2023: Doing Business In Malaysia

Published on Jan 31, 2024

Doing Business In Malaysia

1. What is the current business climate in your jurisdiction including major political, economic and/or legal activities on the horizon in Malaysia that could have a big impact on businesses?

Malaysia attracted a record RM893.2 billion in foreign direct investment (FDI) during the first quarter of 2023, a RM14.1 billion increase compared to the last quarter of 2022 (RM879.1 billion). The attraction of foreign investments is further reinforced by the Madani Economy Framework announced by Prime Minister Datuk Seri Anwar Ibrahim which aims to position Malaysia as a competitive investment destination. The key initiatives introduced under this framework include the establishment of a special financial zone in Johor to attract global investors and knowledge workers, an initial allocation of RM100 million for eco-friendly industrial infrastructure upgrades and workforce training in key sectors, advancing Penang’s semiconductor industry beyond lower value Outsourced Semiconductor Assembly and Test (OSAT) and focusing on high-value semiconductor industries such as IC design, and the allocation of RM1 billion by the government to finance, cultivate and internationalize startups and local SMEs to spur export growth, with the RM1 billion to be matched by private funds to support local startups. In addition, political stability has always been a key factor in determining Malaysia's attractiveness as an investment destination, and with the Prime Minister recently reassuring foreign investors that there is no concern of political instabilities within Malaysia. Malaysia is moving in the right direction in establishing itself as a preferred investment destination.

2. From what countries do you see the most inbound investment? What about outbound?

In the first quarter of 2023, the largest sources of FDI for Malaysia were from Singapore with a total of RM183.2 billion invested, followed by the United States of America at RM102.4 billion and Hong Kong SAR at RM94.6 billion.

As regards Malaysia’s direct investment abroad (DIA), the top three DIA destinations were Singapore with a total of RM 134.9 billion invested, followed by Indonesia at RM 67.6 billion and the Netherlands at RM 37.8 billion.

3. In what industries/sectors are you seeing the most opportunity for foreign investment?

Recently, Prime Minister Datuk Seri Anwar Ibrahim announced that Malaysia is leading in attracting investment in the Renewable Energy (RE) sector. The Government will identify several suitable locations for foreign investors interested in the RE sector to choose from, including Pahang state. With the launching of Phase 1 of the National Energy Transition Roadmap (NETR), we would expect that renewable energy projects and electric car (EV) manufacturing and charging infrastructure are poised for significant foreign investment opportunities.

4. What advantages and pitfalls should others know about doing business in your country?

The World Bank’s Doing Business 2020 report ranked Malaysia in the top 12 out of 190 economies for ease of doing business. With the liberalization of the policy on foreign participation, foreign investors are allowed to hold 100% equity in new, expansion, and diversification projects in the manufacturing sector and certain services sectors.

Malaysia has signed a total of 16 free trade agreements (FTAs) (7 bilateral FTAs and 9 regional FTAs). This creates a potential market size of more than 4 billion people globally. Up to 99% of products have zero import duties under Malaysia’s FTAs with ASEAN. The Malaysian Government also offers various incentives for investments in the manufacturing, agriculture, tourism (including hotel) and approved services sectors as well as R&D, training and environmental protection activities.

While there is no overarching foreign direct investment (FDI) regime in Malaysia, there are certain specific sectors or industries which would require the approval of the specific sectoral regulator for foreign investment or be subject to foreign equity ownership restrictions, for eg. distributive trade, private employment agencies, freight forwarding services, valuers, appraisers, estate agents and property management services, oil and gas sectors, etc.

5. What is one cultural fact or custom about your country that others should know when doing business there?

In Malaysia, the working week and weekend vary between states. Most of the states and federal territories in Malaysia have their working week from Monday to Friday, with Saturday and Sunday as weekend. However, the states of Johor, Kedah, Kelantan and Terengganu observe a Friday to Saturday weekend. In the states which observe a Monday to Friday working week, a longer long lunch break may be observed on Fridays to allow Muslims to perform their Friday prayers.

Our Firm

1. What distinguishes your firm from others in your market?

At Shearn Delamore & Co., we pride ourselves in providing creative, pragmatic, cost-effective solutions and representation for our clients.

Our longevity in the Malaysian legal services market is a testament to our history dating back to 1905, our dynamism, and our innovation. Our ability to be at the forefront of legal developments ensures we are always ahead of the curve. The broad range of domestic and foreign clients who continue to entrust their legal issues to us bear this out.

