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Malaysia, a country that has experienced robust growth rates, but also some growing pains. Malaysia has been benefiting from favorable fundamentals generally in Southeast Asia and the 10 states comprising the Association of Southeast Asian Nations (ASEAN), including a youthful demographic and an expanding middle class. Malaysia also has very good relationships with all countries worldwide. Malaysia has no wars or bad situations with any of its neighbors. This is very unusual and is due to the good diplomacy of the Malaysian government. Malaysia’s old system of subsidies, while popular with the people, created a drain on government resources. Malaysia has set an ambitious goal of achieving “high-income” status by 2020, a standing the World Bank uses to define developed markets.
Malaysia is running a fiscal deficit, and there is concern it could find itself with a current account deficit as well. There will be a few bumps that can impact this vision, and some policies will not be particularly popular with the people—including not only removal of subsidies but also the implementation of the GST, planned for April 2015, which replaces Malaysia’s 10% sales tax and 6% service tax with a flat 6% tax across nearly all goods and services at each stage of the supply chain. Hence, the government has been making strides at avoiding this “twin-deficit” scenario, including removing some long-standing subsidies.
Malaysia is one of the investments destinations in the world.
There are many investors coming to this country to invest in the property, stock market, industries, and many other sectors. There are some of the factors that make property investment in Malaysia attractive:
• Malaysia have a robust and stable economy, in dynamic growth Asia
With a GDP growing by around 6% in recent years, it gives confidence to invest in Malaysian assets.
• Rapid population growth in Kuala Lumpur
Kuala Lumpur recorded an average 50% population growth every 20 years, and is one of the growing cities in Asia
• Undervalued Ringgit
The Malaysian currency is the4th most undervalued currency in the world and is 46% undervalued relative to the US Dollar, according to the July 2012 Economist Big Mac Index.
• Savings on low property gains taxes
With a present 0-15% RPGT of the capital gain, it is relatively attractive.
• Relax investment rules compared to other Emerging Markets
With a liberal property-ownership regulations for foreigners who want to invest in Malaysia, it is becoming easier to buy property here.
• Increasingly Wealthy Population
Demand for property and real estate requirements are growing at a high pace with more increasingly-wealthy population
• Increasing international interest in Malaysian real estate, particularly from the Middle East
Malaysia is the only country in South-East Asia which offers both conventional and shariah-compliant financing
Prominent fund manager Mark Mobius expects utilities to be one area which could potentially benefit as subsidies are lifted and profitability may improve as a result. In his blog on Investing in Malaysia: The importance of stock picking, he said it was important for investors in Malaysia to be selective, particularly given that valuations had been higher than in some other Asian markets, while at the same time, performance had generally been somewhat disappointing.
“One area of focus is smaller companies that we think have potential for growth, but that have been generally overlooked by other investors.”
“Lower oil prices are likely to have a significant impact on its operations, and it looks to us like there will need to be some belt-tightening. Nevertheless, some fields in Malaysia are very low cost, at well below US$50 (RM172.40) per barrel. Therefore, lower oil prices don’t necessarily mean companies in the sector will be unprofitable,” he added. He said there would be a few bumps that could impact this vision, and some policies would not be particularly popular with the people – including not only removal of subsidies but also the implementation of the goods and services tax planned for April 2015, which replaced Malaysia’s 10% sales tax and 6% service tax with a flat 6% tax across nearly all goods and services at each stage of the supply chain.
“As investors, we have to maintain a long-term view and focus on companies we feel can survive and prosper amid changing conditions, and that fill an interesting niche. We also look for companies that have the potential to serve consumers not only in Malaysia but throughout the region, and even globally.
“Currently, we see Malaysia undergoing a period of transition, as old policies must evolve to meet future goals. I would describe our view of Malaysia today as cautiously optimistic – we are certainly hoping Malaysia succeeds in reaching its ambitious goals, and we plan to be there along the way,” he added.
Malaysia as the diamond in the rough with so many opportunities, however still has not yet been excavated due to the global plunging crude oil price which hit the economy badly and some inappropriate government policy. Malaysia should be seen as one of the potential market and government should impose some policies which is benefit for the FDI and Malaysians' living standard.
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