Multinational Companies in Malaysia

Multinational Corporation (MNC) is an enterprise operating in several countries but managed from one (home) country. Generally any firm or group that derives a quarter of its revenue from operations outside of its home country is considered a MNC.

Malaysian government’s initiative to create a viable business environment with opportunities for growth and profits has made Malaysia one of the most promising manufacturing and export base in the region. Malaysia ranks as among the world's top 20 attractive countries for foreign direct investment (FDI), according to the World Investment Prospects Survey 2007-2009 FDI by the United Nations Conference on Trade and Development (UNCTAD).

 

Multinational corporations from more than 60 countries have invested in over 3000 companies in Malaysia’s manufacturing sector, attracted by the conducive business environment which has resulted in the country being one of the most prominent destinations for manufacturing and service based operations. The increasing trend of outsourcing of core as well as non-core activities by large MNCs, open greater investment opportunities in the provision of support services.

 

A major factor that has attracted investors to Malaysia is the government's commitment to maintain a business environment that provides companies with the opportunities for growth and profits. This commitment is seen in the government's constant efforts to obtain feedback from the business community through channels of consultation such as regular government-private sector dialogues. These allow the various business communities to air their views and to contribute towards the formulation of government policies which concern them.

 

Generally, foreign investors in Malaysia's manufacturing sector can hold 100% equity in projects which export at least 80% of their production. However, effective from 17 June 2003, 100% foreign equity holding is allowed for all investments in new projects, as well as investments in expansion/diversification projects by existing companies irrespective of their level of exports.

 

Malaysia's company tax rate is attractive at 27% in2007; 26% in 2008 and further cut to 25% in 2008 is applicable to both resident and non-resident companies. Malaysia also offers a wide range of tax incentives for manufacturing projects under the Promotion of Investments Act 1986 and the Income Tax Act 1967.

 

The main incentives are the Pioneer Status, Investment Tax Allowance, Reinvestment Allowance, Incentives for High Technology Industries and Incentives for Strategic Projects and Incentives for the Setting-up of International/ Regional Service-based Operations permanently filled by foreigners. In addition to that, single-tier tax system will be effective from the year of assessment 2008.

 

Employment and Labor Market
Malaysia offers investors a young, educated and productive workforce at very competitive costs. Malaysia's literacy rates are high at more than 94% and school leavers entering the job market have at least 11 years of basic education.