KL Calling

KL calling
The rise of
Kuala Lumpur
as an investment
destination
An investor's guide
About this publication

Today, many global businesses are
beginning to adopt a city perspective
in their growth and expansion
strategies, rather than gearing their
strategies at a country level. With
the tide of interest beginning to shift
towards Asia and its emerging markets,
Kuala Lumpur, the capital city of
Malaysia, is calling out to investors.
This publication has been crafted to
serve as an investors guide for foreign
multinational companies considering
Kuala Lumpur as the location for their
regional operations. Our findings are
based on in-depth research and
interviews, as well as an Ernst & Young
survey of 117 decision-makers from
multinational companies across
Asia-Pacific in June and July 2012.
In this guide, we explore the compelling
reasons why hundreds of multinational
companies have chosen to locate
themselves in Kuala Lumpur. We
provide potential investors a look into
sectors that are competitive and
growing. In addition, we also introduce
government agencies that have been
created specifically to help companies
take advantage of these unique
investment opportunities.
Seri Wawasan Bridge, Putrajaya
Foreword
ince leading the world out of the worst global recession in more than
50 years, Asias position as an engine of growth in the global economy is
stronger than ever. The impact of this growth is momentous as it creates
new spheres of competition and changes the patterns of trade flows and foreign
direct investment both within and outside the region.
The city
is calling out
to existing
and future
investors
Malaysia, being one of Asias fastest-growing

economies, is obviously a force to reckon with in the
region. The country sits at the center of high-growth
Asian markets with robust trade and domestic
demand. FDI inflows into Malaysia have increased
nearly sevenfold since 2009 to reach nearly US$10.3b
in 2011.
The best of Malaysia can be found in its capital city,

Kuala Lumpur. This publication, KL calling: the rise of Kuala Lumpur as an
investment destination is based on in-depth research, interviews and a survey of 117
decision-makers from multinational companies located here in Malaysia and across
Asia-Pacific. In this report, we examine the attractiveness of Malaysia and Kuala
Lumpur as a preferred investment destination.
In addition to being one of Asias most iconic cities, Kuala Lumpur has a stable and
attractive business environment, a burgeoning middle-class population, quality
infrastructure and a skilled workforce. A key component of our analysis is also the
potential investment opportunities in selected sectors. These are areas in which
Malaysia has, naturally and historically, shown a competitive edge.
This publication is designed to
help foreign investors make
their investment decisions
and consider Kuala Lumpur
in their expansion strategy.
The city is poised for
tremendous growth and
is calling out to existing
and future investors.
Lou Pagnutti
Asia-Pacific Area
Managing Partner
Ernst & Young
KL calling: the rise of Kuala Lumpur as an investment destination
Contents
Chapter one
Foreword
Malaysia,
at the heart
of Asia
Chapter two
16
Why
invest
in KL
Kuala Lumpur
by numbers
Appendices
49
Malaysia fact sheet
50
As Malaysias capital, Kuala Lumpur (KL)

is the countrys center of economic growth
and home to hundreds of multinational
companies. If you are not already here,
here are five reasons why you should be.
Methodology
Malaysia has fast become a rapidly

emerging economy and one of the most
developed countries in Southeast Asia.
With its attractive characteristics and
track-record of stable growth, Malaysia
is truly at the heart of Asia.
17
20
An iconic
Asian city
A conducive
business
environment
24
26
An emerging
middle-class
Welldeveloped
infrastructure
30
A magnet
for talent
Chapter three
Chapter four
32
46
What
to invest
in
Who
can help
you
When investing in Kuala Lumpur, there

are a number of government agencies
that can help potential investors.
There are a number of attractive sectors that hold an abundance of opportunities

for potential investors. We have picked five based on their capacity for growth
and exciting new trends.
33
36
38
41
44
Financial
services
Business
services
Healthcare
Oil and gas
Electrical
and
electronics
Kuala Lumpur
KL's Southeast
Asia ranking
in EIU's 2012
Benchmarking
Global City
Competitiveness
Kuala Lumpur
China Mainland (23)
Japan (27)
percent GDP
or more for 25
years! Malaysia
is one of only 13
economies in the
world to have
achieved this feat.
Thailand (30)
Hong Kong (1)
Singapore (4)
Malaysia's ranking in
the IMD 2012 World
Competitiveness
Yearbook
Korea, Rep. (22)
14
Taiwan (7)
Malaysia's
ranking in
A.T. Kearney's
2011 Global
Services
Location Index
Malaysia (14)
MALAYSIA
GREATER
by numbers
Business
services
US$
KL
Area: 1735.6 square miles

Population: 6 million
24.6b
hot sectors and

their GNI contribution
by 2020
Electrical and
electronics
16.7b
US$
10
Financial
services
US$
38b
billion USD the

GNI amount that
Greater KL will
generate by 2020
Healthcare
Oil and gas
US$
US$
11b
41.1b
the number of
business licenses
reduced to simplify
and streamline the
compliance process
million. Greater KL's

population by 2020. This is
up from 6 million in 2010
28
minutes travel
time on the
high-speed train
connecting KL
International
Airport and
the city center
121
percent
Malaysia's
mobile
penetration
rate
31
stations
for KL's
on-going
Mass Rapid Transit
system, with more
in the pipeline
Malaysia,
at the
heart
of Asia
This is the Asian Century. Over the last decade,

the Asian region has emerged as a global hot-spot
for economic growth and trade against a backdrop
of global economic and currency debt crises.
Many of todays rapid-growth markets are found in Asia. They represent the fastestgrowing region in the world, with an annual growth forecast of more than 6%.1 If Asia
sustains this current growth momentum, it is forecasted to capture 51% of the global
gross domestic product (GDP) by 2050. Asia will then regain the dominant economic
position it held before the Industrial Revolution, making this the Asian Century.2
Asias meteoric growth will be sustained by its emerging middle-class. In 2009, the
size of the middle-class in Asia was only 28% of the worlds total. This figure will
likely nearly double to 54% by year 2020.3 This will lead to an increase in domestic
demand for everything from household appliances to high-value items such as
luxury goods and asset management products.
Asias share of global GDP, 1700-2050
60%
50%
40%
30%
20%
10%
0%
1870
1950
1980
global GDP
is forecasted
to be captured
by Asia.
54% of the
70%
1700
51% of the
2010
2030
2050
Source: Asia 2050: Realizing the Asian Century, Asian Development Bank report, 2011
middle-class
population in
the world will
come from
Asia by 2020.
Share of global middle-class, 2009-2020

Household income of US$10 to US$100 a day in PPP terms (millions)
Middle East and
North Africa
3,500
3,000
Sub-Saharan Africa
2,500
54%
2,000
1,500
Asia-Pacific
Central and
South America
28%
1,000
Europe
500
North America
0
2009
2020
Source: Trading places: the emergence of new patterns of international trade,

Growing Beyond, Ernst & Young, 2010
1
2
Beyond Asia: strategies to support the quest for growth, Growing Beyond, Ernst & Young, 2012
Asia 2050: Realizing the Asian Century, Asian Development Bank
Homi Kharas, The Emerging Middle Class in Developing Countries, Working Paper No. 285,
Organisation for Economic Cooperation & Development, Development Centre, 2011
Asia is set to dominate world trade

Share of total world exports, 2010-2020
100%
90%
80%
70%
Asia
60%
Europe
USA
50%
Middle East and North Africa

40%
Latin America and Caribbean
30%
North America, excluding USA
20%
Russia
10%
Australia, New Zealand and Oceania

Sub-Saharan Africa
0
2010
2020
Source: Trading places: the emergence of new patterns of international trade, Growing Beyond, Ernst & Young, 2011
In addition to predictions of continued GDP growth, economists forecast that over

the next 20 years, Asia will dominate world trade with the fastest growth of trade
in goods and services.4 While global trade has long been led by advanced economies,
their share has declined, especially in the wake of the recent global crises. By 2010,
advanced economies accounted for approximately 60% of global merchandise
exports. In Trading Places: the emergence of new patterns of international trade,
Ernst & Young analysis suggests that this will further decline to 55% by 2020.
Asia is set to step into this gap, bolstered by growth in exports and intra-trade within
the region itself.
Asia is the new global economic center, with

China and India leading the way. Malaysia, one
of Asia's emerging powerhouses, is responding
to this change by shifting her focus from a
labor-intensive, low-technology economy to
a knowledge-based, high-technology economy.
Rauf Rashid, Country Managing Partner, Malaysia, Ernst & Young
10
Trading places: the emergence of new patterns of international trade, Growing Beyond, Ernst & Young, 2011
ASEAN countries are leading the Asian Century

The Association of Southeast Asian Nations (ASEAN) is an association of 10
countries located in Southeast Asia. With a population of 598 million people, it is
more populous than the European Union or the Arab World and holds substantial
geopolitical influence.
In the past, Southeast Asian markets were among the first to suffer from investor
risk aversion during periods of global economic uncertainty. Their current resilience
shows that perception is changing. Fidelitys ASEAN fund hit US$2b in June 2012,
a sixfold increase from its post-2008 economic crisis low. This became the biggest
offshore fund focusing on the region.5
Southeast Asia is beginning to emerge as a stable and relatively low-cost investment
destination with the potential of generating high growth. Six out of the top ten
preferred Asia-Pacific countries for foreign direct investments (FDI) are located
in Southeast Asia according to Ernst & Young's Capital Confidence Barometer
Southeast Asia.
Southeast Asian countries also benefit from their strategic location between
China and India as these countries become the new global economic
powerhouses. China has specifically targeted ASEAN as a bloc for Chinese
companies to be doing business with because of its geographical proximity.
The Ernst & Young

Capital Confidence
Barometer 2012
Five reasons for confidence:
Southeast Asian markets
continue to enjoy solid confidence
from global and regional companies.
Fa c t b o x
Asia-Pacific is a region of choice

for expansion and growth for
global and regional companies.
ASEAN 6
Member countries of the Association of Southeast Asian Nations are:
Brunei
Indonesia
Malaysia
Philippines
Thailand
Cambodia
Laos
Myanmar
Singapore
Vietnam
Population: 598 million (2011)

Combined nominal GDP: US$2.2 trillion (2011)
Foreign investment: US$76 billion (2010)
5

6
Southeast Asian businesses are

cautiously optimistic about the
global economy.
More businesses are focused on
growth, and are optimizing their
balance sheets to fuel that growth.
Continuing yet conservative
appetite for M&As to gain access
to newer markets
Nishant Kumar, Stuart Grudgings, Analysis: Southeast is

Asia's safe haven as China, India stumble, Reuters, 11 July 2012
ASEAN website, The World Bank data
11
Malaysia's rapidly emerging economy

