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Invest in Malaysia

"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 second economic recession, and a grave concern on Brexist and the Europe’s deteriorating sovereign debt crisis, 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

Malaysia is nestled in the centre of Southeast Asia and home to a population of over 30.8 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 USD298 billion which ranks as the 37th largest economy in the world [28th in terms of GDP (PPP) by the World Bank].  Malaysia remains strong in economic strength enjoying strong ties with US, China, Singapore, Japan and Europe with annual foreign trade exceeding USD195 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 25th in the Global Competitiveness Report 2016-2017.

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

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.

 

In October 2010, the Economic Transformation Program (ETP) was launched to road-map Malaysia to achieve the fully developed nation status by 2020.  The ETP entails an investment commitment of up to USD35 billion in the creation of over 250,000 jobs in 10 years. 12 key areas that can drive economic growth were identified with 131 entry-point projects to kick start those areas to be developed ranging from agriculture, communications content and infrastructure, business services, education, healthcare, oil gas and energy, tourism, property development, electronics and electrical, wholesale to retail sectors.

The Bursa Malaysia is its Stock Exchange having a market capitalization of over USD700 billion comprises the most number of listed companies in ASEAN. On 7 January 2011, it achieved a sterling performance, when its key market barometer, FBM KLCI hit 1,572.21 points, the highest level since 1998.

Under the Capital Market Master Plan 2 (CMP2), the present market capitalization is envisaged to  grow to over USD1.5 trillion by 2020 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.

To-date, Malaysia already leads the world as the hub for the Islamic capital market which was achieved under the initiatives of the CMP1. Initiatives under CMP2 include strategies for the internationalization of Malaysia’s Islamic capital market by making further inroads into the international SUKUK market which is set to grow from USD400 billion to USD1 trillion by 2020.

 

Conclusion

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$440 billion in all rounded business opportunities."

 

How can we help?

KCN's aim is to ensure we help our clients attain their goals through providing a range of services and expertise that supports them in their endeavours.

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   KC Chia & Noor (KCN), Chartered Accountants

  • an independent member of GGI Global Alliance of professional firms.

  • a member firm of Malaysian Institute of Accountants

  • registered with the Audit Oversight Board (AOB), able to conduct audit for public interest entities in Malaysia.

  • an Approved Training Employer (ATE) for the following professional bodies:

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