Trade relations between China and Malaysia are looking strong and investment opportunities abound in Malaysia as a result. 

During a six day official visit by Malaysia’s Prime Minister Najib Razak to Beijing late last year, a total of 14 deals worth 144 billion ringgit ($33.5 billion) were signed between the two countries. The majority of those agreements were related to infrastructure.    

“Malaysia is strategically located in the heart of Southeast Asia and has always been perceived to be the ideal gateway to access ASEAN's population. Apart from its ability to provide comprehensive infrastructure such as high-speed Internet, international airports, seaports and so on, Malaysia also offers a variety of business-friendly policies, tax relief/exemption incentives, an affordable business environment as well as a cost-effective workforce,” says Lee Kien Han, managing partner of Malaysian law firm Han & Partners.  

According to numbers from the World Bank and the Statistics Department of Malaysia, state-owned Chinese firms have constructed and invested in $35.6 billion worth of projects in Malaysia from 2010 to 2016. 

Imports of contractors' plant and equipment from China amounted to almost 883 million ringgit during a gold rush of Chinese construction firms entering the Southeast Asian nation in 2014.

And it’s continued to be healthy. Steel imports from China to Malaysia amounted to 8 percent of China’s import total last year. Malaysia’s steel needs are estimated to be at 10 million tonnes a year.  

“These factors have effectively made Malaysia an attractive investment destination for foreign investors, in particular to Chinese investors as the recent collaborations between Malaysia and China under the ‘One Belt, One Road’ initiative has further widened and made available potential business opportunities between the two countries,” says Lee.

Driven by the Belt and Road Initiative, China and Malaysia are in the process of forming a cooperative “port alliance” to hasten trade flows through raising customs efficiency. The Malaysian-China Kuantan Industrial Park serves as an “Iconic Project for Bilateral Investment Cooperation” and testing ground for joint customs clearances between the two countries.  

Malaysia is also working hard on its infrastructure development. This push could open up more investment opportunities.  

“With the commitment by Malaysia’s government to join the ranks of developed countries by 2020, Malaysia has strived to enhance its infrastructure. Examples include the East Coast railway line and the tech hub of Cyberjaya City Centre,"  says Alvin Lee Sze Chang, an associate with the Chinese practice group of Han & Partners. "Therefore, the infrastructure sector, construction sector and real estate sectors are among other sectors likely to benefit from such an initiative.”   

“In view of the stability of Malaysia’s economy and improving market sentiment in the current year, backed by the recovery of the Malaysian Ringgit and strong gross domestic product (GDP) growth, now is the suitable time for investors to invest in Malaysia,” he adds. 

However, Lee cautions that the volatility of the Malaysian ringgit may be a challenge for investors to manage and project their operation costs and business revenues, especially for investors who are heavily involved in export-import businesses. 

INVESTING EASIER

With opportunities opening up, investing in Malaysia has also been made easier.  

“Malaysia’s new Companies Act 2016 has taken significant measures to simplify the investment process, especially those involving the incorporation of a company in Malaysia or dealing with a company incorporated in Malaysia,” says Chiam Jef Fri, an associate with the Chinese practice group of Han & Partners.

He adds that the legal process for investing in Malaysia varies depending on the type of investment. Generally, different types of investment come with separate procedures, guidelines and regulations given that they are governed under different sets of legislations. 

“Therefore, it is prudent for the investors to seek for proper legal advice from legal counsels or other relevant experts in Malaysia before carrying out any investment in Malaysia to ensure that their rights are protected and that all procedures and relevant rules and regulations are complied with,” says Chiam.

"Apart from the supportive pro-business government policies and attractive tax holidays, one major factor that has made things easier for investors from China to invest in Malaysia is language," adds Gan Chong Chieh, a senior associate and head of the China desk at MahWengKwai & Associates. 

"Since many Malaysians are conversant in Chinese, it effectively eliminates the language barrier faced by Chinese investors. Not many countries in the Belt and Road Initiative have a language advantage like Malaysia,” he says. 

Gan cites the strong legal support services in the country as a plus  

"The Supreme People's Court of China has indicated strong support for the use of arbitration to resolving cross-border disputes connected with the Belt and Road Initiative. The KLRCA (Kuala Lumpur Regional Centre for Arbitration) is a leading arbitration center in Malaysia and has had events focusing on the Belt and Road Initiative over the last year," says Gan. 

"Additionally, some mid to large law firms like ours have formed a one-stop China desk to cater for international trade and investments."

Chiam of Han & Partners adds that the legal process for investing in Malaysia varies, depending on the type of investment. 

"Generally, different types of investment come with separate procedures, guidelines and regulations given that they are governed under different sets of legislations," says Chiam. “Therefore, it is prudent for the investors to seek for proper legal advice from legal counsels or other relevant experts in Malaysia before carrying out any investment in Malaysia to ensure that their rights are protected and that all procedures and relevant rules and regulations are complied with.” 

With such strong supporting factors, it's little wonder that Malaysia is highly regarded as a prime investment hub.

"Malaysia was ranked second in ASEAN in the World Bank’s Doing Business Report 2017 and 23rd overall, among 190 economies globally," says Gan. "A survey by BAV Consulting and the Wharton School at the University of Pennsylvania declared Malaysia to be the 'Best Country to Invest In.’ The accolades speak for themselves."