From its agricultural roots, Malaysia has become a rapidly emerging economy and is
one of the most developed countries within ASEAN. Malaysia has transformed to an
upper middle-income country in a single generation, weathering financial crises and
global upheavals to become a globally competitive economy.
Fa c t b o x
Economic
Transformation
Programme (ETP)
Towards a high-income nation status
Aims to accelerate
Malaysia's high-income
agenda
Target
by 2020:
GNI
US$15,000
15,000
12 National Key Economic

Areas (NKEAs)
14,000
Private sector-led,
Government facilitated
12,000
Expected to generate
US$531b in GNI
contribution and
3.3m jobs by 2020
10,000
13,000
11,000
GNI US$
9,000
8,000
7,000
4,000
Addresses the peoples

expectations of the
Government
Seven National Key
Result Areas (NKRAs)
Ensures big, fast results
for specific targets such
as the cost of living and
quality of life are achieved
in the interest of the
people
1983
Privatization
policy
introduced
1970
New
Economic
Policy
introduced
5,000
Government
Transformation
Programme (GTP)
3,000
1986
Industrial
Masterplan
introduced
1957
Independence
2,000
1996
Multimedia
Super Corridor
established
Low-income
nation status
0
1960
1970
1980
1990
2000
2010
Currently, Malaysia is one of only 13 economies in the world to have sustained

growth of over 7% or more for 25 years.7 Malaysias progression can also be seen
through the countrys improvement in several international indices.
Malaysias international rankings
24
24
23
20
18
21
21
21
2008
18
2009
2010
10
New Economic
Model (NEM)
2011
2012
IMD World Competitiveness

Yearbook, International Institute
for Management Development
(IMD)
Ease of Doing Business,

World Bank
The Global Competitiveness

Report, World Economic Forum
Eight Strategic Reform

Initiatives (SRIs)
26
14
Fa c t b o x
12
2020
Source: Ernst & Young analysis
16
Involves measures to
transform both the
workplace and workforce
with the aim of improving
the quality of human
capital in the country
Lower middleincome nation

status
2006-08
Global
financial
crisis
1,000
19
Economic blueprint
to transform Malaysia
into a high-income,
advanced nation
Upper middle2001
income nation
Capital Market
status
Master Plan
and Financial
2010
Sector
New Economic Model,
Masterplan
10th Malaysia Plan, Government
introduced
Transformation Programme,
Economic Transformation
1997-98
Programme introduced
Asian
financial
2011
crisis.
National Transformation
Ringgit
Policy introduced
pegged to
2012
US dollar
Talent Roadmap
2012-2020 introduced
1991
New
Development
Policy
introduced
6,000
Fa c t b o x
High-income
nation status
The Growth Report: Strategies for Sustained Growth and Inclusive Development,
Commission on Growth and Development, 2008
Malaysia has one of the most

accommodative macroeconomic
policies in the region and its domestic
investment climate, driven by the
Economic Transformation Programme,
is expected to remain vibrant and
dynamic. With GDP expected to reach
US$278b by 2020, Malaysia has
continued to see strong loans growth and
is the worlds largest issuer of sukuk.
Renzo Viegas, Deputy CEO and
Head of Consumer Banking, CIMB Group
Expatriate living in Malaysia for nine years
Kuala Lumpur: Malaysia's capital city

Many global businesses are starting to gear their strategies from a city
perspective, instead of a country perspective. With their rapid growth and
potential for development, cities in emerging markets such as Malaysia, are
becoming increasingly attractive to investors. In the Economist Intelligence Units
(EIU) report, Hot Spots: Benchmarking global city competitiveness, Kuala
Lumpur, Malaysias capital city, is ranked against 120 other cities as the second
most competitive global city in Southeast Asia.
Kuala Lumpur
is the 2nd most
competitive
global city in
Southeast Asia
From its humble beginnings as a tin-mining district, Kuala Lumpur has grown to
become one of the most vibrant and dynamic cities in the world. Today, Kuala
Lumpur has developed and expanded into Greater Kuala Lumpur (GKL).
Its status, attractive business environment, growing middle-class, well-developed
infrastructure and skilled workforce make this city an obvious choice for the
hundreds of multinational companies (MNCs) that have heeded Kuala Lumpurs
call to investors.
Fa c t b o x
Greater Kuala
Lumpur (2010)8
Area: 1735.6 square miles
Population: 6 million
GNI contribution: US$82.2b
InvestKL website
13
Malaysias performance in 2012...
Malaysias FDI has recovered from the

global economic slump in 2009 and
shown a nearly sevenfold increase to
reach almost US$10.3b in 2011.
Malaysias recent growth has been the
highest recorded in Asia.9
Increasing FDI inflow is a significant

indicator of investors confidence in the
Malaysian business environment. This
renewed confidence in Malaysia as an
investment destination is due in large
part to concentrated initiatives by the
government, such as the ETP, to make
Malaysia more attractive to foreign
investors.
Respondents say that Malaysias three

most attractive characteristics are:
global/regional connectivity (54.7%),
political stability (46.2%) and costcompetitiveness (42.7%).
Inflow of FDI into Malaysia,

2006-2011 (US$, m)
How do you think the Malaysian

investment climate has evolved
over the past two years?
What do you consider the three most

attractive characteristics of Malaysia
as an investment destination?
Significantly improved
Global/Regional connectivity
7,541
6,946
10,289
Malaysia is well-known
for its global/regional
connectivity
9,163
Almost 50% of respondents

see improvement in the
country's investment climate
9,087
FDI flow into Malaysia shows

an upward trend
10.3%
54.7%
Slightly improved
Political stability
46.2%
37.6%
Neither improved nor deteriorated
Cost competitiveness
42.7%
16.2%
High potential of domestic market
1,575
Slightly deteriorated
23.1%
Significantly deteriorated
40.2%
Access to highly qualified workforce
2011
2010
2009
2008
2007
2006
3.4%
Source: Malaysia Investment Performance 2011,

MIDA, 2012
35.9%
Access to world-class facilities and infrastructure
Cannot assess
9.4%
Source: KL calling: the rise of Kuala Lumpur as an
investment destination, Ernst & Young, 2012
30.8%
Availability of natural resources
21.4%
Access to financing
14.5%
Other
6.8%
Support for R&D and innovation
4.3%
Low bureaucracy
2.6%
Rupa Damodaran, Highest ever FDI for Malaysia,

New Straits Times, 22 February 2012
... and expectations beyond

95.6% of respondents
have long-term goals in
Malaysia
Organic growth is
the preferred mode
of investment
Oil and gas, business

services and healthcare are
the most attractive sectors
More than half of respondents (62.6%)

who have international presence say
that they intend to increase their
operations in Malaysia. At the same
time, 33% of the same group say that
they plan to maintain their current
operations.
60.9% of respondents who have some

presence in Malaysia plan on growing
in the Malaysian market through an
expansion of facility, while 48.9% plan
on doing this by increasing their workforce, a natural next step and sign of
increasing confidence and satisfaction.
According to our respondents, oil and

gas (58.6%), business services (39.6%)
and healthcare (35.1%) are Malaysias
most attractive sectors. Malaysias
rich natural resources and significant
presence in the oil and gas sector
provide a lot of opportunities for
potential and current investors.
What is your groups long-term goal

in Malaysia?
How do you plan to enter or expand in

the Malaysian market? Choose at most
three answers.
In your opinion, what will be the three

most attractive sectors to invest in
Malaysia over the next two years?
Increasing operations in Malaysia
Expansion of facility
Oil and gas
Maintaining operations in Malaysia
Business services
Increasing labor force

35.1%
38.3%
Tourism
Acquisition
33.3%
27.7%
0.9%
Not invest in Malaysia
0.9%
Healthcare
Joint venture/alliances
2.6%
Enter the Malaysian market
39.6%
48.9%
33%
Relocating from Malaysia to another country
58.6%
60.9%
62.6%
Greenfield investments
17%
Communications, content and infrastructure

26.1%
Cannot say
Financial services
23.4%
10.6%
Education
Other
8.5%
23.4%
Electronics and electrical
18.9%
Palm oil
16.2%
Wholesale and retail
15.3%
Agriculture
9.9%
15
2
Kuala Lumpur Tower
Why
invest
in KL
Center of
economic
growth
An iconic Asian city
What
makes KL
an iconic
city?
Sustainable
Every city needs to provide a sustainable,
vibrant
community
vibrant community for its citizens to live, work
and enjoy life. Cities also need to foster economic
growth by providing the right conditions for
Quality and
business and to promote and protect innovation.
affordable
living
Cities for Citizens, Ernst & Young, 2011
Big cities have always been areas of high attraction, typically associated with high
population density and big businesses. As the capital of Malaysia, Kuala Lumpur is
the most developed and largest city in the country. With its instantly recognizable
skyline, the city stands shoulder to shoulder alongside many of the worlds leading
global cities.
Center of economic growth
56.8% of
Kuala Lumpur is well-known as an

international commercial and financial
center with many MNCs choosing to
locate their centers of operations in the
city. In our survey, 56.8% of respondents
with an international presence indicated
that they already have investments in Kuala Lumpur. To quote the Deputy CEO of
a large Japanese bank in Kuala Lumpur, Everything happens in the capital. Thats
why most Japanese companies are concentrated in Kuala Lumpur. This is where
the business and the people are.
respondents already
have investments
in Kuala Lumpur
Living and working in

Kuala Lumpur has given
me great personal
satisfaction. Ive enjoyed
establishing and building a
world-class organization with
the help of outstanding and
dedicated people, developing
long-term friendships and
experiencing the cultural
diversity here. Im glad this city
was my destination of choice.
Fa c t b o x
Selected centers
of operations
in Kuala Lumpur 1
Operational Headquarters (OHQ)
Hewlett-Packard
Kelloggs
Siemens
Kajima Corporation
Japan Tobacco International (JTI)
International Procurement Center
(IPC)
Sony
Sharp
Robert Bosch
Lee Kum Kee
Regional/Global Shared Services
Center (SSC)
Amway
American International Group
British American Tobacco
BMW
Electrolux Home Appliances
DHL
IBM
Shell
Regional Distribution Center (RDC)
UMW Toyota
Scapa Group
Du Pont
Jean Pierre Sabourin, CEO, Malaysia

