Given the times, it’s probably too early to think about business expansion considering normalcy hasn’t really set in. Most of the issues concerning organisations are concretely valid, with low consumption rates and poor market liquidity permeating all types of industries. Expansion today is not limited to just opening up new manufacturing units, it’s also how you choose to pivot from crisis to opportunity by bolstering R&D.

To give readers a glimpse into the actual expansion scene in Malaysia over the last one year, we did some research with government-led investment institutions for deeper insight. Our efforts helped us discover how certain companies (belonging to certain sectors) chose 2020 to focus on innovation and reinvestment rather than try the wait-and-watch approach.

Business Investments in Malaysia in 2020
According to sources*, Malaysia attracted a fair share of investment among MNCs, including Fortune 500s, in the high-end and high-technology industries. A case in point, through InvestKL, Malaysia successfully attracted and facilitated 12 MNCs in various sectors to set up their Regional Services Hubs in Greater Kuala Lumpur. Some of the sectors that witnessed sizeable investments were in the:

  • Semiconductor
  • Medical devices and implants
  • Ultra-high purity cleaning
  • Automotive and industrial components
  • Audio products &
  • Electric vehicle batteries industry

Business Expansion in Malaysia in 2020
Contrary to popular belief, companies are not entirely freezing expansion. Data points out that existing multinationals are continuing to undertake major reinvestments into high-end products and activities in the country by adopting cutting-edge technology in design, development and manufacturing. Some of the sectors that have forayed into expansion include:
  • Computer Hard Disk Drive (HDD), Solid State Drive (SSD) and flash memory device manufacturers
  • Assembly & Testing among microchip manufacturers
  • Design & R&D by E&E manufacturers
  • Semiconductor components and sensors companies
  • Medical devices companies
  • Electric Glass manufacturers (for pharmaceutical use in view of vaccine rollout in Malaysia)
  • Lifesciences sector
  • Data tech companies

FDI Scene in Malaysia
The government’s setting up of a fast-track approval mechanism for manufacturing licence and tax incentives as well as the establishment of Project Acceleration and Coordination (PACU) shows its intention of facilitating necessary approvals. The Malaysian central bank’s efforts at easing foreign exchange rules would offer foreign investors more flexibility to trade in Malaysian Ringgit (MYR) while also helping resident businesses manage hedging of foreign currency risks.

Business or Expansion – What Companies Need to Know
Global businesses making investments in Malaysia can be better supported through the presence of a legal entity in the country. Legal entities, also called Professional Employer Organisations (PEO), help global ventures with setting up the business in shorter time frames by acting as Employer on Record for its employees and operations.

Propay Partners’ PEO services accelerates corporate entry for global entrants by taking over their legal paperwork, immigration requirements, invoicing and contracting operations by minimising complexities and lag. As experts in FDI ventures in the country, we serve clients according to global standards and procedures.

Given the restrictions imposed on foreign travellers into Malaysia during Covid-19’s Movement Control Order (MCO), interim hiring (choosing local talents over expats) may be more preferred for the time being. PEO services can help companies make apt decisions on interim positions as well as host the employee throughout their employment lifecycle.

Much like business entry, ensuring business continuity through payroll and tax compliance can also be some of the challenges that global ventures are likely to face. Propay Partners offers end-to-end managed payroll outsourcing services for multinationals wanting to skip tax penalties and inaccurate payslips. To learn more, visit us here.

*Data for this blog has been sourced from InvestKL, MIDA & DOSM. We thank them for making this data available to us.

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