| Location and Size | Credit and Collections |
| Government | Risk Assessment |
| Legal System | Business Climate |
| People | Business Protocol |
| Economy | |
| Comparative Indicators |
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Location and Size
Malaysia is located in Southeastern Asia, and is a peninsula bordering Thailand and the northern one-third of the island of Borneo, bordering Indonesia, Brunei, and the South China Sea, south of Vietnam. The country is slightly larger than the U.S. state of New Mexico.
Government
Malaysia’s government is a federal parliamentary democracy with a constitutional monarch and a bicameral parliament, and is a member of the Commonwealth (formerly known as British Commonwealth). Malaysia is a federation of peninsular Malaysia, Sabah and Sarawak.
Branches:
- Executive: Chief of State: King Sultan Abdullah Sultan Ahmad Shah; Head of Government: Prime Minister Anwar Ibrahim; Cabinet Elections: Kings are elected for 5-year terms from among the nine sultans of the peninsular Malaysian states. The king is also the leader of the Islamic faith in Malaysia.
- Legislative: Bicameral Parliament consisting of appointed Dewan Negara (Senate) and elected Dewan Rakyat (House of Representatives)
- Judicial: Civil Courts include Federal Court, Court of Appeal, and High Courts of Malaya, Sabah and Sarawak. Sharia (Muslim) Law Courts deal with religious and family matters of Muslims only; decisions of Sharia courts cannot be appealed to civil courts.
Legal System
The legal system is based on English common law. Islamic law is applied to Muslims in matters of family law and religion. Malaysia has not accepted compulsory ICJ (International Court of Justice) jurisdiction.
People
- Population: 31,809,660 (2023 est.)
- Population growth rate: 1.34% (2023)
- Languages: Bahasa Malaysia (official), English, Chinese (Cantonese, Mandarin, Hokkien, Hakka, Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi, Thai and several indigenous languages
- Literacy: 94.6 % (2023 est.)
- Ethnic Make-up: Malay 50.4%, Chinese 23.7%, indigenous 11%, Indian 7.1%, others 7.8%
- Religions: Muslim, Buddhist, Christian, Hindu, Confucianism, Taoism, other traditional Chinese religions
Economy
Since its independence from Britain in 1957, Malaysia’s economic record has been one of Asia’s best. Malaysia has successfully sustained strong economic growth together with a stable currency and low inflation for a substantial part of the past three decades.
Today, Malaysia is a middle-income country with a multi-sector economy based on services and manufacturing. Malaysia is one of the world’s largest exporters of semiconductor devices, electrical goods and appliances.
Leading Markets (2023): Singapore 15.1%, China 12.6%, US 9.4%, Japan 8.2%, Thailand 5.7%, Hong Kong 4.5%
Leading Exports – Commodities: Semiconductors and electronic equipment, petroleum and liquefied natural gas, wood and wood products, palm oil, rubber, textiles, chemicals, solar panels
Leading Suppliers (2023): China 19.9%, Singapore 10.8%, US 8.4%, Japan 7.6%, Thailand 5.8%, South Korea 4.5%, Indonesia 4.4%
Leading Imports – Commodities: Electronics, machinery, petroleum products, plastics, vehicles, iron and steel products, chemicals
Top Industries: Rubber and oil palm processing and manufacturing, petroleum and natural gas, light manufacturing, pharmaceuticals, medical technology, electronics and semi-conductors, timber processing, logging, agriculture processing
Top Agricultural Products: Rubber, palm oil, cocoa, rice, timber, pepper
Comparative Economic Indicators – 2023
| Malaysia |
|
Philippines | Singapore | Thailand | Vietnam | |
| Population (millions)* | 31.8 | 262.7 | 105.8 | 5.9 | 68.6 | 97.0 |
| Population growth rate (%)* | 1.3 | 0.83 | 1.55 | 1.79 | 0.29 | 0.9 |
|
Age Structure (%)
(15 to 64 years old) |
66.17 | 68.11 | 62.32 | 77.19 | 72.30 | 70.39 |
|
Age Structure (%)
(65+ years old) |
6.35 | 7.26 | 4.61 | 10.03 | 10.97 | 6.35 |
| Literacy (%) | 94.6 | 95.4 | 96.3 | 97.0 | 94.1 | 94.5 |
| Unemployment rate (%) | 3.4 | 5.4 | 5.7 | 9.1 | 1.7 | 2.2 |
| Inflation (%) | 3.8 | 3.8 | 2.9 | 0.6 | 0.7 | 3.5 |
| Population below poverty line (%) | 3.8 | 10.9 | 21.6 | n/a | 7.2 | 8.0 |
| GDP** (USD billion) | 933.3 | 3,250.0 | 877.2 | 528.1 | 1,236.0 | 648.7 |
| GDP real growth rate (%) | 5.9 | 5.1 | 6.7 | 3.6 | 3.9 | 6.8 |
| GDP per capita** (USD) | 29,100 | 12,400 | 8,400 | 94,100 | 17,900 | 6,900 |
