Malaysia is one of the most developed countries in South-East Asia. It’s commonly ranked second in overall competitiveness and fourth as a manufacturing hub – it’s ahead of even China and Japan in this respect.
If you’re aiming to start doing overseas business in Malaysia though, it’s good to do your research and get some tips beforehand.
Because there are all kinds of qualities that make Malaysia a great place for foreign businesses:
It’s very stable, politically and economically. There’s a high degree of English proficiency. The infrastructure is excellent. The Malaysian economy was worth about £265 billion in 2019. It’s also at the very heart of the ASEAN.
But doing business in Malaysia is not quite the same as you might be used to in the UK or elsewhere. Here’s a thorough grounding in everything you need to know:
Why do business in Malaysia?
1) Ease of Doing Business
The World Bank Group rated Malaysia 12th in the world in their Ease of Doing Business rankings in 2020. Because of the favourable prevailing conditions here, over 5000 international businesses choose to operate in Malaysia.
Hailing from right around the world, these businesses often find themselves settling in when they arrive on Malaysian shores. You will tend to see foreign businesses expand and diversify their operations here rather than the opposite.
As a foreign investor, with minimal exceptions, you can benefit from a wide range of business benefits:
- Fully owned businesses – even as a foreigner, you can fully own your company in Malaysia.
- Trade license not required – even if you need a trade license, it’s easy to get one.
- Encouraging tax policies – there is no sales tax or service tax. There is also no GST, the rough equivalent of VAT.
- Get a work visa – planning on investing in Malaysia? The government welcomes this, offering working visas for foreign investors and their family members.
- Accessible bank accounts – for both personal and corporate accounts, you only need a certain level of capital investment before opening an account becomes easy for you.
Malaysia is well known for being stable both economically and politically. It is also remarkably free of corruption, exhibiting far lower than any other ASEAN country and indeed much of the rest of the world!
That stability alone might be attractive to companies wanting to do business overseas in Malaysia. But the Malaysian government has also been historically consistently pro-business.
The favourable tax regime and support the government offers to foreign-owned businesses and investors are particularly notable. There is even a Foreign Direct Investment organisation and several others that have the goal of making life easier for overseas companies.
During the COVID-19 pandemic, the Malaysian government also instituted Wage Subsidy and Hiring Incentive programs, saving thousands of jobs and supporting struggling businesses.
3) High-quality infrastructure
Malaysia’s infrastructure is solid on almost every level:
- International transport – great land, sea, and air shipping and cargo connections link Malaysia with the world’s air and waterways as well as with local nations like Thailand and Singapore by road.
- Local transport – internally, Malaysia’s domestic high-speed rail and rapid transit systems provide fantastic coverage.
- Telecommunications – perhaps driven by its business focus, the country is often the first to jump on new communications technologies. Broadband and 4G technologies are present almost nationwide.
- Healthcare – Malaysia’s healthcare systems and services are excellent, modern, and affordable.
- Education – students from around the world come to study in Malaysia and many local educational institutions have strong links with other colleges and universities abroad.
4) Excellent education and English proficiency
Because the country’s educational infrastructure is so good, companies operating in Malaysia will enjoy access to a local workforce that is well educated with a very high standard of English proficiency.
English is commonly spoken here – particularly in the business sector – and the Malaysian legal code is based on the British standard, making it broadly accessible to UK-based businesses.
5) A multicultural nation with a high living standard
Malaysia is a nation that should really be better known for the acceptance its people display and the racial harmony it has enjoyed for decades. The quality of living here is high, but the cost is low.
There are three main ethnic groups – Malay, Chinese, and Indian Malaysians. But historically, there have been very few examples of these groups displaying intolerance towards each other since the country achieved independence in 1957.
Possibly key to this is the principle of muhibbah. This is an Arabic word enthusiastically adopted by Malaysia’s leaders and people and means roughly “goodwill” or “love”. This concept may date back as far as the 15th century, but you’ll still see it referenced in contemporary politics and culture.
All in all, you will generally find Malaysia to be a vibrant place to live and do business that seemingly effortlessly mixes the cultural heritages of its diverse population into a single positive whole.
