Malaysia
Malaysia Country Snapshot S ize of the country
330, 113 sq. kms.
Population
27.2 million (2007)
Capital
Kuala Lumpur
Currency
Malaysian Ringgit (MYR)
1 USD = MYR (Average)
3.33 (2008)
Main macroeconomic indicators1: • GDP in PPP: USD 359.3 billion (2007) • GDP per capita in PPP: USD 13,210 (2007 est.) • CPI: 2.0 percent (2007) • Unemployment rate:3.2 percent (2007 est.) • FDI stock per capita: USD 3171 (2007 est.)
Sources: www.eiu.com, www.cia.gov, Gocurrency.com
Political Structure1 Malaysia follows a federated constitutional monarchy. The country is led by a King who appoints a Prime Minister and on his advice the cabinet is chosen. There are state governments in each of the 13 states, in nine of which the head of state is an hereditary ruler. Each state has its own constitution, a council of state or cabinet with executive authority, and a legislature that deals with matters not reserved for the federal parliament. There are also three federal territories: Kuala Lumpur, Labuan and Putrajaya. Investor climate varies depending on the policies of the State government, in addition to those of the federal government.
Business and Investment Climate Foreign Direct Investment (FDI): FDI inflows into Malaysia grew from 2.2 percent in 2003 to 4.5 percent in 20071. GDP growth: Real GDP growth in Malaysia was 6.3 percent in 2007. The EIU has revised the forecast for real GDP growth to 3.1 percent in 2009 from the previous 4.6 percent1. Inflation: Consumer price inflation is likely to be an average 5.4 percent during 2008, up from 2 percent in 20071. The EIU expects consumer price inflation to average 2.4 percent in 2009 (down from 3.5 percent predicted previously).
2008 (Rating/outlook) EIU’s Sovereign Risk Rating Standard & Poor’s Foreign Currency Risk Rating Ease of Doing Business Rank (2009) Rigidity of Employment Index (2009)
BBB /Negative
IT-BPO Scenario in the country Malaysia clocked revenues of USD 4.7 billion2 through expor ts in 2007, employing close to 365,000 professionals3. There are around 1400 IT-BPO ser vice providers4.
A-/Stable/A-2
Through the Multimedia Super Corridor (MSC) project, the Malaysian government is focusing on the IT-BPO industry to a large extent. The vision of this project is to convert Malaysia into a knowledge economy by year 20205.
20
The Malaysian government is projecting the country as a destination for high-end services, which are relatively less scale dependent.
10
Kuala Lumpur, Cyberjaya, Menara MSC, Cyberport, Johor, KLCC, Kulim High Tech Park, Melaka International Trade centre (MITC), and Penang are the IT-BPO destinations in Malaysia.
Sources: www.eiu.com, World Bank, Standard & Poor’s
Government incentives The Malaysian government provides a variety of incentives to the IT-BPO industry, permitting 100 percent foreign equity participation in companies. Some of the incentives include: Penang
• Investment tax allowance up to 100 percent2
Kuala Lumpur Melaka Johor Emerging Destination Established Destination
• Corporate tax rate to be cut to 25 percent by 2009 from current level of 27 percent2 • Customs duty exemption for import of multimedia equipment. Over the years the Malaysian government has introduced laws to protect intellectual property of IT-BPO companies. Also, Cyber Security, Malaysia an agency under Ministry of Science, Technology & Innovation acts as a one stop coordination center for nominal cyber security initiatives.
1 www.eiu.com, various pages, December 2008 2 www.outsourcingmalaysia.org.my, December 2008 3 Gartner, Analysis of Malaysia as an Offshore Services Location, November 2007
4 ICT in Malaysia, The New Economic Engine of the Nation - MGCC Quarterly Sept/Oct 2007 5 MSC Malaysia Handbook, 2007
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