| Public debt (% of GDP) | 54.1 | 28.8 | 39.9 | 111.1 | 41.9 | 58.5 |
| Industrial production growth rate (%) | 5.0 | 4.1 | 7.2 | 5.7 | 1.6 | 8.0 |
| Exports (USD billions) | 187.9 | 168.9 | 48.2 | 396.8 | 235.1 | 214.1 |
| Imports (USD billions) | 160.7 | 150.1 | 89.39 | 312.1 | 203.2 | 202.6 |
| Reserves of foreign exchange and gold (USD billions) | 102.4 | 130.2 | 81.59 | 279.9 | 202.6 | 49.5 |
| Currency | Ringgit MYR |
Rupiah IDR |
Peso PHP |
Dollar SGD |
Baht THB |
Dong VND |
| Exchange rates (per USD) 10/23/2023 | 4.17 | 14,268.95 | 52.38 | 1.39 | 30.86 | 23,206.0 |
| Exchange rates (per EUR) 10/23/2023 | 4.63 | 15,827.83 | 58.10 | 1.54 | 34.23 | 25,741.26 |
Economic Data from CIA World Factbook
Credit and Collections
Dispute Resolution
Malaysia is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Risk Assessment
Coface Country Risk Rating: A2 — The overall risk is a combination of business-specific factors and factors relating to the country in which the business operates. The analyses use a seven-level ranking. In ascending order of risk, these are: A1, A2, A3, A4, B, C and D.
Coface Business Climate Rating: A3 — Evaluating the business environment involves measuring the quality of a country’s private sector governance. In other words, businesses’ financial transparency and the effectiveness of the courts in settling debts.
Business Climate
An impediment to economic growth is Malaysia’s complex network of racial preferences to promote the acquisition of economic assets by the native Malays. It should also be noted that a number of restrictions exist on the operation of foreign investors in Malaysia; however, the government continues to liberalize and remove investment restrictions.
According to the 2023 Index of Economic Freedom, Malaysia’s economy is 67.3% free, making it the world’s 42nd freest economy. It ranks 8th freest out of 39 countries in the Asia-Pacific region, and its overall score is higher than the regional average.
Corruption: The centralized Malaysian political system suffers from bureaucratic delays, which generate many opportunities for corruption. In Transparency International’s 2022 Corruption Perception Index, Malaysia received a score of 47/100, ranking at the 61st least corrupt nation out of 180 countries in the index.
Business Protocol
- Shaking hands with a member of the opposite sex is not common in Malaysia. Always wait for a Malaysian woman to extend her hand first.
- Most business-people should be addressed with a title and name. If a person does not have a professional title, like “Professor”, “Doctor”, “Engineer” etc., a Westerner may use courtesy titles such as “Mr.” or “Mrs.”
- Business cards should be printed in English. Since a high proportion of Malaysian business-people are Chinese, it will be an asset to have the reverse side of your card translated into Chinese. Gold ink is the most prestigious color for Chinese characters. Ensure that your business card outlines your education, professional qualifications, and business title. After the necessary introductions are made, offer your card to everyone present. Present your card with both hands. Do not write on another person’s business card.
- Standard formal office wear for men is dark trousers and a light-colored long-sleeved shirt and tie, without a jacket. Suits are worn during presentations and formal meetings. Standard business attire for women includes dresses and light-colored, long-sleeved blouses and skirts. Pantsuits or slacks may be inappropriate in some Malaysian offices. Women must be sensitive to Muslim and Hindu beliefs, and, consequently, wear blouses that cover at least their upper arms.
- When answering a question that requires a decision, Malaysians are often quick to answer “yes”, even if they don’t mean it. This is because they must find a way to deliver the “no” politely, without “loss of face.” Qualified answers are usually an indication of a “no.” For example, an answer of “Yes, but…” means “no”, as does “That might be difficult…”
- Establishing a productive business relationship requires a long-term commitment and you will have to be prepared to make several trips to Malaysia before the decision-making stage. Expect negotiations to be slow and protracted.
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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries. For further information, contact [email protected].