Deposit Insurance Corporation (MDIC)
Expatriate living in Malaysia for seven years
1
Malaysia Your Ideal Location for Regional Establishments, MIDA, 2011
17
When my company offered

me a permanent position in
Malaysia, my wife and I decided
that this was an opportunity
we shouldnt miss. I find the cities
and infrastructure interesting, and
the professional work culture in
multinational companies similar
to what I would find anywhere else.
David Lacey, Research & Development Director, Osram Opto Semiconductors
National Science and Research Council (NSRC) Member
Expatriate living in Malaysia for 10 years
Sustainable, vibrant community
23 museums
6 theatre houses
10 art galleries
Kuala Lumpur continues to call people to its city center from across the country
and from all over the world. As of 2010, it is home to around six million people.
There is a large population of expatriates and immigrants who have come to Kuala
Lumpur to live, study, work and participate in the Malaysian way of life. Many
expatriates find it easy to integrate into the city, citing the availability of the
conveniences of any modern city, the warm and welcoming personalities of their
hosts, as well as the fact that a large percentage of the population speak English
as their first language.
Along with plentiful job opportunities, Kuala Lumpurs distinctive culture is a high
attraction point. On the one hand, Kuala Lumpur is a developed city with an
abundance of leisure facilities, shopping malls and other facets of a modern city.
On the other, the city is stamped with Kuala Lumpurs culture and history, from
its architecture to its food to its way of life.
18
Quality and affordable living

Despite its rapid growth, Kuala Lumpur has a lower cost of living compared to
many cities in Asia. According to the Mercer 2012 Cost of Living Survey, Kuala
Lumpur is cheaper than Hong Kong and Singapore in terms of costs of housing,
education, food, transportation and healthcare.
Although property is more expensive in Kuala Lumpur than other areas in Malaysia,
it is still affordable. Renting a three-bedroom condominium in an upmarket area of
Kuala Lumpur can cost up to US$2,000 and above per month; however, there are
cheaper areas and options, starting from US$300 per month. In comparison, it can
cost up to US$11,813 per month to rent a three-bedroom property in Hong Kong,
while a similar property in Singapore costs half that amount.2
Mercer Worldwide Cost of Living

Survey, 2012
City
Tokyo
Singapore
Hong Kong
11
Seoul
22
Jakarta
66
Bangkok
International talents are often concerned about the availability and quality
of education for their children as they move to a new city. This concern is
considerably reduced in Kuala Lumpur as there are more than 20 international
schools in the city that provide quality education in various curricula such as
American, Australian, British, French, German, Japanese and Korean.
$$$
Sydney
Kuala Lumpur
Malaysia has excellent healthcare services. HSBCs Expat Explorer Survey ranks
Malaysia 14th in the world in terms of healthcare. Many of these high-end hospitals,
clinics, highly trained doctors and medical staff are centered in Kuala Lumpur.
Prominent services include those relating to cardiology, dentistry, gastroenterology,
screenings, general surgery, orthopedics, ophthalmology and plastic surgery.
Ranking
81
102
Note: 1= most expensive

Source: Mercer Worldwide Cost of Living Survey, 2012
Fa c t b o x
Selected international
schools in Kuala Lumpur 3
American curriculum
International School of
Kuala Lumpur
Mont'Kiara International School
Australian curriculum
Australian International School
Malaysia
British curriculum
The Alice Smith School
Garden International School
French curriculum
French International School
Kuala Lumpur
German curriculum
German School Kuala Lumpur
An expatriation decision is as much about what the country

offers for the family as it is about career development. Having
lived and worked in regions as diverse as North East Asia,
Europe, Australia and Latin America, we can safely say that
we have in no way compromised the quality of education that
our children have enjoyed here in Malaysia.
Japanese curriculum
The Japanese School of
Kuala Lumpur
Korean curriculum
Korean School of Malaysia
Ramesh Kana, Senior Vice President and Chief Financial Officer

of Emery Oleochemicals Group
Expatriate living in Malaysia
2
3
Singapore among worlds most expensive cities to rent property, ECA International, 20 February 2012
Various school websites
19
Investorfriendly
policies
Attractive
tax
incentives
What
makes for
a conducive
business
environment?
A conducive business
environment
Strong
investor
protection
Ease of
doing
business
Investor-friendly policies
Why do MNCs choose to operate in Malaysia, particularly Kuala Lumpur? Some key
reasons are its market-oriented economy and pro-business government policies.
Its investment policies have been considerably relaxed to attract foreign investors.
For example:
Liberal Equity policy: allows foreign investors to hold 100% equity in all investments
of new projects and expansion/diversification projects by existing companies
Employment of Expatriate policy: allows companies with foreign paid-up capital
of above US$2m up to 10 expatriate posts4
These efforts have resulted in a rise in investor confidence for Malaysia. The IMD
World Competitiveness Yearbook 2012 ranks Malaysia 14th in terms of its ability
to create and sustain a globally competitive business environment, overtaking
economies such as Australia, Mainland China, Japan and India.5
World Competitiveness Scoreboard, 2008-2012

Ranking
Change
2008
2012
Hong Kong
Singapore
Malaysia
19
14
Australia
15
China (Mainland)
17
23
Japan
22
27
India
29
35
Source: IMD World Competitiveness Yearbook 2008-2012
4
5
20
MIDA website
IMD World Competitiveness Yearbook 2012, IMD, 2012
Kuala Lumpur is a capable, prosperous and flexible market

and a prominent city in the ASEAN region. Kuala Lumpurs
ecosystem is attractive for inward investment for a number of
reasons world-class infrastructure, strong economic frameworks
and policies set in place and access to the rest of the ASEAN region.
Kuala Lumpur offers a fitting environment for Philips to continue to
grow our presence in the market across our key business areas
healthcare, lighting and lifestyle.
Naeem Shahab Khan, Managing Director, Philips Malaysia
Expatriate living in Malaysia for three years
Attractive tax incentives

Companies that choose to locate themselves in Kuala Lumpur will find an investor-friendly business environment and
attractive tax incentives. In order to promote foreign investments and priority industries, a wide range of tax incentives have
been offered to investors, such as those under the Promotion of Investments Act 1986. Of particular focus are projects that
are capital intensive, with high value-added content and involve new and emerging technology. These incentives have
evolved to cater to new investment trends, which include companies wishing to locate their Operational Headquarters
(OHQs), International Procurement Centers (IPCs), Shared Service Centers (SSCs)and Regional Distribution Centers
(RDCs) in the city center. An example of this is Multimedia Super Corridor (MSC) Malaysia status:
Multimedia Super Corridor (MSC) Malaysia status

Description
Focus
Selected Incentives
To attract world-class
technology companies while
grooming the local information
and communications technology
(ICT) industry
ICT and ICT-facilitated businesses

that develop or use multimedia
technologies to produce and
enhance their products and
services
Pioneer Status: 100% exemption from

taxable statutory income for five years
Investment Tax Allowance
Freedom to source capital and borrow
funds globally
Duty-free importation of multimedia
equipment
Strong investor protection
54% reduction
in the number of
steps required to
obtain construction
permits in Malaysia
52% reduction
in the number of
business licenses
US$227.8m
reduced in business
license compliance
cost
Malaysia is a member of the World Intellectual Property Organization (WIPO) and a

signatory to the Paris Convention and Berne Convention which govern intellectual
property rights. Malaysia has gone a step further by being one of the few countries
to have dedicated agencies to oversee and enforce intellectual property laws.
Through these efforts, Malaysia is encouraging foreign investment and technology
transfer through acquisition, licensing and franchising.
Ease of doing business

In the past, investors have expressed concerns about the bureaucracy and long
wait time to obtain licenses and permits for business activities in Malaysia. To
mitigate this concern, the government established a Special Task Force to Facilitate
Business or PEMUDAH in 2007 to create a better business environment.
PEMUDAH introduced a series of changes to improve the situation such as online
one-stop centers for business licensing, new company incorporation and simultaneous
registrations.6 For example, it now takes 10 steps and a maximum of 100 days to
get a construction permit, compared to the old process of 22 steps and a waiting
time of 260 days.
These changes have resulted in 405 or 52% of licenses being eliminated or simplified
and an estimated reduction of US$227.8m in business licensing compliance costs.
These efforts are among the factors contributing to Malaysias jump from 24th place
in 2008 to 18th place in 2012, according to The World Banks and International
Finance Corporation (IFC)'s latest Doing Business report.
Ease of Doing Business Index, 2008-2012
Ranking
2012
Singapore
Hong Kong
Korea, Rep
30
22
Australia
15
Thailand
15
17
Malaysia
24
18
Japan
12
20
Source: The World Bank
22
Change
2008
PEMUDAH website
NA
Viewpoint
InvestKL aims to make Kuala Lumpur

one of the worlds top investment
destinations
InvestKL, a specialist investment agency, was set up in 2011
to attract and facilitate investments by large MNCs into
GKL. Since its inception, it has already attracted several
large MNCs and targets to attract 100 MNCs by 2020. The
CEO of InvestKL, Zainal Amanshah, shares his insights on
Kuala Lumpurs potential as an investment destination.
What is Kuala Lumpurs value

proposition for MNCs?
Businesses from all over the
world are increasingly setting
up shop in Kuala Lumpur,
enticed by its businessfriendly policies, competitive
costs and skilled workers. In
Kuala Lumpur, specifically,
MNCs can set up a myriad of
centers, such as OHQs, IPCs,
regional SSCs and regional
centers of excellence.
team of dedicated specialists

who provide services using a
proactive consultative approach
in targeting MNCs.
How does InvestKL assist

MNCs looking to invest in
Kuala Lumpur?
We are available to assist the
end-to-end investment process.
We work with investors to
formulate the plan for GKL
and also for Asia. We will
work with other Government
To date, top MNCs such as
agencies to formulate attractive
Citibank, Schlumberger, Shell,
fiscal packages, expedite
PayPal, HSBC, Prudential, British approvals and help MNCs
American Tobacco, Nestle, Ikea, identify business opportunities,
BMW, Nokia and many others
while strengthening their
have their regional or global
competitiveness regionally
operations in Kuala Lumpur.
and globally.
It is a testament of investors
confidence in our city.
In addition, we work with
other government agencies in
How does InvestKL reach out assisting investors to establish
to MNCs?
their operations within GKL.
We have a proactive approach. For MNCs, this means a smooth
We are targeting Fortune 500,
and expedited process.
Forbes 2000 companies and
emerging MNCs. We look for
MNCs that have long-term plans
and vision to grow in Asia.
Asia is the growth region for
this decade and all MNCs have
profitability on their minds.

