Malaya was the major provider of simple merchandises and natural stuffs to the industrialised states such as China, Hong Kong, Taiwan, etc. since the late 19th century. Merchandises supplied are palm oil, oil, Sn, lumber, gum elastic, natural gas, etc. Malaysia has attained an even passage to modem economic growing over the 19th century due to the supplies of simple merchandises and natural stuffs. Other than that, Malaysia besides considered as one of the successful Asiatic states to accomplish a good economic growing with the growing of GDP during the 1980s to 1990s is averaged 8 % a twelvemonth. The economic system growing remained stable until the twelvemonth 1998 while Malaya goes through a crisp recession with rising prices rate and unemployment rate increased ( Helicon Publishing Ltd. 2000 ) .

1.2 Importance of Foreign Direct Investment

Foreign Direct Investment ( FDI ) defined as the investors from other states purchase the new capital goods and add-ons to stock lists for a long term period ( Bade and Parkin 2004, 592 ) .

Foreign Direct Investment is playing an of import function in a state ‘s economic growing as when investing additions, it will ensue the addition in aggregative demand and lucifers with the additions in aggregative supply. Besides, it will increase the capital stock and leads to presenting new engineering in the invested state ( Sloman, 2006 ) . For illustration, UMW Toyota and other foreign auto maker had invested in Malaysia by puting up vehicle fabricating mill with high engineering machines, this leads to the local vehicle maker – Proton and Perodua develop the new engineering of bring forthing vehicle to vie with foreign vehicle Industry Companies – Toyota, Honda, etc.

Other than that, the economic system of Malaysia entered the upturn state of affairs after the recession in 1997-98 by loosens up the boundaries for foreign direct investing ( FDI ) temporarily to pull more foreign direct investing. The economic system recovered from recession and grew with more foreign direct investing. On the other manus, rising prices rata and unemployment rate had lessening at the same clip.

2.0 Suitable Industries & A ; Businesss

2.1 India

Computer Troubleshooters ( M ) Sdn Bhd is founded by 2 Malayan and it now expanded worldwide. This company is merely supplying services to little and average concerns ( SME ) ( Azhar 2010 ) . Since India IT outsourcing endeavor is making good, India investors could take this opportunity to put into this company to assist them spread out the concern and obtain involvement and greater gross. With greater fund invested into the company, the company could spread out to supply more services to clients expeditiously. Besides, the company could besides spread out their concern by supplying services to big concerns.

Besides that, the Malayan Industry-Government Group for High Technology will show the findings of a survey on high engineering in the state in November 2010. The determination of the survey on high engineering has non confirmed yet but the choice could be nano engineering or renewable energy and it will be selected by the Prime Minister – YAB Dato ‘ Sri Najib Tun Razak ( Ismail 2010 ) . On this state of affairs, India outsourcing company could take this chance to put up preparation or classs about the survey on high engineering in Malaysia.

2.2 In-between Eastern Countries

Other than IT industries, touristry related concerns in new developing metropoliss could besides pull foreign direct investing. Example of new developing metropolis in Malaysia is Putrajaya. The population of Putrajaya has increased 41 % over the past 3 old ages and the entire population calculated is around 85,000. It has an addition of 35,000 people compared to the twelvemonth 2007. The developer has developed more than 21,000 lodging units to suit the current population. Putrajaya Corporation Director claimed that the appraisal of population over the following five twelvemonth will be 150,000 people and the lodging units will be increase to 37,000 ( Cheah 2010 ) .

Middle Easten investors could besides put on hotel and eating house concerns in this underdeveloped metropolis. There are many Middle Eastern eating house have been set up in Kuala Lumpur, e.g. the celebrated eating house named Tarbush Restaurant have 4 subdivisions in Kuala Lumpur. This shows that Middle Eastern eating houses receive good gross in Malaysia.

Besides puting on eating house, Middle Eastern investors could besides put by puting up hotels in the turning population metropolis – Capital of malaysia. This is a great chance as there are fewer rivals in Putrajaya.

2.3 China

China-Muslim investors could take this chance to put nutrient industry such as puting up a Halal nutrient processing Centre in Malaysia as Muslims occupy a great sum of population in Malaysia.

