Doing Business in Malaysia:

2010 Country Commercial Guide for U.S. Companies

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S.
DEPARTMENT OF STATE, 2010. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED
STATES.

• Chapter 1: Doing Business In …

• Chapter 2: Political and Economic Environment
• Chapter 3: Selling U.S. Products and Services
• Chapter 4: Leading Sectors for U.S. Export and Investment
• Chapter 5: Trade Regulations and Standards
• Chapter 6: Investment Climate
• Chapter 7: Trade and Project Financing
• Chapter 8: Business Travel
• Chapter 9: Contacts, Market Research and Trade Events
• Chapter 10: Guide to Our Services
Return to table of contents

Chapter 1: Doing Business In Malaysia

• Market Overview
• Market Challenges
• Market Opportunities
• Market Entry Strategy

Market Overview Return to top

For centuries, Malaysia has profited from its location at a crossroads of trade between
the East and West, a tradition that carries into the 21st century. Geographically blessed,
peninsular Malaysia stretches the length of the Strait of Malacca, one of the most
economically and politically important shipping lanes in the world. Capitalizing on its
location, Malaysia has been able to transform its economy from an agriculture and
mining base in the early 1970s to a high-tech competitive nation, where services and
manufacturing now account for 85% of GDP (55% in services and 30% in
manufacturing, in 2008).

• In 2009 U.S.-Malaysia bilateral trade was US$33.7 billion (down from US$43.7
billion in 2008), ranking Malaysia as America's 18th largest trade partner.
Singapore now ranks slightly ahead of Malaysia as America's largest Southeast
Asia trade partner. The U.S. was Malaysia's third top export destination in 2009
(Singapore was Malaysia’s top importer, and China the second).

• The U.S. goods trade deficit with Malaysia was US$12.9 billion in 2009 – goods
exports totaled US$10.4 billion, and goods imports totaled US$23.3 billion. U.S.
trade in services with Malaysia totaled US$2.9 billion in 2007 -- services exports
from U.S. were US$1.9 billion, services imports from Malaysia were US$1.0
billion.

• The U.S. has consistently been one of the largest foreign investors in Malaysia,
with significant presence in the oil and gas sector, manufacturing, and financial
services. The U.S. foreign direct investment in Malaysia was $13.3 billion at the
end of 2008.

• The Malaysian economy grew 6.3% in 2007 and 4.6% in 2008. GDP growth for
2009 was at -1.70% due to the global economic downturn, but 2010 forecasts
range between 4% and 5%.

The Government of Malaysia actively continues to manage the development and

industrialization of the Malaysian economy. This includes facilitating infrastructure
projects through significant state investment, fostering a close alliance between
government and the private business sector, and designing and implementing a variety
of policies and programs to bolster the overall economic environment, with special
attention to the economic status of the ethnic Malay majority, or bumiputra.
Market Challenges Return to top

• Duty rates and systems of import permits in protected industries, such as

automotives and motorcycles, combined with excessive excise taxes, continue to
block open trade in these sectors.

• Government restrictions hamper foreign involvement in several areas, including:

government procurement contracts; financial, business, and professional
services; and telecommunications. In many cases it is imperative to have a local
partner, usually a bumiputra, in order to effectively compete in the market.

Despite Malaysia’s recent improvements in IPR laws and enforcement, there remain
concerns regarding Malaysia’s effectiveness in protecting IPR, as evidenced by the
continued high rate of production and export of pirated optical disc media, counterfeiting,
lack of effective patent and data protection for pharmaceutical products, and lax
enforcement and prosecution. Insufficient IPR protection will impact the country’s goal
of increasing foreign investment in new areas, such as biotech and other R&D-intense
industries.
• Malaysia's economic freedom score is 64.6, making its economy the 58th freeist
in the 2009 Index. Its score is 0.7 point better than 2008, largely reflecting slight
improvements in trade freedom and business freedom. Malaysia is ranked 9th
out of 41 countries in the Asia/ Pacific region.

Market Opportunities Return to top

• Malaysia’s per capita income is US$7,450 (2008), and its purchasing power is
among the highest in Asia, as evidenced by the strong consumer market. U.S.
branded products and franchises are popular, with the U.S. accounting for 34%
of foreign franchises.

• The U.S. and Malaysia signed a Trade and Investment Framework Agreement
(TIFA) in May 2004, leading to a series of bilateral meetings to address such
issues as market access, investment, intellectual property rights, and regulatory
issues. The U.S. and Malaysia embarked on Free Trade Agreement negotiations
in June 2006, and held eight rounds of negotiations without coming to a
conclusion. The U.S. is now focused on pursuing the regional Trans Pacific
Partnership (TPP) negotiations and Malaysia has expressed its interest, in
principle, to seek to join those negotiations once it has a negotiating mandate.

• In July 2005, just after China revalued the yuan, Malaysia allowed the ringgit to
operate in a managed float against a currency basket. The ringgit, which was
previously pegged to the dollar at a rate of RM3.8 = USD1, was readjusted to a
trade-weighted index of Malaysia’s major trading partners. At the time of this
report the exchange rate is RM3.4 to one US dollar.

• Recognizing the growth potential in the services sector, the Malaysian

government has decided (on April 22, 2009) to liberalize 27 services subsectors,
with no equity condition imposed. These sub-sectors are in the areas of health
 and social services, tourism services, transport services, business services and
computer and related services.

• For more information on best prospects, please see Chapter 4.

Market Entry Strategy Return to top

• Most exporters find using local distributors an easy first step for entering the
Malaysian market. A local distributor is typically responsible for handling
customs clearance, dealing with established wholesalers/retailers, marketing the
product directly to major corporations or the government, and handling after-
sales service.

• Sales to the government require a local agent and/or a joint venture partner,
usually a bumiputra. Additionally, direct involvement by the U.S. company and
demonstrations of long-term commitment to the local market are essential for
contracts of significant size.

Return to table of contents

Return to table of contents

Chapter 2: Political and Economic Environment

For background information on the political and economic environment of the country,
please click on the link below to the U.S. Department of State Background Notes.

http://www.state.gov/r/pa/ei/bgn/2777.htm

Return to table of contents

Return to table of contents

Chapter 3: Selling U.S. Products and Services

• Using an Agent or Distributor

• Establishing an Office
• Franchising
• Direct Marketing
• Joint Ventures/Licensing
• Selling to the Government
• Distribution and Sales Channels
• Selling Factors/Techniques
• Electronic Commerce
• Trade Promotion and Advertising
• Pricing
• Sales Service/Customer Support
• Protecting Your Intellectual Property
• Due Diligence
• Local Professional Services
• Web Resources

Using an Agent or Distributor Return to top

Many exporters designate a Malaysian-based trading company as their local sales agent
responsible for handling customs clearance of imported goods, for dealing with
established wholesalers and/or retailers, for marketing the product directly to major
corporations or the government, and for handling after-sales service. In some cases,
especially when selling to the government, a Malaysian distributor is required.

Establishing an Office Return to top

A number of international accounting and consulting firms are located in Kuala Lumpur,
which can assist with the procedures and requirements for setting up a business in
Malaysia. AmCham (American-Malaysian Chamber of Commerce) can be a useful
resource for those interested in setting up an office or plant (see contacts in Chapter 9).
The following information is intended to provide a guideline for establishing an office,
and is not meant to substitute for qualified legal and consulting services.

The primary concerns for those considering setting up an office or factory in Malaysia
are registration and taxes, labor, wages, rental/construction prices, utilities, and
insurance.

Registration of Foreign Companies

Foreign companies interested in doing business in Malaysia must register with the
Companies Commission of Malaysia (CCM), formerly known as the Registrar of
Companies (ROC). The same registration procedure applies whereby an application
must be submitted on Form 13A to the CCM in Kuala Lumpur or any of its branch offices
in Malaysia, with a payment of RM30 (US$8.30). If the intended name of the foreign
company is available, the application will be approved and the name reserved for three
months. Fees, including application and name reservation, depend on nominal share
capital and range from RM1,000 to RM70,000 (US$278 to US$19,444). Please see the
Malaysian Industrial Development Authority (MIDA) website for a more specific
breakdown of fees.

Upon approval, applicants must lodge the following documents with the CCM:

• A certified copy of its Certificate of Incorporation (or a document of similar effect)

from the country of origin;
• A certified copy of its Charter, Statute or Memorandum and Articles of
Association or other instrument constituting or defining its constitution;
• A list of its directors and certain statutory particulars regarding them (Form 79);
• Where there are local directors, a memorandum stating the powers of those
directors;
• A memorandum of appointment or power of attorney authorizing one or more
persons resident in Malaysia to accept on behalf of the company, service of
process and any notices required to be served on the company;
• A statutory declaration in the prescribed form made by the agent of the company
(Form 80).

The appointed agent undertakes all acts required to be done by the company under the
Companies Act 1965. Any change in agents must be reported to the CCM. Every
foreign company shall, within a month of establishing a place of business or
commencing business within Malaysia, lodge with the CCM for registration a notice of
the situation of its registered office in Malaysia using the prescribed form.

A foreign incorporated company must file a copy of its annual return each year within
one month of its annual general meeting. Within two months of its annual general
meeting, the company must file a copy of the balance sheet of the head office, a duly
audited statement of assets used in, and liabilities arising out of, its operations in
Malaysia, and a duly audited profit and loss account.

Taxation
Most income of companies and individuals accrued in, derived from, or remitted to
Malaysia is liable to tax. However, income remitted to Malaysia by non-resident
companies and individuals is tax-exempt, except in the case of the banking and
insurance business, and sea and air transport undertakings. A company is considered a
resident in Malaysia if the control and management of its affairs are exercised in
Malaysia. Taxation rates can be found on the MIDA website (click on “Costs of Doing
Business” and then “Taxation”).

Rates of Capital Allowances

Capital allowances are given on qualifying capital expenditures. Initial allowances are
given only once while annual allowances are given every year using the straight-line
method. Some of the items accorded allowances are shown below. For plant and
machinery, companies are advised to verify with the Inland Revenue Board on the
specific items that qualify.
Initial Allowances:
Industrial buildings 10%
Computer and IT equipment 20%
Environmental control equipment 40%
Heavy machinery & motor vehicles 20%
Plant & machinery 20%
Others 20%

Annual Allowances:
Industrial buildings 3%

Computer and IT equipment 40%

Environmental control equipment 20%
Motor vehicles, heavy machinery 20%
Plant and machinery 14%
Others 10%

Labor Standards
The Employment Act of 1955 (Amendments 1998) is the main legislation on labor
standards in Malaysia. Normal work hours are not to exceed 48 hours per week or eight
hours per one day. A paid maternity leave of 60 days must be granted, as well as ten
paid holidays, annual leave of 8 to 16 days, paid sick leave 14 to 60 days per year and
overtime pay of time-and-a-half for normal work days, two-times for rest days and three-
times for public holidays.

Under the Employees Provident Fund Act 1991, minimum contributions of 8% of

employees' monthly wages and 12% of employers' monthly wages are compulsory. The
Social Security Organization (SOCSO) administers social security schemes for workers
earning wages not exceeding RM 3,000 (US$834) per month. The Human Resources
Development Fund (HRDF) operates on the basis of a levy/grant system where
contributing companies can apply for grants to subsidize the costs incurred in training
their Malaysian employees. Mandatory contributions of 1% of monthly employee wages
must be made by manufacturing companies that employ 50 or more Malaysians and
companies employing from 10 to 49 employees and with a paid-up capital of RM2.5
million (US$754,375) and above.

Any expatriate on staff requires a work permit. Obtaining a permit may take from two to
three weeks with a fee ranging from RM200 - RM300 (US$56 – US$83) per month
payable in advance for one year.

Wages
There is no national minimum wage law applicable to the manufacturing sector in
Malaysia. Basic wage rates vary according to location and industrial sector, while
supplementary benefits, which may include bonuses, free uniforms, free or subsidized
transport, and performance incentives, vary from company to company. Wage rates can
be found on the MIDA website (click on “Costs of Doing Business” and then “Human
Resources”). Most companies provide medical benefits to both executives and non-
executives. Personal accident insurance is more commonly provided than life insurance
and coverage is generally RM100,000 (US$27,778) or above (senior-middle executive)
and RM50,000 (US$13,889) or below (non-executives).

Rental/Construction Prices and Utilities

For a detailed table of rental and construction rates, please see the MIDA website (click
on “Costs of Doing Business” and then “Starting a Business”). For a detailed table of
utility costs, please see the MIDA website (“Costs of Doing Business” and then
“Utilities”).

Franchising Return to top

The Malaysian franchise industry registered a healthy 15% growth in 2008 and is
expected to continue this trend for 2009. Almost 44% of the franchises operating in
Malaysia are foreign franchises. U.S. franchises account for around 34% of these
franchises. U.S. franchises dominate the food and beverage industry. While most of the
populace still needs to be educated on franchise concepts, the market is gradually
becoming more aware of franchise as a means to producing entrepreneurs.

The Malaysian government’s constant encouragement and promotion of franchise as a

means to improve the number of entrepreneurs is slowly gaining traction. Perbadanan
Nasional Berhad (PNS) is a corporatized government entity tasked as lead agency in
developing the Franchise Development Program under the 9th Malaysian Economic
Plan. It also comes under the guidance and purview of the Ministry of Domestic Trade,
Co-operatives and Consumerism. Even though PNS’s main focus is in encouraging
more home grown franchise concepts, they are not adverse to exploring collaboration
with foreign franchise concepts. Primarily, its function is to identify, acquire, launch,
facilitate and encourage both local and international franchise brands. PNS is leaning
towards lower cost service sectors as the next prime mover for the entrepreneurs.

In Malaysia, franchising is governed by the Malaysian Franchise Act 1998. This Act
applies to the sale of franchises throughout Malaysia. All franchisers that are selling their
franchises in Malaysia are required to register with the Registrar of Franchise (ROF).
ROF comes under the purview of the Ministry of Domestic Trade, Co-operatives and
Consumerism. A franchisor would need to lodge the document with the ROF at least 10
days prior to signing of franchise agreement.

Section 54 of the Franchise Act 1998 states that a foreign person who intends to sell a
franchise in Malaysia or to any Malaysian citizens is required to submit an application for
approval from ROF. Currently, a processing fee of RM50 (approximately US$14.30)
applies for each application. Basic documentation required for ROF applications are as
follows.

• The letter of intent should include the following information: date of incorporation,
and commencement of business, franchise concept and background of company,
franchise experience (if it is self-owned, and the number of existing franchise
outlets), and the identity of proposed Malaysian master franchisee/ franchisee.
• Certified true copy of incorporation from the relevant agencies in the country of
origin.
• Certified true copy of proof of trademark and/or intellectual property mark
registration.
• Company brochure and annual report with photograph of the outlets.

As over 60% of the Malaysian population is Muslim, US food and beverage related
franchise companies that intend to sell to Muslim consumers should be aware of Halal
requirements. Halal is defined as what is permissible under the Islamic Shariah Law.
Malaysian standard MS1500:2400 is used in the production, preparation and handling of
Halal food. This standard prescribes to the practical guidelines for the food industry on
the preparation and handling of Halal food and serves as a basic requirement for food
product and food trade or business in Malaysia. It is used by JAKIM as the basis for
certification. JAKIM is Malaysia’s Halal certifying body.

Please see Chapter 4 Franchise section for more information.

Direct Marketing Return to top

Over the last ten years Malaysia has used technology to more effectively target its broad
consumer base, using improved databases to achieve one-to-one marketing. Direct
marketing in Malaysia is now on par with other developed consumer societies, and
includes a full range, from technology driven Internet banners and SMS messaging to
traditional billing inserts. For a list of direct marketing firms, contact the Direct Marketing
Association of Malaysia (DMAM).

Joint Ventures/Licensing Return to top

Some exporters find it advantageous to establish their own subsidiary in Malaysia to

directly handle sales, distribution, and service. While this provides more direct control, it
requires a commitment of capital and the identification of suitable local joint venture
partners. The selection of a joint venture partner is perhaps the single most important
decision made by a potential investor in Malaysia.

All partnerships must be registered with the Companies Commission of Malaysia (CCM)
under the Registration of Businesses Ordinance 1956. Partners are both jointly and
separately liable for the debts and obligations of the partnership should its assets be
insufficient. Formal partnership deeds may be drawn up governing the rights and
obligations of each partner, but this is not obligatory.

U.S. exporters interested in establishing a joint venture should contact MIDA for more
information about other government policies that may affect contract arrangements
within their specific industry. MIDA may also be able to assist with the identification of a
suitable partner. Any firm intending to establish a local office should secure the services
of a local attorney.

Selling to the Government Return to top

Sales to the government require a local agent and/or a joint venture partner, and may
require a local partner that is bumiputra (ethnic Malay). Additionally, direct involvement
by the U.S. company (including its senior leadership) and demonstrations of long-term
commitment to the local market are essential for contracts of significant size. Offsets
and/or technology transfer are usually an integral part of any large deal. Prices on major
government projects tend to be negotiated, often after a bidding process has narrowed
the range of potential candidates.

The Government of Malaysia is interested in attracting foreign investment and

encouraging companies to establish offices in Malaysia to service both the local and
regional market. When considering bids on major items, there appears to be a definite
government preference for companies with a local presence. The Multimedia
Development Corporation (MDC) has publicly announced that bids from firms investing
in the Multimedia Super Corridor will receive priority consideration when the government
awards major contracts associated with development of the corridor (i.e., flagship
applications). Companies represented by offices outside of Malaysia are often at a
disadvantage in such major competitions or in establishing long-term markets with major
private sector firms, especially in the architecture, construction management, and
engineering sectors. A local presence usually ensures that the customer will have
access to after-sales service and follow-up, which are greatly valued by Malaysians.

Malaysia is not a member of the multilateral WTO Government Procurement Agreement.

Malaysia’s tender process has not always been transparent. Though Malaysia
subscribes to APEC principles on transparency standards, it continues to work towards
implementing the APEC government procurement standards. More recently Malaysia
has developed an e-procurement pilot project, which seeks to develop a central tender
website and common tendering standards that all ministries will follow. It is hoped that
this new system will help ensure a more transparent system.

Distribution and Sales Channels Return to top

U.S. exports to Malaysia move through a wide variety of sales channels, depending on
the product or service. U.S. export wholesalers typically sell food and other consumer
goods to Malaysian general import houses, which then handle distribution to
supermarkets and other outlets. Major equipment sales to corporations in both the
public and private sector require a local presence and local agents, as well as the active
engagement of corporate leadership. It should be noted that bumiputra (ethnic Malay)
firms are often given preference in securing government contracts and privatization
projects.

Capital equipment is almost always handled by in-country representation, either through

locally hired firms or a corporate representative in Malaysia. Electronic components are
purchased directly from the U.S. by major U.S. and other multinational companies with
manufacturing facilities in Malaysia. Much of that business is intra-firm. A large number
of retail outlets and local and international consulting companies handle computer
software. Many software companies have offices and joint ventures in Malaysia.

Selling Factors/Techniques Return to top

When marketing general consumer goods, U.S companies should keep in mind the
cultural norms and standards of the Malaysian population, as well as the fact that
Malaysia is a multiethnic country (Malays, Chinese, and Indians constitute 90% of the
population, while the other 10% is composed of various indigenous groups). For
example, a majority of the population is Muslim which means that certain food products
must be "halal" (meaning lawful and permissible to use/consume in Islam) in order to
appeal to a larger market. It is also advisable to conduct some research on the possible
implications of advertising or promotional activities before initiating them in Malaysia.

U.S. food and other consumer goods are primarily marketed to the rapidly growing urban
middle class, and so tend to occupy the upper end of the local retail price spectrum.
While value for dollar/ringgit is important, the "brand name" status of certain products
appeals to a segment of Malaysians with a higher level of purchasing power. However,
the same techniques used to market upscale goods and services in the U.S. may not be
as effective in Malaysia.

Sales of equipment and material for a specific industry, such as electronics, depend
heavily on specialized trade fairs, publications, and visits by company representatives.
Sales to the government or for large-scale projects involving major equipment require
extensive high-level contact by local representatives and visiting company
representatives. Major companies with investments in Malaysia or interest in significant
export sales also engage in continuing programs of company image building through
articles and advertising in local business journals, sponsorship of conferences and other
events, and participation in public-private sector consultative bodies.

U.S. exporters face strong competition from producers such as China, Australia, India,
Thailand, Holland, New Zealand, and Indonesia when marketing agricultural products.
Although the Malaysian market is price sensitive, price is not the only factor that
determines the success of U.S. exporters operating within the Malaysian agricultural
market. Developing strong business relationships with local industry players (including
importers), maintaining the availability and the quality of the produce, effective
promotional campaigns, and targeting the right markets are other important marketing
factors to consider when operating in Malaysia.

Electronic Commerce Return to top

It has only been in the last few years that Malaysians have slowly adopted e-commerce.
Commercial banks were among the initiators of e-commerce deployment in Malaysia,
with other sectors following suit. The national air carrier Malaysia Airlines and its low-
cost competitor Air Asia now both provide on-line reservation systems. Transactional
security over the Internet remains a major concern of Malaysian consumers and
Malaysians are slowly being educated and eased into e-commerce as a way of doing
business.

Trade Promotion and Advertising Return to top

Advertising approaches differ according to the market sector. For consumer goods,
advertising techniques include the full range of television, radio, newspaper, outdoor
advertisements and other approaches. Extravagant product launches, once deemed
necessary only in Singapore, are becoming the norm. Due to health/religious concerns,
there are prohibitions on most types of advertising for tobacco and alcoholic beverages.

There are six nationwide TV channels in Malaysia: two government channels (TV1 and
TV2) and four private channels (TV3, 8TV, TV9 and NTV7). Most television channels
broadcast programs in the local language (Bahasa Malaysia), as well as in English,
Mandarin, and Tamil. As to pay TV, there are currently three providers (Astro, MiTV,
and Fine TV). The TV market has some 6 million viewers, including 2.9 million ASTRO
subscribers.

Malaysia has several English-language newspapers, the largest being the New Straits
Times and the Star. The primary business-oriented paper is the The Edge. The major
Malay-language newspapers are Utusan Malaysia and Berita Harian, while the largest
Chinese papers are Sin Chew Jit Poh and Nanyang Siang Pau. There are also Tamil
and other language newspapers. Business-oriented magazines include Malaysian
Business, Malaysian Industry, and the Malaysian Investor. Published news on Malaysia
can be accessed through various sites including www.malaysianews.net and
www.asiadragons.com/world/malaysia.

A brief list of local firms that provide professional services and have expressed interest
in working with U.S. companies can be found on the Commercial Service KL website.
U.S. firms can also advertise themselves on the same site through the Featured US
Exporter service.

