AN INCREASING NUMBER OF MULTINATIONALS ARE REALISING THAT MALAYSIA, CONTRARY TO EXPECTATIONS, IS AN EASY PLACE TO DO BUSINESS THANKS TO A NUMBER OF CHANGES MADE BY THE GOVERNMENT. SARAH REES TAKE A LOOK AT THE ALTERATIONS THAT ARE SET TO BRING BUSINESSES TO THE CAPITAL IN DROVES.
Living in Malaysia has long been hailed as an easy, care-free existence, but this was not always the case when it came to doing business. Some foreigners would get frustrated by the business practises that were alien to them, and subsequently Malaysia earned something of a bad name in the world of business.
That is set to change, mainly thanks to the huge focus that the Malaysian government is placing on easing the process of conducting business in the country to encourage foreign companies to bring their businesses – and their money – here.
The Government Transformation Programme (GTP), put into place in 2010, is driven by the ambition of catapulting Malaysia onto the list of high-income nations by the year 2020. It may be a lofty goal, but it is one supported by all manner of subsidiary plans that have seen the establishment of all manner of new companies tasked with working on different sectors to transform the country from the inside out, as well as luring the foreign investments and talent that will boost the country and the economy.
Within the GTP is the Economic Transformation Programme (ETP), which is focused on, as one would expect, transforming the economy to ensure that Malaysia can compete within the international standards demanded of a high-income nation by the year 2020. One of the key aspects of this effort is on reforming the practices already in place to make the country more competitive, and, after much deliberation, these have been split into six areas. These six, known as Strategic Reform Initiatives (SRI), are highlighted for improvements with the aim of making a marked difference to the country and to the ease of doing business.
Strategic Reform Initiatives
- Competition, Standards, and Liberalisation
This first area seeks to raise Malaysian standards to those expected in the international market when it comes to governance, management, and the sustainability of businesses. There are plans to raise the quality standards for goods and services, implement the Competition Law, and reform the existing regulatory framework as well as a move to liberalise entry, ownership, and operations for foreign businesses.
- Government’s Role in Business
In order to improve the standards of business and maintain regulations, a Central Oversight Authority has been established, and an effort is made to divest non-strategic costs to ensure that the economy is kept buoyant.
- Human Capital Development
To further improve the talent available in the country, efforts are made to “upskill” workers to develop existing talents and leverage the talent of women. There is also a consideration of a minimum wage and insurance benefits for those unemployed, as well as developing a Productivity-Linked Wage System (PLWS), all of which will serve to boost workers and encourage better practises.
- Public Service Delivery
Efforts are being made to improve the standard of public service and regulating the delivery, and a citizen-centred public service is seen as an improvement and a method of encouraging awareness.
- Narrowing Disparities
Business in Malaysia has long suffered from disparities between different companies and organisations, and to try and ease these differences, specific programmes will be established for bumiputra SMEs (small and medium enterprises).
- Public Finance Reform
The last of the six reforms focuses on the way in which public money is spent, and aims to improve the expenditure control to ensure that money is not wasted or invested in the incorrect areas.
Such thorough improvements will do much to transform the experience of doing business in Malaysia, and will encourage many more multinationals to set up their headquarters here in the Malaysia – particularly in the capital – to aid the company on its path to economic transformation. These changes are welcomed by InvestKL, the team charged with the task of attracting 100 multinationals to make KL their regional headquarters by 2020. InvestKL is confident that, as the word spreads about the ease of doing business in Malaysia, that figure will swiftly be met.
InvestKL make efforts to document the SRIs as well as the incentives available for businesses. Some of the most attractive incentives include income tax exemption for up to ten years and Foreign Exchange Administration flexibilities, which allows companies to borrow money in Malaysia without incurring any charges. Each industry sector has its own specific incentives – the breakdown can be seen online – which include tax exemptions and grants available for certain projects. Expats will also be rewarded for moving their work down to Malaysia by only being taxed on the income attributable to the number of days they actually spend in the country.
With all these changes, reforms, and incentives in place, it is clear that the government are aware of the vital part that easing the route to business plays in encouraging foreign investment and achieving the goal of becoming a high-income nation in the next ten years. As the capital grows both physically and financially, business will boom and the country can be confident that the impressive changes will not be overlooked by the world.
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