Malaysia

CPTPP and Opportunities for Businesses in ASEAN

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By: Vasundhara Rastogi

ASEAN Briefing- Comprehensive Progressive Agreement for the Tran-Pacific Partnership Way Ahead (002)

Following the withdrawal of the United States from the Trans-Pacific Partnership (TPP), the 11 remaining signatories of the TPP agreed to move ahead with a revised TPP.  The rechristened Comprehensive Progressive Agreement for the Tran-Pacific Partnership (CPTPP) was formally signed on March 8, 2018, and will enter into force as soon as at least six out of 11 member countries ratify it.  The 11 member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

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French FDI in ASEAN Part I: Singapore, Malaysia and Vietnam

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Editor: Thibaut Minot

The business environment of the Association of Southeast Asian Nations (ASEAN) has become increasingly favorable for foreign investment in recent years. 2014 was an exceptional year in terms of FDI, which gave way to a slightly less impressive  2015 despite significant FDI flows of about EUR102 billion (US$126.7 billion). FDI flows remained strong in the areas of finance and infrastructure and strengthened in the manufacturing sector. France’s FDI was no exception: the French FDI stock in ASEAN reached EUR17.4 billion (US$21.6 billion) at the end of 2015, with a penchant for large markets (Malaysia, more than EUR 104.7 million) and those with development prospects (Vietnam, more than EUR 81 million).

This is due to the willingness of governments in ASEAN states to promote foreign investment and the increasingly visible economic developments in the region. The weakening of the Chinese and Brazilian markets, the creation of the ASEAN Economic Community in December 2015, and the streamlining of the regulatory landscape greatly improved the perception of investors. Be it SMEs or multinationals, they now want to expand their presence in the economic region through the creation of various investment routes, production networks and regional headquarters. Despite being rich in opportunities, ASEAN remains a difficult region to define. It is therefore crucial to understand the different advantages and disadvantages that each country offers and to choose accordingly.

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Malaysia’s Digital Free Trade Zone

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By: Vasundhara Rastogi

Malaysia’s Digital Free Trade Zone (DFTZ) went live in November 2017 as a joint undertaking between the Malaysia Digital Economy Corporation (MDEC) and China’s Alibaba Group. It seeks to establish Malaysia as a leading logistics center for global marketplaces by opening opportunities for companies both in Malaysia and other ASEAN countries to leverage a platform that enhances competitiveness and market access. Besides, it aims to develop an internet ecosystem in the country that drives innovation in e-commerce and digital economy.

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Malaysia’s Investment Outlook for 2018

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By: Vasundhara Rastogi

Malaysia is the fourth largest economy in Southeast Asia known for its high labor productivity and diversified economy. Over the years, the country has transformed itself from being a primary commodities exporter into a leading exporter of electrical appliances, electronic parts, and components and natural gas. Moving up the industrial value chain, it has also established itself as an attractive regional hub for services, information and technology, and the logistics sector.

The service sector assumes the largest share of gross domestic product (GDP) accounting for more than 54 percent of GDP and serves as the engine of growth to propel and sustain the country’s economy. Manufacturing, on the other hand, contributes about 23 percent to the GDP. Some of the other major economic activities in Malaysia include the mining and agriculture sectors. In 2017, the service sector is projected to grow at a faster rate – approximately 6 percent, reflecting stronger expansion across most sub-sectors, particularly wholesale and retail trade, information and communication, and food, beverages, and accommodation, and increasing its share to 54.8 percent of GDP.

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Malaysia Foreign Knowledge Worker Projections for 2018

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

The Malaysia Digital Economy Corporation (MDEC) on December 8, 2017 began accepting requests for foreign knowledge worker (FKW) projections. In Malaysia, companies registered with the MDEC must seek FKW projection approval in advance before applying for visa application (new or renewal) for their foreign employees.