Domestic trade fairs (as well as trade fairs in Singapore) also provide U.S. firms with an
opportunity to increase brand awareness and find trade partners. The following is a list
of trade exhibition centers: Kuala Lumpur Convention Centre, Malaysian International
Exhibition & Convention Centre, Midvalley Exhibition and Event Services, Putrajaya
Convention Centre, Putra World Trade Centre, Sunway Pyramid Convention Centre,
Malacca International Trade Centre, and Mahsuri International Exhibition Centre (in
Langkawi). Major trade event organizers include: Malaysian Exhibition Services
(www.mesallworld.com), ABC Exhibitions, AMB Exhibitions, CIS Network, Interexpo,
Mines Exhibition Management, Protemp Exhibitions, and Trade-Link.

Pricing Return to top

A number of factors should be taken into consideration when determining appropriate

product prices. Some factors to consider are the exchange rate (3.4 RM = U.S. $1 at the
time this report was published) and applicable taxes and duties. There may also be
some government regulations for certain industries that affect the price charged to
customers and other end-users. Another factor to consider is the standard of living in
Malaysia. The country is one of the most affluent in the Southeast Asia region, which
means that higher-priced products and services have a niche market. However, prices
of general consumer goods should reflect the lower cost of living and purchasing power
of the average Malaysian. MIDA maintains a table of prices of select consumer goods
(click on “Living in Malaysia”).

In addition, U.S. exporters should generate a price survey of competitor products and
services from both domestic and international firms. The U.S. Commercial Service in KL
can assist exporters by providing a Customized Market Research report that specifically
identifies competitive factors within the market sector or industry.
Sales Service/Customer Support Return to top

Malaysian customers, both corporate and individual, expect high-quality sales service
and after-sale customer support like many other customers in markets worldwide. While
it is not often necessary to establish a local branch or subsidiary, it is usually crucial for
U.S. companies to have a local agent (especially those that are interested in exporting
products or operating services on a continual basis). This agent should be available for
clients to contact immediately should any problems arise.

Protecting Your Intellectual Property Return to top

Introduction

Several general principles are important for effective management of intellectual

property rights in Malaysia. First, it is important to have an overall strategy to protect
IPR. Second, IPR is protected differently in Malaysia than in the U.S. Third, rights must
be registered and enforced in Malaysia under local laws. Companies may wish to seek
advice from local attorneys or IP consultants. The U.S. Commercial Service can often
provide a list of local lawyers upon request.

It is vital that companies understand that intellectual property is primarily a private right
and that the US government generally cannot enforce rights for private individuals in
Malaysia. It is the responsibility of the rights' holders to register, protect, and enforce
their rights where relevant, retaining their own counsel and advisors. While the U.S.
Government is willing to assist, there is little it can do if the rights holders have not taken
these fundamental steps necessary to securing and enforcing their IPR in a timely
fashion. Moreover, in many countries, rights holders who delay enforcing their rights on
a mistaken belief that the USG can provide a political resolution to a legal problem may
find that their rights have been eroded or abrogated due to doctrines such as statutes of
limitations, laches, estoppel, or unreasonable delay in prosecuting a law suit. In no
instance should USG advice be seen as a substitute for the obligation of a rights holder
to promptly pursue its case.

It is always advisable to conduct due diligence on partners. Negotiate from the position
of your partner and give your partner clear incentives to honor the contract. A good
partner is an important ally in protecting IP rights. Keep an eye on your cost structure
and reduce the margins (and the incentive) of would-be bad actors. Projects and sales
in Malaysia require constant attention. Work with legal counsel familiar with Malaysia
laws to create a solid contract that includes non-compete clauses, and
confidentiality/non-disclosure provisions.

It is also recommended that small and medium-size companies understand the

importance of working together with trade associations and organizations to support
efforts to protect IPR and stop counterfeiting. There are a number of these
organizations, both Malaysia or U.S.-based. These include:
• The U.S. Chamber and local American Chambers of Commerce
• National Association of Manufacturers (NAM)
• International Intellectual Property Alliance (IIPA)
• International Trademark Association (INTA)
• The Coalition Against Counterfeiting and Piracy
• International Anti-Counterfeiting Coalition (IACC)
• Pharmaceutical Research and Manufacturers of America (PhRMA)
• Biotechnology Industry Organization (BIO)

IPR Resources

A wealth of information on protecting IPR is freely available to U.S. rights holders. Some
excellent resources for companies regarding intellectual property include the following:

• For information about patent, trademark, or copyright issues -- including enforcement

issues in the US and other countries -- call the STOP! Hotline: 1-866-999-HALT or
register at www.StopFakes.gov.
• For more information about registering trademarks and patents (both in the U.S. as
well as in foreign countries), contact the US Patent and Trademark Office (USPTO)
at: 1-800-786-9199.
• For more information about registering for copyright protection in the US, contact the
US Copyright Office at: 1-202-707-5959.
• For US small and medium-size companies, the Department of Commerce offers a
"SME IPR Advisory Program" available through the American Bar Association that
provides one hour of free IPR legal advice for companies with concerns in Brazil,
China, Egypt, India, Russia, and Thailand. For details and to register, visit:
http://www.abanet.org/intlaw/intlproj/iprprogram_consultation.html
• For information on obtaining and enforcing intellectual property rights and market-
specific IP Toolkits visit: www.StopFakes.gov This site is linked to the USPTO
website for registering trademarks and patents (both in the U.S. as well as in foreign
countries), the U.S. Customs & Border Protection website to record registered
trademarks and copyrighted works (to assist customs in blocking imports of IPR-
infringing products) and allows you to register for Webinars on protecting IPR.
• The U.S. Commerce Department has positioned IP attachés in key markets around
the world. You can get contact information for the IP attaché who covers Malaysia
at: Jennifer Ness, Commercial Officer (Intellectual Property Rights).

IPR Climate in Malaysia

Trademark counterfeiting is a major problem in Malaysia and impacts a broad range of

industries, including: optical media, apparel and luxury goods, tobacco, and electrical
items. More information is available on this subject in Chapter 6.

Though Malaysia is a party to international agreements to protect intellectual property

(including the WIPO, Berne and Paris Conventions, among others), it is recommended
that a company register its patents and trademarks with the appropriate Malaysian
agencies and authorities. Because intellectual property rights are private rights, the U.S.
government can provide only limited direct assistance and cannot provide American
companies with legal advice or advocate on a company’s behalf where a matter is
before a court or administrative agency. Once a company decides to pursue a remedy,
the U.S. government will monitor the case, if requested to do so by the company. The
U.S. government cannot intervene in these cases. However, we can inquire about their
status or contact government officials about concerns related to the effective
administration of legal remedies available to IP holders as a general matter. To report
an IPR-related trade complaint or get more information, call 1-866-999-4258. In
addition, the Department of Commerce’s Trade Compliance Center (TCC) actively
monitors and tracks trade barrier complaints filed by U.S. businesses. As well, the TCC
maintains a trade barrier toolkit on its website, which provides comprehensive advice on
dealing with trade problems.

Due Diligence Return to top

Several firms gather information and publish reports on Malaysian companies, including
Rating Agency Malaysia, United Management Services, and D&B Information Services
(M) Sdn. Bhd. For major corporate transactions, financial advisors and lawyers can
perform due diligence. Publicly listed companies are required to publish audited
financial results, which can be checked prior to entering into business agreements. In
smaller transactions, letters of credit are a standard requirement of potential customers,
while bank references and track records can be checked prior to appointing agents.

Local Professional Services Return to top

A brief list of local firms that provide professional services and have expressed interest in
working with U.S. companies can be found on the Commercial Service KL website. For
a more complete list of service providers in a certain sector (i.e. legal, financial,
accounting), please contact the U.S. Commercial Service in Kuala Lumpur.

Web Resources Return to top

Companies Commission of Malaysia: www.ssm.gov.my

Inland Revenue Board: www.hasilnet.org.my/english/eng_index.asp
Malaysian Franchise Organization www.mfa.org.my/
Malaysian Industrial Development Authority (MIDA): www.mida.gov.my
Malaysia news sites: www.malaysianews.net and www.asiadragons.com/world/malaysia
Ministry of Entrepreneur Development:
http://mcsl.mampu.gov.my/english/fedgovt/entre.html
Multimedia Development Corporation: www.mdc.com.my/
Rating Agency Malaysia: www.ram.com.my/
Social Security Organization: www.perkeso.gov.my/english/introduction.html

Return to table of contents

Return to table of contents

Chapter 4: Leading Sectors for U.S. Export and Investment

• Agricultural Sector

Commercial Sectors

• Aircraft & Parts

• Oil & Gas Equipment
• Digital Broadcasting Products & Content
• Broadband Products
• Environmental Equipment
• Renewable Energy (RE) & Efficient Energy (EE)
• Franchising
• Health Supplements
Aircraft & Parts

Overview Return to top

2008 2009 2010 (estimated)

Total Market Size  1,609 1,301 1,433

Total Local Production 600 676 720
Total Exports 597 775 800
Total Imports 1,606 1,400 1,533
Imports from the U.S. 319 280 308
*Unofficial estimates generated by the Commercial Service in Kuala Lumpur
Figures given in U.S. dollars in millions. Exchange rate: U.S. $1= RM(Ringgit Malaysia)3.46 (2008);
US$1 = RM3.47 (2009), US$1 = RM3.35 (2010). .

• The Malaysian government has identified the aerospace industry, particularly

aerospace maintenance, repair and overhaul (MRO) services, as a new growth
industry for Malaysia to exploit.

• Malaysia Airlines (MAS) is embarking on fleet modernization. It has a firm order

of 35 B737-800 (delivery of aircraft between 2010 and 2014). It has another firm
order of 15 A330-300 (delivery of aircraft between 2011 and 2014). It also has
optional orders for 20 B737-800 and 10 A330-300. MAS expects to receive six
A380 (ordered several years ago) in 2011-2012.

• AirAsia has placed orders of 175 A320s since 2005. It has received 70 of the
aircraft. The other 80 aircraft will be received from 2010 to 2014. Over time,
Airbus aircraft will completely replace the Boeing 737-300 fleet currently used by
AirAsia Group, which comprises AirAsia in Malaysia, Thai AirAsia and AirAsia
Indonesia.

• The Royal Maysian Air Force (RMAF) today operates some 80 combat aircraft
such as Hawks, MiG-29N, F/A-18DHornets and Sukhoi Su-30MKM. Altogether,
the RMAF has about 200 aircraft of various makes.

Best Prospects/Services Return to top

• The best prospects in the Malaysian aviation sector are airliners – Malaysia
Airlines is planning to acquire up to 55 wide-body aircraft for long haul routes – in
addition to the recent order of 55 narrow-body planes B737-800 from Boeing.
Aircraft engines are also a best prospect because of the purchase of those
airplanes.
Opportunities Return to top

• As Malaysia’s annual investment in exploration and development of its oil and

gas sector is expected to increase over the next few years, sales prospects for
helicopters to be used for this sector should be good.

• U.S. exports of aircraft parts have consistently enjoyed a dominant position in the
market, due to consistently superior quality and performance in comparison to
other makes.

Resources Return to top

For more information about this sector, please read the market research entitled
Malaysia’s Safety & Security Equipment Market available in our market research
database. See “Chapter 9: Market Research” for instructions about accessing the
report.
Air Asia: www.airasia.com
Malaysia Airlines: www.mas.com.my
Ministry of Defense Malaysia: www.mod.gov.my
Langkawi Int’l Maritime & Aerospace Exhibition, Dec 1-5, 2009: www.lima2009.com.my
Defense Services Asia, April 19-22, 2010: www.dsaexhibition.com
For more information contact Senior Commercial Specialist Desmond Cheng.
Oil & Gas Equipment

Overview Return to top

2008 2009 2010 (estimated)

806 800 830
Total Market Size
Total Local Production 166 170 180
Total Exports 75 70 70
Total Imports 715 700 720
Imports from the U.S. 408 395 400
*Unofficial estimates generated by the U.S. Commercial Service in Kuala Lumpur
Figures given in U.S. dollars in millions. Exchange rate: US $1= RM(Ringgit Malaysia)3.35 (2008);
US$1 = RM3.45 (2009), US$1 = RM3.30 (2010).

• Malaysia’s crude oil production, including condensates, averaged 658,000

barrels per day in 2009; and the production of natural gas was 940,000 barrels of
oil equivalent (BOE) per day. Malaysia’s total reserves (as of January 1, 2009):
5.52 billion barrels of oil, and 14.66 billion BOE of gas.

• Prospects for Malaysia's oil and gas industry remain optimistic, especially in
deepwater and ultra-deepwater areas.

• US$6.0 billion was spent in the Malaysian exploration and production sector in
2009. Of this, about US$4.0 billion was spent on development and production
projects and exploration activities, and the balance on operations.

• The Malaysian market for offshore oil and gas equipment (excluding rigs,
platforms, modules, jackets, marine vessels) in 2009 was estimated at US$800
million.

Best Prospects/Services Return to top

• Strong market prospects include drilling tools, fishing tools, pressure control
equipment, mud equipment, cementing equipment, perforating systems,
multilateral well completion systems, core completion products, down-hole
testing systems, blowout preventer systems, artificial lift systems, sub-sea
Christmas trees, etc.

• Everything from completion fluids and perforating optimization to completion

hardware geared toward maximizing recovery for justifying large capital
investments in deepwater fields will have high market potential.

• Intelligent completion and control architectures, multilateral systems, sand control

solutions and expandable completion systems, which ensure that production
maintains high levels, will also have strong potential.
Opportunities Return to top

• The 2004-2006 period has seen several significant oil and gas finds in Malaysia
and great excitement has been generated with recent major discoveries in the
deep water offshore Sabah, in Eastern Malaysia. With these discoveries, foreign
investors have shown renewed interest in Malaysian waters. Deepwater
development presents complex operational challenges – high cost and high risk.
American equipment/systems/services that are technologically advanced will
have very solid prospects in this market over the next several years.

• Exxon/Mobil produces almost half of Malaysia’s present hydrocarbon output.

Triton, Amerada Hess, and Murphy are likely to be joining existing producers
Exxon/Mobil and Shell in the next few years as large hydrocarbon producers.
Other U.S. companies presently working as production sharing contractors in
Malaysia are ConocoPhillips and Newfield. The U.S. market position and share
of oil and gas equipment will likely be enhanced over the next several years, as
U.S. firms will produce more hydrocarbon.

Resources Return to top

For more information about this sector, please read the market research entitled
Malaysia’s Oil & Gas Industry available in our market research database. See “Chapter
9: Market Research” for instructions about accessing the report.
OGA 2011 (Oil & Gas Asia Exhibition), June 8-10, 2011: www.oilandgas-asia.com
Petronas: www.petronas.com.my/
For more information contact Senior Commercial Specialist Desmond Cheng.
Digital Broadcasting Products and Content

Overview Return to top

Digital Broadcast 2008 2009 2010 (estimated)

Infrastructure Spending
RTM 17.6 mill 17.6 mill 20.6 mill
Media Prima 8.8 mill 7.3 mill 8.8 mill
Astro 17.6 mill 19.1 mill 22.1 mill
Total 44.0 mill 44.0 mill 51.5 mill
*figures are rough estimates given by the Broadcasters

• There exist a large demand for digital broadcasting products and content as
Malaysia moves into digital TV, high definition TV (HDTV), mobile TV and
Internet Protocol TV (IPTV), over the next five years. The government plans to
switch off analog broadcast service in 2015. The estimated cost for the industry
to migrate from analog to digital TV is $588 million.

• Malaysia’s Free-To-Air (FTA) broadcasting, presently in analog format, comprise

of six television stations. The government owns two stations (RTM1, RTM2) and
Media Prima Berhad owns four stations (TV3, ntv7, 8TV and TV9). About 98% of
Malaysian households (6.1 million in a population of 27.8 million), have access to
FTA terrestrial TV and radio. Media Prima holds more than 70% of the FTA
market.

• Direct-To- Home (DTH) TV started in 1996, offered by Astro which has exclusive
rights to provide DTH satellite broadcasting service. Astro, which offers more
than 100 pay-TV channels, has 2.8 million customers, covering more than 40%
of Malaysian households.

• Telekom Malaysia (TM) will be launching its IPTV service in April 2010, to be
provided over its high speed broadband (HSBB) infrastructure in selected high
impact areas, with broadband speed of 10 Mbps to 1 Gbps. DE Multimedia, a
subsidiary of Redtone Internl, recently launched its IPTV service.

• Both RTM and Media Prima are apparently digital ready. They are just waiting
for the government to organize a framework & policy on the nationwide digital
transmission network infrastructure. Planned rollout for the infrastructure is by
2011.

• Astro launched commercial HDTV in December 2009, by offering 4 HDTV

channels and response has been good. It plans to offer at least 10 HDTV
channels by end 2010.
In addition, Astro is in the midst of exploring IPTV.
 • Maxis, Celcom and Digi launched their mobile TV service in 2008. Take up has
been slow due to the poor quality as the service is delivered through video
streaming. Mobile broadcast TV service is expected to be launched in 2011.

• Astro is the content leader in Malaysia. Its content budget for 2010 will exceed
$264 million. RTM spends $73.5 million a year and Media Prima $58.8 million a
year on content.

Best Prospects/Services Return to top

• The products in demand here include set top decoder boxes, transmitters,
encoders, multiplexes, studio cameras, automation system, monitoring & quality
system, content management system, editing & video server system, microwave
system, television receive only (TVRO) equipment and earth stations. Content is
a growing demand.

Opportunities Return to top

• RTM, Media Prima and Astro will invest more than $51 million in 2010 on
broadcast infrastructure. RTM plans to spend $73.5 million and Astro $29.4
million to upgrade their studios to high definition standards over the next few
years.

• RTM, Media Prima and Astro will be investing more than $396 million in 2010 on
content where at least 30% will be foreign content. RTM has budgeted $857
million to spend on content over the next few years as it plans to increase its TV
channels from two to seven by 2012.

• The local broadcasters and production companies are interested to gain foreign
technology in content development. There is a demand for foreign expertise in
developing local content.

• TM and other IPTV players will invest in products relating to IPTV and content.
When mobile TV takes off, the telecommunication companies in Malaysia will
have to invest in broadcasting products and content in the next few years.

Resources Return to top

ACM Asean ICT Expo & Forum: www.ambexpo.com

Ministry of Information, Communication and Culture: www.kpkk.gov.my
Malaysian Communications and Multimedia Commission: www.skmm.gov.my
SIRIM Bhd: www.sirim.my

For more information contact Commercial Specialist LayHwa Teh

Broadband Products

Overview Return to top

Telco Infrastructure 2008 2009 2010 (estimated)

Spending
TM 559 mill 588 mill 647 mill
Maxis 235 mill 294 mill 294 mill
Celcom 235 mill 235 mill 294 mill
Digi 235 mill 220 mill 235 mill
Total 1,264 mill 1,337 mill 1,470 mill
*figures are rough estimates given by the Telcos

• The broadband market (fixed and mobile) has a high potential for growth, creating a
large demand for broadband products. As of September 2009, Malaysia’s
broadband household penetration rate is 29.2% out of a population of 28.4 million.
Average usage is at the speed of 512 Kbps to 1 Mbps.

• At present, more than 70% of the broadband market are fixed-line, using
asymmetric digital subscriber line (ADSL) technology. Nevertheless, mobile
(wireless) broadband using high-speed packet access (HSDPA) technology has
been growing well since the mobile phone operators, Maxis Communications
Berhad (Maxis), Celcom Berhad (Celcom) and Digi Telecommunications Sdn Bhd
(Digi) launched their services over the last two years.
Mobile broadband is offering speed of 384 Kbps to 3.2 Mbps.

• In its efforts to become an industrialized nation by year 2020, the government is

targeting 50% household penetration by 2010. It is undertaking a nationwide
broadband strategy, with the following two categories of broadband, to achieve the
target, using a mixture of fixed, mobile and satellite technologies:
- Broadband for General Population (BBGP) with speed of up to 2 Mbps;
- High Speed Broadband (HSBB) for selected high impact areas with usage of
between 10 Mbps to 1 Gbps through fibre (undertaken by Telekom Malaysia Bhd
(TM)).

• TM plans to commercially launch HSBB retail service in the high economic impact
areas, including Klang Valley, Cyberjaya, Putrajaya and Iskandar in June 2010 but
this may only be achievable by the end of 2010.

• To help achieve the broadband target, the government awarded four WiMAX
(2.3GHz spectrum) licenses to Packet One, Red Tone International Bhd (Redtone),
YTL E-Solutions Bhd (YTLe) and Asia Space Sdn Bhd (Asia Space). All licensees
are allowed nationwide coverage except for Redtone whose license covers only the
states of Sabah and Sarawak.
• Malaysia is one of the most mature mobile phone markets in the region, with
penetration rate of 104.1% as of September 2009. The keen competition among
the mobile operators, Maxis, Celcom and Digi has helped push forward the mobile
subscriber growth. Maxis and Celcom hold more than 75% of the mobile market
share. The new mobile operator, UMobile which launched its service in 2008 is still
trying to stay afloat due to the intense competition. Since the mobile phone market
is getting saturated, the mobile operators are looking at mobile broadband as their
key growth area over the next few years.

Best Prospects/Services Return to top

• There exist an increasing demand for the following products:

- Broadband technologies - Mobile broadband (HSDPA,WiMAX, WiFi), fixed
broadband (ADSL, SDSL, VDSL, ETTH, FTTH) and satellite.
- Networking equipment and solutions (including routers, switches, firewall);
- Security and surveillance equipment and solutions;

Opportunities Return to top

• Infrastructure investment by telcos in 2010 will exceed $1.4 billion. This should
increase when the HSBB and WiMAX services take off.

• For the HSBB project, TM is rolling out phase one over 2009-2012, starting with
parts of the Kuala Lumpur area. There will be opportunities to bid for TM’s
contracts in subsequent phases of the project which will be roll out over ten
years. This would include fiber optic last mile connectivity, core network and
improvements to international connectivity. For the rollout of BBGP and rural
areas, a mixture of fixed, mobile and satellite technologies will be used.

• Maxis, Celcom and Digi will continue to invest to expand its network coverage for
3G and HSDPA. The four WiMAX players will continue to invest in infrastructure
to deploy their broadband services. Celcom’s parent company, Axiata and Maxis
are aggressively expanding overseas in Asia. This will create demand by these
operators for more broadband products in the future.

Resources Return to top

ACM Asean ICT Expo & Forum: www.ambexpo.com

Malaysian Communications and Multimedia Commission: www.skmm.gov.my
Ministry of Information, Communication and Culture: www.kpkk.gov.my
SIRIM Bhd: www.sirim.my

For more information contact Commercial Specialist LayHwa Teh:

[email protected]
Environmental Equipment

Overview Return to top

2008 2009* 2010**

Total Market Size 803 841 879
Total Local Production* 92 99 106
Total Exports 156 161 166
Total Imports 867 903 939
Imports from the U.S. 145 139 140
(Source: World Trade Atlas and Department of Statistics Malaysia)
Figures given in U.S. dollars in millions. Exchange rate: U.S. $1= RM 3.30 (Ringgit Malaysia)
*Unofficial estimates **Unofficial projection

• The government's commitment to this industry was proven with the establishment of
the Energy, Green Technology and Water Ministry as well as agencies such as the
National Solid Waste Department and Solid Waste and Public Cleansing
Management Corporation (PPSPPA).