Our modus operandi is similar
to private banking we have a
23
An emerging middle-class
The new middle-class is often cited as essential for economic growth and stability.
It drives domestic demand and represents a considerable source of spending power.
This segment of the population is on the rise as developing markets experience
explosive growth. In these markets, the emerging middle-class spends a total of
US$6.9t annually.7 Malaysia is no exception to this trend. Since 1992, Malaysia has
been an upper middle-income nation.
Case study
Nestl chooses Malaysia as its Halal Centre of Excellence

The global halal market is becoming increasingly lucrative.
In 2010, there were 1.6 billion Muslims worldwide.
Muslims are expected to account for 26.4% of the world's population by 2030.
Global halal trade is estimated to be worth US$1.2t annually.
Malaysia is a country with a majority Muslim population,

strategic location, established infrastructure and globally
recognized halal certification. As a result, Nestl has
chosen Malaysia to be its Halal Centre of Excellence to
offer policy guidelines, know-how and expertise on halal
products to other Nestl markets worldwide.
The emerging middle-class offers

companies a rare and highly valuable
opportunity to seize a new market of
unprecedented size. Companies must
act now to create attractive products
and services, establish a presence and
build market share and scale.
Maria T. Pinelli, Global Vice Chair, Strategic
Growth Markets, Ernst & Young
24
David Court, Laxman Narasimhan, Capturing the worlds emerging middle class, McKinsey Quarterly, July 2010
Retailers Haven
The emerging middle class demographic is very noticeable in Kuala Lumpur and
KL-ites, as the citys population is commonly known, are becoming more
sophisticated and cosmopolitan. This is the reason for the increasing number of
megamalls and shopping centers. Kuala Lumpur is home to two of the worlds
largest malls.
Kuala Lumpur is a prime location for foreign investors wishing to take advantage of
the citys increasing affluence and growing demand for quality goods and services.
After making inroads in the 1990s, foreign-owned, large hypermarkets such as
Tesco and Carrefour have expanded aggressively in the city and they now dominate
the retail landscape.
The country is ranked 11th in the world by AT Kearneys Global Retail Development
Index in terms of retail investments. In addition,
the Malaysian retail industry found that the
sectors sales grew by 9.1% in the second
quarter of 2011. This was unexpectedly
higher than the 5.8% growth recorded during
the same period in 2010.
Ranked 11th for

the development of
retail investments
Case study
Tesco in Greater Kuala Lumpur

Tesco Malaysia contributed positively to the groups performance in Asia with sales
expanding 12% for the financial year 2011/2012. This was mainly contributed by new
stores, aggressive promotions and investments in human capital. During this period,
the company opened eight new stores, bringing the total number of stores to 46 in
Peninsular Malaysia.
The growing affluence of the rising

middle-class in Kuala Lumpur is reflected
in the increasing demand for international
consumer goods. This is why Japanese
investors and retailers have expanded into
Malaysia to take advantage of the
growing domestic demand.
Katsuko Shioya, Partner, International and Transaction
Tax Services, Ernst & Young Shinnihon Tax
25
Strategic
location
Connected
transportation
network
What
makes up
well-developed
infrastructure?
Well-developed
infrastructure
Developed
industrial
parks and
specialised
parks
Strategic location
Comprehensive
telecommunication
networks
Fa c t b o x
Selected
commercial and
cargo airlines in
Kuala Lumpur
Air Asia
Air Asia X
Air Astana
Air China
Air India
Bangkok Airways
Cargolux
Cathay Pacific
China Airlines
China Eastern Airlines
China Southern Airlines
Etihad Airways
Emirates Airlines
EVA Airways
Federal Express Corporation
Firefly
Garuda Indonesia
KLM Royal Dutch Airlines
Korean Air
Kuwait Airways
Japan Airlines
Jet Star Asia Airways
Lufthansa
Malaysia Airlines
Oman Air
Qatar Airways
Royal Jordanian Airlines
Singapore Airlines
Thai Airways
TNT
United Parcel Service
Source: Kuala Lumpur International

Airport website
26
One of Kuala Lumpurs inherent competitive advantages is its location at the crossroads of international sea and air travel routes, as well as the European and Pacific
time zones. Global and regional connectivity is seen by our survey respondents as
the most attractive characteristic of Malaysia as an investment destination. In the
same survey, 68% perceive Malaysia as a gateway to the ASEAN, Asian or global
markets. However, a strategic location alone is insufficient. It has to be supplemented
by connectivity and accessibility.
Developed infrastructure is a major prerequisite for investors in search of new
business opportunities. Unsurprisingly, 56% of our respondents indicated that
infrastructure had a high impact in their decision to invest or operate in Kuala Lumpur.
Recognizing this, Kuala Lumpur has made investments in transportation and digital
infrastructure a priority to support the rise of the city as an investment destination.
Connected transportation network

Air transportation
Kuala Lumpur has three international airports. It is within a three-hour flight radius
to most ASEAN capitals and a six to eight-hour flight radius to the other key business
centers such as Hong Kong, Beijing, Bangalore, Dubai, Tokyo and Sydney. Budget
air travel has become common in Asia and this has also increased the ability of MNCs
to access the Asian market from Malaysia.
Flying radius from Kuala Lumpur
ina ion
Ch ulat on
p
po billi
1.3
ast
le E ion
dd
Mi ulat illion
p
po 2.1 m
20
ia
As
uth ion
So ulat on
p
po billi
1.6
ore
gap
Sin karta
Ja thin
wi rs
2h
ur
mp
Lu
a
l
a
Ku
ia
As
ast
the tion
u
So ula lion
p
po 8 mil
59
Source: IMF World Economic Outlook database 2009 and EIU ViewsWire
hai g
ang on
Sh ng K
Ho ijing
Be kyo
To thin
wi s
r
6h
rs
4h
ia
As hina)
st
Ea cl. C ion
(ex ulat illion
p
po 4.2 m
22
Well-developed infrastructure reduces the effect of distance

between regions, integrating the national market and connecting
it at low cost to markets in other countries and regions."
Global Competitiveness Report, World Economic Forum, 2010 - 2011
Network of highways and railways

Kuala Lumpur is the nucleus for Peninsular Malaysias comprehensive network
of highways and railways. Companies have become increasingly reliant on this
network for the smooth flow of goods and services in a global supply chain.
Current network
Future network
Highways
479.6 miles of tolled road from
North to South of Peninsular
Malaysia
ASEAN Rail Express (ARX)

Containerized service between
Kuala Lumpur and Bangkok
Plans to expand this to link
Singapore, Vietnam, Cambodia,
Laos, Myanmar and China
Rail
Various intercity rail links with
Kuala Lumpur as the main
transit hub
28 minutes from Kuala Lumpur
International Airport to city
center
Which of the following best describes

your perception of Malaysia as an
investment destination?
A gateway to ASEAN
39%
A market in itself
27.1%
A gateway to Asia
18.6%
A gateway to the global market
11%
Other
Mass Rapid Transit

Integrated with existing rail
transportation network and bus
routes
Comprising 31 stations
1.2 million passengers
Opens in 2017
4.2%
Source: KL Calling: the rise of Kuala Lumpur as an
Efficient seaport
More than 90% of Malaysias trade is carried out by sea via seven international
ports. Port Klang is within the GKL radius and is Malaysias busiest container port,
managing almost half of the countrys container load. This port has state-of-the-art
systems for fast cargo clearance and transaction, and comes with deep-water
facilities to cater to the worlds largest ships.
Malaysia is an attractive destination for investment, thanks

to its economic and political stability with relatively developed
infrastructure. This is why British American Tobacco, besides
its public listed business entity, has chosen Malaysia as the
location for its Global IT hub, Regional Product Development
Centre and Asia Pacific Finance Shared Services Centre.
William Toh, Managing Director, British American Tobacco (Malaysia) Berhad
27
Developed industrial parks and specialized parks

Government agencies and private developers are continuously planning and
developing industrial parks to meet the increasing demand for industrial land and
ecosystems. Approved commercial activities in the Free Commercial Zone (FCZ)
are subject to minimal Customs formalities. The Free Industrial Zone (FIZ) offers
duty-free import of raw materials, component parts,
machinery and equipment required directly in the
manufacturing process for export-oriented
manufacturing companies. Most of the largest FCZs
and FIZs are concentrated in GKL such as the Port
Klang Free Zone.8
3,033
technology
companies have
benefited from
Technology Park
Malaysia
Kuala Lumpur also has specialized parks such as the

Technology Park Malaysia (TPM) to cater to the needs
of technology-intensive industries and research and
development (R&D) activities. This Park provides
fourth generation incubation programs that offer full facilities including premises,
shared-services, continuous technical advisory support services, and access to
funds, market, technology and commercialization. Some 3,033 technology
companies have benefited from TPMs facilities and infrastructure and 28 homegrown TPM companies are listed on Bursa Malaysia.9
Case study
BMW Group Malaysia's headquarters in Kuala Lumpur

serves as one of its strategic touch points for its
growth plans in Southeast Asia
BMW Group Malaysia was established in Malaysia in 2003. The company has invested
significantly to set up the requisite infrastructure for Malaysia to become a hub for the
BMW Group, from local assembly to ownership to after sales.
BMW Group Malaysia carries out five main functions, three of which are centered in
Cyberjaya, Kuala Lumpur:
National headquarters in Cyberjaya that oversees the Wholesale, Retail and After Sales
of BMW, MINI and BMW Motorrad in Malaysia
Regional Group Data Centre in Cyberjaya that houses one of three global hubs for
end-to-end IT services
Regional training centre in Cyberjaya, where specialists from
all around the Asia-Pacific region come to be trained
Parts distribution centre in Port Tanjung Pelepas, Johor which
serves 19 markets in Asia-Pacific and is rated among the top
five BMW warehouses worldwide
Assembly facility in the Kulim Hi-Tech Industrial Park, Kedah
8
9
28
MIDA website
Technology Park Malaysia website
Comprehensive telecommunication networks

Malaysia has invested substantially in providing an affordable and accessible
telecommunication network, to increase the take-up and utilization of technology.
For example, Malaysia has reached a mobile penetration rate of 121%.10
Broadband penetration has seen an impressive increase from a penetration rate
of 31.7% in 2009 to 55.6% in 2010. In the third quarter of 2011, the broadband
penetration rate for households was over 61%.
Kuala Lumpur has some of the countrys most advanced network systems. Under
the ETP, there are developments towards creating a diagnostic services nexus to
achieve scale in domestic radiology and telemedicine for international outsourcing.
The goal is for Kuala Lumpur to become the diagnostic services hub for the region.
This is being developed by General Electric (GE), in conjunction with local partners.
Fa c t b o x
Kuala Lumpur Tower

Completed on 1 March 1995
Used for communication purposes
and features an antenna
that reaches 421-metres
Seventh tallest
telecommunication
tower in the world
121% mobile
penetration in
Malaysia
61%
broadband
penetration
rate for
households
Kuala Lumpur serves as our corporate headquarters for

ASEAN. We see huge growth potential for Malaysia and
our focus for GE is to play a key role in supporting the
countrys goals towards becoming a high income nation
by 2020. We are excited by the opportunities that
initiatives such as the ETP present. I am very proud of
our entry point project on a diagnostics service nexus
with our Malaysian partners and look forward to
announcing upcoming initiatives under other NKRAs.
Stuart Dean, CEO of GE ASEAN
Expatriate living in Malaysia for 10 years
10
InvestKL website
29
Why is
Kuala Lumpur
a magnet for
talent?
A magnet for talent

