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Malaysia: a Profit Center for Global Manufacturers

Although Malaysia might have slipped under the radar for some site selectors, it has all the right ingredients to make it a global economic powerhouse in the years to come.

Jennifer LeClaire  (Jun/Jul 08)
(page 2 of 2)
American Companies Explain the Benefits
The investment climate in Malaysia doesn't have to speak for itself. American companies are speaking for it. Nick Zefferys, governor and past president of the American-Malaysian Chamber of Commerce (AMCHAM), points to initiatives like PEMUDAH, a special task force to facilitate business in Malaysia, as a boon for U.S. companies looking to set up shop there. PEMUDAH has reduced the paperwork and the red tape for FDI in Malaysia.

"Foreign companies used to have to fill out stacks of paper and make trips back and forth to wade through the bureaucracy," Zefferys explained. "Now, many of the unnecessary licensing procedures and outdated laws have been discovered and eliminated. Approvals are much faster because the delivery system is streamlined. What used to take months now takes days - and the government is committed to a policy of continual improvement toward being competitive."

Malaysia may be getting more competitive, but the country has always enjoyed political stability, an attribute that American companies cite again and again as a reason for locating and expanding there. A market-oriented economy with a well-developed financial and banking center and low overall inflation is another. There's also a developed infrastructure of well-maintained seaports, airports, highways, and railways, along with high-quality telecommunications networks, fully developed industrial parks - including free-trade zones - and an enviable quality of life.

Chow Chiu Mei, general manager of TRW Automotive, an automotive supplier headquartered in Livonia, Mich., said the telecommunications infrastructure in Malaysia is better than what China and Thailand have to offer, and qualified labor is available with low turnover. TRW employs 130 at its facility in Cyberjaya. "We've found the skills we need here, and the people are multi-lingual, which makes it easy to do business in multiple countries," Mei said, noting that the company employs Malays, ethnic Indians, and ethnic Chinese, all of whom also speak English.

Entegris, a materials integrity management company headquartered in Billerica, Mass., moved most of its production from Germany to Kulim, Malaysia, which is near the island of Penang. The company is also moving more of its U.S. production there. Entegris is located in the Kulim Hi-Tech Park. The park was opened in 1996 and is the first high-technology industrial park in Malaysia. The vision of the park is to become the "Science City of the Future." BASF, Fuji Electric, Infineon Technologies, and First Solar are also among the tenants.

"Malaysia is investor-friendly, with tax holidays and other incentives for firms expanding here," said Chai Eng Leng, plant manager for Entegris' Kulim facility. "We plan to move two or three of our product lines to our facilities here each year until the transition is complete."

Western Digital has been expanding throughout Malaysia for decades. Its U.S. headquarters are in Lake Forest, Calif., but the firm has facilities in Johor, Sarawak, Penang, and Kuala Lumpur to produce millions of hard drives for PCs, DVRs, game consoles, and MP3 players. "What's been most important to us is the economic stability and growth we've seen over the decades," noted Thomas Fong, director of finance for Western Digital. "It's too expensive for us to do most of our business in Singapore. Malaysia is more expensive than Thailand, but the knowledge workers here - along with the availability of power and water and the stable government - have caused us to continue to grow our operations in Malaysia."

With thousand of companies producing world-class products across Malaysia, it's almost difficult to call it Asia's best-kept secret. Still, with China and India getting so much media attention, Malaysia has slipped underneath the radar screen for many site selectors. But Malaysia has all the right ingredients that promise to make this nation a recognizable powerhouse of global trade in the years ahead. And as the "Gateway to Asia," Malaysia is poised to give foreign investors direct access to coveted markets with the lower risks that come with a political stability the country has enjoyed for 50 years.
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