• Malaysian Government placed emphasis on preventive measures to mitigate and

minimize pollution and to strike a balance of promoting sustainable natural resources
management and development.

• Solid wastes constitute a growing problem and the amount generated in Malaysia is
increasing faster than it can be disposed of efficiently.

• The growing population and increasing consumption generating up to 1kg/capita/day

or an equivalent of 30,000 tons of rubbish per day.

• Modern conveniences and a “disposable” lifestyle aggravate the solid waste

situation, especially in larger cities.

• Current solid waste composition is made up of 45% food waste, 24% plastic, 7%
paper and 6% iron Approximately 95-97% of waste collected is taken to landfill for
disposals. The remaining waste is sent to small incineration plants, diverted to
recyclers/re-processors or is dumped illegally.

• Upgrading of unsanitary landfills, construction of new sanitary landfills and transfer

stations with integrated material recovery facilities are being carried out in phases
with recycling, and handling of specific types of solid waste like plastic, paper etc.
Only seven of the 289 garbage disposal sites in the country are environmental-
friendly sanitary sites

• The government aims to have 22% of the waste recycled by 2020. The 2008
National Strategic Plan for Solid Waste Management seeks a more systematic and
organized solid waste collection and disposal structure in Malaysia.
• Solid Waste Management providers have not upgraded their equipment over the
past decade, but after the implementation of the Solid Waste and Public Cleansing
Management Act 2008, providers are pressed to provide better and more efficient
services. Prior to 2008, waste management was controlled at the municipal level, but
after the implementation of the above Act, control was handed over to the Federal
Government.

Best Prospects/Services Return to top

• Priority will be to reduce, reuse, recover and recycle waste.

• Companies supplying technology, equipment and know-how within the area of solid
waste management and solid waste disposal equipment

• Most frequently asked for or requested for are automated rubbish sorters or sorting
plants and equipments.

• Environmentally friendly waste disposal plants and equipment

Opportunities Return to top

• Companies for joint ventures and/or transfer of technology in the fields of strategic
environmental planning, waste handling, handling of hazardous substances,
recycling, recovery and transformation of “waste to wealth” and “waste to energy”
technology, refuse derived fuel

• Equipments such as Refuse Collection Vehicles and Equipment similar to RORO

trucks

Resources Return to top

Ministry of Natural Resources and Environment

The Malaysian Water Association
Institute for Environment and Development
Ministry of Energy, Green Technology and Water
Waste Management Association of Malaysia
Solid Waste Department and Solid Waste and Public Cleansing Management
Corporation
For more information contact Commercial Specialist Randall Liew
Renewable Energy (RE) & Efficient Energy (EE)

Overview Return to top

2008 2009* 2010**

Total Market Size 367 385 405
Total Local Production* 0 0 0
Total Exports+ 0 0 0
Total Imports 317 385 405
Imports from the U.S. 76 92 101
(Figures are obtained from estimation from market sources as no available statistics)
Figures given in U.S. dollars in millions. Exchange rate: U.S. $1= RM 3.30 (Ringgit Malaysia)
*Unofficial estimates
** Unofficial Projections
+ Currently there are 5 major PV panels manufacturers in Malaysia but full production is expected to commence after the Q1 of 2010

Sustainable development of the energy sector is a priority to the economic

competitiveness of Malaysia, particularly the industrial, transportation and commercial
sectors. Efforts will continue to be undertaken to manage both depletable and renewable
energy resources to cater to the demands of a rapidly growing economy. The main
thrust will be to ensure an adequate, secure, and cost-effective supply of energy,
promote its efficient utilization and minimize the negative impact on the environment.The
framework conditions for formulation of energy policy with more focus on Renewable
Energy (RE) and Energy Efficiency (EE).

• Malaysia will experience a large increase in overall energy demand. Use of oil
products, natural gas and coal are increasing to meet increasing demands in all
sectors, particularly manufacturing, service & commercial, and transportation

• The final energy demand is expected to double to almost 74 Mtoe by 2020 1

• Electricity’s share of final energy demand is expected to increase from 18% in 2009
to 21% in 2020*

• The fuel mix contribution from renewable energy will be 5% in 2010 to 10% in 2020

• The energy supply needs is expected to increase to 125 Million Mtoe by 2020*

• In 2015 Malaysia will be net importer of energy 2

• If prices and subsidies remain at today’s level, the annual fiscal burden is expected
to be US$7 Billion in 2010 and US$12 Billion by 2020*

1
Malaysian Industrial Development Authorities, 2009
22
Malaysia Energy Centre
Drivers that will spur the growth of RE and EE are:

• The Malaysia Institute of Architects (PAM) and Association of Consulting Engineers

Malaysia (ACEM) has recently developed the Green Building Index, which
incorporates recognised practices in designing and constructing environmentally
friendly operations in Malaysia.

• The advocacy of Energy Efficiency (EE) and sustainable townships with houses that
will be equipped with eco-friendly features such as solar power heating and
photovoltaic. generators

• Tax exemptions on capital expenditure for the development of green technology.

• Soft loans from the Ministry of Green Technology and Water to companies that are
involved in green technologies.

Best Products/Services Return to top

• Priority will be to reduce wastage and increase efficiency.

• Companies supplying technology, equipment and know-how within the area of RE

and EE products and equipment

• Most frequently asked for or requested for are efficient solar accumulators and hybrid
generators.

• Environmentally friendly energy sources and equipment

Opportunities Return to top

• Companies for joint ventures and/or transfer of technology in the fields of RE and EE
equipment or systems

• Other alternative source of RE besides the traditional Biomass, Solar, Wind.

• Most interestingly are the “waste-to-wealth” type resources

Resources Return to top

Ministry of Energy, Green Technology and Water

Energy Commissions of Malaysia
Ministry of Natural Resources and Environment
Institute for Environment and Development

For more information contact Commercial Specialist Randall Liew

Return to table of contents

Franchising

Overview Return to top

2008 2009 2010

(estimated)
Total Franchises in Malaysia 326 388 427
Total Malaysian Franchises 213 262 288
Total Malaysian Franchises 26 28 31
currently exporting
Total Foreign Franchises in 113 126 139
Malaysia
Number of U.S. Franchises in 38 43 47
Malaysia
Source: Malaysian Franchise Association

The Malaysian franchise industry registered a healthy 10% growth in 2008. In 2009, the
global recession is expected to reduce this somewhat, to about 8% growth rate. Almost
33% of the franchises operating in Malaysia are foreign franchises. U.S. franchises
account for around 34% of these franchises.

Out of the entire Malaysian franchise market, 56% are home-grown. Twenty-eight of the
domestically grown franchise brands have made inroads to 48 overseas markets. These
brands are mostly in the food, early child education, clothing and accessories and
beauty sectors. As of October 2009, there are 388 franchise businesses operating in the
country. Food and beverage takes up 120 of these franchises, while maintenance and
services have 46 franchises.

The Government of Malaysia will continue to emphasize and encourage Franchising as

a catalyst for entrepreneur growth. The Malaysian government budget allocation for this
sector under the 9th Malaysian economic plan (2006-2010) was about RM26 million.

Best Products/Services Return to top

The Food and Beverage sector commands one-third of the market share and remains
the franchise best prospect for Malaysia. Unique food and beverage franchise concepts
would still be in demand.

Education has always been important to Malaysians. An increasingly large number of

Malaysian parents are placing their children into private international schools from K-12
and college level. U.S. based syllabus education system are increasingly gaining
popularity among consumers of private education.

Other franchise service sectors gaining market acceptance are in the health and beauty
and retail sectors. Low capital investment and entry cost franchises also are attractive to
first time franchise entrepreneurs.
Opportunities Return to top

Most of the successful US franchise concepts in the market are in the food and
beverage industry. Niche selling points and renowned branding is absolutely essential in
attracting the large conglomerate investors.

Large corporations and conglomerates notwithstanding, the other Malaysian franchise

investors are constantly on the lookout for moderate price range franchise potential.
Although food and beverage sectors continue to be in the forefront of demand,
increasingly the education, health and retail sectors are gaining popularity.

Resources Return to top

• Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC)

• Malaysia Franchise Association
• Perbadanan Nasional Berhad (PNS)
• Halal Malaysia
• Malaysian Qualification Agency (MQA)
• Malaysian-American Commission on Educational Exchange (MACEE)

For more information, please contact Commercial Specialist Tracy Yeoh.

Health Supplements

Overview Return to top

2008 2009* 2010*

Total Market Size 95.74 104.22 114.63
Total Local Production 0.38 0.39 0.42
Total Exports 51.22 30.09 33.10
Total Imports 146.58 133.92 147.31
Imports from the U.S. 41.41 68.47 75.32
Source: Malaysian Department of Statistics under HS coding 210690800 for food supplements, and HS
23936 for Pro-vitamins, Vitamins and derivatives.
Local production: Only vitamins producers are reported in the survey. Other types of health supplements are
not covered/ reported.
*Estimated figures: 2009 official figures are available for January-September.
Figures are given in U.S. Dollar in Millions.

Public healthcare is heavily subsidized in Malaysia. With increasing healthcare cost,

public hospitals are getting oversubscribed and over burdened as 63% of the Malaysian
population is between the ages of 15-64. Even so, the Malaysian government still place
a lot of importance into the health and well being of its citizens by allocating a big portion
of its national budget for the healthcare sector. Under the 9th Malaysian Economic Plan,
the Government of Malaysia has allocated US$3.24 billion for healthcare development.

Certain segments of the Malaysian population that want speedy and quality healthcare
would frequent private hospitals. This is especially so among the upper-middle and high
income population. Even though this segment of the population can afford private
healthcare, however, they are increasingly adopting the “prevention is better than a cure
mentality”. Food and vitamin supplements are seen as preventive measures towards
maintaining optimal health.

Malaysia’s domestic health supplements consumption is mainly met by imports. Private

labeling of health supplements is very popular in this country. Additionally, raw
ingredients are also imported by the local supplements manufacturer. Domestic health
supplement manufacturers focus on manufacturing traditional herbal preparations and
generic OTC products. A small proportion of multinationals manufacture branded OTC
products. There are 140 manufacturers licensed to produce traditional medicines and
40 OTC product producers in Malaysia. The U.S. is the largest supplier of healthcare
supplements to Malaysia commanding about 28% of the market share. U.S. brands are
both trusted and well received by the Malaysian consumers.

Best Products/Services Return to top

In addition to the mainstay of basic vitamin and pro-vitamins; natural and organic
supplements are slowly gaining popularity. Joint-support care, fish oils, heart-care,
cholesterol lowering supplements, CoQ10, Gingko, and male urinary health supplements
are some of the market best sellers.
Market perceptions of a combination of two or more types of natural supplement
ingredients are better than single type supplements. Natural slimming and fat burning
food supplements are also in high demand.

Opportunities Return to top

Direct selling companies are the major importers of health supplements in Malaysia.
They generally private label the supplements. Certified organic and natural health
supplement is a niche and growing market. High-end proprietary U.S. brands would do
well in the specialized healthcare or organic stores.

Cholesterol lowering products, cardiovascular and cancer preventives, and supplements

that are beneficial to diabetics would be well received by the marketplace.

Resources Return to top

• Ministry of Health Malaysia

• Malaysian Medical Association
• Association of Private Hospital of Malaysia
• Malaysian Organization of Pharmaceutical Industries (MOPI)
• Nutrition Society of Malaysia

For more information, please contact Commercial Specialist Tracy Yeoh.

Agricultural Sectors Return to top

Temperate Fresh Fruits

Overview Return to top

2008 2009 2010 (estimated)+

Total Market Size 155.2 164.2 173.2
Total Local Production 0.2 0.2 0.2
Total Exports - - -
Total Imports 155 164 173
Imports from the U.S. 23 24 25
Figures given in U.S. dollars, in millions. Exchange rate: U.S. $1= RM 3.5 (Ringgit Malaysia)
• Since Malaysia has a tropical climate, almost all temperate fruits are imported, which is why the
total market size is not much greater than total imports.
+ Unofficial estimates

• Apples, oranges, mandarin oranges, pears, quinces and grapes are the major
fruits imported into Malaysia. China, Australia, New Zealand and the U.S. are
market leaders for these fruits. Australia and the U.S. are the market leaders for
oranges and grapes. China leads in mandarin oranges, apples and pears.

• These fruits are widely consumed by consumers in the urban and rural areas and
across various income levels.

• Premium imported fruits such as grapefruit, apricot, cherries, peaches and

berries are confined to consumers in the middle income and above.

• Malaysian consumers prefer to “see, feel and pick” when purchasing their fruits.

• Most retail outlets sell fresh fruits loose; however, packed fresh produce in
transparent materials is gaining acceptance among consumers. The preferred
packing size for fruits, such as apples, pears and oranges is 6-10 fruits per pack;
0.5-1.0lb for grapes and 0.5lb for berries and cherries.

Best Products/Services Return to top

• Oranges, grapes and apples are the existing best product prospects for
this sector. Higher end fruits, such as plums, peaches, cherries, and
grapefruits are gaining popularity among consumers.

Resources Return to top

General guidance to food exporters can be found in the Malaysia Exporter Guide on the
Foreign Agricultural Service website.

Return to table of contents

Pet foods (Dogs and cats)

Overview Return to top

2008 2009 2010 (estimated)*

Total Market Size 45 48 51
Total Local Production 0.2 0.2 0.2
Total Exports - - -
Total Imports 45.2 48.2 51.2
Imports from the U.S. 9 11 13
Figures given in U.S. dollars, in millions. Exchange rate: U.S. $1= RM 3.65 (Ringgit Malaysia)
* Unofficial estimates

• As Malaysians become more affluent, keeping pets especially pedigree, is

regarded as a lifestyle.

• Pet shops, complete with full range of pet care products and specialists on hand
for advice, are increasingly popular among pet lovers.

• With education and awareness, pet owners are feeding their pets with prepared
food as opposed to food scraps from the dining table. With increase popularity of
pedigree animals, sales of prepared pet food will continue to grow.

• Most dog and cat foods are sold through hypermarkets and supermarkets
because of their price and affordability. Premium pet foods are sold through pet
shops.

Best Products/Services Return to top

• Wet dog and cat foods (premium and economy), dry dog and cat foods
(premium and economy), dog treats such as biscuits, meat jerky, raw
hides and meal bones.

Resources Return to top

U.S. exporters seeking general export information/assistance or country-specific commercial

information should consult with their nearest Export Assistance Center or the U.S. Department
of Commerce's Trade Information Center at (800) USA-TRADE, or go to the following website:
http://www.export.gov.

To the best of our knowledge, the information contained in this report is accurate as of the date
published. However, The Department of Commerce does not take responsibility for actions
readers may take based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other commercial
arrangements. The Department of Commerce can assist companies in these endeavors.

Return to table of contents

Temperate Hardwood Lumber Return to top

Overview Return to top

2006* 2007* 2008 (estimated)*+

Total Market Size** 48 62 45
Total Local Production 0 0 0
Total Exports 0 0 0
Total Imports 48 62 45
Imports from the U.S. 19 23 18
(Insert footnote information here)

*Figures given in U.S. dollars, in millions

+Unofficial estimates
**Total market size for temperate hardwood is exactly the same as total imports because
only tropical hardwood is available in Malaysia. Therefore all temperate hardwood in
Malaysia is imported.

• Temperate hardwood lumber is mainly used in the Malaysian furniture/interiors

sector, which showed strong resilience in 2008 with a small increase in overseas
demand for Malaysian-made furniture. Export earnings rose 4% to US$2.0 billion in
2008.

• The furniture industry less optimistic than the past years for 2009. The 15th MIFF, to
be held in Kuala Lumpur on March 3 – 7, 2009, will again showcase the best of
Malaysian manufactured furniture. With the exhibition space expected to be
expanded to over 85,000 sq meters, MIFF is touted as the largest furniture fair in
Southeast Asia and offers itself as a gateway for international players to penetrate
the regional market. More than 500 leading furniture manufacturers and exporters
from Malaysia and Asia are expected to participate at the Fair. It is estimated that
MIFF accounts for about 40 percent of Malaysia’s total annual furniture exports.

Best Prospects/Services Return to top

• Much of the opportunities for U.S. exporters in the Malaysian furniture industry arise
from coupling cheaper native woods, such as rubberwood, with high-value veneers
from the U.S. Strong increases in market share of U.S. temperate hardwood lumber
and veneer in past years confirm this trend. As Malaysia moves into the top ten
furniture exporters in the world, the U.S. wood industry, if properly positioned, would
largely benefit from the development.

Opportunities Return to top

• The American Hardwood Export Council (AHEC) does a commendable job of

increasing the awareness of U.S. hardwoods in Malaysia. Its main activities are
participating in trade shows, conducting a technical seminar, holding two regional
conferences involving speaker/panelist from Malaysia.
• U.S. wood suppliers should team up with AHEC to participate at trade shows in order
to increase their visibility in the local market and to make direct contact with local
furniture manufacturers

Resources Return to top

Malaysian International Furniture Fair (MIFF) Mar 3-7, 2009 www.miff.com.my

American Hardwood Export Council: www.ahec.org/
Chapter 5: Trade Regulations and Standards

• Import Tariffs
• Trade Barriers
• Import Requirements and Documentation
• U.S. Export Controls
• Temporary Entry
• Labeling and Marking Requirements
• Prohibited and Restricted Imports
• Customs Regulations and Contact Information
• Standards
• Trade Agreements
• Web Resources

Import Tariffs Return to top

Tariffs are the main instruments used to regulate the importation of goods in Malaysia,
and the simple average applied normal trade relations (NTR) tariff rate is 8.56%. Import
duties range from 0% to 50% and can be found on the US-ASEAN Business Council’s
website (note: the site provides both CEPT rates under AFTA, as well as NTR rates
applicable to U.S. goods, and Malaysia follows the Harmonized Tariff System (HTS) for
the classification of goods). The higher rates apply to luxury goods and protected
sectors. The level of tariff protection is generally lower on raw materials and increases
for those with value-added content or which undergo further processing. Seventeen
percent of Malaysia’s tariff lines (principally in motor vehicle, construction equipment,
forestry, logging, agricultural, and minerals sectors) are also subject to non-automatic
import licensing designed to protect import-sensitive or strategic industries. The
Malaysian government continually reviews tariff rates in line with its objective of
achieving a more open and liberal economy, and applied tariff rates have fallen over the
past ten years.

In 2004 and again in 2005, Malaysia lowered some of the substantial import duties to
which foreign-made automobiles and motorcycles were previously subject. At the same
time, the government applied equally high excise taxes, leaving the tax burden on
imported vehicles virtually unchanged. In October 2005 the government issued the New
Automobile Policy framework that eventually could enhance competition; for example,
the framework eliminated a 50% rebate on the auto excise tax for which only national car
manufacturers were eligible. The government unveiled its long awaited new National
Automotive Policy (NAP) in March 2006. With this policy, the government is attempting
to eliminate disparities in the treatment of local and foreign automakers and to turn
Malaysia into a regional hub for the manufacturing, assembly and distribution of
automotive vehicles. As of the NAP review, the rates of import duty for most favored
nation and excise duty for Complete Built-Up and Complete Knocked-Down vehicles are
maintained. However, per 2009 National Budget, imports of complete build-up hybrid
cars are exempted from duty and are granted 50% excise duty exemption. These
exemptions are given for a period of two years, until December 31, 2010. Currently there
is no electric vehicle manufacturing available in the country.
Under the recent NAP review, the Approved Permit (AP) for importation of automotive
vehicle commitments has been extended:
• Open AP for used vehicles (commercial, passenger and motorcycles) has
been extended to end by 31 December 2015; and
• Franchise AP to be terminated by 31 December 2020.

Further information about tariffs may be found on the website of the Royal Malaysian
Customs.

In addition to import duties on specific classes of goods, a general sales tax of 10% is
levied on most imported goods. However, the sales tax is not applied to machinery used
in export-oriented production.

Trade Barriers Return to top

The Government of Malaysia operates a system of import licensing. Import licenses are
required for a number of items, including arms and explosives; motor vehicles; heavy
construction equipment; certain drugs and chemicals; plants; timber; soil; tin ore, slag or
concentrates; and various essential foodstuffs. Prohibited imports include any “indecent
or obscene” articles and certain poisonous chemicals.

Imports of meat and poultry are regulated through licensing and sanitary controls. All
imported beef, lamb, and poultry products must originate from facilities that have been
approved by Malaysian authorities as “halal,” or acceptable for consumption by Muslims.

Malaysia has an export licensing system. For some products, such as textiles, export
licenses are used to ensure compliance with bilateral export restraint agreements. For
other products, such as rubber, timber, palm oil, and tin exports, special permission from
government agencies is required. Export duties ranging from 5% to 15% are imposed
on the principal commodities of timber and palm oil. A flat rate of 10% export duty is
imposed on petroleum.

Malaysia is not party to the WTO Government Procurement Agreement, and as a result
foreign companies do not have the same opportunity as some local companies to
compete for contracts, and in most cases are required to take on a local partner before
their bids will be considered.

Malaysia’s services sector, which constitutes about 56% of the national economy,
remains highly protected. At a September 2005 WTO meeting, Malaysia joined other
developing economies in protesting proposals to change WTO rules in order to
accelerate the liberalization of services in developing countries. In sectors such as
telecommunications, legal services and direct selling, foreign firms are limited to a 30%
share in local operators. Other services, including architecture and engineering, can
only operate as a joint-venture participant, and accounting and taxation firms can only
operate through affiliates.

Protection of intellectual property rights is also a trade barrier for certain industries, and
this issue is discussed in Chapter 6. For a full report on trade barriers in Malaysia,
please visit the U.S. Trade Representative’s report.
Import Requirements and Documentation Return to top

The following documents are required by Malaysian customs for exporting products to
Malaysia: invoice; packing list; delivery letter; leaflet, catalogue or other related
documents; insurance certificate, if insured; loading bill/airway bill; letter of credit (if
used); permit, licenses/certificates; proof of fare payment; and a declaration form
(customs form No 1) that indicates the number, description of packages/crates, value,
weight, quantity and type of goods and country of origin. Completed Custom forms
should be submitted to Customs offices at the place where the goods are imported or
exported.

All duties/custom taxes imposed on imported goods will need to be paid in advance
before the goods can be released. Taxes to be paid include import tax and sales tax.

Imports of electric goods are required to have an approval certificate issued by the
Malaysia Electricity Supply Board (JBEM). If shipping raw materials/components or
machineries to a Free Industrial Zone (FIZ) in Malaysia, the manufacturer in the FIZ is
required to forward a list of goods along with a manufacturing flow chart to the State
Customs Director for approval.