Young,
well-educated
workforce
Globally
competitive
workforce
With its strong economic pull, talents from across the country and the rest of the
world are being drawn towards Kuala Lumpur. It is projected that the population in
GKL will grow from 6 million in 2010 to 10 million by 2020. This increment will
stem from the baseline population growth of 1.6 million people in 2010 with the
remaining from both domestic and international immigration.11
Malaysia, along with a number of Asian countries, is experiencing a reverse migration
trend. Young, well-educated talents who went to the West for education and career
opportunities, and who once might have stayed permanently in those countries, are
choosing to return home. Malaysia has been quick to latch on to this trend by establishing
Talent Corporation Malaysia (TalentCorp) to engage with the Malaysian diaspora
and interested foreign talents to encourage and facilitate their move to Malaysia.
20 public
universities
33 private
universities
Young, well-educated workforce
More than
400 colleges,
polytechnics,
and industrial
training
institutions
Malaysia has a distinct advantage over her regional peers, with her large base of
relatively young and well-educated talent. Literacy rates in Malaysia have reached
nearly 93%. More than 50% of graduates from institutes of higher learning studied in
the fields of social science, business and law or science, mathematics and computer
studies.
With Malaysias colonial past and multi-racial demography, most of her citizens are
multi-lingual: fluent in English and other languages such as Bahasa Melayu and
various Chinese or Indian dialects. This is an added advantage in global business
since Asian markets present MNCs with large-scale business opportunities and market
share. According to our survey, 35.9% of respondents consider access to a highly
qualified workforce as one of Malaysias most attractive characteristics.
Globally competitive workforce

Recently, MNCs have changed their talent strategy in relation to new markets like
Malaysia. In the past, companies may have parachuted leaders from the headquarters
to manage large-scale operations in Malaysia. Today, many companies recognize the
caliber of local talent and have started grooming them for leadership positions, even
though this internal pipeline development requires time and investment.
Fifteen years ago, 90% of our managers were expatriates

from the US. Through knowledge transfer, development of
expertise and exposure to international markets, Malaysian
talents have become more central in our operations.
Suresh Kumar Shunmugam, Managing Director, Engine Services (Malaysia), GE Aviation
11
30
Economic Transformation Programme, PEMANDU, 2010
Viewpoint
Building a global talent pool for Malaysia

Talent Corporation Malaysia Berhad (TalentCorp) was
established in 2011 and is tasked with establishing initiatives
that will help Malaysia meet her talent needs. Johan Mahmood
Merican, CEO of TalentCorp shares his insights on developing
a global talent pool for Malaysia.
As the global economy shifts towards Asia, how can Malaysia

leverage on her talents as a value proposition?
Malaysia is at the center of Asia and has long-standing economic
and cultural ties to the three fastest growing economies in the region:
China, India and Indonesia. Being multicultural and multilingual,
Malaysians are able to relate and communicate easily with these
countries, making us an ideal base to do business in the region.
How has Malaysia fared in building the capabilities of her local
talent?
The good news is that Malaysia has done well in building up the
capabilities of her local talents. The bad news is that other countries
are aware of it, and we now have to compete with them to keep our
talents. For instance, in the oil and gas sector, we have a long history
in building up our talent pool. These talents and experts have become
instrumental in our value proposition to attract more investments
in the sector and in Malaysian companies successful forays abroad.
There is a perception among MNCs who operate here that there
is a lack of qualified workforce. What is your take on this?
This is not a concern that is unique to Malaysia. We are in the middle
of a transformation journey; it is no longer business as usual. For
example, one of the major challenges for the electronics sector is
to become less assembly or manufacturing orientated and move
towards knowledge-based R&D work. Naturally, we need different
skills set and expertise. We will drive capacity building programs
towards this but it may take time for demand and supply to reach
equilibrium.
With regard to talent, does Malaysia intend to reduce the import
of foreign talent and develop her own talent?
Malaysia views foreign talents as complementary and not substitutes
for local talent. Even if we build up our own talent, we will still
need foreign talents and expertise as part of knowledge transfer
and sharing of best practices.
Are there new measures to encourage the entry of foreign talent
to Malaysia?
Policies are in place to better facilitate the entry and retention
of top talents. For example, the Residence Pass-Talent caters to
highly skilled expatriates who seek to continue living and working
in Malaysia.
Fa c t b o x
TalentCorp's Residence Pass-Talent

Introduced in April 2011
Aims to attract and retain top talent in the country
with a range of benefits
Offered to highly qualified expatriates seeking to
continue living and working in Malaysia on a long term basis
Enables spouse to apply for employment in Malaysia
Being able to
work and live in
Malaysia for up
to
years
10
Dependents
over 18 years of
age, parents and
parents-in-law are
eligible for a 5-year
Social Visit Pass
Spouse
change
and
employers children
Being able to
without having to
renew the Pass
(under 18 years
old) are eligible
for the Pass
Spouse can also
Spouse and
children (under
18 years old)
are also eligible
to
seek
employment
without the need
to apply for an
Employment Pass
study
31
What
to invest
in
What to invest in
Financial services
consisting of
Retail banking
Venture capital, private
equity and hedge funds
Business banking
Islamic banking
Capital market
Micro finance/developmental
finance institutions (DFIs)
Insurance and takaful
Investment management
(asset management,
wealth management)
Kuala Lumpur is rising as a global financial center

The financial services sector has progressed beyond its role as a facilitator of
growth to become a growth sector in its own right. It generates value-added
business, attracts investments and creates employment. In 2011, the financial
services sector contributed 11.6% to the Malaysian GDP.1
Case study
Projected incremental
GNI contribution by
2020: US$38b
Kuala Lumpurs Tun Razak Exchange 2

The Tun Razak Exchange (TRX) project,
which was launched in July 2012, aims
at strengthening Kuala Lumpurs position
in the financial services sector. The
project is expected to attract over 250
MNCs and make the city a center for
international finance, trade and services.
Projected
additional jobs
created by 2020:
A number of incentives are in the pipeline

for the development of the TRX, including
an income tax exemption of 100% for 10
years, stamp duty exemption on loan and
service agreements, industrial building
allowances and accelerated capital
allowances.
New trends and demand for higher

value financial services
Globalization and volatile financial markets have

made the control of currency and interest rate
risks crucial to a companys bottom line. In
response, many companies are considering
setting up specialized treasury units to hedge
and manage interest, liquidity and currency risks,
manage surplus funds and reduce overall finance costs. Malaysia is also expecting
growth through various other opportunities within the financial services sector
such as commercial banking, investment banking, insurance, asset management
as well as other areas including DFIs.
275,400
1
Bank Negara Malaysia and Department of Statistics Malaysia
2
Kamarul Yunus, Raising KLs financial stature, New Straits Times, 31 July 2012
Malaysias Treasury
Management Centre tax
incentives include partial
exemption from corporate
income tax and full exemption
from stamp duty and
withholding tax, as well as
concessions on personal
income tax for expatriate
employees. These incentives
are part of the Governments
initiative to develop the
financial services industry and
to make Malaysia a preferred
location for regional treasury
operations.
Julian Wong, Partner, International Tax
Services, Malaysia, Ernst & Young
33
Bank Negara Malaysia introduces liberalization measures

to boost the financial sector
Malaysias financial services sector consists of the conventional financial system
and the Islamic financial system, which co-exist and operate in parallel. The Central
Bank of Malaysia (Bank Negara Malaysia) plays a key developmental role to
ensure sustainable growth of the sector. This includes introducing liberalization
measures to pursue opportunities that will contribute to the development of the
Malaysian financial sector. These measures include permitting licensed onshore
banks to trade foreign currency against another foreign currency with a resident
and permitting a resident to convert existing ringgit or foreign currency debt
obligation into another foreign currency.3
Malaysia as an Islamic financial center
Malaysia's total
assets in the Islamic
banking sector
grew by 23.8%
to US$135.8b
in 2011.
Trade volume with
China and India is
expected to reach
US$100b
and US$15b
In 2011, Bank Negara Malaysia released the Financial Sector

Blueprint 2011-2020 to ensure a more competitive, diversified
and dynamic financial sector that is fully integrated within the
regional and international financial systems. An important focus
of the Blueprint is the internationalization of Islamic finance
and the development of Malaysia as an international Islamic
financial center, in tandem with the global rise in demand for
Islamic banking and finance.
Islamic finance has experienced tremendous growth since its
global debut in the 1970s.4 Along with the Middle East, Malaysia
is a core market for Islamic banking as well as a sphere for growth.
73.2%
of global
issuance
of sukuk
originates
from
Malaysia.
Increase in trade with China and India increases the demand

for onshore and offshore financial services
Trade is another growth driver for Malaysias financial sector. Trade volume with
China and India is expected to reach US$100b and US$15b respectively in 2012,
and is likely to increase as both countries continue to become the growth engines
for the global economy.5 As a result, financial institutions can capitalize on the
increase in demand for onshore and offshore financial services.
respectively in 2012.
3
Bank Negara Malaysia website
4
Asian Banker website
5
The Star online website, accessed 13 March 2012; New Straits Times website, accessed 15 March 2012
34
Viewpoint
Malaysias potential as
an Islamic banking hub
attracts Japanese MNCs
Mizuho Corporate Bank (Malaysia)
Berhad is a subsidiary of Mizuho
Corporate Bank Ltd with presence
in Malaysia for nearly 30 years.
Mr. Hiroyuki Yoshinari, Managing
Director/Chief Executive Officer
for the bank shares insights on the
companys growth strategy and
involvement in the Islamic finance
industry.
What is Mizuhos Asia growth strategy?
Mizuho intends to play a major role in
facilitating trade and business activities
between Malaysia and other countries
through its trade finance and fund-raising
services, advisory capabilities and other
financial services. Malaysia was a critical
component in our expansion strategy.
It was the missing piece in a puzzle. Our
presence in Malaysia is our gateway to
the ASEAN region in addition to being a
global hub for Islamic finance.
What was behind Mizuhos decision to
make Malaysia its Islamic finance hub?
Islamic finance is one of the banks five key
focus areas, apart from financial solutions,
cross-border business, environment-related
business and infrastructure finance. We
believe Malaysia has strong Islamic finance
infrastructure backed by the launch of the
Malaysia International Islamic Finance
Center (MIFC).
Does Mizuho plan to expand its presence
in Malaysia?
Yes, we do. We see great opportunities in
Malaysia as there are over 1,500 Japanese
companies operating here, with the highest
concentration in Kuala Lumpur. Malaysia
offers immense business opportunities and
more Japanese companies are expected to
play a significant role in the Malaysian
economic development. Furthermore, we
will provide our best possible solutions for
Malaysian companies and MNCs by using
Mizuhos world-wide network. In terms of
growing in the Islamic finance industry, we
are still new in this market and are taking
small but steady steps to expand our
business in this area.
35
What to invest in
Business services
consisting of
IT services and outsourcing
Business process outsourcing
Professional services
Aviation maintenance, repair and overhaul services (MRO)
We selected Malaysia for

our global delivery center
based on the strong publicprivate partnership in the
country, its competitive
business model, Cyberjaya
location, and the talent and
skills that the Malaysian
people have to offer. These
global delivery centers are
critical to IBMs ability to
offer our clients support at
any level: local, regional
and global. Our new center
in Cyberjaya is now a core
component of that global
network.
Craig Tucker, Director, IBM Global
Delivery Center, Cyberjaya
(Malaysia)
The business services sector is growing rapidly in Kuala Lumpur

