Business

Foreign Direct Investment in Malaysia

The French economic presence in Malaysia has grown considerably and has diversified accordingly business sectors. The businesses types are expanded in several areas in the Malaysian country.

In addition, the attractiveness of Malaysia, encouraged by a public policy supporting foreign direct investment, is based on four factors: a central geographic position in Southeast Asia, a stable institutional framework and a secure legal environment, infrastructure modern and skilled workforce, speaking English and technophile. At the regional level, Malaysia is the 4th country of investment in stock of inward Foreign Direct Investment abbreviated FDI equivalent to $ 140 billion, after Singapore that values $ 1,285 billion, Indonesia with a price of $ 248 billion and Thailand that is up to $ 219 billion.

 

Business creation in Malaysia and its advantages

 

In this favorable environment, French Foreign Direct Investment or FDI in Malaysia has tripled since 2010 to reach € 1.3 billion at the end of 2017. However, according to the Malaysian Statistics Department, French investments represent only 1.1% of the Foreign Direct Investment stock in Malaysia in 2017 and France is the 19th foreign investor there, the 4th European.

Know that more than 280 French entities are registered in the country by SSM procedure, mainly subsidiaries of large groups and medium-sized business. These entities employed more than 25,000 peoples at the end of 2016, for an aggregate annual turnover of € 4.3 billion and an indirect effect on the local economy of € 2.1 billion. Apart from that, the manufacturing sector represents 37% of the combined turnover, with 32% of services and 28% of construction services.

 

Examples of French business installed in Malaysia

 

Major groups include the following corporations: Accor, Air Liquide, Airbus, Axa, BNP Paribas, Bouygues-Colas Rail, Danone, Engie, Essilor, LafargeHolcim, Legrand, L’Oréal, LVMH, Michelin, Orange, Pernod Ricard, PSA, Renault, Saint-Gobain, Schneider Electric, Société Générale, TechnipFMC, Total, Valeo, and Vinci.

 

Sector subdivision when creating business in Malaysia

 

First of all, to create business according SSM standards, it is compulsory to follow certain recommendations such as choose the sector of business desired by the author of the business. For more information, check out this SSM Malaysia guide.

Approximatively 65% of French investments in Malaysia are in the sector of manufacturing industry. In this sector, STMicroelectronics, Schneider Electric and FCI Connectors have been established in Malaysia more than 30 years through the establishment of production units. France has been involved in oil and gas engineering.

Besides, Total Exploration & Production holds interests in exploration permits and produces, through its subsidiary SunPower, solar panels in the state of Malacca. Lastly, Air Liquide opened in 2018 an innovative engineering center enabling remote control of the twenty or so industrial sites served by the group in Asia-Pacific.

 

In the financial sector, Amundi, BNP Paribas, Société Générale and also Mazars are well established. BNP Paribas is the only French bank to have a full banking license, obtained among the five authorizations granted to foreign banks in 2010. Axa, JV partner at the bank Affin Holdings, is now one of the five largest companies in insurance in the country, where the insurance company relocated in 2018 an IT center of shared services, on the outskirts of Kuala Lumpur, covering Asia.

 

In the construction sector, Lafarge-Holcim is the most active foreign company on the construction market, listed on the Kuala Lumpur stock exchange, through its fifteen local subsidiaries including cement, aggregate, and concrete. The group Lafarge-Holcim has participated in major infrastructure contracts, and exports 20% of its production in the local area.

 

French companies promote Kuala Lumpur and its periphery, the state of Selangor and that of Johor, neighboring Singapore territory. Kuala Lumpur mostly attracts companies in the tertiary sector nearly 80% of French companies in this sector while the State of Selangor brings together light industries and construction. The state of Johor welcomes groups from the electrical and electronic goods sector, attracted by the proximity to Singapore.

 

Economic opportunity of creating business in Malaysia

 

A French community that is growing due to economic opportunities.

The established French population in Malaysia has doubled since 2010, with approximatively 3,500 French people registered, their total number probably rising to nearly 4,000, including 52 international volunteers abroad abbreviated VIE. The French community in Malaysia is mainly made up of workers employed in industry and services. It is the 6th largest in ASEAN after the French communities in Singapore, Thailand, Indonesia, Vietnam and Cambodia.

 

In addition to expatriates, Malaysia attracts French entrepreneurs, particularly involved in the sectors of business services, leisure and culture, catering, but also new technologies, with the beginnings of ‘a French Tech community seeking to benefit from the facilities set up by the authorities to promote the development of innovative companies.