U.S. Export Controls Return to top

Exports and re-exports of munitions, dual-use commodities and technology to Malaysia

are subject to U.S. export controls. U.S. companies exporting to Malaysia need to apply
for an export license from the Bureau of Industry and Security (BIS) if their products or
services are controlled for any of the following reasons: CB1, CB2, NP1, NS1, NS2,
MT1, RS1, RS2, CC1, and CC3. If a firm does not know its export commodity control
number, it should contact its local U.S. Export Assistance Center for more information on
BIS commodity classification, or review the Export Administration Regulations database.
Additional information about the types of products covered may be obtained from the
State Department’s Directorate of Defense Trade or the Commerce Department’s
Bureau of Industry and Security.

Temporary Entry Return to top

Malaysia acceded to the Convention on Temporary Admission of Goods (ATA

Convention) in 1988, and information on temporary entry of goods under the ATA is
found in Chapter 8. Raw materials used directly for the manufacture of goods for export
are exempted from import duties if such materials are not produced locally or if the local
materials are not of acceptable quality and price. This provision, for example, applies to
Malaysian imports of semiconductor components used in the fabrication of completed
semiconductors for export. Exemptions from duties are also available for machinery and
equipment used directly in the manufacturing process or not available locally.
Labeling and Marking Requirements Return to top

All imported consumer goods must identify the importing agent, typically accomplished
by affixing a label after goods have cleared customs. Pre-packaged drugs must be
labeled in English or Bahasa Malaysia, indicating the substance and its components.
Malaysia requires nutrition labeling for all food products. Foods that have been enriched
or fortified with specific vitamins and minerals must have a declaration of the amounts of
these nutrients on the label. The mandated nutritional guidelines closely follow Codex
guidelines. American standard RDA guidelines will not be accepted; instead nutrients
must be expressed as a percentage of the Codex recommended Nutrient Reference
Value (NRV). Companies may apply stickers that contain the nutritional information in
lieu of producing packaging specifically for the Malaysian market. All meat, processed
meat products, poultry, and eggs must receive halal certification from Pusat Islam in
order to bear the halal mark.

Prohibited and Restricted Imports Return to top

Quantitative import restrictions are seldom imposed, except on a limited range of

products for protection of local industries or for reasons of security. Seventeen percent
of Malaysia’s tariff lines (principally in the construction equipment, agricultural, mineral,
and motor vehicle sectors) are also subject to non-automatic import licensing designed
to protect import-sensitive or strategic industries.

Customs Regulations and Contact Information Return to top

Malaysia follows the Harmonized Tariff System (HTS) for the classification of goods. All
imported and exported goods into the country must be categorized based on the
Malaysian Customs tariff numbers. Any queries regarding classification of import and
export goods should be made to the particular customs station of which the goods are to
be imported. For more information, please see the Royal Malaysian Customs’ website.

Standards Return to top

• Overview
• Standards Organizations
• Conformity Assessment
• Product Certification
• Accreditation
• Publication of Technical Regulations
• Labeling and Marking
• Contacts

Overview Return to top

Standards are widely used in all sectors of Malaysian society, and the national
standardization system uses a consensus process to develop new standards, allowing
manufacturers, traders, consumers, government, and others to provide input and
consideration into the development process. Malaysia adheres to the WTO's “Standard
Code" on Technical Barriers to Trade. SIRIM Berhad, formerly known as the Standards
and Industrial Research Institute of Malaysia, is the government-owned company
providing institutional and technical infrastructure for the Government.

Standards Organizations Return to top

SIRIM Berhad is the national organization of standardization and quality and also serves
as the government’s catalyst for industrial research and development. Its functions
include developing Malaysian standards, undertaking scientific industrial research, and
providing technology transfer and consultancy services.

As the appointed standards development agency, SIRIM publishes Malaysian standards

and provides quality certification services. Today, more than 3,600 standards are
available. The current standards are also reviewed every five years or whenever
required to keep current with the latest technological developments. Many of these
standards are implemented in product certification, quality management systems, and
environmental management systems certification.

NIST Notify U.S. Service

Member countries of the World Trade Organization (WTO) are required under the
Agreement on Technical Barriers to Trade (TBT Agreement) to report to the WTO all
proposed technical regulations that could affect trade with other Member countries.
Notify U.S. is a free, web-based e-mail subscription service that offers an opportunity to
review and comment on proposed foreign technical regulations that can affect your
access to international markets. Register online at Internet URL:
http://www.nist.gov/notifyus/

Conformity Assessment Return to top

There are a few important national testing organizations that operate under SIRIM and
define the structure and objectives of national standardization as well as ensure the
functionality and quality assurance of products. For a list of conformity assessment
bodies visit the Department of Standards and Malaysia website and click on
“Accreditation” and then on “Directory of Accredited CBs” as well as on “Directory of
Accredited Labs”.

Product Certification Return to top

Malaysia is part of the Asia Pacific Economic Cooperation (APEC) Mutual Recognition
Arrangement. This is a multilateral arrangement between the U.S. and the economies of
twenty nations, most of which are located in Southeast Asia. The purpose of the APEC
MRA is to facilitate trade, promote market access, reduce or minimize non-tariff trade
barriers, and arrive at a Mutual Recognition Arrangement of conformity assessment
processes. All economies in the APEC Arrangement, including Malaysia, are already in
Phase I, which encompasses mutual recognition of test reports. Many economies are
ready for Phase II, which is an acceptance of product approvals from one another.

Accreditation Return to top

The Department of Standards Malaysia (DSM) was established following the

establishment of SIRIM to undertake the statutory roles in national standardization
formerly carried out by the Institute. It operates as the sole national accreditation body
in the country. DSM provides accreditation services to certification bodies, inspection
bodies, and testing and calibration laboratories. DSM is responsible for processing
applications for accreditation and their submission to the Director General who, in
successful cases, issues certificates of accreditation. DSM fee structure for
accreditation is: (a) application fee - RM 5,000; (b) annual fee - RM 5,000. An
accreditation certificate is valid for three years.

Publication of Technical Regulations Return to top

Malaysia’s legislative body produces an official gazette entitled Government Gazette.

Proposed and final technical regulations are published, but accessing the government
information over the Internet requires a subscription. The website LawNet provides
basic information and accepts feedback on any number of subjects. U.S. firms can
review and comment on proposed standards and technical regulations through the
SIRIM Berhad website, by clicking on “Corporate Ads” and then “Public Comment.” A
list of existing standards can be found on the same site, by clicking on “Online Services”
and then “MS Catalog Online.”

Labeling and Marking Return to top

Sirim QAS, a subsidiary of SIRIM Bhd, is the leading certification, inspection and testing
body in Malaysia, and provides marks for a variety of certifications. For a full list, visit its
website at: http://www.sirim-qas.com.my/certlist2.asp. Permission to use the SIRIM
Quality Mark on products or services is given to manufacturers and companies whose
products and services consistently conform to the relevant MS guidelines. To ensure
compliance to the requirement of the Mark, SIRIM periodically tests the product, makes
both regular and unannounced visits to manufacturers, and regularly checks their quality
control and procedures.

For other information on labeling, please see the section earlier in Chapter 5.

Contacts Return to top

Standards contacts at the U.S. Embassy in Malaysia: Terry J. Sorgi and Tracy Yeoh
Department of Standards Malaysia: http://www.dsm.gov.my/
LawNet: http://www.lawnet.com.my/
Malaysian Certified: http://www.malaysiancertified.com.my/
Notify US: http://www.nist.gov/notifyus/
SIRIM Berhad: http://www.sirim.my/
SIRIM QAS: http://www.sirim-qas.com.my/

Trade Agreements Return to top

Malaysia has pursued bilateral and regional free trade arrangements in complement to
its active participation in the World Trade Organization. Malaysia’s specific objective in
concluding FTAs is to maintain the country’s competitive position vis-à-vis its neighbors.
Malaysia also requires that the FTAs it negotiates include elements of trade and
investment cooperation that allows its industry to build capacity through technical
cooperation and collaboration.
Malaysia is a member of the ASEAN Free Trade Area (AFTA), which aims to reduce
trade barriers among the member countries over a 15-year period. A key AFTA
objective is for the six original ASEAN members (Malaysia, Indonesia, Singapore,
Thailand, the Philippines, Brunei) to reduce import duties to 5% or less by 2010, with
newer members (Vietnam, Laos, Burma, and Cambodia) to do the same by 2015. By
2003, 99.26% of Malaysian goods included in the AFTA Common Effective Preferential
Tariff (CEPT) scheme were subject to duties of less than 5%; of these products, 60.4%
were subject to zero tariff.

Malaysia has signed and implemented bilateral FTAs with Japan and Pakistan and
recently concluded negotiations with New Zealand. Malaysia is also a party to five
regional FTAs namely ASEAN-China, ASEAN-Korea, ASEAN-Japan, ASEAN-Australia-
New Zealand and ASEAN-India. Currently, Malaysia is negotiating bilateral FTAs with
India, Chile and Australia, and the regional ASEAN-EU FTA.

The U.S. and Malaysia signed a Trade and Investment Framework Agreement in May
2004. The TIFA established a Trade and Investment Council (TIC) that meets several
times a year to discuss ways to improve the bilateral trading relationship. Malaysia is
also a member of the Asia-Pacific Economic Cooperation (APEC) group.

Web Resources Return to top

ASEAN Free Trade Area (AFTA): www.aseansec.org/economic/afta/afta.htm

Asia-Pacific Economic Cooperation (APEC): www.apec.org
ASEAN Tariff Database: www.us-asean.org/aftatariffs.asp
ATA Carnet: www.atacarnet.com/
Bureau of Industry and Security: www.bis.doc.gov/
Department of Standards Malaysia (DSM): www.dsm.gov.my/
Government Gazette (subscription needed): www.lawnet.com.my
Malaysia’s APEC Action Plan: www.apec-iap.org/document/MAS_2005_IAP.htm
Malaysian Customs Department: www.customs.gov.my
Malaysia’s Economic Planning Unit: www.epu.jpm.my/
Malaysia’s External Trade Development Corporation (MATRADE):
www.matrade.gov.my/
Malaysia’s National Economic Action Council: http://neac.gov.my/
Ministry of International Trade and Industry: www.miti.gov.my/
SIRIM: www.sirim.my/
SIRIM QAS: www.sirim-qas.com.my/
State Department’s Directorate of Defense Trade Controls: www.pmdtc.org
U.S. Trade Representative: www.ustr.gov/
U.S. Export Assistant Centers: www.export.gov/comm_svc/eac.html

Return to table of contents

Return to table of contents

Chapter 6: Investment Climate

• Openness to Foreign Investment

• Conversion and Transfer Policies
• Expropriation and Compensation
• Dispute Settlement
• Performance Requirements and Incentives
• Right to Private Ownership and Establishment
• Protection of Property Rights
• Transparency of Regulatory System
• Efficient Capital Markets and Portfolio Investment
• Competition from State Owned Enterprises
• Corporate Social Responsibility
• Political Violence
• Corruption
• Bilateral Investment Agreements
• OPIC and Other Investment Insurance Programs
• Labor
• Foreign-Trade Zones/Free Ports
• Foreign Direct Investment Statistics
• Web Resources

Openness to Foreign Investment Return to top

The Government of Malaysia (GOM) encourages foreign direct investment (FDI) by

providing a number of incentives, particularly in export-oriented high-tech industries and
"back office" service operations. The GOM also hosts international trade shows and
advertises broadly to attract FDI. Many U.S. companies have operations in Malaysia,
including ExxonMobil, Intel, Microsoft, Dell, GE, UPS, Mattel, and Motorola, just to name
a few.

Malaysia’s current Prime Minister Najib Razak took office in April 2009 and quickly
signaled his administration’s intention to further liberalize investment regulation to
stimulate new foreign investment. The government removed foreign ownership limits for
27 non-controversial services subsectors, repealed Foreign Investment Committee (FIC)
guidelines on mergers and acquisitions, reduced Bumiputra ownership requirements for
new listings of foreign owned corporations from 30% to 12.5%, and reduced FIC
approval requirements for foreign ownership of properties to only those above RM 20
million (USD 8 million). In his 2010 budget speech, the PM called for additional
economic and investment reform measures.

Inflows of actual FDI to Malaysia decreased by 2.4% from USD 8.4 billion in 2007 to
USD 8.2 billion in 2008, according to the UN Conference on Trade and Development
(UNCTAD). However, conversations with Malaysian investment officials portend a
substantial decrease in actual FDI during 2009, as much as 80% below 2008 figures,
due to financial crisis-related implementation delays in previously approved projects.
Malaysian investment outflows continued during the same period, rising from USD 6.04
billion in 2006 and USD 10.98 billion in 2007 to USD 27 billion from mid 2008 to mid
2009, during the height of the global financial crisis (GFC). One GOM official attributed
the substantial increase in outward flows largely to cross-border assets acquisitions and
USD 15 billion of portfolio investment outflows as a result of a “flight to safety” during the
global financial crisis. There are reports or portfolio investment inflows in November and
December 2009.

As a destination for FDI, Malaysia’s attractiveness for lower-wage manufacturing has

diminished as years of steady economic growth have made it a middle-income country.
The GOM seeks to move the economy “up the value chain” by promoting specific
sectors. In its 2006-2020 Third Industrial Master Plan, the GOM identified specific
higher-tech industries it wanted to attract and develop. In the manufacturing sector
these included electrical & electronics; medical devices; textiles & apparel; machinery &
equipment; metals; and transportation equipment. The GOM has recently targeted
“green” industries, and succeeded in attracting three large investments by U.S. and
German solar panel manufacturers. Also targeted for growth were a number of
resource-based industries and some services sub-sectors including logistics; however,
the extent to which foreign investors are allowed to participate in these sectors is limited.

The Ministerial Functions Act grants relevant ministries broad discretionary powers over
the approval of specific investment projects. Investors in industries targeted by the GOM
often can negotiate favorable terms with the ministry or other regulatory body. This can
include assistance in navigating a complex web of regulations and policies, a few of
which can be waived on a case-by-case basis. In general, the GOM welcomes foreign
investment; however, investors in non-targeted industries tend to receive less GOM
assistance in obtaining the necessary approvals from the various regulatory bodies and
therefore face more bureaucratic obstacles.

Nevertheless, the GOM actively reaches out to targeted industries and negotiates terms
that successfully attract FDI. According to the Malaysian Industrial Development
Authority (MIDA), the total value of foreign projects approved in 2009 was $6.5 billion a
51% decrease from the $13.3 billion approved in 2008. The value of approved projects
from Australia, the U.S. and Germany declined significantly in 2009 as effects of the
global financial crisis took hold. U.S. investment plummeted by 72% from $2.5 billion to
$0.7 billion, though still ranking third after Japan and Hong Kong for total approved
foreign investment projects. (Note: Approval statistics are not directly comparable to
actual FDI statistics. Also, manufacturing investment statistics do not capture
investments in non-manufacturing-related services or upstream oil and gas production.)

Malaysia has been working on an export control law since 2005 and plans to present
legislation to Parliament in 2010. Implementation of an export control law will qualify
Malaysian exports for expedited customs handling upon import to the U.S. and to other
countries. An export control law also will be essential if Malaysia is to achieve its goal
of becoming a “logistics hub,” particularly in light of the international trade system’s
growing emphasis on secure supply chains and transparent cargo movements
throughout the manufacturing and shipping process.
Regulatory Burden

The World Bank compiles an annual “Doing Business” report comparing regulations
affecting ten areas of everyday business across the globe. In its Doing Business 2010
report, which covers the period through June 2009, Malaysia moved down from 21st to
23rd place overall among the 181 economies covered in this survey. 3 Malaysia’s best
rankings were in the standardized indicators “getting credit” and “protecting investors,”
where it ranks first and fourth, respectively. Malaysia’s worst ranking at 109th place is in
“dealing with construction permits” which, in the standardized example of obtaining the
approvals necessary to build a warehouse, involves 25 procedures and takes 261 days,
at a cost of 7.1% of per capita income, all before construction can begin. The 2009
ranking is marginally better than last year, when the cost was 7.9% of per capita income.

Malaysia’s other rankings in the report slipped. Starting a business dropped from 75th to
88th place, closing a business, moved from 54th to 57th place, and enforcing contracts
remained at 59th place. Malaysia’s ranking also declined in employing workers,
registering property, and trading across borders, where it now ranks 61st, 89th, and 35th,
respectively.

To improve business conditions in Malaysia, former Prime Minister Abdullah Badawi

established the PEMUDAH committee in 2007. PEMUDAH consists of 23 high-level
government and private sector leaders with a mission to identify and evaluate
bureaucratic impediments to conducting business in Malaysia and to make
recommendations to the PM on how to address them. PEMUDAH’s focus is specifically
on administrative reforms designed to enhance the efficiency of the government
bureaucracy’s interaction with the private sector. It does not have the authority to make
deeper reforms needed to address policy-level structural inefficiencies in Malaysia’s
economy. PEMUDAH efforts did not result in as many category improvements in the
Doing Business 2010 report as improved in the previous year’s report. More information
about the committee is available at www.pemudah.gov.my.

One significant impediment to Malaysia’s economic growth is its complex network of

racial preferences to promote the acquisition of economic assets by ethnic Malays and
other indigenous groups (bumiputera). The details of implementation are largely left to
the various ministries. Policies and practices vary greatly. Some practices are explicit
while others are informal, leaving much ambiguity for potential investors.

The initial public aim of these programs when they were implemented in 1970 was to
establish a more even distribution of wealth among races to rectify a situation whereby
bumiputra made up nearly 60 percent of the nation’s population but held less than three
percent of the nation’s wealth. Despite a stated goal of poverty alleviation, these race-
based policies are not subject to upper income limitations; in practice wealthy and well-
connected bumiputera receive the lion’s share of the benefits. The resulting economic
distortions in the property, labor, and stock markets inhibit growth and deter both foreign
and domestic investment. 4

3
Doing Business in 2009: How to Reform, published by the World Bank Group.
4
Citigroup Special Report: “Regaining Investor Confidence” October 30, 2006, The Edge
Malaysia
The GOM set a target of 30 percent of the nation’s wealth to be held by bumiputera.
Several studies have demonstrated that the 30 percent equity target has been reached
or exceeded; however, official government figures place bumiputera equity at 18.9
percent. The GOM has not responded to public requests to make its methodology fully
transparent, but does admit to including government-owned corporate equity in its
calculations, placing it squarely on the non-bumiputera side of the ledger. This approach
weighs heavily on the result, as the government owns more than a third of publicly
traded corporate equity. A further distortion in the government figure is the practice of
measuring equity based on par value rather than market value. However, increasing
discussion of the race-based policies in both private and public sector circles, as well as
several government-commissioned studies on how best to enhance the country’s
business and investment climate, may be indicators that the government recognizes the
high social and economic costs of these policies and may be open to efforts to re-focus
the policies on poverty reduction as originally intended. This year, approximately 41% of
federal revenue came from Petronas, the national oil company, and oil related taxes and
fees. Fewer oil-based revenues will be available to support government poverty
reduction programs, as Malaysia is expected to become a net importer of oil over the
next few years, and may stimulate further movement toward economic reform.

Corporate Equity

One of the government’s racial preference policies is a requirement that foreign and
domestic non-manufacturing firms take on bumiputera partners (with a minimum of 30%
of share capital). If a company seeks public listing on the Bursa Malaysia (formerly
Kuala Lumpur Stock Exchange), it is required to reserve at least 30% of its initial public
offering (IPO) for purchase by bumiputera. In 2003 the GOM ended a formal
requirement that corporations issue additional stock to bring bumiputera equity back up
to 30% if those shareholders had sold their stock. This was a welcome change,
especially in light of critics’ complaints that individual bumiputera taking advantage of
these offers often sold the stocks immediately for a quick profit, thus reducing the
company’s bumiputera equity to below 30% almost immediately. However, bumiputera
equity remains a consideration when companies apply for an array of required permits
and licenses, many of which must be renewed either annually or biennially. In
November 2008, the government announced that it would relax the minimum 30%
bumiputera equity requirement for domestic companies seeking listing on Bursa
Malaysia. However, the IPO must first be offered to bumiputera-controlled institutional
investors and then to bumiputera individuals. If neither is interested, the requirement
can be waived.

The government caps foreign investment shares in most sectors. To alleviate the effects
of the regional economic crisis, in 1998 Malaysia temporarily relaxed foreign-ownership
and export requirements in the manufacturing sector for companies that did not compete
directly with local producers. In June 2003, the government extended this policy
indefinitely, permitting expansion of existing investments in manufacturing concerns to
be foreign-owned. Manufacturing investments approved under the liberalized measures
are not subject to racial preference requirements for divestment or dilution. Those with
prior investments must honor the initial conditions to which they agreed but may request
that they be changed. Malaysia’s 2003 liberalization of foreign equity ceilings in
manufacturing led to a spike in both foreign and domestic investment in the sector.
In 2004, the government announced that venture capital firms could be 100 percent
foreign-owned, in addition to manufacturing and information technology firms, subject to
government approval. The Securities Commission approved the establishment of the
first foreign venture company in Malaysia, Japan Asia Investment Co Ltd (JAIC), in
September 2008. Approvals are handled by the Malaysian Industrial Development
Authority (MIDA) for most manufacturing projects and the Multimedia Development
Corporation (MDC) for Multimedia Super Corridor (MSC) status companies (see below).
Especially in the case of investments focused toward the domestic market and those in
sectors other than manufacturing, the GOM has used this authority to restrict foreign
equity (normally to 30 percent) and to require foreign firms to enter into joint ventures
with local partners. The GOM often approves investments in high-tech industries, but is
less inclined to approve lower-wage manufacturing and in some cases will not renew tax
abatement agreements to existing manufacturers that rely heavily on low-wage foreign
workers or are not perceived as sufficiently high-tech.

Manufacturing

MIDA screens all proposals for manufacturing and related projects in Malaysia, both
foreign and domestic, to determine the extent to which they contribute to the
government’s goals and objectives. These are outlined in the Third Industrial Master
Plan (2006-2020), the various regional initiatives (Iskandar Development Region and the
Northern, Eastern, Sabah and Sarawak Economic Regions) as well as other strategic
economic and social development initiatives and policies. Project approval depends on
many other factors as well. MIDA may consider the size of an investment, the export-
orientation of production, the type of financing required (both local and offshore),
capital/labor ratio, the potential for technological diffusion into the local economy, the
ability of existing and planned infrastructure to support the effort, and the existence of a
local or foreign market for the output. If both local and foreign firms propose similar
projects, the local firm will be given preference. All requests are handled on a case-by-
case basis. MIDA has the authority to issue or renew licenses for most manufacturing
companies, eliminating a second layer of approval from MITI. A RM 50 fee also has
been eliminated and tariffs on 48 raw materials and intermediate goods have been
reduced or eliminated. MIDA maintains a Business Information Center which provides
information on investment, productivity, trade, and financing, as well as staff who can
discuss a variety of manufacturing sectors. The center also has space for business
meetings. MIDA established an on-site immigration unit in 2007 which has helped
expedite the processing of expatriate work visas. Applications for investment in sectors
other than manufacturing are handled by the relevant regulatory agencies and
sometimes require multiple approvals.

