Malaysia offers a sizeable demand market with its population of 31.4 million, a large middle class and over one-third of the population living in urban areas. This offers your business opportunities in areas like e-commerce, education, F&B, healthcare, and retail.
Malaysia’s cities have flourishing retail and food services sectors with a vibrant and developed shopping mall scene. The thriving franchise industry in Malaysia presents opportunities for your business to grow your brand there. Some 40% of the franchise brands in Malaysia are foreign-owned1, most of which are in the F&B sector, followed by retail & apparel, and education. In 2016, the franchise industry contributed RM26.6 billion (S$8.8 billion) to the economy2.
Singapore companies such as Charles and Keith, Sakae Sushi and Love, Bonito have made inroads into Malaysia. Since 2011, Malaysia has allowed retail and food services companies to be 100% foreign-owned. You can decide on different modes of entry, such as using a franchise model, setting up a joint venture or as a fully-owned subsidiary.
1: VF Franchise Consulting, 2017
2: Ministry of Domestic Trade, Co-operatives and Consumerism, 2017
Malaysia’s digital economy is growing significantly. Between 2010 to 2016, it grew by 9% each year, and is expected to contribute 20% of Malaysia’s GDP by 2020. One-third of the value will come from e-commerce, which accounted for RM74.6 billion (S$24.7 billion) or 6.1% of Malaysia’s GDP in 2016. Total e-commerce is expected to exceed RM110 billion (S$36 billion) by 2020.3
The digital economy is poised to be the new driver of development in Malaysia. The Malaysian government plans to set up a Digital Free Trade Zone (DFTZ), a special trade zone that provides physical and virtual space to help small and medium-sized enterprises (SMEs) with e-commerce activities. E-commerce giant Alibaba has announced plans to set up an e-commerce hub in Malaysia to provide logistics, cloud-computing and e-financial services in the DFTZ.
Malaysia has also made significant efforts to foster digital entrepreneurship. Your company can benefit from the help and opportunities provided by institutions like the Malaysia Digital Economy Corporation, the Malaysian Global Innovation and Creativity Centre and Cradle, which have been established to attract investments, provide incentives, facilitate financing, and offer training and opportunities to startup firms.
Singapore companies can find business opportunities in the supporting ecosystem of Malaysia’s growing digital economy, in areas such as digital marketing, e-marketplace, last-mile fulfilment, logistics, and payment & financing solutions.
3: World Bank staff projections based on DOSM data, Information and Communication Technology Satellite Account, 2016
Malaysia’s manufacturing sector is placed second only to services, accounting for about 23% of its GDP in 20174. Key manufacturing regions include Johor, Kedah, Melaka, Penang, and Selangor.
The Malaysia government is guiding the industry towards higher-value manufacturing activities. You can ride on the growth in this space, and explore opportunities in aerospace, chemicals, electrical & electronics, machinery & equipment, and solar space. You can also look for opportunities to supply components to the increasing number of multinational corporations in Malaysia.
If your business is in industrial automation and Internet of Things solutions, Malaysia is a market to consider, given its Industry 4.0 goal. The Malaysian government has put in place a National Industry 4.0 framework to support Malaysian manufacturers to upgrade their technology and transform through digitisation.
4: Federation of Malaysian Manufacturers