21 INTERNATIONAL TECH HUB | BDO LLP
MALAYSIA
THE TECH LANDSCAPE There are quite a few hubs in Malaysia for technology companies. For example, in the capital Kuala Lumpur, there is a tech hub called Cyber City. It’s an industrial freezone where businesses enjoy a lot of tax incentives. Another key area is Penang Island, off the south-eastern strip of mainland Malaysia, which also has a very well-established industrial freezone that’s predominantly for high-technology companies. Along with startups and scale-ups, you’ve got the likes of Bosch, Dell, HP, Intel, Motorola and Osram all based here. Established in 1972, it’s one of the oldest such zones in the whole South-East Asia region, and is often referred to as ‘the Silicon Valley of the East’. As well as being a hotspot for tech companies, a lot of R&D work is done in Penang because it offers very strong intellectual property protection. This is a very valuable factor for international companies with IP to defend and a strong R&D tradition because in some Asian countries, there is a risk that you may not be able to establish or enforce legal protection for your intellectual property. But in the industrial freezones, companies can rely on the same level of IP protection as in developed economies. Another point to add here is that business flows very freely between Singapore and Malaysia –which were, of course, a single country, Malaya, until 1965. Singapore is Malaysia’s nearest neighbour, and while it’s a cosmopolitan business centre in its own right, space is at a premium and the cost of doing business is far higher. So a lot of businesses may choose to have a sales office or corporate office in Singapore, but have their back office, processing, manufacturing or other operations in Malaysia. Equally, if you’re setting up operations for your tech business in Malaysia, tapping into the Singapore market is a very real possibility.
With expert input from Sanjay Sidhu Executive Director, Advisory BDO Kuala Lumpur. Sanjay heads up the technology practice for Malaysia and five other Asian countries: Vietnam,
Cambodia, Myanmar, Laos, and Brunei. He works with a wide spread of technology companies, which are especially prevalent in Malaysia, including large, global companies like Microsoft, Google and Dell, medium-sized companies and startups.
OVERVIEW: AN ATTRACTIVE PACKAGE TO LURE FOREIGN BUSINESSES Malaysia is very attractive to tech businesses for a number of strong reasons: its highly skilled workforce, its strategic location within the south-east Asian region, competitive tax rates, business-friendly legislation, and the wealth of very generous incentives that the Government offers to attract investment and business activity from overseas. In the most recent World Bank rating, Malaysia was ranked 12th out of the 190 economies. Malaysia was also ranked 12th globally in terms of ease of doing business. In addition, foreign companies can own 100% of their business; you don’t need to have local owners. So all in all, it’s a very attractive place for technology companies to base themselves.
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