Investment regulations are specified in the Promotion of Investments Act of 1986 (PIA)
and the Industrial Coordination Act of 1975. The government pledged in 2004 to replace
the PIA with a more concise law covering investments in both manufacturing and
services, but has yet to do so. The PIA does not address services investment. The
Securities Commission and the Foreign Investment Committee (FIC) implement the
regulations specified in the Malaysian Code on Takeovers and Mergers. The FIC also
formulates policy guidelines for foreign participation in non-manufacturing sectors.
Private entities, both foreign and domestic, may acquire, merge with, and take over
business enterprises. However, the acquisition or disposal of five percent or more of
interests in any local financial institution requires the prior approval of the Minister of
Finance.
Historically, non-export-oriented foreign firms that had negotiated temporary exemptions
from general equity limits were required to restructure within a definite timeframe. A
restructuring program could involve taking on new local partners, giving existing local
partners a greater equity share, or floating shares on the Bursa Malaysia. The
government's goal at that time was to reduce foreign ownership of most firms producing
for the domestic market to 30%.

Distribution Services, including Direct Selling

Malaysia’s requirements for the licensing and operation of direct selling companies
include a provision that a locally incorporated direct selling company must allow for 30
percent bumiputera equity. The Ministry also “recommends” local content targets. Local
companies that seek multi-level direct selling licenses require paid-in capital of RM 1.5
million ($423,700), while companies with foreign shareholders must have paid-in capital
of RM 5 million ($1.4 million).

The Malaysian government also included local content requirements in "Guidelines on

Foreign Participation in the Distributive Trade Services" that came into effect in
December 2004. Among other provisions, department stores, supermarkets and
hypermarkets are required to reserve at least 30 percent of shelf space in their premises
for goods and products manufactured by bumiputera-owned small and medium sized
industries. The guidelines also require that at least 30 percent of a store’s sales consist
of bumiputera products, a rule that does not take into account discretionary behavior on
the part of consumers.

Regional Distribution Centers and International Procurement Centers (CPC 87909) were
two of the 27 service sectors from which the government removed 30% Bumiputra
ownership requirements in 2009.

Legal Services

Foreign lawyers may not practice Malaysian law, nor may they affiliate with local firms or
use their international firm’s name. Foreign law firms may not operate in Malaysia
except as minority partners with local law firms, and their stake in any partnership is
limited to 30 percent. Under the Legal Profession Act of 1976, the practice of Malaysian
law normally is restricted to Malaysian citizens or permanent residents who have
apprenticed with a Malaysian lawyer, are competent in Bahasa Malaysia (the official
language), and have a local law degree or are accredited British Barristers at Law. The
Attorney General has authority to grant limited exceptions on a case-by-case basis,
provided the applicant has seven years of legal experience. Malaysian law does not
allow for foreign legal consultancy except on a limited basis in the Labuan International
Offshore Financial Center. Malaysia limits such foreign attorneys’ scope of services to
advice concerning home country and international law. Persons not licensed as lawyers
are subject to criminal penalties if they directly or indirectly undertake activities relating
to the Malaysian legal system, including drafting documents.

During 2009, the government approved authorization of five international legal firms for
the specific purpose of providing legal services for Islamic financial institutions in
Malaysia.
Architectural Services

A foreign architect may operate in Malaysia only as a joint-venture participant in a

specific project with the approval of the Board of Architects. Foreign architectural firms
are not permitted to operate in Malaysia, either independently or as partners of
Malaysian architectural firms. Foreign architects may not be licensed in Malaysia but are
allowed to be managers, shareholders, or employees of Malaysian firms. Only licensed
architects may submit architectural plans. Architectural services are governed by the
Architects Act of 1967 and are regulated by the Ministry of Works.

Engineering Services

Foreign engineers may be licensed by the Board of Engineers only for specific projects,
and must be sponsored by the Malaysian company carrying out the project. The license
is valid only for the duration of the project. In general, a foreign engineer must be
registered as a professional engineer in his or her home country, have a minimum of 10
years experience, and have a physical presence in Malaysia of at least 180 days in one
calendar year. To obtain temporary licensing for a foreign engineer, the Malaysian
company often must demonstrate to the Board that they cannot find a Malaysian
engineer for the job. Foreign engineers are not allowed to operate independently of
Malaysian partners, or serve as directors or shareholders of an engineering consulting
company. A foreign engineering firm may establish a commercial presence, subject to
meeting government requirements on Malaysian citizen participation. Foreign
engineering companies may collaborate with a Malaysian firm, but the Malaysian
company is expected to design the project and is required to submit the plans for
domestic approval. Engineering services are governed by the Registration of Engineers
Act and regulated by the Ministry of Works.

Accounting and Taxation Services

Foreign accounting firms may provide accounting and taxation services in Malaysia only
through affiliates. All accountants who wish to provide auditing and taxation services in
Malaysia must register with the Malaysian Institute of Accountants (MIA) before they
may apply for a license from the Ministry of Finance. Citizenship or permanent
residency is required for registration with MIA. Malaysian citizens or permanent
residents who received degrees from local universities or are members of at least one of
the 11 overseas professional bodies recognized by Commonwealth countries may apply
for registration. The American Institute of Certified Public Accountants (AICPA) is not
recognized by Commonwealth countries.

Energy

Under the terms of the Petroleum Development Act of 1974, the upstream oil and gas
industry is controlled by the parastatal, Petroleum Nasional Berhad (Petronas), the sole
entity with legal title to Malaysian crude oil and gas deposits. Foreign investment takes
the form of production sharing agreements (PSAs). Foreign operators include
ExxonMobil, ConocoPhillips, Amerada Hess, Baker Hughes, Newfield, and Murphy Oil
from the U.S., as well as Royal Dutch Shell. Non-Malaysian firms are permitted to
participate in oil services either in partnership with local firms or as contractors. They are
restricted to a 30% equity stake if they are incorporated locally.
Telecommunications

Under the WTO Basic Telecommunications Agreement, Malaysia made limited

commitments on most basic telecommunications services and partially adopted the
reference paper on regulatory commitments. Foreign companies are limited to a 30
percent equity stake in existing fixed line operations, an investment ceiling codified as
part of Malaysia's WTO services offer which limits market access commitments to
facilities-based providers. These restrictions constitute one of the most restrictive
regimes for an economy of Malaysia’s level of development. Value-added service
suppliers are similarly limited to 30 percent foreign equity. Restrictions on these
activities tend to benefit the dominant provider, government-controlled Telekom
Malaysia, and hamper the development of a more efficient information infrastructure.

In December 2005, Malaysia issued its revised WTO services offer, which offers to
increase foreign equity limits to 49% in "application service providers" (ASP); however,
precisely what this category encompasses is unclear. Foreign ownership of "network
facilities providers" (NFP) and "network service providers" (NSP) would be limited to
30% under the revised offer. One foreign NSP negotiated a five-year exemption which
allowed the company a temporary 61% stake with a requirement that the foreign equity
holding be reduced to 49% over a 5-year period commencing on the date of
incorporation.

The government removed 30% Bumiputra ownership requirements from computer

hardware installation consultancy services (CPC 841), software implementation services
(CPC 842), data processing services (CPC 843), database services (CPC 844),
computer repair services (CPC 845), and other computer related services (CPC 849)
during 2009.

Broadcasting

Private broadcasting companies are regulated by the Ministry of Energy, Water, and
Communications and the Malaysian Communications and Multimedia Commission.
Foreign ownership of radio and television stations is not permitted. Foreign investment
in terrestrial broadcast networks is prohibited. As a condition for obtaining a license to
operate, video rental establishments are required to have 30 percent local content in
their inventories. Malaysia maintains a Censorship Board under the Ministry of Home
Affairs that regularly censors movies and television shows deemed inappropriate on
religious or sexual grounds.

Advertising

Advertising falls under the purview of multiple ministries and agencies, complicating the
adoption of a single set of advertising regulations and enforcement procedures for all
stakeholders in this process. International firms have concerns about the lack of clear
and consistent advertising content guidelines, and how some advertisers misrepresent
their products and services through advertising. The Government of Malaysia has an
informal and vague guideline that commercials cannot “promote a foreign lifestyle.”

In 2007, the government required that at least 70% of television commercials must be
made in Malaysia, feature local actors, and be shot in locations within the country. The
same percentage would be required for post-production of the commercials and for the
usage of equipment and facilities available. This regulation is not routinely enforced.

Product labeling also is weak; for example, products can be found on store shelves with
no indication of the manufacturer or country of origin.

Other industries

The GOM also restricts foreign investment in the financial services and insurance
sectors (see section on capital markets below). Foreigners are permitted to hold a 70%
stake in shipping companies and 49% in forwarding agencies. In 2009, the government
announced that it would allow foreign financial institutions to hold up to a 70% stake in
local insurers. Malaysia restricts foreign participation in professional services (other than
"back office" operations that support foreign business activities), agriculture (unless it is
an agro-tourism linked project), and construction. Ownership of agricultural land is
restricted to Malaysian citizens.

Corporate taxes

For tax purposes, local and foreign enterprises are treated essentially the same.
Resident petroleum companies pay 38% income tax; all other resident companies
currently pay an income tax of 25% for 2009, reduced from 26% in 2008. The 2010
budget keeps a 25%tax rate for non-petroleum resident companies. Dividends are taxed
at the corporate rate. A company is resident in Malaysia for tax purposes if its
management and control is exercised in Malaysia, that is, if directors’ meetings are held
in Malaysia. Payments made to non-residents for technical or management services
and rental of movable properties are subject to withholding tax at the rate of 10%. In the
2010 budget, the income tax rate for non-resident individuals was reduced to 26% from
27%. The U.S. and Malaysia have not concluded a bilateral tax agreement and no
negotiations are anticipated at this time. The government is considering implementing
Goods and Services Tax (similar to a value-added tax) at 4% to broaden the overall tax
base.

Human Resources

Beyond the heavy regulatory burden and the investment restrictions resulting from the
buimputera policies, Malaysia’s shortage of skilled labor is its most oft-cited impediment
to economic growth. (See sections on labor and performance requirements).

Conversion and Transfer Policies Return to top

In an effort to insulate the Malaysian economy from risks posed by volatile short-term
capital flows and to eliminate offshore trading of the ringgit, the government imposed
selective capital controls on September 1, 1998. The selective capital controls
measures have been removed in a series of sequenced and progressive liberalization
initiatives, with major and significant liberalizations made in 2005 and 2007, gradually
relaxing controls on foreign direct investment flows, wages, dividends, interest, and
rental income earned in Malaysia.
In 2008, the government further liberalized the foreign exchange administration rules on
borrowing in foreign currency by residents as well as borrowing and lending in ringgit
between residents and non-residents. More information on Malaysia’s foreign exchange
administration can be found at www.bnm.gov.my/fxadmin.

All payments to other countries must be made through authorized foreign exchange
dealers. Banks must record the amount and purpose of each cross-border transfer over
RM 200,000 (approximately $58,000).

Resident and non-resident travelers may carry no more than RM 1,000 into or out of
Malaysia. Residents may not carry out foreign currency more than the equivalent of USD
10,000 without prior permission. Non-residents may carry in any amount of foreign
currency, but are required to declare currency amounts in excess of USD $10,000. Non-
residents may carry out foreign currency up to the amount they carried in.

On July 21, 2005, Bank Negara ended its policy of pegging the ringgit at a fixed rate of
RM 3.80 to the dollar and shifted to a managed float against a trade-weighted basket of
currencies. The ringgit’s lowest level against the USD in 2009 was RM3.7255 on March
2, while its highest level was RM3.3475 on October 15.

Expropriation and Compensation Return to top

The Embassy is not aware of any cases of uncompensated expropriation of foreign-held

assets by the Malaysian government. The government's stated policy is that all
investors, both foreign and domestic, are entitled to fair compensation in the event that
their private property is required for public purposes. Should the investor and the
government disagree on the amount of compensation, the issue is then referred to the
Malaysian judicial system.

Dispute Settlement Return to top

Malaysia has signed and ratified the Convention on the Settlement of Investment
Disputes Between States and Nationals of Other States. Malaysia became a
Contracting State on October 14, 1966 when the Convention entered into force, granting
jurisdiction over investment disputes between the Government of Malaysia and non-
Malaysian citizens to the International Center for Settlement of Investment Disputes
(ICSID, www.worldbank/org/icsid). ICSID is affiliated with but independent of the World
Bank.

Malaysia also is a signatory to the Convention on the Recognition and Enforcement of

Foreign Arbitral Awards. The domestic legal system is accessible but generally requires
any non-Malaysian citizen to make a large deposit before pursuing a case in the
Malaysian courts (i.e., $100,000), and can be slow and bureaucratic. The U.S. Embassy
is aware of an ongoing case where a U.S. investor plaintiff reports that it took 44 months
and 26 hearings before the Malaysian court took action to address the merits of his
case. The plaintiff claims to have provided the court with documentation both from
Malaysia and from a U.S. court case involving the same company that the company’s
assets continue to be drained through ongoing fraud. However, the court stayed his
petition that the company be put in receivership until the matter is resolved. The court
also stayed plaintiff’s petition for discovery. Progress has been made in the case over
the past 12 months as a trial is now ongoing. One local law firm reports that cases
involving intellectual property rights generally take five to eight years, with more complex
patent infringement cases taking ten to fifteen years.

Many firms choose to include mandatory arbitration clauses in their contracts. The
government has set up the Kuala Lumpur Regional Center for Arbitration
(http://www.rcakl.org.my) under the auspices of the Asian-African Legal Consultative
Committee to offer international arbitration, mediation, and conciliation for trade
disputes. The KLRCA is the only recognized center for arbitration in Malaysia. The U.S.
Embassy is aware of one contractual dispute with a U.S. company where the Malaysian
firm chose not to honor mandatory arbitration clauses as stated in their contract.
Resolution of that case is pending.

Performance Requirements and Incentives Return to top

Fiscal incentives granted to both foreign and domestic investors historically have been
subject to performance requirements, usually in the form of export targets, local content
requirements and technology transfer. Performance requirements are usually written into
the individual manufacturing licenses of local and foreign investors.

In the May 2003 Economic Stimulus Package, the Malaysian government extended the
full tax exemption incentive from ten to fifteen years for firms with "Pioneer Status"
(companies promoting products or activities in industries or parts of Malaysia to which
the government places a high priority), and from five to ten years for companies with
"Investment Tax Allowance" status (those on which the government places a priority, but
not as high as Pioneer Status). Government priorities generally include the levels of
value-added, technology used, and industrial linkages. If a firm (foreign or domestic)
fails to meet the terms of its license, it risks losing any tax benefits it may have been
awarded. Potentially, a firm could lose its manufacturing license. The government has
stated that in the long term, it intends gradually to eliminate most of the fiscal incentives
now offered to foreign and domestic manufacturing investors. More information on
specific incentives for various sectors can be found at www.mida.gov.my.

Malaysia also seeks to attract foreign investment in the information technology industry,
particularly in the Multimedia Super Corridor (MSC), a government scheme to foster the
growth of research, development, and other high technology activities in Malaysia.
Foreign investors who obtain MSC status receive tax and regulatory exemptions as well
as public service commitments in exchange for a commitment of substantial technology
transfer. For further details on incentives, see www.mdc.com. Some corporations have
used the MSC to outsource call center and back office operations, including Dell, HSBC,
AIG, and BMW. The Multimedia Development Corporation (MDeC) approves all
applications for MSC status.

In the services sector, the government’s stated goal is to attract foreign investment in
regional distribution centers, international procurement centers, operational
headquarters, research and development, integrated market and logistics support
services, cold chain facilities, central utility facilities, industrial training, and
environmental management. To date, the GOM has had some success in attracting
regional distribution centers; however, there has been little progress in the other targeted
areas. Some industry contacts cite Malaysia’s poor record in protecting intellectual
property rights as one of their reasons for not bringing their R&D to the country.

Malaysia also has stated that it would welcome foreign investment in biotechnology;
however, to date no U.S. biotech companies are operating here except representative
offices of some pharmaceutical companies. The Agriculture Minister repeatedly has
expressed strong interest in using biotechnology to help invigorate the agricultural sector
in Malaysia. Investment in biotechnology figures prominently in the national budget and
is a lynch pin in the 9th Malaysia Plan (the government’s five-year economic
development plan), launched in March 2006. Malaysia is developing implementing
regulations for its Bio Safety Act of 2007. Major concerns include: the undefined
adherence to the "precautionary principle"; socio-economic, religious, and cultural norms
that would be a part of the regulatory process; stringent penalties hindering modern
biotechnology development; and mandatory labeling resulting in non-tariff trade barriers,
higher costs of production for biotech manufacturers, and encouragement of negative
public attitudes toward GM products.

Employing Expatriates

Despite broad recognition of Malaysia’s shortage of skilled labor, most foreign firms face
restrictions in the number of expatriate workers they are allowed to employ. Foreign
workers are categorized as follows: “expatriates” (anyone earning at least RM 5000, or
USD 1429, per month); “foreign skilled workers,” and “foreign unskilled and semi-skilled
workers.”

Employing expatriates involves two phases. First, the company must be granted
approval for the expatriate post; then the individual must be approved by receiving a
“reference visa” from the Malaysian embassy in the expatriate’s home country and
approval from the Immigration Department. More details can be found at
www.pemudah.gov.my/guidebook.pdf.

Companies in different sectors must apply for approval for expatriate posts through the
respective government authority: manufacturing and manufacturing-related companies
apply through MIDA; companies with “Multimedia Super Corridor” status through the
Multimedia Development Corporation; banking and insurance companies through the
central bank (Bank Negara Malaysia); securities brokers through the Securities
Commission; biotechnology companies through Biotech Corp; and companies in other
sectors through the Expatriate Committee. Each authority has its own set of
requirements and decisions are made on a case-by-case basis.

MSC-status companies are not restricted as to the number of expatriates they can bring
into the country. In 2008 the GOM unveiled three “e-Xpats” centers in the Penang and
Kulim industrial parks and announced its intention to establish a third in Cyberjaya.
Only applicants from select countries working for companies with MSC-status are
eligible to use the services of the centers, which process a work visa in six days.

Manufacturing companies that are 100% foreign-owned must have a minimum paid-up
capital of RM 500,000 (as of January 1, 2009) to be allowed to employ expatriates.
Companies with joint foreign and Malaysian ownership must have a minimum paid-up
capital of RM 350,000 while Malaysian-owned companies must have a minimum of
RM 250,000. Manufacturing-related companies in sub-sectors targeted by the
government for development are given priority. These include regional establishments
(operational headquarters, international procurement centers, regional distribution
centers); support services (integrated logistics services, integrated market support
services, central utility facilities, cold chain facilities); research and development;
software development; hotel and tourism projects; technical and vocational training;
some environment-related services; and film or video production. Except manufacturing
companies with automatic allowances, a firm wishing to employ expatriate personnel
generally must demonstrate that there is a shortage of qualified Malaysian candidates
and that a Malaysian citizen is being trained. In practice this is difficult for firms to
document. Expatriate visas are issued for a period of two years, with possible – but not
guaranteed – renewals for up to a maximum of ten years. The uncertainty of whether
investors will be permitted to remain in the country after their businesses become
profitable remains a significant barrier to foreign direct investment. Unskilled foreign
workers receive a three-year work permit, renewable annually up to five years, and
foreign skilled workers can qualify for up to 12 months. If an unskilled worker acquires
“skills certificates,” he/she may apply for a permit as a skilled worker after exhausting the
five-year maximum as an unskilled worker. Only foreign domestic helpers are permitted
to remain in Malaysia on a work permit beyond ten years. Malaysia’s freeze on
permanent resident visas remains in place; however, it has launched the “Malaysia, My
Second Home” program that provides long-term resident visas for well-off expatriates.

The government has made significant progress in simplifying and expediting permit
approvals for some categories of foreign personnel. In 2007 it established four
additional immigration units intended to expedite visa approvals for expatriates, and the
Pemudah Committee developed a guidebook clarifying the various procedures and
requirements. Processing times have been shortened considerably. The spouse of an
expatriate holding a Dependent Pass is allowed to take up paid employment without
converting the Dependent Pass to an “Employment Pass” or to a “Visit Pass for
Temporary Employment” on the condition that permission to take up the paid
employment is endorsed on his/her passport by an authorized Immigration officer. In
2009 the GOM began issuing Dependent Passes to husbands of Expatriates holding
Employment Passes. Previously husbands of professionals were issued a six-month
“social visit pass” which required them to leave the country and return.

Right to Private Ownership and Establishment Return to top

The World Bank ranks Malaysia 86th among 181 countries for the ease of registering
property, which takes an average of 144 days, and 88th in starting a business, which
involves 9 government-required procedures and takes an average of 11 days.

Patents registered in Malaysia generally have a 20-year duration from date of filing,
which can be extended under certain circumstances. The length of time required for
patent registration averages five years and trademark registration averages two years.
Registrations are handled by the Patents and Trademarks Department of the Ministry of
Domestic Trade and Consumer Affairs. Copyright protection extends to computer
software and lasts for 50 years after the author’s death. The Copyright Act includes
enforcement provisions allowing government officials to enter and search premises
suspected of infringement and to seize infringing copies and reproduction equipment.
Protection of Property Rights Return to top

Malaysia is a member of the World Intellectual Property Organization (WIPO) and is a

party to the Berne Convention for the Protection of Literary and Artistic Works and the
Paris Convention for the Protection of Industrial Property. In 2006 Malaysia acceded to
the Patent Cooperation Treaty. Malaysia has not ratified the WIPO Copyright Treaty or
the WIPO Performance and Phonograms Treaty (which extend traditional copyright
principles to the digital environment) but has indicated its intention to accede to these
conventions eventually.

In 2000, Malaysia’s parliament amended the Copyright Act, the Patents Act, and the
Trademarks Act, as well as legislation on layout designs of integrated circuits and
geographical indications, in order to bring Malaysia into compliance with its obligations
under the WTO TRIPS Agreement. In 2004, Malaysia passed the “Protection of New
Plant Varieties Act 2004” in line with the requirements of Article 27.3 (b) of the TRIPS
Agreement. Enabling regulations for this law are pending. Malaysia does not prohibit
other companies from relying on test and other undisclosed information submitted by
another company to the government to obtain marketing approval of pharmaceuticals
and agricultural chemicals, as called for under TRIPS Article 39.3. Malaysia plans to
update its Copyright and Trademarks Acts during 2010.

Optical Media Piracy

Malaysia has a problem with piracy of copyrighted materials, particularly those stored on
optical media. Malaysia’s production capacity for Compact Discs (CDs) and Digital
Video Discs (DVDs) significantly exceeds local demand plus legitimate exports. U.S.
industry estimates Malaysia’s excess capacity is several times more than needed for the
legitimate market.

