Access all areas – European SMEs and Malaysia

In a new era of global business opportunities, Malaysia recognizes that the importance of SMEs is only going to increase and it is keen to highlight the advantages of a nation that sits at the crossroads of Southeast Asia(1).

Malaysia’s attributes are numerous and cover the spectrum from incentives to competitive energy costs, higher levels of productivity, a low-cost skilled, educated and capable workforce and an embrace of technology and innovation.

These benefits have attracted global companies, including many from Europe. And Malaysia is proactively reaching out to more SMEs through offices in Germany, France, Sweden and the UK operated by the Malaysian Investment Development Authority (MIDA).

MIDA smooths the way for foreign investors

MIDA is the one-stop center for overseas investors seeking information and assistance in setting up or expanding a business in Malaysia, says its CEO, Datuk Wira Arham Abdul Rahman.

“We understand that foreign companies might have concerns when it comes to investing in a new country, like language barriers, cultural differences and regulatory challenges,” he says. “But with 21 overseas and 12 regional offices, our teams facilitate investors through the initial stage of planning their investments and then provide guidance throughout the implementation and post-investment phases.”

A dedicated team is on hand to provide tailored solutions to newcomers to the market, and MIDA offers a range of facilitation programs such as its Biz Clinic, which enables investors to raise concerns and receive rapid and clear advice on solutions.

“To further enhance the competitiveness of doing business in Malaysia, we provide a wide range of investment incentives, such as tax holidays, grants and allowances,” says Arham. “Our Pioneer Status and Investment Tax Allowance are available to companies of all sizes, including SMEs undertaking strategic, high-quality activities and are considering shifting part of their operations to Malaysia.”

In some cases, that potentially means tax exemptions of up to 100 percent for five to ten years.

This approach is paying off. In 2022, MIDA attracted $59.9 billion worth of investments in 4,454 projects in the manufacturing, services and primary sectors. Chinese firms were the largest investors, followed by companies from the U.S., the Netherlands, Singapore and Japan.

“Investors have much to gain in terms of capturing growth opportunities and immediate market access by choosing Malaysia,” says Arham. “Located in the heart of Southeast Asia, we are at the center of one of the fastest-growing economic regions in the world, while our links with ASEAN provide a valuable platform for businesses. Supported by a strong and mature local engineering support industry, European investors seeking to expand their production capacity into the country can do so efficiently and with ease.”

Petzl leans on its Malaysian partners

French-owned Petzl is rightly proud of its reputation for quality. The company strives to guarantee that the sports and industrial harnesses and other outdoor equipment that it manufactures go beyond the required standards. And that’s where its rock-solid partnership with Malaysia comes into play.

“The relationship between Petzl in France and Malaysia started through a collaboration with one of our important suppliers based in Ipoh,” says Eric Vavasseur, managing director of Petzl Manufacturing Malaysia Sdn Bhd. “As a result of the increase in production capacity, the company naturally explored the opportunity to set up its new business activity in Malaysia. The results of a benchmarking study conducted against other Southeast Asian countries obviously appealed to the company and further convinced it to invest in Malaysia.”

Founded in 2009, the local Petzl unit has a manufacturing plant in Rawang, north of Kuala Lumpur, where its core business activity is manufacturing high-end technical textile products, including nearly the entire range of Petzl Sport harnesses. The plant produced more than half a million slings last year, as well as 460,000 harnesses. The company employs 275 Malaysian staff, and all its products are exported globally.

From the outset, the business relationship with Petzl’s Malaysian hosts went smoothly, says Vavasseur, with MIDA assisting the company in arranging permits, visas and access to financial and other support.

“Within a short period of time, we have proven our ability to reach the top production level in terms of quality and productivity,” he says. “The plant now has the highest headcount among all manufacturing facilities in the group, and in 2024, we are going to implement new product assembly lines, including robotized equipment.”

Vavasseur knows he can still lean on his trusted Malaysian partners if he needs their advice.

“Even today, I still rely on MIDA, and we contact them whenever we need support in relation to the development of the company here,” he says.

SteriPack grows value in Malaysia

Starting as an SME, having a base in Malaysia has enabled the SteriPack Group to take its business global and meet the demands of client firms in a business sector known for being demanding.

Founded in Ireland, the company has grown rapidly and is a world leader in contract manufacturing services for medical devices and packaging for the pharmaceutical industry. In 2005, SteriPack, with clean room manufacturing facilities in Europe and North America, established a plant in Malaysia.

“We chose Malaysia because of the medical device manufacturing and services hub that has grown up here over the previous 40 years, with a talented and experienced workforce,” says John Ward, VP of pharmaceutical and combination devices.

The guidance and backing of MIDA were instrumental in the company being able to quickly find its footing in a completely new region and market. “From the start, MIDA supported us with all the licensing requirements and other elements of establishing the business in Malaysia, and it was important to have good contacts within the legal and accountancy sectors here,” he says.

The business has grown steadily in the intervening years, with the majority of the items produced at its 8,000-square-meter Malaysian facility, which incorporates a Class-8 clean room, destined for export to the booming U.S. and European Union customer base.

“The plant in Malaysia allows the company to offer our services globally, depending on the market and customers’ needs, and lets us successfully implement complex projects on behalf of our customers,” says Ward.

Malaysia: A home away from home for European SMEs

Malaysia offers a range of advantages and opportunities for companies seeking to expand their operations, with a forward-looking economy backed by an innovative society and business community, as well as an SME-friendly government. Together, these positive factors can expand European firms’ horizons in Malaysia.

(1) https://www.dosm.gov.my/portal-main/release-content/small-and-medium-enterprises-smes-performance-2020