Doing Business in Malaysia

The bilateral Malaysia-Australia Free Trade Agreement (MAFTA) guarantees tariff-free entry for over 97% of our current exports to Malaysia.

Malaysia is one of the ASEAN region's largest economies. Australia and Malaysia share a strong economic relationship, with the latter being Australia's ninth largest trading partner. 

In 2012, the two governments signed the bilateral Malaysia-Australia Free Trade Agreement (MAFTA), which guarantees tariff-free entry for 97.6% of our current exports to Malaysia. This percentage is expected to rise by 2017. Malaysian exports to Australia are similarly duty free.

MAFTA gives Australian business increased access to Malaysia's high-middle income, export oriented economy and favourable business climate. To further improve its business environment, the Malaysian government has relaxed foreign ownership laws in the manufacturing sector. It has also introduced a range of incentives to attract investors to invest in infrastructure. It has also recently implemented liberal changes to the financial services sector to attract international players.

Consider some key facts:

  • Malaysia was the world’s 35th biggest economy in 2015, with a gross domestic product (GDP) of just under USD300 billion.
  • In terms of purchasing power parity, Malaysia is the third most prosperous nation in Southeast Asia, behind Singapore and Brunei.
  • Although GDP growth slowed in late 2015, the rate still stood at an impressive five per cent.
  • Malaysia’s government expects the country’s burgeoning middle class to grow from its current 40 per cent of the population to 45 per cent by 2020. 
  • Average household incomes in Malaysia increased by 52 per cent between 2009 and 2014, to a value of MYR 6,141 ($2,103). 

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Doing Business in Malaysia

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  • Why do business in Malaysia?

    MAFTA gives access to Malaysia's high-middle income, export oriented economy.

    Malaysia is one of the ASEAN region's largest economies. Australia and Malaysia share a strong economic relationship, with the latter being Australia's ninth largest trading partner. 

    In 2012, the two governments signed the bilateral Malaysia-Australia Free Trade Agreement (MAFTA), which guarantees tariff-free entry for 97.6% of our current exports to Malaysia. This percentage is expected to rise by 2017. Malaysian exports to Australia are similarly duty free.

    MAFTA gives Australian business increased access to Malaysia's high-middle income, export oriented economy and favourable business climate. To further improve its business environment, the Malaysian government has relaxed foreign ownership laws in the manufacturing sector. It has also introduced a range of incentives to attract investors to invest in infrastructure. It has also recently implemented liberal changes to the financial services sector to attract international players.

    Looking to expand your knowledge further? Discover the Asian business events and relevant research & resources to help realise your opportunities in the Asian markets.

  • Opportunities for Australian businesses in Malaysia

    Malaysia has liberalised 17 services sub-sectors.

    ICT – The information communications technology market is a competitive one, but there are opportunities in mobile content, broadband, cloud computing, financial and health systems and more.

    Infrastructure, building and construction – The scope here is broad, a result of market demand, government initiatives and incentives and a lack of expertise in certain areas in the market. Australian companies are well placed to take advantage of the many gaps between supply and demand in the Malaysian market.

    Wine – Despite a competitive environment and extensive tariffs, duties and regulations, Australian wines are the current market leader in what is a growing wine drinking culture. It should be noted though that over 60% of the population is Muslim, and no alcohol-related marketing should be directed to this segment.

    Aged care – There is a strong demand in the market for aged care facilities, services and expertise by the general public, private and public sectors that is significantly unmet in Malaysia. Opportunities exist in aged care facilities and retirement homes, in-home facilities and systems and acute care.

    Agriculture – Australian agriculture has an excellent reputation in Malaysia, and Australia will have an important part to play in assisting Malaysia with initiatives in sustainable agriculture, food safety and security and self-sufficiency in agricultural produce and food supplies that arise from MAFTA.

    Business services – Malaysia have liberalised 17 services sub-sectors, allowing international companies to move into areas like telecommunications, education, hospitals, medical and dental clinics, department and specialty stores, legal, architectural and engineering and more.

    Food and beverage – Opportunities exist in food and beverages, and food services, education and training. Halal food is also a growing industry, and Australian exporters should familiarise themselves with Malaysia's Halal guidelines.

    Health and medical – Australian health and medical services will find opportunities in specialised medical equipment, medical tourism products and services, health and dietary supplements, aged care facilities and services and specialised medical education and training.

  • Business etiquette in Malaysia

    Business in Malaysia is personal and based on trust.

    • Gifts are not usually exchanged as they may be perceived as a bribe. If you are presented with a gift, accept it with both hands and do not open it in front of the giver. Be sure to reciprocate with a gift of equal value in order to avoid loss of face.

    • Be patient, polite and calm during business negotiations. The process is often a long and detailed one that should not be hastened.

    • Don't assume that a signed contract is the end of negotiations. It is common for negotiations to continue after a contract has been signed.

    • Bring plenty of business cards. Present and receive them using both hands, and handle them carefully.

    • Accept food that is offered to you. More than 60% of Malays are Muslim and follow a Halal diet, so they do not eat pork or drink alcohol – hence most restaurants in Malaysia are halal. Most Indians in Malaysia do not eat beef, and some are vegetarian. If you are arranging a dinner, vegetables, chicken, lamb and fish are good choices.

    • Business in Malaysia is personal and based on trust. Developing relationships, rather than exchanging facts and information, is the one of the main objectives of communication, and you may be asked many personal questions.

    • Direct answers, particularly negative ones, are avoided in order to prevent disagreement and preserve harmony.

    • Be mindful of your tone of voice, body language, eye contact and expression as Malaysians will watch these closely.  As with many other Asian cultures, never publicly criticise or contradict anyone, refer to a mistake, show anger or disagree with a business contact – this is known as losing face.  Causing your Malaysian contact to lose face – even accidentally – may result in a negative business outcome. 

    • In meetings, men should wear a long sleeve shirt and tie. Women are able to wear formal trousers or skirts. You do not need to wear stockings, however you should avoid showing too much flesh. A jacket is often necessary for evening dinners and other formal events.

    • If you receive an invitation with the wording 'long sleeve batik', this refers to a men's batik silk shirt, which is accepted as formal wear. The alternative here is business wear or evening wear for women.

    • A firm handshake is the usual form of greeting. Men should only shake hands with a woman if she initiates the greeting – if she does not, a simple nod of acknowledgement is best.

    • Malaysians will address you as Mr or Mrs unless you insist otherwise – you should initially do the same. There are a few different forms of address, some of which are dependent on race, so it is best to be formal and to address them in the same way they introduce themselves, until you are advised otherwise.