Chinese investors could besides put in Malaysia by puting up other nutrient treating mills e.g. confect ‘s industry, biscuit ‘s industry, etc. Other than nutrient processing mills, Chinese investors could besides put in Electronic and Vehicle fabrication in Malaysia.

3.0 Strengths

3.1 Stability of Malaysia ‘s Politic

One of the strengths that attract foreign investors to put in Malaysia is the stableness of Malaysia ‘s politic. Recently, Prime Minister of Malaysia – YAB Dato ‘ Sri Najib Tun Razak has launched a 1Malaysia programme to better the stableness of the state which include many races such as Malay, Chinese, Indian, etc. The chief aim of the 1Malaysia plan is to garner all the citizens of Malaysia to contend against extremism and create zero racism society. Zero racism is really of import issue in a state which has many different races of citizens. With this plan introduced, the stableness of Malaysia will better as every citizen serve the equal rights no affair which races he/she is.

3.2 Multicultural Society

Besides, Malaysia is a multicultural state which has many races. The chief races are Malay, Chinese and Indian. With the multicultural society, foreign investors from China and India would non hold the trouble in communicating as investors from China can talk Chinese with the Malayan Chinese and investors from India can pass on with the Malayan Indian by talking Indian.

3.3 Stability of Economic in Malaysia

Other than that, the strengths besides include the stableness of the economic system in Malaysia. On the August 2010, the Bank Negara Malaysia ( BNM ) has announced the economic system rose by 8.9 % in the 2nd one-fourth. It was a great betterment comparison to last twelvemonth with a negative growing by 1.7 % for the twelvemonth 2009 due to planetary fiscal crisis. This proves that the authorities is implementing certain policies to better the state economic and it retrieved a positive consequence. The Gross Domestic Product ( GDP ) is rated with a growing of 9.5 % for the first half of 2010. Besides that, the rising prices rate and unemployment rate remain at low degree. ( Jasin 2010 )

Chart of Malaysia Unemployment Rate obtained from Trading Economics ( hypertext transfer protocol: //www.tradingeconomics.com/Economics/Inflation-CPI.aspx? Symbol=MYR )

As the chart above, Malaysia ‘s unemployment rate had non be the maximal rate of 4 for the past 5 old ages. The latest unemployment rate obtained is 3.3 which is below the average rate of 3.41.

Chart of Malaysia Inflation Rate obtained from Trading Economics ( hypertext transfer protocol: //www.tradingeconomics.com/Economics/Inflation-CPI.aspx? Symbol=MYR )

As the chart above shown, although the rising prices rate had a great addition in twelvemonth 2008, but it declined in twelvemonth 2009 and rose to 1.90 presently.

3.4 Safer Society

Malaysia ‘s offense rate will be lessening due the Government enacts more rigorous Torahs to diminish the sum of migratory smuggling. The Dewan Rakyat and Dewan Negara have both approved the amended Act and now the Act is waiting for the blessing of Royal Assent. The enforcement alterations are the mulct is up to RM1 million and an up to 20 old ages jail term ( Chik 2010 ) .

3.5 Low Corporation Tax

Following strength would be the corporation revenue enhancement imposed by Malayan authorities. The Corporation revenue enhancement is 25 % presently which is lower than the neighbour state – Siam with 30 % and the targeted investors ‘ state – India with a revenue enhancement of 30-40 % ( Tax rate around the universe, 2010 ; Invest in Malaysia: Company Tax, 2010 ) .

3.6 One-Stop Investment Station

Last is the One-stop investing station commenced by Malaysia ‘s authorities. Foreign investors can put in Malaysia easy and expeditiously through the one halt station. They do non necessitate to register at different authorities bureaus for their concerns puting up processs and blessing ; they ( foreign investors ) merely have to done all the process at the one halt station. This will greater the efficiency of the process and brings efficient the investors.

