong fundamental and macroeconomic factors that the government is creating in 2019.
This has helped to create a stable economy with the potential to grow in the future, with Malaysia now representing a more viable investment hotspot that more established Southeast Asia nations.
The concept of Industry 4.0 is also providing an opportunity for sustained growth. This entity refers to the trend towards automation and data exchange in manufacturing technologies, such as artificial intelligence (AI), cloud computing and the Internet of Things (IoT).
A proposed cloud solution hub will also further boost Malaysia’s position as a premier digital hub in the region, as Industry 4.0 continues to evolves to create money-making potential and the chance to improve efficiency within the economy.
How can you successfully benefit from FDI in Malaysia
Whilst there are considerable opportunities available through FDI in Malaysia, there are several steps that you need to take to capitalise on these.
Firstly, you need to recognise that there are several policies and common regulations to protect local investors from the impact of foreign investments. These also help to create a level playing field for all investors, whilst ensuring that they help to create growth and a favourable climate for all parties.
It’s the task of the Division of Investment Policy and Trade Facilitation that reviews the policies for governing international investment, and being aware of these local laws should help you to take informed actions.
You’ll also need to ensure that you comply with tax laws in Malaysia, which will apply to any profits that you garner through your investments.
As a general rule, tax compliance experts such as RSM will tell you that the Malaysian authorities do not tax capital gains from the sale of investment or capital assets, other than those related to land and buildings.
Aside from this, you’ll also need to ensure that you pay the right level of taxation in relation to the amount that you earn, otherwise you’ll run the risk of incurring significant financial sanctions.