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Malaysia’s 2018 Budget: Salient Features

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

ASB- Malaysias 2018 Budget (002)

On October 27, 2017, Malaysia’s Prime Minister Najib Abdul Razak tabled the country’s much anticipated 2018 budget. The new budget is in line with the government’s agenda to achieve Transformasi Nasional 2050 (TN50) or National Transformation 2050; TN50 is a 30 year-plan,first introduced in the budget 2017,that aims to make Malaysia one of the world’s top 20 countries by 2050.

Termed as a generous and people friendly budget, the proposed allocation for 2018 stands at RM280.25 billion (US$66.3 billion) – a rise of 7.5 percent from 2017. The Malaysian government has proposed several tax incentives for investors and venture capital firms in the 2018 budget. In this article, we look at the salient features of the budget and their implications for businesses.

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Malaysia-Thailand Trade and Economic Relations

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By Dr Sarika Dubey

Editor’s Note: This article was originally published in The Diplomatist Magazine, June 2017, and has been republished with the permission of L.B. Associates (Pvt.) Ltd., a contract publishing house.

Malaysia and Thailand, both active members of the Association of Southeast Asian Nations (ASEAN), enjoy cordial diplomatic relations and share strong bilateral ties in areas such as trade and investment; security; education and vocational training; youth and sports; tourism; and connectivity and socio-economic developments in border areas. Both countries like any other countries in the region. Though both countries share a land border, yet they are culturally distinct. Malaysia is a primarily Malay Muslim country with a multicultural character with some non-Muslim minorities. On the other hand, Thailand is a homogenous Thai Buddhist country with a small Muslim community, especially in its southern region bordering Malaysia. Before discussing the problems and the prospects of the trade and economic relations of the two countries, let us have a look at their historical, political and cultural linkages over the years.

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Malaysian Labor Contracts: What You Need to Know

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By: Dezan Shira & Associates

Editor: Bradley Dunseith

ASB- Malaysian Labor Contracts (002)

Malaysia continues to be an attractive FDI destination in South East Asia, offering foreign investors a skilled workforce at competitive rates. However, in the regional context, as Chet Scheltema, Regional Director of Dezan Shira & Associates, notes, “historic sensitivity to abusive labor practices, and in some cases combined with the influence of litigious jurisprudence, has led to an environment where foreign investors are advised to tread cautiously and lay a solid foundation for human resources management, lest they run afoul of local labor laws or trigger costly labor disputes. One pillar of this firm foundation is typically a well-crafted employment contract.”

As such, Malaysia as well as some of its fellow members within ASEAN, including Indonesia and Vietnam, distinguish themselves by mandating a formal, written labor contract signed by the parties. When drafted with a strong understanding of Malaysia’s regulatory landscape and labor laws, these formal contracts can serve as an opportunity for foreign investors to establish a firm foundation for human resources management in the country.

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Import and Export Procedures in Malaysia – Best Practices

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By Bradley Dunseith

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Nestled between the South China and Andaman Seas, Malaysia is a historic trading center and strategic operating location – bordering Brunei, Indonesia, Singapore (via bridge), and Thailand by land and the Philippines and Vietnam by sea.

In 2015, Malaysia exported US$254 billion and imported US$175 billion worth of goods and services. Malaysia continues to liberalize its import and export regulations; but, complex goods-specific rules still exist. In this article, we explain best practices for importing into and exporting out of Malaysia.

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Individual Income Tax in Malaysia for Expatriates

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HR-Payroll-Cover-300-230By Dezan Shira & Associates
Editor: Ellena Brunetti

Revised and Updated by Bradley Dunseith

Malaysia uses both progressive and flat rates for personal income tax, depending on an individual’s duration and type of work in the country. As expatriates may fall into either tax category depending on their work, it is important to understand Malaysia’s basic tax structure. 

The Income Tax Act of 1967 structures personal income taxation in Malaysia, while the Malaysian government’s annual budget can change the rates and variables for an individual’s taxation.

In this article, we explain how expatriates should calculate their individual income tax in Malaysia. We highlight exceptions to tax rates and penalties for noncompliance.

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