DOING BUSINESS IN MALAYSIA
Malaysia is a country of two halves combining the urban and the rural, metropolitan cities and exotic rainforest, bustling towns and beaches. Separated by the South China Sea into Peninsular Malaysia and Malaysian Borneo, it is home to over 30 million culturally diverse and multilingual people. The country originated from the Malay Kingdoms which fell under the rule of the British in the eighteenth century and later became a British protectorate until it peacefully gained independence in 1957. These political historic ties mean that the Malaysian governing system is still reminiscent of the Westminster Parliamentary model while the legal system is governed by common law, and English remains a common second language throughout the country.
Malaysia’s vibrant economy is newly industrialised and relatively open with growth rates commonly over 4%. It also scores highly in the World Bank’s ‘Ease of Doing Business’ index. Strengths of the Malaysian market include a well-developed financial sector, cost-effective access to the increasingly thriving Asian markets, and an impressive infrastructure. One of the most technologically developed nations in the Association of South-East Asian Nations (ASEAN) it is tipped to be the fourth largest single market by 2030. For these reasons, Kuala Lumpur is an ideal location for an Asian headquarters for globally expanding firms.
However, the rainforests of Northern Borneo are suffering as a result of market pressure to produce larger and larger amounts of palm oil and timber, threatening both the environment and Malaysia’s economic strength – as organisations attempt to curb the levels of deforestation. Other risks of doing business in Malaysia are a weak competitive environment and a permeating degree of corruption, as the nation is ranked in the top third of countries in the ‘Corruption Perceptions Index’, which render research and preparation essential for doing business in Malaysia.
Naturally the plurality of cultures, including Malaysian Chinese, Malaysian Indian and indigenous peoples, has created a complex and quirky corporate etiquette. The World Business Culture website provides the necessary knowledge of business culture, such as the importance of company hierarchies and titles, as well as information on the economic environment and opportunities necessary for business ventures in this Eastern market.
Malaysia often appears very near the top of the tree in the ‘Best Country to Invest in’ league tables. With a highly skilled, well-educated workforce and a pro-business government Malaysia attracts high levels of foreign direct investment and Kuala Lumpur is rapidly becoming a destination of choice for global organisations who are looking to establish an Asian head office. In fact, more than 5000 companies from over 40 countries have established operations in Malaysia and that trend looks set to continue.
It would appear then that lots of global organisations consider doing business in Malaysia to be an attractive proposition. You should ask yourself why you haven’t considered Malaysia as a potential market if you are still to make that move. Political stability, great infrastructure, a highly motivated workforce and ideal geographic location make doing business in Malaysia sound like good business sense.
Yet Malaysia is a complex mix of different ethnicities all working and living together. This mix has produced a very distinctive local business culture which you need to understand before starting to build relationships and sell your good or services. Traditionally the minority Chinese section of society ran most business activities in the country but changing demographics and pro-Malay legislation have altered this picture over the past few decades. How have these changes impacted on day-to-day business dealings in Malaysia? What type of communication style can you expect from such a mixed-race culture? How do traditional hierarchical mindsets fit with the more modern matrixed approach used by so many foreign capital companies? You need to think about these things before you arrive in Kuala Lumpur rather than on the plane home. Don’t leave things to chance; do some homework.
This country profile provides an overview of some of the key aspects of Malaysian business culture in a concise, easy to follow-format. The document includes information on:
- Background to business
- Business Structures
- Management style
- Women in business
- Top tips