Malaysia will maintain its free market and attractive policies for foreign investors and the general election results in 2008 will in no way diminish the government’s objective to continue developing the Malaysian economy. The government has assured all existing and potential investors of its continued pro-business policies and incentives packages formulated and implemented by the federal government.

Local and foreign investors remain unperturbed by the election results, as they view this new political development positively, with Malaysia having strong democratic foundations.

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The president of the American-Malaysian Chamber of Commerce (AMCHAM) is confident that political developments will not affect FDI inflows into Malaysia or negatively affect US investments. He is of the view that the new state governments will continue with the pro-business and investor-friendly policies of the previous state governments. In fact, AMCHAM would complement the government’s efforts and continue to promote Malaysia as a preferred location for outward US investments.

Growth areas

Similar views were expressed by thepresident of the Malaysia-American Electronics Industry (MAEI), the president of the Taipei Investors Association in Malaysia, foreign chambers of commerce and industry based in Malaysia, and leading local corporate personalities.

As part of Malaysia’s move towards a knowledge-driven economy, the government is committed to promote foreign investments into higher value-added, high-tech and knowledge-intensive projects in the manufacturing sector. In this regard, the government

is promoting new growth areas to diversify the manufacturing base. Among the growth areas targeted for promotion are:

• IT and communications,

• biotechnology,

• machinery and equipment,

• aerospace, including aviation services,

• optics,

• photonics,

• nanotechnology,

• pharmaceuticals,

• medical devices.

Malaysia is also actively promoting manufacturing-related activities such as regional establishments (which include operational headquarters), international procurement centres, regional distribution centres, regional offices and representative offices.

In addition, Malaysia is fast becoming an important location for foreign companies in the oil and gas industry to establish their regional headquarters.

Business opportunities

Besides creating employment opportunities at the professional and managerial levels, these service-related activities have spin-off benefits to other sectors of the Malaysian economy, such as banking, insurance, logistics and the wholesale and retail sectors.

This opens up business opportunities to Malaysians as suppliers and distributors. In addition, international procurement centres and regional distribution centres promote

the use of Malaysian ports and increases Malaysia’s global trade.

The Malaysian government implements measures to maintain the competitiveness of the country, including the reduction of corporate tax from 27% in 2007 to 26% in 2008. The corporate tax will be further reduced to 25% in 2009. With this reduction, Malaysia is among the most competitive countries in Asia for corporate tax.

Other measures include the establishment of a special task force to further improve the public sector delivery system, and the establishment of an immigration unit at the Malaysian Industrial Development Authority to facilitate issuing of visas to expatriates.

Based on the successes of the first quarter of the year, Malaysia hopes to sustain the momentum of investments into the manufacturing and services sector in 2008, despite uncertain global developments like the high oil prices. Malaysia has faced challenges before, as in the 1997/98 financial and economic crisis, and weathered the storm.

Continuing investments

The country’s strong pull factors, which include its resilient economy, human capital, developed infrastructure and competitiveness, should see continued inflows of foreign investments into the manufacturing and services sector.

Malaysia is home to success stories with the presence of major multinationals from the US, Europe, Asia and Australia.

The country still has the prerequisites to entice foreign investments and remain a profit centre in Asia.

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