The International Intellectual Property Association (IIPA) estimates 2008 industry losses
in Malaysia due to copyright piracy at $206.2 million. IIPA estimates 2008 piracy rates at
60 percent for business software and for music. Malaysia has remained on the Special
301 Watch List since October 2001.

The Optical Disc Act of 2000 established a licensing and regulatory framework to control
the manufacture of optical discs and to fight piracy. Under the Act, manufacturers are
required to obtain licenses from both the Ministry of International Trade and Industry and
the Ministry of Domestic Trade, Co-operatives, and Consumerism (MDTCC), to place
source identification (SID) codes on each disc, and to allow regular inspections of their
operations. Malaysia plans to update its Optical Disc Act during 2010.

In 2009, the Malaysian government continued to make progress in IPR enforcement.

The number of MDTCC enforcement actions have increased significantly during 2009.
Although prosecution continues to be an ongoing challenge, the establishment of a
specialized IP court in mid-2007 has alleviated the backlog of infringement cases. Both
judges and prosecutors have been assigned full time to handle IPR cases. The court
was initially established in Kuala Lumpur, but will eventually have branches throughout
Malaysia. U.S industry representatives in Malaysia have been pleased with the pace
and outcome of the court's initial cases.
Pharmaceuticals

Sales of counterfeit pharmaceuticals are a problem in Malaysia. Counterfeit medicines

that have been identified include "drugs" with the wrong ingredients, insufficient active
ingredients, and those with fake packaging. The copied drugs are believed to originate
in China. Unregistered generic copies of patented products, primarily imported from
India, are also available in Malaysia. Both street vendors and health professionals sell
the counterfeit products. The Ministry of Health and the MDTCC are improving their
enforcement efforts, and share information and collaborate with industry on those efforts.

In April 2007 the Ministry of Health announced that Malaysia would provide data
protection for pharmaceuticals for five years for new chemical entities, and three years
for new indications. The time periods would be based on a drug's approval date in its
country of origin. An interagency committee has been set up to explore all issues
related to the implementation of data protection. The Malaysian government does not
have an effective patent linkage mechanism to prevent the regulatory approval of copied
versions of pharmaceuticals that are still patented; U.S. industry has reported several
cases of the registration of generic versions of pharmaceuticals which are still under
patent protection.

Trademarked Consumer Products

A number of U.S. consumer product companies also have suffered significant losses
due to the manufacture and sale of counterfeit trademarked products. The volume is
difficult to determine because of the broad scope of products involved. Counterfeiting in
Malaysia includes printer cartridges, plastic container systems, motor oil, household
cleaning agents, shampoo and skin care items, herbicides, and penlight batteries.
Counterfeiters have improved the quality of packaging and marketing so that consumers
are misled into purchasing the products. The products have caused harm to individuals
and damage to automobiles and household goods. Some of the pirated goods are
produced in Malaysia, while many are brought into the country from China, Thailand,
and India.

Enforcement by the local government is hampered by the lack of training and scarcity of
information about ongoing counterfeit activities. Complicating enforcement of trademark-
related violations is a Malaysian Court of Appeals interpretation of the trademark law that
requires enforcement officials to have a “Trade Description Order” to conduct criminal
raids when the counterfeit product seized is not identical to the trademarked original.
High specificity requirements necessary to seize a shipment suspected of containing
pirated or counterfeit products also represent an enforcement obstacle to U.S. industry.

Transparency of Regulatory System Return to top

Transparency

Malaysia’s Official Secrets Act makes it a crime to divulge the contents of any proposed
law or regulation before it comes into effect. This denies stakeholders an opportunity for
input into the drafting of legislation that affects their interests. U.S. companies have
indicated that they would welcome improvements in the transparency of government
decision-making and procedures, including government tenders.
In addition to secrecy laws regarding proposed new legislation, Malaysia maintains a
complex network of practices for which no documentation is available. In response to
U.S. government requests for a list of laws and regulations pertaining to market access
in various sectors, one government official responded that ministries and agencies were
“not in a position to make available an exhaustive list of the laws and regulations
pertaining to their respective sectors,” in part because these were “still being streamlined
and in some cases being developed,” and in part because “a number of market access
issues are addressed by way of administrative circulars/guidelines/polices which may
not be stated explicitly in any document. 5 ”

In some cases, local private sector associations discriminate against foreign-owned

companies. For example, an association of local banks decided to charge foreign banks
significantly higher fees for joining an automated clearinghouse (ACH) system.
According to one foreign bank contact, the fee for a local bank to join was nominal; the
fee for a foreign bank to join was based on the approximate cost of setting up a new
branch.

Government Procurement

Malaysia is not a signatory of the WTO Government Procurement Agreement (GPA).

Malaysia’s official policy is explicitly discriminatory, calling for procurement to be used to
support national public policy objectives. These objectives include encouraging greater
participation of bumiputera (ethnic Malays) in the economy, transferring technology to
local industries, reducing the outflow of foreign exchange, creating opportunities for local
companies in the services sector, and enhancing Malaysia’s export capabilities.

Generally, international tenders are invited only where domestic goods and services are
not available. In domestic tenders, preferences are provided for bumiputera suppliers
and other domestic suppliers. As a result, foreign companies do not have the same
opportunities as local companies to compete for contracts. In most procurements,
foreign companies are required to take on a local partner before their bids will be
considered.

Another concern with Malaysian government procurement is the lack of transparency

and competitive bidding. In October 2003, Prime Minister Abdullah Badawi announced
that the Government would introduce open tenders for government procurements and
major projects, with direct negotiations limited to special cases; however, little progress
has been made. U.S. companies have voiced concerns about the non-transparent
nature of the procurement process in Malaysia. The government’s central tender
website provides links to other ministries’ websites, but not all of them provide user-
friendly information on government tenders. In September 2005, the Ministry of Finance
announced that the purchase of roadway, decorative, and outdoor lighting fittings,
together with equipment and accessories for all government projects, must be sourced
from one of three local bumiputera manufacturers. In October 2007 press reports
highlighted several recent government directives instructing relevant ministries to award
contracts for certain products only to bumiputera-owned businesses, in one case naming
a specific company to receive the contract.

5
December 6, 2006
Corruption Return to top

Malaysia’s ranking in Transparency International’s Corruption Perception Index slipped

to 56th in 2009 down from 47th place in 2008 and 26th in 2004 among the 180 countries
surveyed. The judiciary is regarded as politically influenced.

The Malaysian government considers bribery a criminal act and does not permit bribes
to be deducted from taxes. Nevertheless, corruption remains a serious concern. The
Anti-Corruption Agency (ACA) began operations in 1967 under the Prime Minister’s
department. Since June 1997, senior state-level officials have been required to declare
their assets to the ACA upon taking office. Foreign businessmen are asked to report any
individuals who ask for payment in return for government services. The ACA is
authorized to conduct investigations and prosecute cases with the approval of the
Attorney General. ACA investigations are sometimes reported in the newspapers, but
are rarely targeted at high-ranking officials or business representatives with well-
connected companies. Prime Minister Najib declared after assuming office that the fight
against corruption was one of his priorities.

In 2008, Parliament passed the Malaysian Anti-Corruption Commission (MACC) bill and,
a day later, a bill intended to make judicial appointments more transparent (the Judicial
Appointments Commission Bill). The MACC, which replaced the ACA, widens powers of
investigation and questioning to include public bodies and extended family members;
provides for the seizure of properties; protects whistleblowers; and permits the
prosecution of Malaysians for offense committed overseas as well as the prosecution of
"foreign public officials" who abuse their positions to accept or offer bribes. These
provisions are consistent with Article 16 of the United Nation's Convention Against
Corruption (UNCAC) which Malaysia ratified in September 2008. Critics have
questioned the bills’ potential effectiveness, as all key personnel under these bills will be
appointed directly by the Prime Minister’s office and the MACC, like the ACA, will not
have independent authority to proceed with prosecutions. Four people were indicted in
the Port Klang Free Trade Zone scandal, and there have been several other indictments
for lower-level corruption incidents.

Corruption:

Corruption, including bribery, raises the costs and risks of doing business. Corruption
has a corrosive impact on both market opportunities overseas for U.S. companies and
the broader business climate. It also deters international investment, stifles economic
growth and development, distorts prices, and undermines the rule of law.

It is important for U.S. companies, irrespective of their size, to assess the business
climate in the relevant market in which they will be operating or investing, and to have an
effective compliance program or measures to prevent and detect corruption, including
foreign bribery. U.S. individuals and firms operating or investing in foreign markets
should take the time to become familiar with the relevant anticorruption laws of both the
foreign country and the United States in order to properly comply with them, and where
appropriate, they should seek the advice of legal counsel.

The U.S. Government seeks to level the global playing field for U.S. businesses by
encouraging other countries to take steps to criminalize their own companies’ acts of
corruption, including bribery of foreign public officials, by requiring them to uphold their
obligations under relevant international conventions. A U. S. firm that believes a
competitor is seeking to use bribery of a foreign public official to secure a contract
should bring this to the attention of appropriate U.S. agencies, as noted below.

U.S. Foreign Corrupt Practices Act: In 1977, the United States enacted the Foreign
Corrupt Practices Act (FCPA), which makes it unlawful for a U.S. person, and certain
foreign issuers of securities, to make a corrupt payment to foreign public officials for the
purpose of obtaining or retaining business for or with, or directing business to, any
person. The FCPA also applies to foreign firms and persons who take any act in
furtherance of such a corrupt payment while in the United States. For more detailed
information on the FCPA, see the FCPA Lay-Person’s Guide at:
http://www.justice.gov/criminal/fraud/docs/dojdocb.html.
Other Instruments: It is U.S. Government policy to promote good governance, including
host country implementation and enforcement of anti-corruption laws and policies
pursuant to their obligations under international agreements. Since enactment of the
FCPA, the United States has been instrumental to the expansion of the international
framework to fight corruption. Several significant components of this framework are the
OECD Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions (OECD Antibribery Convention), the United Nations Convention
against Corruption (UN Convention), the Inter-American Convention against Corruption
(OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and a
growing list of U.S. free trade agreements. This country is party to [add instrument to
which this country is party], but generally all countries prohibit the bribery and solicitation
of their public officials.

OECD Antibribery Convention: The OECD Antibribery Convention entered into force
in February 1999. As of December 2009, there are 38 parties to the Convention
including the United States (see http://www.oecd.org/dataoecd/59/13/40272933.pdf).
Major exporters China, India, and Russia are not parties, although the U.S. Government
strongly endorses their eventual accession to the Convention. The Convention obligates
the Parties to criminalize bribery of foreign public officials in the conduct of international
business. The United States meets its international obligations under the OECD
Antibribery Convention through the U.S. FCPA. [Insert information as to whether your
country is a party to the OECD Convention.]

UN Convention: The UN Anticorruption Convention entered into force on December 14,

2005, and there are 143 parties to it as of December 2009 (see
http://www.unodc.org/unodc/en/treaties/CAC/signatories.html). The UN Convention is
the first global comprehensive international anticorruption agreement. The UN
Convention requires countries to establish criminal and other offences to cover a wide
range of acts of corruption. The UN Convention goes beyond previous anticorruption
instruments, covering a broad range of issues ranging from basic forms of corruption
such as bribery and solicitation, embezzlement, trading in influence to the concealment
and laundering of the proceeds of corruption. The Convention contains transnational
business bribery provisions that are functionally similar to those in the OECD Antibribery
Convention and contains provisions on private sector auditing and books and records
requirements. Other provisions address matters such as prevention, international
cooperation, and asset recovery. [Insert information as to whether your country is a
party to the UN Convention.]
 OAS Convention: In 1996, the Member States of the Organization of American States
(OAS) adopted the first international anticorruption legal instrument, the Inter-American
Convention against Corruption (OAS Convention), which entered into force in March
1997. The OAS Convention, among other things, establishes a set of preventive
measures against corruption, provides for the criminalization of certain acts of
corruption, including transnational bribery and illicit enrichment, and contains a series of
provisions to strengthen the cooperation between its States Parties in areas such as
mutual legal assistance and technical cooperation. As of December 2009, the OAS
Convention has 33 parties (see http://www.oas.org/juridico/english/Sigs/b-58.html)
[Insert information as to whether your country is a party to the OAS Convention.]

Council of Europe Criminal Law and Civil Law Conventions: Many European
countries are parties to either the Council of Europe (CoE) Criminal Law Convention on
Corruption, the Civil Law Convention, or both. The Criminal Law Convention requires
criminalization of a wide range of national and transnational conduct, including bribery,
money-laundering, and account offenses. It also incorporates provisions on liability of
legal persons and witness protection. The Civil Law Convention includes provisions on
compensation for damage relating to corrupt acts, whistleblower protection, and validity
of contracts, inter alia. The Group of States against Corruption (GRECO) was
established in 1999 by the CoE to monitor compliance with these and related anti-
corruption standards. Currently, GRECO comprises 46 member States (45 European
countries and the United States). As of December 2009, the Criminal Law Convention
has 42 parties and the Civil Law Convention has 34 (see www.coe.int/greco.) [Insert
information as to whether your country is a party to the Council of Europe Conventions.]
Free Trade Agreements: While it is U.S. Government policy to include anticorruption
provisions in free trade agreements (FTAs) that it negotiates with its trading partners, the
anticorruption provisions have evolved over time. The most recent FTAs negotiated now
require trading partners to criminalize “active bribery” of public officials (offering bribes to
any public official must be made a criminal offense, both domestically and trans-
nationally) as well as domestic “passive bribery” (solicitation of a bribe by a domestic
official). All U.S. FTAs may be found at the U.S. Trade Representative Website:
http://www.ustr.gov/trade-agreements/free-trade-agreements. [Insert information as to
whether your country has an FTA with the United States: Country [X] has a free trade
agreement (FTA) in place with the United States, the [name of FTA], which came into
force. Consult USTR Website for date: http://www.ustr.gov/trade-agreements/free-trade-
agreements.

Local Laws: U.S. firms should familiarize themselves with local anticorruption laws, and,
where appropriate, seek legal counsel. While the U.S. Department of Commerce cannot
provide legal advice on local laws, the Department’s U.S. and Foreign Commercial
Service can provide assistance with navigating the host country’s legal system and
obtaining a list of local legal counsel.

Assistance for U.S. Businesses: The U.S. Department of Commerce offers several
services to aid U.S. businesses seeking to address business-related corruption issues.
For example, the U.S. and Foreign Commercial Service can provide services that may
assist U.S. companies in conducting their due diligence as part of the company’s
overarching compliance program when choosing business partners or agents overseas.
The U.S. Foreign and Commercial Service can be reached directly through its offices in
every major U.S. and foreign city, or through its Website at www.trade.gov/cs.
The Departments of Commerce and State provide worldwide support for qualified U.S.
companies bidding on foreign government contracts through the Commerce
Department’s Advocacy Center and State’s Office of Commercial and Business Affairs.
Problems, including alleged corruption by foreign governments or competitors,
encountered by U.S. companies in seeking such foreign business opportunities can be
brought to the attention of appropriate U.S. government officials, including local embassy
personnel and through the Department of Commerce Trade Compliance Center “Report
A Trade Barrier” Website at tcc.export.gov/Report_a_Barrier/index.asp.

Guidance on the U.S. FCPA: The Department of Justice’s (DOJ) FCPA Opinion
Procedure enables U.S. firms and individuals to request a statement of the Justice
Department’s present enforcement intentions under the antibribery provisions of the
FCPA regarding any proposed business conduct. The details of the opinion procedure
are available on DOJ’s Fraud Section Website at www.justice.gov/criminal/fraud/fcpa.
Although the Department of Commerce has no enforcement role with respect to the
FCPA, it supplies general guidance to U.S. exporters who have questions about the
FCPA and about international developments concerning the FCPA. For further
information, see the Office of the Chief Counsel for International Counsel, U.S.
Department of Commerce, Website, at http://www.ogc.doc.gov/trans_anti_bribery.html.
More general information on the FCPA is available at the Websites listed below.

Exporters and investors should be aware that generally all countries prohibit the bribery
of their public officials, and prohibit their officials from soliciting bribes under domestic
laws. Most countries are required to criminalize such bribery and other acts of
corruption by virtue of being parties to various international conventions discussed
above.

POST INPUT: Public sector corruption, including bribery of public officials, [remains a
major/minor challenge for U.S. firms operating in Malaysia.

Anti-Corruption Resources

Some useful resources for individuals and companies regarding combating corruption in
global markets include the following:

• Information about the U.S. Foreign Corrupt Practices Act (FCPA), including a “Lay-
Person’s Guide to the FCPA” is available at the U.S. Department of Justice’s
Website at: http://www.justice.gov/criminal/fraud/fcpa.

• Information about the OECD Antibribery Convention including links to national

implementing legislation and country monitoring reports is available at:
http://www.oecd.org/department/0,3355,en_2649_34859_1_1_1_1_1,00.html. See
also new Antibribery Recommendation and Good Practice Guidance Annex for
companies: http://www.oecd.org/dataoecd/11/40/44176910.pdf

• General information about anticorruption initiatives, such as the OECD Convention

and the FCPA, including translations of the statute into several languages, is
available at the Department of Commerce Office of the Chief Counsel for
International Commerce Website: http://www.ogc.doc.gov/trans_anti_bribery.html.
 • Transparency International (TI) publishes an annual Corruption Perceptions Index
(CPI). The CPI measures the perceived level of public-sector corruption in 180
countries and territories around the world. The CPI is available at:
http://www.transparency.org/policy_research/surveys_indices/cpi/2009. TI also
publishes an annual Global Corruption Report which provides a systematic
evaluation of the state of corruption around the world. It includes an in-depth
analysis of a focal theme, a series of country reports that document major
corruption related events and developments from all continents and an overview of
the latest research findings on anti-corruption diagnostics and tools. See
http://www.transparency.org/publications/gcr.

• The World Bank Institute publishes Worldwide Governance Indicators (WGI).

These indicators assess six dimensions of governance in 212 countries, including
Voice and Accountability, Political Stability and Absence of Violence, Government
Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See
http://info.worldbank.org/governance/wgi/sc_country.asp. The World Bank
Business Environment and Enterprise Performance Surveys may also be of interest
and are available at: http://go.worldbank.org/RQQXYJ6210.

• The World Economic Forum publishes the Global Enabling Trade Report, which
presents the rankings of the Enabling Trade Index, and includes an assessment of
the transparency of border administration (focused on bribe payments and
corruption) and a separate segment on corruption and the regulatory environment.
See
http://www.weforum.org/en/initiatives/gcp/GlobalEnablingTradeReport/index.htm.

• Additional country information related to corruption can be found in the U.S. State
Department’s annual Human Rights Report available at
http://www.state.gov/g/drl/rls/hrrpt/.

• Global Integrity, a nonprofit organization, publishes its annual Global Integrity

Report, which provides indicators for 92 countries with respect to governance and
anti-corruption. The report highlights the strengths and weaknesses of national
level anti-corruption systems. The report is available at:
http://report.globalintegrity.org/.

Efficient Capital Markets and Portfolio Investment Return to top

Banking

The Malaysian government limits foreign participation in financial services to encourage

the development of domestic financial services providers. Its policies are guided by the
Banking and Financial Institutions Act of 1989 (BAFIA) and the ten-year Financial Sector
Master Plan, unveiled in 2001, which sets out a three-phase strategy for developing the
Malaysian banking sector, and expired at the end of 2009. Phase I focused on capacity
building and developing a core set of domestic banking institutions through mergers of
commercial banks with merchant banks, discount houses and stock brokerage firms.
Within the first four years of the Plan, the number of domestic financial institutions
declined from 63 to nine. According to the Plan, Phase II was to include the removal of
many restrictions on incumbent foreign financial institutions, leveling the playing field and
increasing competition. Implementation of such reforms has been slow. The
government began implementing Phase III during 2009 by introducing new foreign
competition. In April 2009, the government announced it would issue licenses to up to
five new foreign commercial banks, two new foreign Islamic banks and two new Islamic
insurers (takaful). Bank Negara announced in November 2009 that China’s ICBC Bank
will receive a new license separate from the announced allotment.

During 2009, the equity stake in investment banks foreign institutions are allowed to hold
increased from 49 percent to 70 percent. Currently, foreign participation in commercial
banks is still restricted to an aggregate maximum stake of 30 percent. By 1994 BAFIA
required all foreign banks operating in Malaysia to incorporate locally. Locally
incorporated foreign banks currently operating in Malaysia are required to have a
minimum of two Malaysian residents on their Boards of Directors. Bank Negara
generally requires all banks, including U.S. banks, to maintain their back office and
computer operations in Malaysia, citing data secrecy concerns as well as claiming that
any operations outside of Malaysia are “outsourcing.” This policy prevented some
foreign banks from keeping up with global trends in Internet banking. Bank Negara will
consider waiving the requirement on a case-by-case basis for foreign banks willing to
reinvest sufficiently in Malaysia.

In 2009, Bank Negara announced that locally incorporated foreign banking institutions
currently operating in Malaysia would be allowed to open four additional bank branches
in 2010, with one branch in a market center, two in semi-urban centers, and one in a
non-urban center. Foreign banks are also allowed to open 10 microfinance branches.
Each location must be approved by Bank Negara. Some foreign banks may obtain
permission to open more than four, particularly if the new branches will be in
underserved areas. Foreign Islamic banks are given much greater latitude in numbers
and locations of new branches.

In 2005, the GOM launched the Malaysian Deposit Insurance Company (MDIC) which
was designed in accordance with international standards. MDIC insures deposit
accounts of up to RM 60,000 (USD 16,950) with separate funds for conventional and
Islamic banking institutions. On October 16, 2008 the government announced that all
deposits in banks in Malaysia would be guaranteed until end-December 2010.

Islamic Financial Services

On October 14, 2004, Bank Negara issued three new Islamic banking licenses to three
Middle Eastern Islamic banks : Kuwait Finance House, Al-Rajhi (Saudi Arabia), and
Asian Finance Bank (a consortium of shareholders based in Qatar, Saudi Arabia, and
Kuwait), as part of the Government’s initiative to make Malaysia a global hub for Islamic
financial services. The GOM provides tax incentives and other measures to encourage
commercial banks operating in Malaysia to set up full-fledged Islamic banking
subsidiaries in which foreigners may take a 49 percent equity stake. In June 2005, Bank
Negara established the Fund for Shariah Scholars in Islamic Finance to provide funding
for research grants and scholarships. In August 2006, Bank Negara announced the
launch of its three-pronged Malaysia International Islamic Financial Center (MIFC)
Initiative, including special tax and regulatory treatment, scholarships, and efforts to work
toward mutual recognition of Islamic banking and takaful practices. This was acted upon
in part in the Government’s 2007 budget, released September 1, 2006, which proposes
a ten-year tax exemption on Islamic financial products in foreign currencies and tax relief
for Islamic Finance studies. In its 2008 budget release, the government announced that
expatriate Islamic finance experts would be exempted from paying income tax in an
effort to better enable Malaysia to attract foreign talent. During 2009, the government
announced that foreign institutions could increase their equity ownership in Islamic
banks from 49 percent to 70 percent.