Although relatively small today, the business services sector in Malaysia is growing
rapidly. Between 2000 and 2010, the GDP contribution of business services grew
by 7.9% annually, making it the second fastest growing sector of the Malaysian
economy. Information Technology (IT) services and outsourcing, engineering
services, management services, legal and accountancy are significant contributors,
with IT services and outsourcing being the largest sub-sector.6 Much of this is
centered in Kuala Lumpur.
Global trends and Kuala Lumpurs value propositions

spur growth
Three main reasons why there are increasing demand and opportunities in the
business services sector:

The boom in IT-enabled services and technology has spurred demand for data
centers, business process outsourcing (BPO) and cloud-computing services,
especially in Asia. For example, the data center industry in Asia-Pacific is expected
to grow by 16.3% annually, reaching US$3.4b by 2014.7
Kuala Lumpur's well-developed infrastructure, accessible broadband networks,

intensive fiber-optic cabling and availability of skilled talent allow Kuala Lumpur
to position itself as a prominent destination for offshore outsourcing. These
outsourcing services range from the back-office operations to activities moving
up the value chain, such as research, design and development to downstream
activities, such as marketing.
Kuala Lumpur is virtually free of natural disasters. After the natural disasters in
Thailand and Japan adversely impacted industry growth and supply chains,
exposure to natural disasters has become an important consideration for MNC
companies in search of offshore locations.
Malaysia has existing capabilities and comparative advantage

to be globally competitive
Building on Malaysias existing strengths and competitive advantage, Malaysia has
become one of the preferred locations for outsourcing business processes, systems
integration, IT consulting, data centers and MRO services.
6, 7
36
GNI contribution by
2020: US$24.6b
Projected additional
jobs created by 2020:
107,000
Building strong outsourcing and data center capabilities
To further enhance Malaysias attractiveness in business services, Malaysia
provides incentives and tax policies for investors to set up centers of operations
such as OHQs and Global/Regional SSCs. At the end of 2011, there were 3,031
regional establishments in Malaysia and this number is expected to increase.8
In the same year, four data centers with a combined investment value of US$240.6m
were developed and are expected to be fully operational in 2012. In 2011, 17 new
outsourcing projects were established by MNCs such as IBM, Paypal, Schlumberger
and Eli Lilly.
Aviation MRO services have significantly surpassed target

The global MRO sub-sector is growing rapidly and Malaysia is developing towards
becoming a regional MRO services hub. A joint venture between MAS Aerospace
Engineering and GMR Hyderabad International Airport Limited has been established.
This enables higher value-added MRO work to be channeled to the MAS Aerospace
Engineering facility in Kuala Lumpur.9
Developing future growth sub-sectors

The next wave of government initiatives for the business services sector focuses
on developing business services areas with high potential for future growth,
exports and job creation. These include pure-play engineering design services,
green technology and Islamic banking knowledge process outsourcing.
We chose
Malaysia as the
multi-lingual
and skilled
workforce is ideal for our
Regional and Global Support
Services. Our regional center
in Kuala Lumpur offers service
and support to customers
across Southeast Asia. It also
provides operational support
for our global payment service.
This demonstrates our
commitment to offer a safer,
more secure online payment
platform to millions of
customers in the region,
especially in Southeast Asia.
Case study
Hewlett-Packard (HP) in Malaysia
John McCabe, Senior Vice-President,

Worldwide Operations, PayPal
As a global company operating in more than 170 countries, HP believes in

investing for growth in strong maturing markets, such as Malaysia, to help reach
out to their customers. HP Malaysias headquarters was established in Kuala
Lumpur in 1978 and since then HP has continued to grow its presence across
Malaysia. In October 2010, the HP Global Center in Cyberjaya was inaugurated.
This 63.3 acre, state-of-the-art HP facility is the single largest facility of its kind by
a multinational technology company in Malaysia. HPs investment
in Malaysia is the result of a growing customer base, Malaysias
strategic location, supportive Government initiatives and the
developed infrastructure of Cyberjaya.
8
9
Malaysia Investment Performance 2011, MIDA, 2012

GMR Group website
37
What to invest in
Healthcare
consisting of
Medical technology and manufacturing
Pharmaceutical and biotechnology
Health services
Healthcare demand driven by domestic consumption
GNI contribution
by 2020:
US$11b
181,000
The Malaysian healthcare sector is primarily driven by domestic consumption of

healthcare products and services. This is especially apparent in Kuala Lumpur, with
the shifts in demographics, greater affluence and the changing lifestyle of the
Malaysian population. Malaysias overall healthcare spending is 5% of GDP which is
relatively higher compared to the majority of its peers such as Indonesia, Singapore,
China and India.10
Malaysias manufacturing base provides the foundation

for high-value healthcare products
Malaysia is one of the largest manufacturers of rubber-based medical consumables,
supplying 80% of the worlds market for rubber catheters and 60% for rubber gloves.11
As Malaysia moves towards a higher income economy, greater emphasis will be on
producing higher value products. Over 180 local and MNC medical device manufacturers
are currently involved in high value products such as orthopedic products, diagnostic
radiographic equipment and medical electrodes. The government is currently providing
opportunities for investors to move into manufacturing and R&D of medical technology
sub-sectors such as medical devices, diagnostic equipment and healthcare technology.
Malaysia supplies
80% of the world's
market for rubber
catheters and 60%
for rubber gloves.
Case study
Based in Kuala Lumpur, IHH Healthcare Berhad is the

world's third largest listing for 2012 12
In 2012. Malaysias IHH Healthcare
Berhad (IHH) raised nearly US$2b from
its initial public offering (IPO), making
it the third largest IPO in the world this
year, after Facebook Inc. and Felda Global
Ventures Holdings Berhad. This listing
will further enhance Malaysias presence
in the global healthcare sector.
At US$0.89 per share, IHHs current
market capitalization is approximately
US$8b. This makes IHH the second
largest listed healthcare provider after
10
11
12
38
HCA Holdings Inc., a US-based hospital

operator with US$12.25b market
capitalization.
IHH is the largest hospital operator in Asia.
Based in Kuala Lumpur, it offers premium
healthcare services in Singapore, Malaysia,
Turkey, China, Hong Kong and India.
IHH offers a full spectrum of integrated
healthcare services from clinics to
hospitals, quaternary care and postoperative rehabilitation centers,
ambulatory care and medical education.
Economic Transformation Programme, Annual Report 2011, PEMANDU, 2012

MIDA website
Joyce Koh, Elffie Chew, IHH Healthcare raises $2 billion in third-biggest IPO of 2012, Bloomberg, 12 July 2012
Viewpoint
Insights on the growth opportunities and future prospects

within the Malaysian healthcare sector
KPJ Healthcare Berhad (KPJ) is the leading healthcare service provider in Malaysia.
KPJs portfolio includes healthcare technical services, hospital development and
commissioning, nursing, health sciences and continuous professional healthcare
education, KPJ Healthcare University College, pathology services, central procurement
and retail pharmacy. Datin Paduka Siti Sa'adiah Sheikh Bakir, Managing Director
of KPJ Healthcare Berhad, shares some insights into Malaysias healthcare sector.
What do you think is the future for Malaysias

healthcare sector?
The Malaysian healthcare industry represents
one of the most dynamic and vibrant sectors
of our economy and has very positive future
prospects. It is anticipated that the nations
private healthcare industry can grow up to
15% per annum. By 2015, Malaysias private
hospital services are expected to be worth
US$5.9b. KPJs own experience has shown
that the healthcare sector is very resilient
and is very defensive against volatile market
movements over an extended period.
How has KPJ contributed towards nationbuilding in Malaysia?

KPJs future expansion plans and investment
amount to US$270.9m over the next three
to four years, through six of its new hospital
development projects which are listed in the
healthcare sector of the countrys ETP under
Entry Point Project 4. These projects are
currently at different stages of development,
and are expected to collectively create more
than 3,000 jobs as well as generate an estimated
US$375m in GNI for the country. As we are
a customer-driven organization, we will
evaluate all service offerings and allocate

resources respectively to these areas based
on consumer demand. Whatever services we
do offer, we make great efforts to ensure that
they are of the highest quality and are in line
with the demands of the market.
What growth opportunities has KPJ
identified in the region and internationally?
We have identified medical tourism and aged
care as potential growth areas. The increasing
aging population throughout Asia will put
increasing demands for such developments
as aged care centers. Acute care and geriatrics
have been identified as growth areas and will
play a key role in KPJs service development.
KPJ Healthcare acquired 51% share of Jeta
Gardens, a viable aged care business in
Brisbane, with immense growth potential.
KPJ has committed to expanding Jeta's
services in Australia and we will also set up
similar centers in Malaysia. This means a
further expansion and diversification of our
business, namely catering to specialized
niche markets (i.e. aged care) in Malaysia.
39
Malaysias pharmaceutical products are globally recognized

Malaysian pharmaceutical manufacturers have the capability of producing medicine
and developing off-patent generic and herbal products. Since Malaysia is a member of
the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation
Scheme, Malaysias pharmaceutical products are popular among countries in the
European Union, Australia and Canada. New investments in state-of-the-art technologies
and compliance with international standards have also enabled Malaysian companies
to be strategic outsourcing partners for MNCs.13
Healthcare tourism presents a growing opportunity

Healthcare tourism has immense potential in Malaysia, backed by the aggressive
promotion of Malaysia as an overall luxury
tourist destination. Malaysia expects to
attract 1.9m health tourists contributing
US$3.5b in revenue by 2020.14 The Malaysia
Healthcare Travel Council (MHTC) was
established under the Ministry of Health
Malaysia (MOH) as the agency to develop
and promote the healthcare travel industry.
1.9m health
tourists contributing
US$3.5b in
revenue by 2020
13
14
40
MIDA website
What to invest in
Oil and gas

consisting of
Upstream activities
Midstream activities
Downstream activities
Malaysia has an abundance of oil and gas within its borders

Malaysias oil reserves are the third highest in the Asia-Pacific region after China
and India. Petroliam Nasional Berhad (PETRONAS), which ranks among the largest
companies in the world, responsibly manages and adds value to Malaysias oil and
gas resources as well as ensures the orderly and sustainable development of the
countrys petroleum industry.
The Companys headquarters, the PETRONAS Twin Towers, also the worlds tallest
twin towers, are located in Kuala Lumpur. Various oil and gas, as well as related
companies are also located at the Malaysian iconic landmark.
The Petroleum Management Unit (PMU) of PETRONAS manages domestic oil
and gas assets, by pioneering innovative solutions to drive business growth in the
Malaysian oil and gas industry. PETRONAS Exploration & Production (E&P)
subsidiary, PETRONAS Carigali Sdn Bhd (PCSB), is a hands-on operator that
works alongside a number of petroleum multinationals through Production Sharing
Contracts (PSCs) to explore, develop and produce oil and gas in Malaysia.
In the last 30 years, the oil and gas sector has been the cornerstone of Malaysia's
growth, contributing approximately 20% of the national GDP. By 2020, the oil and
gas sector is estimated to contribute US$41.1b in GNI and create approximately
52,300 jobs within the sector.
Fa c t b o x
PETRONAS
GNI contribution
by 2020:
US$41.1b
52,300
40% of Malaysia's
total revenue comes
from petroleum
resources.
PETRONAS is Malaysias National Oil Company, and wholly-owned by the Government.

