Malaysia is a multi-ethnic society of 28.4 million and the country has remained in a strong economic position in spite of the economic downturn and it aims to achieve Developed Nation status by 2020. It’s also one of the world’s best spots for offshore manufacturing and service-based ventures.
And, much like Singapore, it’s strategic position between the Indian Ocean and the South China Sea makes it popular with investors.
Trade between the UK and Malaysia is worth around £8 billion, making it the UK’s second largest trading partner in the Association of Southeast Asian Nations (ASEAN). If you’re interested in doing business in Malaysia, the top five sectors for trade are:
- machinery and transport equipment
- manufactured goods
- chemical and related products
- crude and fuel
- food, beverages and tobacco
Here’s everything you need to know about exporting to Malaysia…
Where is Malaysia?
Malaysia is in southeast Asia and is the only country with territory in both the Malay archipelago and on the Asian mainland. Its capital, Kuala Lumpur, is around 6,500 miles from London with regular flights departing from the UK.
The national language is Malaysian the currency is the Malaysian ringgit, and the dialling code is +370.
The pros and cons of exporting to Malaysia
More than 5,000 Malaysian businesses benefit from investment from overseas multinational companies, making the country one of the world’s leading locations for offshore manufacturing.
The Malaysian market has many strengths, notably:
- excellent infrastructure and transport connectivity
- well developed financial sector
- cost-effective gateway into to Asian markets
And the benefits to UK businesses trading in Malaysia include:
- English speaking, educated workforce
- current exchange rate makes UK products and services attractive
- strong historical and cultural ties
- similar business and legal practices
- similar technical standards
- close to major Asia Pacific economies
It’s not without its challenges though, and you could encounter the following problems:
- public procurement process not transparent
- ranked in top third of countries in Corruption Perceptions Index
- a weak competitive environment (including policies that favour Bumiputera, the indigenous Malaysians)
- Malaysian talent often moves abroad for work.
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How does tax work in Malaysia?
The main tax rates in Malaysia are:
- VAT – known as Goods and Sales Tax (GST) and charged at a standard rate of 6%. GST replaced Sales and Services tax on April 1, 2015. Foodstuffs remain largely exepmpt from GST
- Corporation tax – charged at 24%
- Income tax – charged between 0% and 26%, depending upon income.
How will I be affected by customs in Malaysia?
Tariff duties range from 2% to 60%, with the highest duties levied on ‘luxury’ items, as well as any that are deemed to be in direct competition with locally produced goods.
Import licences are required for certain controlled items, and there is a restrictive import licensing system that will affect the import of heavy construction equipment, electrical household appliances, and iron and steel products.