Insurance

The life insurance industry remains dominated by foreign providers, including some U.S.
firms, and domestic firms control the general insurance industry. The 2001 Financial
Sector Master Plan sets out a timeline for liberalization of the insurance industry in
several phases. These include increasing caps on foreign equity, fully opening the
reinsurance industry to foreign competition, and lifting existing restrictions on
employment of expatriate specialists. In 2009, foreign ownership limits were raised from
49% to 70% for branches of foreign insurance companies. Branches of foreign
insurance companies were required to incorporate locally under Malaysian law by June
30, 1998, although a few companies were granted extensions until they could formulate
a workable plan for local incorporation.

The Government continues to promote takaful as part of its strategy to make Malaysia a
global hub for Islamic financial services, including through new tax breaks announced in
the 2007 budget. In January 2006, Bank Negara awarded four new takaful licenses to
four joint ventures, of which foreign investors were permitted to own up to 49%. In 2006,
Bank Negara announced that international takaful operators, both domestic and foreign,
could apply for license to conduct business in international currencies, either as
incorporated entities or as branches. International takaful operators will not be subject to
foreign equity caps. Currently, AIA Takaful International Bhd is the sole foreign-owned
international takaful operator in Malaysia. In 2007, Bank Negara invited qualified local
and foreign players to apply for licenses to provide "re-takaful" (reinsurance under
Islamic principles) services in Malaysia and to make Malaysia their center for re-takaful
activities. New re-takaful operators will be given flexibility to conduct business in the
country as a subsidiary or branch.

Investment Services

The Securities Commission’s ten-year Capital Market Master Plan, released in February
2001, established a timetable for liberalizing foreign participation limits. According to this
plan, foreigners would be permitted to purchase a limited number of existing
stockbrokerage licenses and to take a majority stake in unit trust management
companies, beginning in 2003. On March 22, 2005, the government allowed five foreign
stock brokerage firms and a foreign fund management company to set up operations in
Malaysia. Foreign ownership in Malaysian stock brokerage firms was increased during
2009 from 49% to 70% and in unit trusts increased from 30% to 70%. Restrictions to
fund management companies 100 percent foreign-ownership were removed during
2009. Futures brokerage firms may be 100 percent foreign-owned. Wholly foreign-
owned Islamic fund management companies are permitted to invest all of their assets
abroad. Fees received from the management of Islamic funds are tax-exempt for ten
years. In 2008, five international Islamic fund management firms were given licenses.
The government provides tax incentives for existing stock brokerage firms to set up
Islamic brokerage subsidiaries and will issue three new licenses to brokers that attract
Middle Eastern funds. U.S. firms Goldman Sachs and Citibank Securities were issued
stock brokerage licenses during 2009.

The Federal Territory of Labuan was established as an International Offshore Financial

Center in October 1990. Businesses receive preferential tax treatment for offshore
banking activities, trust and fund management, offshore insurance and offshore
insurance-related businesses, and offshore investment holding businesses. Islamic
banks and takaful operators regulated by the Labuan Offshore Financial Services
Authority are given greater flexibility to open operation offices anywhere in Malaysia and
are granted a tax exemption for international currency Islamic financial businesses.
They retain the favored tax treatment extended to offshore businesses in Labuan, 3
percent or RM 20,000 (approximately $5,650), whether or not they maintain a physical
presence in Labuan. This option is not available for conventional banks, which are
required to maintain a physical presence in Labuan in order to retain the favorable tax
treatment.

Lending

The overnight rate as of December 2009 was 2.00% and the base lending rate 5.5%. In
November 2008, Bank Negara announced a reduction of the overnight policy rate by 25
basis points from 3.5% to 3.25%, and continued reducing the rate throughout 2009 to its
current level. Expectations are that BNM will increase base interest rates by .25% to
.50% in 2010 as the economy continues to improve.

In April 2004, Bank Negara replaced the three-month intervention rate with the overnight
rate as the indicator of the Central Bank’s stance on monetary policy, and as the target
rate for the day-to-day liquidity operations of the Bank. Bank Negara also relaxed
certain rules on how banks compute their lending rates, namely removing the cap on
lending rates for most lending products. The new framework was enacted to give banks
more flexibility to create structured and customized products. Bank Negara still
prescribes certain limits on interest rates used by banks, specifying a minimum rate for
fixed deposits, and maximum rates for credit cards and certain home loans.

Foreign investors and foreign companies have access to credit on the local capital
market. In 2005, the government abolished the 3:1 gearing ratio requirement imposed
on foreign-controlled companies in Malaysia for domestic borrowing in ringgit. It also
allowed foreign-controlled companies to seek any amount of ringgit credit facilities
without Bank Negara’s approval. Beginning 2007, in addition to the purchase and sale of
ringgit on a spot basis, foreign investors were allowed to buy or sell Malaysian ringgit on
a forward basis with licensed onshore banks to facilitate the settlement of investments in
ringgit. Bank Negara abolished restrictions on foreign stock brokerage companies
obtaining ringgit facilities to facilitate the settlement of transaction on the Malaysian stock
and bond markets. Bank Negara also removed the limit on the number of residential
and commercial property loans allowed to foreigners. In October 2007, Bank Negara
further relaxed its foreign exchange administrative rules by removing 5 registration
requirements, allowing greater flexibility for Islamic funds managed onshore, and on
hedging of ringgit exposure by foreigners. In November 2007 Bank Negara lifted
restrictions on resident companies with export earnings from paying in foreign currencies
to another resident company for the purchase of goods and services.
Though the government has relaxed the post Asian financial crisis capital controls and
the ringgit remains fully convertible, the government continues to control the use of
ringgits abroad. Settlement for the import and export of goods between residents and
non-residents continues to be required to be made in foreign currency.

Foreigners may trade in securities and derivatives. The Malaysian government has an
adequate regulatory system to facilitate portfolio investment. In the wake of the 1997-
1998 Asian financial crisis, Malaysia took steps to improve accounting transparency and
corporate governance. Publicly listed companies must submit quarterly reports that
include a balance sheet and income statement within two months of each financial
quarter’s end and audited annual accounts for public scrutiny within four months of each
year’s end. An individual may hold up to 25 corporate directorships. All public and
private company directors are required to attend classes on corporate rules and
regulations.

Legislation also regulates equity buybacks, mandates book entry of all securities
transfers, and requires that all owners of securities accounts be identified. A Central
Depository System (CDS) for stocks and bonds established in 1991 makes physical
possession of certificates unnecessary. All shares traded on the Bursa Malaysia must be
deposited in the CDS. Short selling of stocks is not permitted.

Competition from State Owned Enterprises Return to top

The government owns approximately 36% of the value of firms listed on the Bursa
Malaysia through its seven Government-Linked Investment Corporations (GLICs),
including a majority stake in a number of companies. Only a minority portion of stock is
available for trading for some of the largest publicly listed local companies. After the
economic crisis of the late 1990s, the government began to re-acquire a number of
entities it had privatized earlier, including the national air carrier, MAS, and Kuala
Lumpur's light rail transit system. The government has indicated increasing interest in
restarting its privatization efforts. Khazanah, the government’s largest GLIC, handles
many of the country’s major infrastructure projects, typically through companies in which
it owns a majority stake. The Prime Minister sits on Khazanah’s Board of Directors.

New Competition Policy legislation, reportedly due to be tabled to Parliament in early

2010, may provide a more level competitive playing field for new market entrants.
Further details are not available at this time. The text of all pending legislation in
Malaysia is covered by the Official Secrets Act, thereby making it a crime to divulge its
contents before adoption.

Corporate Social Responsibility Return to top

The development of corporate social responsibility in Malaysia is moving to higher levels

and Malaysia is recognized as being among the most active emerging economies in
relation to corporate responsibility. In 2006, Malaysian stock market regulator Bursa
Malaysia published a CSR Framework for all publicly listed companies, which are
required to disclose their CSR programs in their annual financial reports. Companies in
Malaysia have expanded their annual reports beyond the traditional reporting by
incorporating elements of environmental, social, product and employee information.
Malaysian government linked corporations,(GLCs) frequently have extensive social
responsibility programs including providing scholarships and other social services to
their employees and the community at large.

Political Violence Return to top

Malaysia has experienced little political violence since ethnic rioting in 1969. Najib
Razak, peacefully assumed power as Malaysia’s 6th Prime Minister on April 2, 2009.
Malaysia can be characterized as a politically stable country relative to most countries in
the region, but it shows sign of rising internal tension. In the past year, the government
routinely denied assembly permits for anti-government street demonstrations, allowing
police to take action against street protestors on the basis of lacking a permit. This
condition did not stop civil society groups and opposition parties from holding a series of
public, anti-government street protests in the past year. In some instances, police have
used force to disperse otherwise peaceful protestors.

Bilateral Investment Agreements Return to top

Malaysia has bilateral investment guarantee agreements with over 70 economies and
has double taxation treaties with over 70 countries. Malaysia’s double taxation
agreement with the U.S. currently is limited to air and sea transportation. Efforts to
negotiate a more comprehensive bilateral investment treaty would require resolution of
several issues, the most important of which is differing interpretations of national
treatment.

In April 2002, the GOM passed the Mutual Assistance in Criminal Matters Bill, and in
July 2006 concluded a Mutual Legal Assistance Treaty with the United States. Malaysia
concluded a similar treaty among like-minded ASEAN member countries in November
2004.

OPIC and Other Investment Insurance Programs Return to top

Malaysia has a limited investment guarantee agreement with the U.S. under the U.S.
Overseas Private Investment Corporation (OPIC) program, for which it has qualified
since 1959. However, few investors have sought OPIC insurance in Malaysia.

Labor Return to top

Other than Malaysia’s extensive regulatory burden, its shortage of skilled labor is the
most oft-cited impediment to economic growth cited in numerous studies. Malaysia has
an acute shortage of highly qualified professionals, scientists, and academics. An in-
depth study of the investment climate, conducted by the GOM in collaboration with the
World Bank and published in 2005, 6 identified Malaysia’s top two economic constraints
as 1) its regulatory burden, especially for services, and 2) its shortage of skilled labor.
Two similar studies, one conducted by UBS and the other by the Institute of International
Finance, reached similar conclusions.

6
“Malaysia: Firm Competitiveness, Investment Climate, and Growth,” The World Bank, June
2005
Education

Malaysia’s success in achieving near-universal primary enrollment is noteworthy, and its

secondary school enrollment has increased rapidly over the past two decades.
However, the emphasis in most government-run schools is on rote memorization, not
critical thinking skills. Despite increased enrollment in tertiary education made possible
by increased government expenditure, the quality of university education is declining, as
evidenced by growing numbers of unemployed graduates and decreasing output in
terms of research and publications. 7 An earlier shift from English medium curricula to
separate vernacular schools for Malays, Chinese, and Tamils (Malaysia’s three main
ethnic groups) elicited considerable controversy regarding the quality of education,
social cohesion, the global competitiveness of Malaysians, and differentiated funding for
Malay vs. non-Malay-medium schools. In 2009, the government announced that by
2011-12, Malaysian primary schools would begin teaching math and science in Malay
rather than English, reducing the availability of English instruction in the Malaysian
education system. Further complicating the declining quality of tertiary education,
Malaysia offers across-the-board racial preferences for university admissions and
scholarships, and decisions regarding recruitment and promotion of faculty often are
based on racial quotas more than on merit. The Government of Malaysia also awards
scholarships to study abroad, primarily through the Jabatan Perkhidmatan Awam (JPA)
which consistently has awarded 80% of its international scholarships to bumiputera each
year from 2000 to 2005, as well as 70% to local universities each year from 2002-2005.

Labor

The government of Malaysia reported that the domestic labor market declined in 2009
with unemployment increasing to 4.0% (the official full employment rate is 4.0%) due to
the economic slowdown associated with the global financial crisis. Unemployment for
2010 is expected to stay at around 4.0%. The number of unemployed university
graduates has increased, accounting for over 15% of total unemployed in the country.
In an effort to improve the employability of local graduates, the GOM offers additional
training modules at public universities in English language skills, presentation
techniques, and entrepreneurship.

The government no longer seeks to entice labor-intensive companies to establish

operations in Malaysia, and reserves its fiscal incentives for higher value-added projects.
In 2009 the number of registered foreign workers was approximately 2 million, including
roughly 35,000 expatriate professionals. Most of the unskilled and semi-skilled foreign
workers were employed in the manufacturing (36%) and agricultural (25%) sectors. The
majority of the foreign workers are from Indonesia, followed by Nepal, India, and
Myanmar. The expatriate professionals were engaged primarily in the services (60%)
and manufacturing (33%) sectors. In 2005, the government increased the levy on
foreign workers in the services and plantation markets by 50%. In 2007 the GOM
reduced the time required to process expatriate work permits to less than 7 days and
extended the validity from 2 years to 5-10 years.

7
Center for Public Policy Studies, “Achieving Higher Performance in Higher Education,” February
2006
The government rigorously monitors the ethnic balance among employees of both
foreign and domestic firms, especially in the areas of technology, management and the
like. Meeting GOM recommendations is essential for obtaining and renewing any of a
multitude of licenses and approvals, which are essential to doing business in Malaysia’s
closely-managed economy. However, companies not meeting the racial quotas
recommended by the GOM sometimes have been successful in obtaining renewals of
their licensing requirements upon clearly demonstrating their inability to attract and hire
qualified bumiputera employees.

Race-based preferences in hiring and promotion are widespread in government and in

government-owned universities and corporations. While bumiputera represent about
60% of the population, they make up 77% of the civil service, including 84% of the top
management group, 85% of the diplomatic service, and over 90% of the military. 8

With regard to employing workers, Malaysia ranks 61st among 181 countries in the World
Bank’s report Doing Business 2010. A notable impediment to employing workers in
Malaysia is the high cost of terminating their employment, even in cases of wrongdoing.
The World Bank estimates that the financial cost of firing an employee averages 75
weeks of salary for that worker. 9

Malaysia is a member of the International Labor Organization (ILO). Labor relations in

Malaysia are generally non-confrontational. A system of government controls strongly
discourages strikes. Some labor disputes are settled through negotiation or arbitration by
an industrial court, though cases can be backlogged for years. Once a case is referred
to the industrial court, the union and management are barred from further industrial
action.

While national unions are proscribed, there are a number of national confederations of
unions. The government has prevented some trade unions, such as port workers’
unions, from forming national federations. There are no labor unions in the electronics
sector. Employers and employees share the costs of the Social Security Organization
(SOSCO), which covered 12.9 million workers as of November 2008. No welfare
programs or government unemployment benefits exist; however the Employee Provident
Fund (EPF), which employers and employees are required to contribute to, provides
retirement benefits for workers in the private sector. Civil servants receive pensions.

Foreign-Trade Zones/Free Ports Return to top

The Free Zone Act of 1990 authorized the Minister of Finance to designate any suitable
area as either a Free Industrial Zone (FIZ), where manufacturing and assembly takes
place, or a Free Commercial Zone (FCZ), generally for warehousing commercial stock.
Currently there are 13 FIZs and 12 FCZs in Malaysia. In June 2006, the Port of Klang
Free Zone opened as the nation's first fully integrated FIZ and FCZ. The Minister of
Finance may appoint any federal, state, or local government agency or entity as an
authority to administer, maintain and operate any free trade zone.

8
Center for Public Policy Studies, “Toward a More Representative and World Class Malaysian
Civil Service,” February 2006
9
World Bank Doing Business 2009 report.
Raw materials, products and equipment may be imported duty-free into these zones with
minimum customs formalities. Companies that export not less than 80% of their output
and depend on imported goods, raw materials, and components may be located in these
FZs. Ports, shipping and maritime-related services play an important role in Malaysia
since 90% of its international trade is seaborne.

Goods sold into the Malaysian economy by companies within the FZs must pay import
duties. If a company wants to enjoy Common External Preferential Tariff (CEPT) rates
within the ASEAN Free Trade Area, 40% of a product's content must be ASEAN-
sourced. In addition to the FZs, Malaysia permits the establishment of licensed
manufacturing warehouses outside of free zones, which give companies greater
freedom of location while allowing them to enjoy privileges similar to firms operating in
an FZ. Companies operating in these zones require approval/license for each activity.
The time needed to obtain licenses depends on the type of approval and ranges from 2-
8 weeks.

Foreign Direct Investment Statistics Return to top

Until recently, the U.S. consistently was the largest foreign investor in Malaysia, with
significant presence in the oil and gas sector, manufacturing, and financial services. An
American Chamber of Commerce 2005 survey puts cumulative U.S. interest in Malaysia
at more than US $30.0 billion. U.S. firms with significant investment in Malaysia’s
petroleum sector include: Exxon/Mobil (which participates in upstream and downstream
activities), Caltex, ConocoPhillips, Murphy Oil, Amerada Hess, Dow Chemical and
Eastman Chemicals (all of which have investments in downstream activities). Major
semiconductor manufacturers, including Freescale, Texas Instruments, Intel,
StatsChipPac, National Semiconductor, and others have substantial operations in
Malaysia, as do electronics manufacturers Western Digital, Komag and Dell Computers.
Virtually all major Japanese consumer electronics firms (Sony, Fuji, Panasonic,
Matsushita, Hitachi, etc.) have facilities in Malaysia.

Table One: Sources of Approved Manufacturing Investment in Malaysia

(Value in Millions of U.S. Dollars)

2005 2006 2007 2008 2009

8,173 12,532 17,422 18,146 9,543

Total Investment

4,706 5,512 9,717 13,323 6,475

Foreign

Domestic 3,467 7,021 7,705 4,823 3,068

 Table Two: Leading Foreign Investment Sources
in the Manufacturing Sector
(Value in Millions of U.S. Dollars; Share in Percent)

2005 2006 2007 2008 2009

Germany 102 63 1,092 1,287 124

United States 1,357 675 878 2,544 672

Singapore 768 514 858 565 585

Netherlands 441 895 491 526 140

Japan 966 1,202 1,896 1,637 2,047

Australia 41 698 490 3,830 94

Hong Kong N/A N/A N/A 24 1,550

China N/A N/A N/A 10 47

Korea N/A N/A N/A 58 98

Total Foreign 4,706 5,512 9,717 13,323 6,475

U.S. Share of
28.8% 14.3% 9.0% 19.1% 10.4%
Total Foreign

Foreign Share of
57.6% 44.0% 55.8% 73.4% 67.9%
Total

-Source: Malaysian Industrial Development Authority; values represent approved, not actual
investment.
-Exchange Rates: U.S. $1.0=RM 3.42 (2009 rate)
-Note: Manufacturing investment only, does not include the upstream oil and gas industry or
services.
 Table Three: Foreign Manufacturing Investment by Sector

(U.S. Dollars Millions)

Sector 2005 2006 2007 2008 2009

Chemicals 35 826 454 357 2,058
Petroleum Products 193 165 1,551 364 135
Electronics 2,979 2,344 3,993 5,068 1,162
Basic Metal 113 623 1,450 5,978 127
Food Manufacturing 140 244 107 313 273
Transport 133 59 89 249 158
Other 762 685 2,073 994 2,562
Total 4,706 5,512 9,717 13,323 6,475

Source: Malaysian Industrial Development Authority

Source: Bank Negara Annual Report 2004-2007

Web Resources Return to top

Bank Negara Malaysia: www.bnm.gov.my

Securities Commission: www.sc.com.my
MIDA: http://www.mida.gov.my
World Intellectual Property Organization (WIPO): www.wipo.int/

U.S. exporters seeking general export information/assistance or country-specific

commercial information should consult with their nearest Export Assistance Center or
the U.S. Department of Commerce’s Trade Information Center at (800) USA-
TRADE, or go to the following website: http://www.export.gov.

To the best of our knowledge, the information contained in this report is accurate as of
the date published. However, The Department of State does not take responsibility for
actions readers may take based on the information contained herein. Readers should
always conduct their own due diligence before entering into business ventures or other
commercial arrangements. The Department of Commerce can assist companies in
these endeavors.

Return to table of contents

Return to table of contents

Chapter 7: Trade and Project Financing

• How Do I Get Paid (Methods of Payment)

• How Does the Banking System Operate
• Foreign-Exchange Controls
• U.S. Banks and Local Correspondent Banks
• Project Financing
• Web Resources

How Do I Get Paid (Methods of Payment) Return to top

Exports to Malaysia may be financed through cash in advance, open account, or letters
of credit issued to importers by banks in Malaysia. Financing is readily available in the
domestic market to Malaysian importers. Exporters requiring credit ratings can obtain
them from two domestic credit rating institutions, the Rating Agency Malaysia Berhad
(RAM) and the Malaysian Rating Corp. Berhad (MARC), both launched in the 1990s.

A list of major Malaysian commercial banks and their contact information, as well as
contact information for the other institutions listed below, can be provided by the U.S.
Commercial Service in Kuala Lumpur upon request.

How Does the Banking System Operate Return to top

The government took a number of measures to strengthen Malaysia's banking system

following the regional financial crisis in mid-1997. Bank Negara (BNM) directed the
merger of Malaysia's local banking institutions into ten anchor banks, which was
completed in 2002. The government is promoting further mergers among the local
banking institutions to ensure that they will be competitive with international banks.
Presently, there are nine local banks in the country. Malaysia is trying to position itself
as a leader in Islamic banking (based on Sharia law that disallows the payment of
interest in favor of profit-sharing), launching the Malaysian International Islamic Financial
Centre (MIFC) initiative in August 2006. The government has been encouraging local
banks to enter the market and allowing foreign Islamic banks to operate in Malaysia.
There are now two standalone domestic Islamic banks and all the nine local banks have
Islamic banking subsidiaries. In addition, there are three foreign Islamic banks operating
in the country, three local Islamic foreign banks (Islamic subsidiaries of foreign
commercial banks), three international Islamic banks (which can only operate in foreign
currencies) and two foreign banks operating “Islamic banking windows” here. Islamic
banking now accounts for almost 20% of Malaysia’s total banking assets.

The banking system remains the largest financial intermediary in the country with total
assets standing at US$400 billion (RM 1.362 trillion), as of December 2009. The Central
Bank licenses and regulates businesses such as commercial banking, investment
banking, Islamic banking and money brokering. Foreign firms currently are restricted in
the acquisition of local financial institutions (equity participation is limited to 30% for
commercial banks, 70% for investment banks and 49% for Islamic banks). Foreign
equity participation in a domestic Islamic bank can be increased to 70% on the condition
that its paid-up capital is at least US$ 1 billion. Additionally, banks and financial
institutions need to adhere to strict guidelines with respect to product pricing of their
products. BNM has been liberalizing the financial services sector under the Malaysia’s
Financial Sector Master Plan (FSMP) for 2000-2010. There should be further
liberalization under FSMP II for 2011-2020.