Established in 1974, PETRONAS is ranked among the largest companies in the world
with a proven track record in integrated oil and gas operations. Its business activities
include the:
(i) exploration, development and production of crude oil and natural gas locally

and abroad;
(ii) liquefaction, sale and transportation of Liquefied Natural Gas (LNG);
(iii) processing and transmission of natural gas, and the sale of natural gas products;
(iv) refining and marketing of petroleum products;
(v) the manufacture and sale of petrochemical products;
(vi) trading of crude oil, natural gas, LNG, petroleum products and petrochemical

products; and
(vii) shipping and logistics relating to LNG, crude oil and petroleum products.
Committed to ensuring long-term business sustainability,
PETRONAS also strives to responsibly manage natural
resources in a way that contributes holistically to the
well-being of the people and nations where it operates.
41
Global trends validate the importance of oil and gas sector

in Malaysia
Two factors have cemented oil and gas as Malaysias most valuable resource:
Global demand for oil and gas has never declined, and is expected to continue
to shift towards developing economies till 2020.
Crude oil prices have been on the rise since 2010, spurred by the global
economic recovery, ample liquidity and political unrest in the Middle East and
North African region in 2011. The high crude oil prices are a boon for Malaysia,
a net exporter of oil and gas.
Enhancing oil recovery
US$12b of
EOR investments
Increase in oil
recovery from
36% to 50%
Domestic oil and gas production is projected to decline by 1-2% yearly by 2020. In
January 2012, PETRONAS signed two new PSCs with Shell Malaysia for enhanced
oil recovery (EOR) projects offshore Sarawak and Sabah. This project, the worlds
largest offshore EOR project, is expected to see the average recovery factor increase
from 36% to 50% in the Baram Delta and North Sabah fields. Totaling approximately
US$12b over the next 30 years, the EOR project is expected to contribute towards
the development of local talent in a niche technology, among others.
Malaysia: a regional oil storage and trading hub

Malaysia is primed to become an oil storage and trading hub for the Asia-Pacific
region. A pilot project to develop an Independent Deepwater Petroleum Terminal
(total storage capacity of 16.4 million cubic feet of petroleum) is currently
underway in Pengerang, Johor. The Global Incentives for Trading (GIFT) program
was introduced to encourage global petroleum trading companies to use Malaysia
as their regional base to enter the markets of China, India and Southeast Asia.
These companies can trade in petroleum, petroleum-related products, selected
commodities, including minerals and carbon credits.
Developing marginal fields and intensifying domestic exploration

The Government aims to increase the production capacity of small oil fields by 5%
per year up to 2020 in order to meet domestic demand and to sustain crude oil
exports. To promote oil and natural gas exploration and development, the
Government introduced new tax and investment incentives under the Petroleum
Income Tax Act. PETRONAS introduced the Risk Service Contracts (RSC) in 2011,
a new petroleum arrangement for the development of marginal fields. Instead of
trying to improve the PSC terms, this model strikes a balance in the sharing of risks
with fair returns. Under this arrangement, PETRONAS is the project owner while
contractors are service providers with equity share in the RSC. Currently, PETRONAS
has entered into three RSCs with companies such as Coastal Energy, Petrofac and
ROC Oil Company Limited. The development of marginal oil fields will receive an
added boost with the deployment of PETRONAS first floating LNG liquefaction
facility, scheduled to come on stream in 2015. PETRONAS is also focusing on the
development and deployment of carbon dioxide (CO2) management technologies to
develop high CO2 gas fields domestically and abroad.
Malaysia was the

2nd largest
exporter of LNG
after Qatar in 2011.
LNG as a cleaner source of energy

The global energy consumption is forecasted to grow by 40% by 2035, and consumption
of natural gas to generate electricity in Europe is forecasted to increase to 25%. Gas
has been increasingly seen as the cleaner source of energy. Malaysia was the second
largest exporter of LNG after Qatar in 2011. PETRONAS has established Malaysias
first re-gasification terminal in Melaka. The worlds first-of-its-kind re-gasification unit
on an island jetty (JRU) has a capacity to receive, store and vapourize up to 3.8 million
tonnes per annum (530 million standard cubic feet per day) of LNG, which will be
imported from various supply sources globally. 2012 PETROLIAM NASIONAL BERHAD (PETRONAS)
All rights reserved. PETRONAS makes no representation or warranty, whether expressed or implied, as to the
accuracy or completeness of the facts presented. PETRONAS disclaims responsibility from any liability arising out
of reliance on the contents of this publication.
42
VIEWPOINT
Shell sees robust growth in Malaysias oil and gas sector

Shell has been active in Malaysia since 1892. Its business activities in Malaysia include Upstream International, Downstream,
Projects and Technology as well as several services hub businesses. Darrel Lourdes, Director of Human Resources of Shell
Malaysia Limited shares his insights about the oil and gas sector and its outlook in Malaysia.
Why did Shell choose to locate and remain

in Malaysia?
We have been in Malaysia for 120 years now;
therefore, growing in Malaysia is intuitive for
Shell. Malaysia is our Heartland and our
current contracts could easily sustain us for
another 30 to 40 years here. In addition,
Malaysia offers lower operating costs; has a
mature and diverse workforce with very concrete
industry experience; strong infrastructure
and an expat friendly environment. The
government is also committed to make Malaysia
a business friendly environment for both
locals and MNCs.
What are some of the challenges in the
Malaysian oil and gas sector?
Like any natural resources, oil in Malaysia
is depleting, especially when we have been
extracting and exploring around the same
areas for so long. However, this problem can
be overcome by developing new and better
technology that will help us sustain production
for many years to come. There are new

territories that we can explore around the
surrounding areas but these areas are often
within disputed territories and it would
need very strong government intervention.
Challenges will increase with time but
Malaysia is backed by good government
support, infrastructure and resources
(people). The transfer of technologies and
job opportunities will also be a key contributor
to boosting the rise of skilled workers in the
sector.
What is the outlook for oil and gas in
Malaysia and what are Shell's future
prospects in Malaysia?
There is definitely a greater emphasis on the
oil and gas sector in Malaysia. The government
is making a conscious attempt to improve it. An
example of a major attempt is the Refinery and
Petrochemicals Integrated Development
(RAPID) project which will further expand
the oil and gas downstream sector and attract
significant investments from MNCs. Shell is

currently conducting deep water exploration
activities in Sabah. High-technology drilling
methods are required for this and we are in
the process of developing them in the
coming few years.
Shell is also in the midst of exploring new
technologies in the area of EOR. This is
something completely new in this part of the
world. There is great potential for this
technology and activities which will soon
make Malaysia the hub for offshore EOR
activities.
Gas exploration is another area that has a high
potential in the Malaysian oil and gas sector
as Malaysia is well-endowed with natural gas
reserves. The majority of Shells activities in
Malaysia are centered on gas production.
The gas market is also growing as the world
begins to focus on green and sustainable
energy.
43
What to invest in
Electrical and electronics

consisting of
Electrical products
Consumer electronics
Industrial electronics
Electronic components (LEDs)
Well-established electrical and electronics sector
GNI contribution
by 2020:
Malaysias electrical and electronics sector is one of the most well-established and
largest sectors in the country. Malaysias success in electrical and electronics was
built up over the years since the enactment of the Free Trade Zone in 1971, which
attracted MNCs such as Clarion and National Semiconductor.15
Malaysia as a manufacturing base
Malaysia has become a strong manufacturing base for electrical and electronics
MNCs from Japan, Germany, USA, Taiwan and Korea.16 As a result, Malaysia is one
of the largest global exporters of semiconductor components. In 2011, electrical
and electronics was the leading sector in terms of foreign investments (US$3.2b)
and became Malaysias major contributor to output, employment and exports.17
This has allowed the movement into niche areas, such as medical devices, electronic
devices for the renewable energy industry, devices and sensors for high performance
agriculture, nano-electronics and other specialized electronics and services.
157,000
Moving up the value chain
US$16.7b
FDI in 2011:
US$3.2b
Services such as business processing outsourcing, information technology outsourcing

(ITO), shared services outsourcing, and warehousing tend to be manufacturingrelated and thrive well around electrical and electronics clusters.18 For example,
Intel runs one of its three Global IC Design Centers in Malaysia. Malaysia is also home
to ASICs design company, Altera, which is the groups largest offshore R&D center,
involved in designing next generation field-programmable gate array (FGPA) chips.19
Opportunities in LED products

Global demand for light emitting diodes (LED) is driven by LED televisions, mobile
devices and replacement of conventional lighting as legislation by governments
and environmental awareness among consumers increase. The global revenues from
the LED lighting market is estimated to increase at 30% per annum, amounting to
almost 65b by 2020, almost 60% of the overall lighting market.20
The Malaysian government recently decided to phase out the use of incandescent
lights or round bulbs and move towards adopting compact fluorescent lamps and
LED. As a result, LED product companies in Malaysia are either expanding or
15
Working Papers in Trade and Development, United Nations Economic and Social Commission for Asia and the Pacific, 2011
16
Economic Transformation Programme, Annual Report 2011, PEMANDU, 2012
17
MIDA Malaysia Investment Performance 2011, MIDA, 2011
18
New Economic Model for Malaysia Part 1, National Economic Advisory Council, 2010
19
Altera website
20
Lighting market report, McKinsey, 2011
44
manufacturing new LED test equipment or high brightness modules this year to
capture the rising global and domestic demand for LED.
30% growth per
LED lighting is also known as solid state lighting (SSL). Malaysia has the opportunity
to become the global hub for SSL. Four of the largest global SSL companies either
operate in or contract a significant portion of work to companies in Malaysia. They
perform a variety of operations ranging from R&D, wafer fabrication to packaging
and applications.
annum estimated
global revenues from
the LED lighting
market till 2020
Viewpoint
Knowles Electronics chooses to locate its International

