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Malaysia - Moving Forward Up the Global Value Chain

Sound economic policies and a focus on high-value activities puts Malaysia in an advantageous position for future growth.

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The government has a long-standing policy of encouraging foreign investment into Malaysia. Although Malaysia is seeking to promote domestic investment and home-grown companies, the government has no intention of reducing foreign investment inflows. The development of domestic players as being highly complementary to the global supply chain of established global corporations specifically welcomes partnerships in value-added activities such as agriculture, manufacturing, and manufacturing related services.

Shared services outsourcing (SSO) has also become a critical element in today's business world. The fastest growing segment of the SSO industry is the outsourcing of business operations offshore, especially to countries where cost of operations is lower. Already today, Malaysia shines because it can offer cutting-edge sophistication at a fraction of the cost comparable with the lowest overall cost in the region.

Today, many international corporations have made Malaysia their center for shared services, particularly to consolidate services for their branches and subsidiaries in the Asia-Pacific region. These include Hong Kong and Shanghai Banking Corporation, DHL, BMW, Shell, Intel, IBM, and Ericsson. Being in a strategic location in the ASEAN and East Asian region also stands Malaysia in good stead to be a competitive regional hub.

These firms are experiencing for themselves what Frost & Sullivan, A.T Kearney, and as McKinskey & Co have reported - that Malaysia is a global leader in SSO operations and has consistently been ranked as the third-most attractive destination for SSO behind only India and China. Malaysia has expertise in niche sectors such as finance, energy logistics, and technology, thus enabling Malaysia to deliver high-quality, specialized services compared to other destinations that offer generic services and solutions providing a higher level of service and advanced solutions that meet the increasingly complex sourcing and multi-sourcing needs of global companies.

The SSO industry in Malaysia is expected to yield US$2 billion in revenue and employ more than 300,000 people by 2012
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