Foreign-Exchange Controls Return to top

Although limited capital controls were imposed in September 1998, Malaysia's current
account remains fully convertible and importers and exporters have sufficient access to
foreign exchange to carry out their business. The ringgit cannot be sent or received from
abroad, thus payments for imports and exports must be sent and received in foreign
currency. Over the past few years, Malaysia removed capital controls on the activities of
portfolio investors and foreign direct investment capital remains freely convertible.

U.S. Banks and Local Correspondent Banks Return to top

Three U.S. banks have operations in Malaysia: Bank of America, Citibank, and J.P.
Morgan Chase Bank. In addition, Bank of New York has a representative office in Kuala
Lumpur. Malaysia also has an offshore banking center on the island of Labuan where
57 offshore banks operate. Most Malaysian banks have correspondent relationships
with banks in the United States.

Project Financing Return to top

Government initiated projects are usually funded by the Ministry of Finance. Though
another ministry may implement the tender or be in charge of technical committees, the
Ministry of Finance is the final decision maker in all major projects. As the Prime
Minister also serves as the Minister of Finance, this ensures that government projects
are decided on the highest level, often with cabinet input.

The Asia Development Bank (ADB) is not active in Malaysia, as its projects, whether
public or private, must satisfy the criterion of poverty alleviation in order to qualify for
ADB financing. Thus for most purposes, Malaysia is too affluent to borrow from the ADB
for Malaysia-specific projects. The only area where Malaysia could benefit from ADB
assistance would be in the area of a Regional (not Malaysia-specific) Cooperation
Technical Assistance program (such as an ASEAN-wide telecom network or similar
regional project).

The Islamic Development Bank finances a few projects in Malaysia, mainly in the areas
of healthcare and university expansion. Malaysia is considered to be a high or mid-
income country by the IDB and a partner in providing technical expertise to other IDB
member countries.
Web Resources Return to top

Export-Import Bank of the United States: http://www.exim.gov

Country Limitation Schedule: http://www.exim.gov/tools/country/country_limits.html
OPIC: http://www.opic.gov

Trade and Development Agency: http://www.tda.gov/

SBA's Office of International Trade: http://www.sba.gov/oit/
USDA Commodity Credit Corporation: http://www.fsa.usda.gov/ccc/default.htm
U.S. Agency for International Development: http://www.usaid.gov
Asian Development Bank (ADB): www.adb.org
Islamic Development Bank Group (IDB): www.isdb.org
Overseas Private Investment Corporation: www.opic.gov
Malaysian Rating Corporation Berhad (MARC): www.marc.com.my
Rating Agency Malaysia Berhad (RAM): www.ram.com.my
Bank Negara Malaysia: www.bnm.gov.my
Labuan Offshore Financial Services Authority: www.lofsa.gov.my
Malaysia International Islamic Financial Centre: www.mifc.com

Return to table of contents

Return to table of contents

Chapter 8: Business Travel

• Business Customs
• Travel Advisory
• Visa Requirements
• Telecommunications
• Transportation
• Language
• Health
• Local Time, Business Hours and Holidays
• Temporary Entry of Materials and Personal Belongings
• Web Resources

Business Customs Return to top

Malaysia has a multicultural and multiracial population consisting of Malays, Chinese,

Indians, and indigenous peoples. Although Malaysia's ethnic mix is generally
harmonious, the various communities remain largely separate. With such a varied
ethnic composition, there is a diversity of religions, and although the official religion is
Islam it is common to see temples, mosques, and churches within the same area.

Business customs in Malaysia do not differ fundamentally from those of the U.S.
Frankness, openness, and punctuality, are valued traits in business negotiations and
dealings. Personal contact is important. However, visitors should be aware of religious
and cultural traditions, which differ for each ethnic group. For example, Malay Muslims
may feel uncomfortable in business or social functions where alcohol or pork is served,
and visitors should take note that items (such as business cards) should always be
presented or received using the right hand.

Travel Advisory Return to top

Business travelers should be mindful of the State Department's Travel Alerts when
planning a trip, as well as the Country Specific Information for Malaysia. Travel updates
can also be obtained by calling the Overseas Citizens Services toll free at 1-888-407-
4747.

Visa Requirements Return to top

U.S. visitors arriving without visas are allowed to stay in Malaysia for three months and
are allowed one two-month extension. U.S. business visitors to Malaysia do not require
visas unless they enter the country for employment purposes. Business visitors may be
issued passes at the point of entry for attending business meetings and conducting
business negotiations. However, if one is to engage in work in Malaysia (such as
overseeing the installation of equipment on a project), it is necessary to apply for a
business or professional pass visa prior to arrival.
U.S. Companies that require travel of foreign businesspersons to the United States
should be advised that security options are handled via an interagency process. Visa
applicants should go to the following links.

State Department Visa Website: http://travel.state.gov/visa/index.html

United States Visas.gov: http://www.unitedstatesvisas.gov/

In Malaysia, the Consular Section at the U.S. Embassy in Kuala Lumpur has a quick and
user-friendly application process. Applicants can go online through an Embassy-
designated visa-processing agency to complete a visa application form and schedule an
interview at a day of their choice. The agency’s website includes a thorough explanation
of the process and can be found at: http://www.vfs-usa-my.com
State Department records indicate that the processing time for U.S. visas in Kuala
Lumpur is one of the fastest in the world. Most applicants can receive visas in one or
two days, although some applications may take longer to process – two to three weeks
on average. As a result, it is strongly recommended that applications are submitted as
early as possible to prevent delays or changes to the travel plans.
For additional information on visas and other updates, U.S. companies can advise their
clients to visit the U.S. Embassy in Kuala Lumpur’s visa website at:
http://malaysia.usembassy.gov/

Telecommunications Return to top

International telephone service from Malaysia is adequate and more investment is being
undertaken to keep up with the very rapid increase in demand. GSM is the Malaysian
standard for digital cellular communications. One of its cellular providers is GPRS
enabled, while the other two are 3G spectrum holders. The later have commenced their
3G pilots and it should be commercially deployed early 2005.

Broadband Internet access is widely available in most major hotels. Offices and
residential customers gain dial-up or broadband Internet access via ISDN, ADSL, SDSL,
WiFi and/or WiMax. WiFi/WiMax Internet access are mushrooming in coffee outlets in
metropolitan Kuala Lumpur and other major cities. As of the most recent statistics
provided by the Malaysian Communications and Multimedia Commission, over 45
percent of Malaysian households use dial-up Internet connections, while 17.5 percent of
households have broadband access. Residential broadband access pricing has been
slashed recently, so rising penetration rates will likely continue.

Transportation Return to top

Malaysia's central location in the Asia Pacific region makes it an ideal gateway to Asia
and the ASEAN markets. Air cargo facilities are well developed in the five international
airports - the Kuala Lumpur International Airport (KLIA), Penang International Airport and
Langkawi International Airport in Peninsular Malaysia, Kota Kinabalu International
Airport in Sabah, and Kuching International Airport in Sarawak. Malaysia's ultra-modern
Kuala Lumpur International Airport (KLIA) is the nation's largest, located 50 kilometers
south of Kuala Lumpur. Cargo import and export procedures are fully automated at
KLIA.
Kuala Lumpur is served by a number of international airlines, though no U.S. airlines fly
to Malaysia directly. Additional international connections are available via Singapore,
from which there is a joint Malaysian Airlines/Singapore Airlines air shuttle service.
Direct flights to Singapore are available from the U.S., Europe, the Middle East, and
Asia. Within Malaysia, the national airline - Malaysian Airlines (MAS) - provides frequent
service to all major cities, as does low-cost competitor Air Asia.

Peninsular Malaysia's network of well-maintained highways link major growth centers to

seaports and airports throughout the peninsula and provide an efficient means of
transportation for goods. To complement these highways, a Kuala Lumpur-Bangkok rail
service known as the ASEAN Rail Express (ARX) has been initiated with the aim of
expanding it to become the Trans-Asia Rail Link that will include Singapore, Vietnam,
Cambodia, Laos and Myanmar before ending up in Kunming, China.

Local transportation rates can be found on the MIDA website (click on “Costs of Doing
Business” and then “Living in Malaysia” and then “Public Transport”).

Language Return to top

As a result of the country's ethnic diversity, most Malaysians speak at least two and
even three languages - Bahasa Malaysia (the national language), English, and their own
mother tongue (often Chinese Mandarin or Hokkien, or Tamil). English is widely spoken
and is commonly used in business.

Health Return to top

State-of-the-art medical facilities are available in Kuala Lumpur and other big cities.
Quality health care is accessible in Malaysia with many reputable private hospitals, as
well as numerous clinics and doctors who are aware of the expectations and needs of
expatriates. Rates for medical services as well as hospital stays are generally lower
than in the U.S.

The climate can be debilitating because of the uniformly high temperatures, the rainfall,
and high humidity. Travelers should also be aware of dengue fever, including the
hemorrhagic variety, which exists throughout Malaysia. Though it is not as common in
Kuala Lumpur, open drainage ditches and stagnant water at construction sites facilitate
breeding of mosquitoes in the city, and expatriates are occasionally affected by dengue
or malaria.

Local Time, Business Hours, and Holidays Return to top

The first thing to consider when planning business travel to Malaysia is whether or not
any local holidays may occur during the trip, and whether they will disrupt the normal
flow of business. If offices are not open, appointments may not be scheduled as easily.

Listed below are official Malaysian holidays. All states and territories in Malaysia
observe federal holidays, and in addition each state also observes its own respective
local holidays, such as birthday celebrations of its Sultan and the current King. A list of
federal and state holidays can be found and downloaded through the official Malaysian
Prime Minister’s Department website (Bahasa Malaysia only).

2010 Malaysia holidays observed by the U.S. Embassy can be found on the Embassy
website.

Additionally, travelers should be aware that Friday is the holy day for Muslims, and
government offices close from 12:00-2:00 on Fridays. It is usually difficult to schedule
meetings on Friday afternoons, especially with government agencies.

Malaysia does not practice daylight savings, and is EST + 12 hours in spring/summer
and EST + 13 hours in the fall/winter.

Temporary Entry of Materials and Personal Belongings Return to top

Malaysia has no restrictions on temporary entry of business-related materials, such as

software, laptop computers, etc. Movement of exhibit materials for Malaysia-based
trade shows is typically handled by official freight-forwarding companies that are able to
handle customs and other required procedures easily and quickly. Malaysia also
accepts the ATA Carnet, which is essentially a passport for your goods. If the good can
be described as a "tool of the trade," then upon presentation of the ATA Carnet the good
may be exempt from duties and taxes. "Tools of the trade" are items such as
commercial samples, professional equipment, items used for trade shows or exhibitions
and some ordinary goods such as computers (including laptops) or industrial equipment.
Carnets do not cover consumable goods, disposable items or postal traffic. The ATA
Carnet can be ordered by contacting the U.S. Council for International Business (1-866-
786-5625 or 1-212-703-5078).

Some equipment, including some high-speed or encrypted laptop computers, requires

an export license from the Department of Commerce's Bureau of Industry and Security
(BIS). Also, some technical materials, sophisticated equipment, and goods taken to
certain countries will need a license. If you are unsure whether or not an export license
is required for your laptop or other materials, please contact BIS at 202-482-4811 or visit
their website.

Finally, before returning to the U.S., the U.S. Customs Service should be notified that
your items will be coming back into the U.S. and that U.S. import duties and taxes
should not be assessed on the goods once they return. U.S. Customs will need the
serial number of the item(s) taken. To find your local customs office, information may be
found online at the U.S. Customs website.
Web Resources Return to top

Bureau of Industry and Security: www.bis.doc.gov

Malaysia Ministry of Foreign Affairs: http://www.kln.gov.my/
State Department's Travel Advisories: http://travel.state.gov/malaysia.html
State Department Visas: http://travel.state.gov/visa/index.html
U.S. Customs: www.customs.gov
U.S. Embassy in Kuala Lumpur: http://malaysia.usembassy.gov/klcons.html
U.S. Visas.gov: www.unitedstatesvisas.gov/
United States Council for International Business: www.uscib.org
Immigration Department of Malaysia: http://www.imi.gov.my/eng/im_Page1.asp
Tourism Malaysia (Official Site): http://www.tourism.gov.my/
Prime Minister’s Department (Malaysia): http://www.kabinet.jpm.my/eng/
Malaysia Communications and Multimedia Commission:
http://www.skmm.gov.my/mcmc/

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Return to table of contents

Chapter 9: Contacts, Market Research, and Trade Events

• Contacts
• Market Research
• Trade Events

Contacts Return to top

U.S. Government Contacts for Malaysia

U.S. Embassy Kuala Lumpur

U.S. Ambassador to Malaysia: James R. Keith
Robert G. Rapson, Deputy Chief of Mission
Tel: 011(603) 2168 - 5000 (switchboard)
Fax: 011(603) 2142-2207
Office hours: Mon – Fri, 7:45 a.m. - 4:30 p.m.
www.usembassymalaysia.org.my
Street address: U.S. Embassy Kuala Lumpur
376 Jalan Tun Razak
50400 Kuala Lumpur
Malaysia

*Mailing address U.S. Embassy Kuala Lumpur

from U.S.: APO AP 96535-8152

*Note: do not add country name `Malaysia' to this address. Letters and priority mail sent
via APO (Army Post Office) take approx. one week transit time; packages shipped parcel
post can take up to 6 weeks.

U.S. Commercial Service (USCS)

Website: www.buyusa.gov/malaysia/en/
E-mail: [email protected]
General inquiries: (603) 2168-5050
Fax: (603) 2142-1866
Nasir Abbasi, Commercial Counselor
Tel: (603) 2168-4869
E-mail: [email protected]

Foreign Agricultural Service (FAS)

David W. Cottrell, Agricultural Attaché
Tel: (603) 2168-5082; Fax: (603) 2168-5023
E-mail: [email protected]

Economic Section (ECON)

Matthew J. Matthews, Economic Counselor
Tel: (603) 2168-5000; Fax: (603) 2168-4952
E-mail: [email protected]
Political Section
Brian D. McFeeters, Political Counselor
Tel: (603) 2168-4946; Fax: (603) 2168-5165
Email: [email protected]

Consular Section
Charles J. Wintheiser, Consular Chief
Tel: (603) 2168-5175; Fax: (603) 2148-5801
Email: [email protected]

Public Affairs (Formerly U.S. Information Service (USIS))

Marrie Schaefer, Counselor for Public Affairs
Tel: (603) 2168-5071; Fax: (603) 2148-9192
E-mail: [email protected]

RSO / Regional Security Office (Security briefings & updates)

Eugene P. Kim, Regional Security Officer
Tel: (603) 2168-5111; Fax: (603) 2168-4961
E-mail: [email protected]

Office of Defense Cooperation (Defense Sales)

(Formerly Security Assistance Office) (SAO)
LtCol. Stephen C. Ma, Chief, Office of Defense Cooperation
Tel: (603) 2168-5047; Fax: (603) 2141-1080
E-mail: [email protected]

U.S. Government Agencies in the Washington D.C. Area

Department of State
Bureau of East Asian & Pacific Affairs
Kurt Tong, Economic Coordinator
2201 C Street, N.W.
Washington, D.C. 20520-6310
Tel: (202) 647-2001; Fax: (202) 647-0136
 
Department of Commerce
Trade Information Center
Ronald Reagan Building
Washington, DC 20230
Tel. in U.S.: 1-800-USATRADE (1-800-872-8723)

DOC/The Advocacy Center

Malcolm Burke
ASEAN & Pacific Basin
1401 Constitution Av. N.W., Room 3812
Washington DC 20230
Tel: (202) 482-4166; Fax: (202) 482-3508
Website: www.ita.doc.gov/advocacy
DOC/Defense Trade Advocacy
John Yu, Program Manager for Asia & Middle East
Tel: 202-482-5879
Email: [email protected]

DOC/Market Access and Compliance (MAC)

Dr. Ira Kasoff, Deputy Assistant Secretary, Asia
14th & Constitution Avenue, NW Room 2319
Tel: (202) 482-4008; Fax: (202) 482-3316
E-mail: [email protected]

Department of Agriculture
Foreign Agricultural Service (FAS)
Trade Assistance and Promotion Office
Tel: (202) 720-7420; Fax: (202) 205-9728

For further information regarding GSM Credit Guarantees:

Program Planning, Development, and Evaluation Division
Export Credits, FAS-USDA
Stop 1034, 1400 Independence Ave. SW
Washington, DC 20250-1034
Tel. (202) 720-4221; Fax (202) 690-0251
General information about FAS programs, resources, and services is available on the
Internet at the FAS home page: www.fas.usda.gov

Trade Development Agency (TDA)

Henry Steingass, Regional Director Asia
Diana Rossiter, Country Manager, Malaysia
1621 North Kent Street, Suite 300
Arlington, VA 22209-2131
Tel: (703) 875-4357; Fax: (703) 875-4009

Asia Regional Office, Bangkok, Thailand

Mark Dunn, Regional Manager for Asia
E-mail: [email protected]
Rachaneekorn Sriswasdi, Deputy Regional Manager for Asia
E-mail: [email protected]
Tel: (66)(2) 205-5090; Fax: (66)(2) 255-4366

Overseas Private Investment Corporation (OPIC)

James Brache, Regional Manager, Asia
1100 New York Avenue, NW
Washington, D.C. 20527
Tel: (202) 336-8585; Fax: (202) 408-9859
E-mail: [email protected]
Website: www.opic.gov
U.S. and Multilateral Development Banks

Export-Import Bank of the United States (EX-IM Bank)

Judith Rivera, Director Business Development
811 Vermont Avenue, NW
Washington, D.C. 20571
Tel: (202) 565-3417; Fax: (202) 565-3931
Website: www.exim.gov

World Bank (International Bank for Reconstruction & Development)

East Asia & Pacific External Affairs Team
1818 H Street, NW
Washington, D.C. 20433
Website: www.worldbank.org
E-mail: [email protected]
Tel: (202) 473-1000 Fax: (202) 522-6341
Marilene Montemayor; E-mail: [email protected]

Singapore Office
Tina Taheri Moayed
Tel: (65) 6501-5519 Fax: (65) 6501-5510
E-mail: [email protected]

Asian Development Bank (ADB)

Joel Fischl, Director, Senior Commercial Officer
The U.S. Commercial Liaison Office for ADB (CS/ADB)
American Business Center
25th Floor, Ayala Life-FGU Building
6811 Ayala Avenue
Makati City, Philippines 1226
Tel: 011(632) 887-1345; Fax: 011(632) 887-1164
E-mail: [email protected]
Website: www.adb.org

U.S. mailing address:

PSC 500 Box 33
FPO AP 96515-1000
Key Malaysian Ministries

Ministry of International Trade & Industry

Website: www.miti.gov.my

Ministry of Finance
Website: www.treasury.gov.my

Ministry of Health
Website: www.moh..gov.my

Ministry of Defense
Website: www.mod.gov.my

Ministry of Agriculture & Agro-Based Industry

Website: www.agrolink.moa.my

Ministry of Energy, Water & Communications

Website: www.ktak.gov.my

Ministry of Natural Resources & Environment

Website: www.nre.gov.my

Ministry of Education
Website: www.moe.gov.my

Trade and Business Organizations for Malaysia

American-Malaysian Chamber of Commerce (AMCHAM)

Fui K. Soong, Executive Director
AMODA 11.03 Level 11
22 Jalan Imbi
55100 Kuala Lumpur, Malaysia
Tel: (603) 2148-2407; Fax: (603) 2142-8540
E-mail: [email protected]
Website: www.amcham.com.my

U.S. - ASEAN Business Council

1101 17th Street NW, Suite 411
Washington, DC 20036
Tel: (202) 289-1911; Fax: 289-0519
E-mail: [email protected]
Website: www.us-asean.org

Pacific Basin Economic Council

Bernard S.Y. Fung, Chairman
PBEC US Member Committee
1819 L Street, NW, 2nd Floor
Washington, DC 20036
Tel: (202) 293-1093; Fax: (202) 289-1940
Website: http://www.pbec.org/

Federation of Malaysian Manufacturers (FMM)

Lee Cheng Suan, Chief Executive Officer
Wisma FMM, No. 3
Jalan Persiaran Agang, PJU 9
Bandar Sri Damansara
52200 Kuala Lumpur
Tel: (603) 6286-7200; Fax: (603) 2674-1266
E-mail: [email protected]
Website: www.fmm.org.my

Malaysian International Chamber of Commerce and Industry

Stuart Forbes, Executive Director
Tel: (603) 6201-7708; Fax: (603) 6201-7705/7706
E-mail: [email protected]
Website: www.micci.com.my
Mailing Address:
P.O. Box 12921
50792 Kuala Lumpur
Street Address:
C-8-8, Block C, Plaza Mont'Kiara
2 Jalan 1/70C, Mont'Kiara
50480 Kuala Lumpur

The National Chamber of Commerce and Industry of Malaysia

Wong Kum Sin, Executive Director
6A, 6th Floor, Menara BGI
Plaza Berjaya, 12 Jalan Imbi
55100 Kuala Lumpur
Tel: (603) 2141-9600 Fax: (603) 2141-3775
E-mail: [email protected]
Website: www.nccim.org.my

Government Agencies and Businesses Service Providers

For contact information for specific Malaysian Government agencies, or for a list of
market research firms, domestic and international banks, collection agencies or law
firms, please contact the U.S. Commercial Service in Kuala Lumpur

Market Research Return to top

To view market research reports produced by the U.S. Commercial Service please go to
the following website: http://www.export.gov/marketresearch.html and click on Country
and Industry Market Reports.

Please note that these reports are only available to U.S. citizens and U.S. companies.
Registration to the site is required, but free of charge.
Trade Events Return to top

Please click on the link below for information on upcoming trade events.

http://www.export.gov/tradeevents.html

Please click on the link below for information on upcoming trade events in Malaysia:
http://www.buyusa.gov/malaysia/en/46.html

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Return to table of contents

Chapter 10: Guide to Our Services

The U.S. Commercial Service offers customized solutions to help your business enter
and succeed in markets worldwide. Our global network of trade specialists will work
one-on-one with you through every step of the exporting process, helping you to:

• Target the best markets with our world-class research

• Promote your products and services to qualified buyers
• Meet the best distributors and agents for your products and services
• Overcome potential challenges or trade barriers

For more information on the services the U.S. Commercial Service offers U.S.
businesses, please click on the link below.

http://www.buyusa.gov/malaysia/en/6.html

Return to table of contents

U.S. exporters seeking general export information/assistance or country-specific commercial

information should consult with their nearest Export Assistance Center or the U.S. Department
of Commerce's Trade Information Center at (800) USA-TRADE, or go to the following website:
http://www.export.gov

To the best of our knowledge, the information contained in this report is accurate as of the date
published. However, The Department of Commerce does not take responsibility for actions
readers may take based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other commercial
arrangements. The Department of Commerce can assist companies in these endeavors.