"The businessmen should like fishing experts thriving in the surging water because that is the place where the big fishes are safely escorting their little ones to swim to the surface. Thus, in every crisis, there is certainly ensuing big opportunities as well as benefit .”

-- Robert Kuok, a Malaysian entrepreneur and one of the richest Chinese businessmen in the world.

 

Against a backdrop of market retraction and prospective economic recession, and a grave concern on the adverse effects that caused by the pandemic, one would expect a lukewarm response to any mention of expending investment capital.  Nevertheless as the old adage goes, there is still an opportunity in every market scenario, and perhaps even more so in a period of negative sentiment.

 

While not immune to global downturn and a prospective double dip, Malaysia has put in place numerous precautionary economic strategies and can therefore offer prospective investors with attractive opportunities.

 

Background information

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Malaysia is nestled in the center of Southeast Asia and home to a population of over 32.7 million made up of Malays, Chinese, and Indians. Malaysia consists of 13 states with 11 in the Peninsular and another 2 in the Borneo Island.  The system of government is through a parliament democratically elected by its people and the medium of communication is both Malaysian and English.

 

Malaysia’s GDP is about USD337 billion with an expected growth rate of 5% to 7.5%% in 2021.  Malaysia remains strong in economic strength enjoying strong ties with China, US, Singapore, Japan and Europe with annual foreign trade exceeding USD233 billion.  Its currency of exchange is Ringgit, which operates on a managed float regime against a trade weighted basket of currencies.  In the recent survey released by the World Economic Forum, Malaysia ranked 27th in the Global Competitiveness Report 2020-2021.

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"Invest in Malaysia, you would get the whole of Asia.”

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In response to the motto of “Invest in Malaysia, you would get the whole of Asia.”, which implies to Malaysia’s rich and diverse cultural heritage and foreign trade tradition having strong links to Indonesia, China, India and Middle East countries. Thus, Malaysia is well positioned as the gateway to the ASEAN with 10 member nations, 628 million in total population and an economy size worth USD2.4 trillion, hence rank as the 6th largest economy in the world and the 3rd largest in Asia.

 

Rationalization initiatives: Liberalization of 27 service sub-sectors; Economic Transformation Plan; and Capital Market Master Plan 2.

After the 2008 financial crisis, Malaysia took the contrarian approach in stead of protectionist route and has continued in phases to liberalize its key services by lifting the foreign equity restriction in 27 sub-service sectors including accounting, taxation, legal, education and training services.  So far, concerted efforts have also been taken to expedite and ensure the smooth implementation of such measures.

 

The Bursa Malaysia is its Stock Exchange having a market capitalization of over USD436.5 billion in 2020. The present market capitalization is envisaged to  grow further by adopting a more holistic or comprehensive approach by promoting capital formation from the inception stage to the internationalization of such innovations. In line with this, incentives and regulatory supports will be emphasized on the areas such as venture capital and private equity industries, and the expansion of the bond markets.

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To-date, Malaysia already leads the world as the hub for the Islamic capital market which was achieved under the initiatives which include strategies for the internationalization of Malaysia’s Islamic capital market by making further inroads into the international SUKUK market which has grown from its humble start to USD258 million in 2020.

 

Conclusion

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The first reaction to any market downturn would be to conserve cash and hold back on investments.  However, there are many prior precedents   that  dictated that the converse would have yielded optimum results.  In addition to the above criteria, Malaysia is also engulfed with 9 key factors that account for its success as a location of choice for investors namely:-  

 

1. Political and social stability;

2. Good physical and legal infrastructure;

3. Ready availability of human talent;

4. Effective and efficient supply chain management;

5. Competent and reliable logistics and communications hub;

6. Strong Intellectual Property protection;

7. Good governance and effective leadership;

8. Building creativity and innovation in science and technology, and

9. Livable, open and safe city environment.

 

In all, with the strong governmental supports and commitments, and the diligence, perseverance and ingenuity of its people, Malaysia is set to continue as a conducive and attractive country of choice for the discerning investors as what has been reminded by its Prime Minister: "We are determined to develop and adapt to the environment, when you invest in Malaysia's transformation programme, you will now get over US$500 billion in all rounded business opportunities."