Technically, Malaysia is a Muslim country. Yet devotees of all religions are encouraged to practice here and many religious traditions and festivals have been adopted as wider Malaysian cultural ones.
6) A key part of ASEAN
Malaysia is an integral part of ASEAN, the Association of South-East Asian Nations. With ten members, all situated in this rapidly developing part of the world, ASEAN represents a market of over 650 million people with a fast increasing individual and overall purchasing power.
With its great communications and transport links, Malaysia is ideally situated to benefit from this certain growth now and in the years to come.
What language is spoken in Malaysia?
The high degree of English proficiency among the Malaysian business community and the population at large can mean it’s easy to overlook the incredible range of languages spoken in Malaysia.
The official language is Malay (Bahasa Melayu Malaysia). But you will regularly hear Chinese dialects like Mandarin, Cantonese, Hokkien, and Hainanese being spoken alongside Indian languages like Tamil, Hindi, Punjabi, and Gujerati.
Again, it’s common for Malaysian people to display an almost uniquely positive attitude to the country’s melting pot of languages. The concept of “Bahasa Rojak” is a common one. This could be very loosely translated as a “language salad” (rojak is a local salad that is known for having a wide range of flavours).
Like muhibbah, the idea of Bahasa Rojak may date back centuries to when local port towns were major regional trading hubs. Yet you’ll see modern Malaysians mix languages, throw in interjections from other tongues, and use popular slang from multiple cultures with great enthusiasm.
Tips for doing overseas business in Malaysia
1) Accept the local business culture
Doing business in Malaysia isn’t a world away from doing business in the UK or the US. The business culture in some South-East Asian nations may attract criticism for lack of punctuality or relative obliqueness in negotiations. Far less so Malaysia.
That said, it’s relatively common for business negotiations to stray away from the topic at hand here. Digressions and conversational tangents should be treated as essentially an expected part of Malaysian business culture.
It’s also worth noting the importance of hierarchy to most local businesspeople. The cultures of all three of the main contributory Malaysian ethnic groups are generally hierarchical when it comes to business. This makes treating senior members of your own team and your local partners’ teams with respect a must.
2) Allow time for trust to grow
Malaysian businesspeople do tend to value ongoing personal contact in a manner that will be familiar to you if you have traded with other business cultures in South-East Asia.
This is often seen as a necessary period that allows trust to be built on both sides. Don’t necessarily expect a new business partner to want to jump straight into major deals before you have the chance to build a working relationship.
You should also understand that who does business with who is seen as very important in local business culture. The ability to introduce somebody to somebody else is something of a local currency.
3) Use business cards
The common South-East Asian practice of the exchange of business cards being treated seriously and respectfully is definitely present in Malaysian business culture.
Be sure to fully read any business card you receive before placing it in a binder or wallet that is clearly designed to be kept and referred to in future. As Malaysia is technically a Muslim culture, it’s good practice to use your right hand (the left hand is generally seen as unclean) to accept a card. You might also see people use their right hand supported by their left.
Needless to say, having your business cards localised into Bahasa Malay as well as English should be standard practice. An alternative or addition would be translating them into Chinese.
4) Check your dress code
Malaysia is broadly an accepting place when it comes to personal choices of attire. Though it is a Muslim country and conservative clothing choices are usually appreciated, especially for women.
Malaysian business dress code may vary by setting and who you are going to meet. But it will typically be:
- Male dress code – generally, a dark, formal suit with long sleeves and tie. Some exceptions are sometimes made as Malaysia is a tropical country. Certainly, you have more flexibility than you would if you were in a formal setting in Japan, for example. But probably less than you would in Singapore.
- Female dress code – a trouser suit or below knee-length skirt is a good standard, though colourful clothing is also accepted. As a broadly Muslim country, covering your hair may be appreciated depending on who you are meeting, though it is not usually expected.
5) Master the greetings
As a foreigner, it’s usually simplest to let your host lead the way when it comes to the form initial greetings take. This is because, depending on who you are meeting with, touching between genders may be viewed as inappropriate.