Procurement Center in Malaysia
Knowles is a multinational company founded in 1946. It offers a range of microacoustic, electro-mechanical and related technology platforms. Vincent J.
Sweeney, Corporate Controller for Knowles Electronics, talks about the companys
decision to locate its International Procurement Center (IPC) in Malaysia.
What was behind Knowles decision to

locate its IPC in Malaysia?
Malaysias IPC tax holiday incentive coupled
with the FCZ facility was the perfect match
for the Knowles Global Distribution Model.
Being in the FCZ allows for fast transit time
as the majority of international carriers
have gateways in the FCZ linked with their
International Hub and Spoke system. We
can ship to the US and Europe within two
days transit time and to Asian countries
within one day. We also have very efficient
FCZ Customs procedures, which allow
Knowles to perform same day cross dock
with the shipments from our China factories
to worldwide destinations.
Did Knowles have to adapt to any
operational complexities in Malaysia?
We did not find any major operational
complexities in Malaysia. The majority of
Malaysians can communicate fluently in

English and some in Mandarin. The Customs
and various government agencies have
many years of experience working with
multinational companies - more than 40
years. MIDA offers attractive tax incentive
programs as well.
2014 Malaysia
to stop import and
sale of incandescent
lights or round bulbs
and move towards
adopting compact
flourescent lamp
and LED
Does Knowles have plans to increase its

decision-making functions in Malaysia?
Knowles' business continues to grow
organically, especially in Asia. Our
acquisition of Sound Solutions in 2011
significantly increased our global footprint
and broadened our
product offering.
We are currently
evaluating our
options for product
distribution and
procurement.
45
Who
can help
you
InvestKL offers customized

investment services; from formulating
plans for Greater Kuala Lumpur
and Asia, customizing incentives,
expediting approvals with government
agencies, securing talent, offering
relocation assistance to postinvestment advisory.
InvestKL helps companies set up
their operational headquarters,
international procurement centers,
regional distribution centers and
regional shared services in Greater
Kuala Lumpur and strategically
grow their business in Asia.
In doing so, InvestKL works with
government ministries, entities
and agencies such as MIDA,
BiotechCorp, HDC and MDeC.
Visit www.investkl.gov.my
Multimedia
Development
Corporation
MIDA is the Government's principal

agency for the promotion of the
manufacturing and services sectors
in Malaysia. MIDA is the first point of
contact for investors who intend to set
up projects in the manufacturing and
services sectors in Malaysia.
MDeC directs and promotes MSC

Malaysia, the countrys national
information and communication
technology initiative. It is designed
to attract world-class technology
companies while grooming the
local ICT industry.
Visit www.mida.gov.my
Visit www.mdec.my
(MIDA)
(MDeC)
Malaysian
Halal Industry
Biotechnology Development
Corporation
Corporation
(BiotechCorp) (HDC)
BiotechCorp is the lead development
agency for the biotech industry in
Malaysia and acts as a central contact
point providing support, facilitation, and
advisory services for biotech and life
sciences companies in Malaysia.
Visit www.biotechcorp.com.my
HDC coordinates the overall development

of the halal industry in Malaysia.
Visit www.hdcglobal.com
On light color background
InvestKL is a specialist investment

agency that was set up by the
Government to focus on attracting
and facilitating investments of large
global MNCs into Greater Kuala
Lumpur. It is under the purview of
the Ministry of International Trade
and Industry (MITI) and the Ministry
of Federal Territories and Urban
Wellbeing. It is also accountable
to PEMANDU, the Performance
Management and Delivery Unit
under the Prime Ministers
Department.
Malaysian
Investment
Development
Authority
rk color background
InvestKL
47
Appendices
Malaysia fact sheet
Politics
Long-term economic and social development
Prime Minister
Dato' Sri Mohd Najib
bin Tun Haji Abdul Razak
Political system
Parliamentary democracy with
constitutional monarchy
1975
1985
1995
2010
803.26
4.5
12.3
37.7
65.8
2015.65
0.3
15.7
45.9
68.8
4287.11
3.4
20.7
55
71.1
8372.83
1.7
28.4
72.2
74
2009
2010
2011
Current account of BOP, % of GNI

Trade balance, US$b
FDI, US$b
Total debt, % of GDP
External debt, US$b
16.9
-395.2
1.4
34.4
-
14.6
-472.5
9.1
53.1
7.26
11.3
-673.8
10.28
53.5
78.1
GDP per capita, US$

Inflation, %
Population, m
Urban population, % of total
Life expectancy, years
Source: World Bank
Currency
Ringgit Malaysia (RM)
Structural economic indicators

Composition of exports
(% of total) 2011
Rubber
1.9%
Source: World Bank, Economic Planning Unit
Others
8.5%
Oil and gas

11.9%
Tin
0.5%

Forestry
0.7%
Palm oil
9.3%
Long-term sovereign
credit ratings and outlook
Structure of GDP
by output
Agriculture, forestry & fishing
Mining
Manufacturing
Construction
Services
2010
7.9%
10.5%
24.2%
3.1%
53.2%
Ratings
Outlook
A3
Stable
Fitch
A-
Stable
Standard & Poor
A-
Stable
Moody
Source: Economic Planning Unit
Source: Guardian
Destination of goods
exports
Corruption Perception
Index
Manufacturing
67.7%

ASEAN
Far East
Newly industrialised economies
EU
North America
Rest of the world
2011
24.7%
24.7%
11.5%
10.4%
8.7%
20.0%
2011
Scoring: 10 highly clean, 0 highly corrupt
Developed economies (average)

Emerging economies (average)
Malaysia
Emerging Asia
7.7
3.5
4.3
3.3
Source: Corruption Perception Index, Transparency

International, 2011
Note: Conversion rate: RM3.2 = US$1
49
Methodology
Ernst & Young KL calling: the rise of Kuala Lumpur as an investment destination
survey is based on:
The attractiveness of Malaysia and Kuala

Lumpur to international decision-makers
Our evaluation of the reality of FDI in Kuala Lumpur is based on international

reports from the World Bank and Malaysian government sources such as the Central
Bank of Malaysia and the Economic Transformation Programme Annual Report.
The perception and outlook of Malaysia and
Kuala Lumpur by international decision-makers

We define the attractiveness of a location as a combination of its image, investors
confidence and the perception of a country or areas ability to provide the most
competitive benefits for FDI. Ernst & Young, Malaysia conducted the field research
from June till July 2012 via an online survey, based on a representative panel of
117 international decision-makers. These companies with international presence
were identified from the Ernst & Young database. The information has also been
verified through the individual companys websites.
Profile of companies surveyed:

sector respondents
Profile of companies surveyed:

job title
Financial services
CEO / President / Country Manager / Managing

Director / Managing Partner / Chairman / COO
18.1%
38.8%
Manufacturing
16.2%
Head of Department / Director

24.0%
Electrical and electronics

11.4%
CFO / Financial Controller

21.7%
Consumer products
9.5%
Chemicals
Business Executives
15.5%
8.6%
Business services
7.6%
Healthcare
6.7%
Oil, gas and energy
5.7%
Automotive
5.7%
Engineering and construction
5.7%
Wholesale and retail
3.8%
Palm oil and rubber
1%
50
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2012 EYGM Limited
All Rights Reserved.
FEA no. 00000140
In line with Ernst & Youngs commitment to minimize its impact

on the environment, this document has been printed on paper
with a high recycled content.
This publication contains information in summary form and is therefore
intended for general guidance only. It is not intended to be a substitute for
detailed research or the exercise of professional judgment. Neither EYGM
Limited nor any other member of the global Ernst & Young organization can
accept any responsibility for loss occasioned to any person acting or refraining
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About this publication

Seri Wawasan Bridge, Putrajaya

Malaysia, being one of Asias fastest-growing

The best of Malaysia can be found in its capital city,

KL calling: the rise of Kuala Lumpur as an investment destination

As Malaysias capital, Kuala Lumpur (KL)

Malaysia has fast become a rapidly

KL calling: the rise of Kuala Lumpur as an investment destination

When investing in Kuala Lumpur, there

There are a number of attractive sectors that hold an abundance of opportunities

Oil and gas

KL calling: the rise of Kuala Lumpur as an investment destination

KL calling: the rise of Kuala Lumpur as an investment destination

China Mainland (23)

Hong Kong (1)

Korea, Rep. (22)

Area: 1735.6 square miles

hot sectors and

billion USD the

million. Greater KL's

KL calling: the rise of Kuala Lumpur as an investment destination

This is the Asian Century. Over the last decade,

Share of global middle-class, 2009-2020

Source: Trading places: the emergence of new patterns of international trade,

Asia is set to dominate world trade

Middle East and North Africa

Australia, New Zealand and Oceania

In addition to predictions of continued GDP growth, economists forecast that over

Asia is the new global economic center, with

KL calling: the rise of Kuala Lumpur as an investment destination

ASEAN countries are leading the Asian Century

The Ernst & Young

Asia-Pacific is a region of choice

Population: 598 million (2011)

Southeast Asian businesses are

Nishant Kumar, Stuart Grudgings, Analysis: Southeast is

KL calling: the rise of Kuala Lumpur as an investment destination

Malaysia's rapidly emerging economy

Towards a high-income nation status

12 National Key Economic

Addresses the peoples

Currently, Malaysia is one of only 13 economies in the world to have sustained

IMD World Competitiveness

Ease of Doing Business,

The Global Competitiveness

Eight Strategic Reform

Source: Ernst & Young analysis

Lower middleincome nation

KL calling: the rise of Kuala Lumpur as an investment destination

Malaysia has one of the most

Kuala Lumpur: Malaysia's capital city

KL calling: the rise of Kuala Lumpur as an investment destination

Malaysias performance in 2012...

Malaysias FDI has recovered from the

Increasing FDI inflow is a significant

Respondents say that Malaysias three

Inflow of FDI into Malaysia,

How do you think the Malaysian

What do you consider the three most

Almost 50% of respondents

FDI flow into Malaysia shows

Source: Malaysia Investment Performance 2011,

Rupa Damodaran, Highest ever FDI for Malaysia,