4.0 Challenges

4.1 The Unfair Policies

The first negative perceptual experience would be Non-bumiputera man of affairs being treated unjust because of the New Economic Policy ( NEP ) and pro-Bumiputera policies. The aim of these policies is to increase more Bumiputera-owned houses in Malaysia and protect the involvement of Malays. Non-bumiputera concerns have to accept Malay financess to be the stockholder of the company if they ( non-bumiputera man of affairs ) wished to increase grosss in the hereafter ( Jasin 2010 ) .

4.2 Low efficiency of Government Agencies

Another negative perceptual experience that will be the consideration of the foreign investor to put in Malaysia is the inefficiency of authorities bureaus.

Class of Complaints ( Ministries & A ; State Government Agencies ) from Jan 1 to Aug 31, 2010

Class

Entire Ailments

Percentage

Delay/ No Action

3,738

39.9

Unsatisfactory Quality of Service

1,572

16.8

Unfair Action

1,309

14.0

Failure of Enforcement

944

10.1

Assorted Ailments

701

7.5

Lack of Public Amenities

583

6.2

Misconduct of Civil Servant

179

1.9

Maltreatment of Power/ Misappropriation

151

1.6

Failure to Adhere to Set Procedures

149

1.6

Insufficiencies of Policy Implementation and Law

49

0.5

Sum

9,375

100

Table obtained from New Straits Times on 17th of September 2010.

Table above shows the inefficiency of authorities bureaus. Foreign investors will miss of confident to put in Malaysia because of the immense sum of ailment by Malaysia citizens. If an investor wants to put in Malaysia with puting up a concern or industry, many procedure will be done by the authorities bureaus and with this negative perceptual experience, the investor do non swear on the efficiency of the authorities and would get rid of the thought of puting in Malaysia.

4.3 Stealing Rank of Competitiveness

Other than that, based on the World Economic Forum ( WEF ) study, the place of Malaysia in the universe ‘s most competitory states has dropped to 26th topographic point from 21st topographic point from the past 3 old ages. The competitions are concern on the higher instruction and preparation, technological preparedness and labour market efficiency ( Damodaran, 2010 ) .

4.4 Minimum Wage Considered Higher Than Other ASEAN States

Besides, The Minister of Human Resources – Datuk S. Subramaniam has proposed a minimal pay policy and will be implemented following twelvemonth. The minimal pay proposed is RM700 and this policy will be across the board for all sectors. ( Sulaiman, 2010 )

The minimal pay proposed tripled the minimal pay of Vietnam. Recently, the Prime Minister of Vietnam has proposed that the minimal pay for workers at foreign invested company is about RM213 after transition which is a much lesser sum comparison with the minimal pay in Malaysia. ( Minimal pay rises by $ 4.50, 2010 )

The minimal pay is still considered more expensive than the neighbour state of Malaysia – Siam. The latest lower limit pay in Bangkok effectual on the 1st of January 2010 is around RM540 after transition. ( Thailand lower limit pay addition, 2010 )

5.0 Recommendations

The authorities should proper the New Economic Policy and Pro-bumiputera Policy so that every company will handle reasonably no affair whether it is owned by a non-bumiputera or bumiputera.

Other than that, Malaysia Government should supply a better and more efficient service to citizens or investors as bad services provided would make a bad image to the investors.

Besides, if Malaysia wants to pull more foreign direct investors, the lower limit pay has to be decreased. Foreign investors would seek for states which provide cheaper labor cost to put on. Corporation revenue enhancement could be besides lessening to pull more foreign direct investing.

The most significantly is the degree of workers should be improved. More preparation or instruction should be given to workers to hold better accomplishments. Better accomplishments would convey more efficiency of the work.

6.0 Decision

In the decision, Malaysia is rather a suited and net income devising state for foreign investors to put. Based on the strengths above, it is convenient for China, India and Middle East investors to put in Malaysia as if they decide to engage their employees in direction section, they would non hold trouble to pass on with Malayan workers as Malaysia is a multicultural society and could talk many linguistic communications like English, Chinese, Indian and Malay.

Other than that, the cost of natural stuff in Malaysia would be more sensible as the rising prices rate in Malaysia remains stable. Most significantly is the quality of workers, the Malayan workers have better accomplishments and higher instruction degree comparison with other neighbour states. With better skilled workers, the efficiency of a house would be better.

( 2057 words )