But always remember that Malaysia is an ethnically and culturally diverse place. A local ethnically Malay businessperson would probably not usually expect to see men and women shake hands. Meanwhile, a local ethnically Chinese businessperson might shake hands with a foreigner of either gender as a matter of course. Local ethnically Indian businesspeople might or might not.
This means that your go-to choice for cross-gender greetings should probably be a polite bow of your head with your right hand held to your heart. Again, if in doubt, watch what everyone else is doing.
A good alternative can be to hire a native Malaysian interpreter or a foreigner who is an expert in the local business culture. They will be able to guide you through the correct etiquette in any situation.
6) Schedule meetings with care
Local expectations regarding punctuality are that you should be on time. Certainly, you should expect your local partners to be and act accordingly.
Do be aware though that, in Kuala Lumpur in particular, traffic conditions are often challenging. This means you should allow plenty of extra time to reach your destination.
Another important consideration is that Friday is a day for Muslim religious observance. It’s also fairly common for most Malaysians to want or expect to be able to leave the office early on a Friday. This means there are far better days than Friday to schedule a meeting for.
7) Understand introductions and titles
In a general sense, it is always best to arrange to be introduced to someone you want to do business with in Malaysia. For most Malaysian businesspeople, this is tantamount to offering a recommendation that you are reliable. It can be difficult to succeed without this kind of support from someone who is a known and trusted quantity to the person you want to deal with.
Partly linked to this, and to the local importance of hierarchy in business circles, using a person’s surname and correct title – usually “Mr” or “Mrs” – during introductions and business discussions is both a norm and a sign of respect.
There are also local styles and honorifics – usually seen among government officials – that need to be understood and used where applicable. Malaysia has a huge number of these, though the most common are Tun, Tan Sri, Datuk, and Dato.
Do be aware that, for foreigners, determining which of a local business person’s names is their surname or preferred name can be difficult. If in doubt, research first or ask.
Hearing local people address each other as “brother” or “sister” despite not being related when they know each other very well is not uncommon.
8) Be prepared to remove your shoes
It’s relatively common for office workers in Malaysia to go about their day without wearing shoes. It’s part of the expected practice and dress code, so don’t be surprised if you’re asked to remove yours at the door.
This can sound like merely a little cultural thing that won’t be an issue. Yet you might be surprised how many foreign businesspeople are thrown off their game by it.
If you will be making a presentation in Malaysia, try rehearsing in formal attire but with no shoes. This will help you retain your usual confidence and formal style during the real thing.
9) Err on the side of cultural caution
There are a few things that are generally considered good practice and norms in Malaysian business culture or society more generally. The country is a wonderfully diverse mix of contributing cultures and a broadly positive and accepting place. Yet it’s always a good idea to:
- Be respectful and polite – especially to senior figures and anyone in authority.
- Be calm and patient – displaying anger or frustration is rarely beneficial in a business setting. It’s particularly poorly thought of here.
- Understand cultural norms – don’t joke about pork or alcohol and avoid offering them at any business functions. You should also avoid wearing yellow, as it’s the colour of royalty.
Doing business in Malaysia – key takeaways
With a welcoming attitude to international business, a business-supportive government and tax policies – not to mention a high standard of affordable living, great infrastructure, a highly educated multilingual workforce, strategic positioning, and excellent transport links – Malaysia is a highly attractive place to trade.
The country is also a broadly accepting, multicultural place that generally celebrates a diversity that has resulted in a nation that is even greater than the sum of its considerable parts.
But operating in Malaysia does require some adjustment for UK and foreign businesspeople. Some of the best tips for doing overseas business in Malaysia include researching and accepting the local culture, understanding the importance of hierarchy, respect, and titles, trying to arrange an introduction, and being patient as you establish trust between yourself and local parties.
You might also consider hiring an interpreter or working with a local partner. Because as with every time you do business internationally, there are all kinds of small things you can do to smooth the way in negotiations and operations that only a cultural native or expert is suited to guide you through.
Thinking about doing business overseas in Malaysia?
Let’s talk. Asian Absolute specialises in helping firms localise, translate, and interpret their communications for South-East Asian countries.
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