Our confidence and belief in what we offer are underscored by the consistent reviews from international publications, which rank the firm and our lawyers at the highest tiers.

2. What are three words that describe the culture of your firm?

Creative. Pragmatic. Cost-effective.

3. How does your firm participate in Corporate Social Responsibility (CSR) and/or Environmental, Social and Governance (ESG) initiatives?

In November 2022 and July 2023, our firm organized tree planting activities in partnership with the Forest Research Institute Malaysia (FRIM), a leading institution in tropical forestry research in the world, to raise awareness of the importance of a green and sustainable environment. Our firm also participated in the food bank program organized by Kechara Soup Kitchen Society, a charitable organization serving marginalized communities, by distributing food items to the urban poor and needy living in the city in April 2023. A similar event was organized in November 2023.

Our firm provided free legal advice to an Earthshot Prize Pro Bono Opportunity finalist on taxation issues and their legal presence in Malaysia. Earthshot Prize Pro Bono Opportunity is a global environmental initiative founded by Prince William to discover and scale the best solutions to help repair our planet.

4. Are there any new and exciting initiatives, practice areas or industry focuses in your firm?

Shearn has set up dedicated desks for various Asian countries, comprising of skilled lawyers from different practice areas who are equipped with the necessary cultural understanding in the region to provide services that meet the clients’ needs. Further, focus committees for regulatory and anti-bribery/ anti-corruption compliance, ESG, and renewable energy have been introduced, keeping in line with the needs and development of the market.

In terms of employee well-being, Shearn partnered with Naluri in March 2023 to launch a comprehensive Wellness & Mental Health Programme for our employees. This structured initiative reflects our commitment to holistic health support, empowering our team to thrive physically, mentally, and emotionally.

Shearn also prioritizes lawyer development, offering both internal and external training in financial literacy and valuation skills to boost retention.


Zhen Pik Lai and Kar Mun Ng


  1. Ministry of Economy, Department of Statistics Malaysia, “Malaysia International Investment Position, First Quarter 2023” (Latest Release: 12 May 2023) <https://www.dosm.gov.my/portal-main/release-content/c2c0f1e5-8b7b-11ed-96a6-1866daa77ef9>
  2. MalayMail, “Madani Economy: Setting the stage for Malaysia’s next industrial take-off” (29 July 2023) <https://www.malaymail.com/news... Investment Development Authority (“MIDA”), “Madani Economy: GLCs, GLICs to spur domestic investments – Tengku Zafrul” (27 July 2023) <https://www.mida.gov.my/mida-news/madani-economy-glcs-glics-to-spur-domestic-investments-tengku-zafrul/>
  3. The Malaysian Reserve, “Political stability key to attract investors” (S Birruntha, 13 October 2022) <https://themalaysianreserve.com/2022/10/13/political-stability-key-to-attract-investors/>
  4. MalayMail, “No issue with political stability, this is right time to invest in Malaysia, PM Anwar assures foreign investors” (13 September 2023) <https://www.malaymail.com/news/malaysia/2023/09/13/no-issue-with-political-stability-this-is-right-time-to-invest-in-malaysia-pm-anwar-assures-foreign-investors/90731>
  5. Ministry of Economy, Department of Statistics Malaysia, “Malaysia International Investment Position, First Quarter 2023” (Latest Release: 12 May 2023) <https://www.dosm.gov.my/portal... Straits Times, “Anwar: Government identifying locations for foreign investors in the renewable energy sector” (7 October 2023) https://www.nst.com.my/news/na... of Economy, “National Energy Transition Roadmap: Energising the Nation, Powering Our Future” <https://www.ekonomi.gov.my/sit... World Bank, “Doing Business 2020–Sustaining the pace of reforms” https://www.worldbank.org/en/news/feature/2019/10/24/doing-business-2020-sustaining-the-pace-of-reforms
  6. Malaysian Investment Development Authority (MIDA), “Why Malaysia” (edition 2022) https://www.mida.gov.my/wp-content/uploads/2022/01/MIDA_WHY-MALAYSIA-2022-NEW.pdf
  7. Ministry of Investment, Trade and Industry, “Malaysia’s Free Trade Agreements (FTAs)” https://fta.miti.gov.my/index.php/pages/view/4?mid=23
  8. Malaysian Investment Development Authority (MIDA), “A Land of Opportunities” https://www.mida.gov.my/why-malaysia/a-land-of opportunities/#:~:text=On%20the%20ASEAN%20level%2C%20Malaysia,under%20Malaysia's%20FTAs%20with%20ASEAN.