5fd6f5828590325e5d4413b40fdb5acb Economic miracle

Malaysia can be proudly called an economic miracle of South-East Asia.
Malaysia has had one of the best economic records in Asia, with GDP growing an average 6.5 per cent annually from 1957 to 2005. Malaysia's economy in 2014–2015 was one of the most competitive in Asia, ranking 6th in Asia and 20th in the world, higher than countries like Australia, France and South Korea. In 2014, Malaysia's economy grew 6%, the second highest growth in ASEAN behind Philippines' growth of 6.1%. The economy of Malaysia (GDP PPP) in 2014 was $746.821 billion, the third largest in ASEAN behind more populous Indonesia and Thailand and the 28th largest in the world.

In July 1981, following the resignation of Hussein Bin Onn, the post of Prime Minister was taken by Dato Seri Mahathir Muhammad (ruled 1981-2003). The term of rule of Dr. Mahathir Mohamad is associated with the modernization of Malaysian society. The Government has committed itself to strengthening the order of production and social life, improving the efficiency of the administrative apparatus, strengthening the fight against corruption.

 
During the term of Mahathir Mohammad important substances as petroleum and natural gas were added to the traditional Malaysian export - rubber and palm oil. Industrial production later joined the list and became one of the most important contributors. Economic growth was accompanied by a reduction in the proportion of the population below the poverty line from 20,7 to 4.5% in 2007. Malaysia has achieved those results by relying on exports, the proceeds of which in 2002 amounted to 95.2 billion dollars.
  

During the term of Mahathir Mohammad important substances as petroleum and natural gas were added to the traditional Malaysian export - rubber and palm oil. Industrial production later joined the list and became one of the most important contributors. Economic growth was accompanied by a reduction in the proportion of the population below the poverty line from 20,7 to 4.5% in 2007. Malaysia has achieved those results by relying on exports, the proceeds of which in 2002 amounted to 95.2 billion dollars.

 
An interesting fact is that at the conference of Muslim countries the former prime minister stressed that Malaysia did not develop on the suggestions of foreign advisers but acted in completely different and sometimes opposite ways. Foreigners advised Malaysia to retain as an exporter of cheap raw materials, but Malaysia industrialized. Foreigners warned against the beginnings of social justice, while Malaysia is implementing a new economic policy that harmonized society and prevented friction between ethnic and religious groups. Foreigners advised not to commence the development of the automotive industry, while Malaysia has done it and achieved notable success. Foreigners advised not to start big infrastructure projects, and the leaders of Malaysia thought in broad mind - large projects provide great economic benefits. 840-kilometer highway from north to south, Pinang bridge, KL Tower, Kuala Lumpur International Airport (KLIA), designed to service 25 million passengers annually (this amount will be sufficient in the next century), and other basic infrastructure projects.
The main stages of development 
To increase production, gross national product and economic growth of Malaysia such leading companies as SONY, PANASONIC, BRIDGESTONE, WESTERN DIGITAL, etc. were involved in the production, which for the sake of greater interest have often been granted tax incentives up to the tax exemption during the first 10-15 years of production. Due to these benefits, more and more world corporations opened up and continue to open their branches and factories in Malaysia. In return, it has provided good employment opportunities to Malaysians and benefited society. Unemployment in Malaysia eventually fell to 2%!
  

In 1983 the government of Malaysia established Islamic Banking. Also International Islamic University was established which conducts scientific research in the field of "Islamic Civilization".

Tourism is not in the last place in the country's economic development. Malaysia is in the top ten most popular tourist destinations In 2009, Malaysia was on the 9th place in the list of most visited countries, just behind Germany. 

In the development of this direction the government has implemented the program "Malaysia Welcomes the World", to train the hotels’ staff of better service, as well as training of customs and police officers.

During the term of Dr. Mahathir program "2020" has been established. According to this program Malaysian government has set the task of uprising Malaysia to the ranks of developed economies by 2020. Among the most important tasks are introduction of modern technologies, improved staff training and increase of public education level. Under this program in 2007, Malaysia with the help of Russian Federation and Kazakhstan launched their first astronaut. 

Business 
As for the business affairs, this issue also seems to be all right here. While in many countries during the organization of one’s own business the number of shares of a foreign investor and the representative of the country should be allocated as 50% to 50%, in Malaysia it is arranged a little differently. To raise the involvement of indigenous people in the business, government in many cases agrees to increase the rate of share capital of foreign investors up to 70%. It must be emphasized that there is such a notion as "bumiputra" - people who have Malaysian citizenship and practicing Islam.

 

Briefly about the tax system 

The tax system of this country is simple. It Significant benefits provided by industrial enterprises, on on one hand enhance the competitiveness of Malaysian producers and on the other, stimulate savings and investment. The main tax paid by Malaysian companies is income tax or, as it is often called corporate tax. Its rate was lowered to 25% in 2009, before that it was 28%. However, it has a large number of benefits. For example, a company specializing in information technologies, as well as educational areas and tourism may be exempt from tax for 5 years with possible extension. In addition to corporate tax Malaysian companies pay sales tax on both imported and domestic goods. Ad valorem rates (in percent) are sometimes specific (specific amount). The general rate of sales tax - 10%, on wine and spirits - 20%, on cigarettes - 25%.

The Goods and Services Tax (GST) is a value added tax in Malaysia. GST is levied on most transactions in the production process, but is refunded with exception of Blocked Input Tax, to all parties in the chain of production other than the final consumer.

The existing standard rate for GST effective from 1 April 2015 is 6%.

Excise taxes in Malaysia are established on cigarettes, wine and liquors and automobiles. Oil producing and processing enterprises, which are not the least in enhancing the economy of Malaysia, are taxed at a rate up to 38%.

Residents of the country pay income tax on their earnings. It is progressive in nature and charged at a rate of 0 up to 27%. When selling any property or real estate citizens must pay Real Property Gain Tax, - tax on profits from sale of the property. RPGT rate varies from 5 to 30% depending on the period of ownership of real property or valuable securities. Residents are exempt from this tax in case if they hold the property for six years or more, and corporate entities in similar cases pay 5%.


Islamic banks 
Islamic banks in Malaysia operate under Sharia law (the official religion in Malaysia is Islam). According to Islamic principles money is not considered a commodity, and therefore to require payment for their provision as debt (ribu) is considered a violation of Sharia. Thereby Islamic credit system is based on the principle of profit sharing on investment between the lender and the borrower. There are two types of credit transactions: mudaraba - when the financial resources of the company draw on deposit accounts and invest them in various projects in exchange for a strictly specified share of the profits, if it brings a loss, the loss rests solely with the borrower. The second system - Musharaka: investors are making investments pool of their savings and share the profits and losses according to the size of the share of each participant.

Offshore Investments

There are also offshore zones in Malaysia. One of these is the Island of Labuan.
The convenient location of Malaysia in most dynamically developing region in the world, regime of a free port and low administrative costs are ensuring the privacy of all legitimate business and non-interference by the government and most importantly, the absence of the excessive number of other offshore companies - potential competitors (but this is just the time factor), promise the pioneers very enticing prospects. That’s why one needs to hurry up....


Trading in Malaysia

Important assets in the export of Malaysia are palm oil, rubber, household appliances, electronics and exotic fruits. Just as weird it may sound but the Malaysian government even considered a plan to export monkeys in order to reduce their population in the regions where there are simply too many of them and where they became a threat to the society.


Property in Malaysia

As for the real estate in Malaysia, it should be noted that it is relatively cheap.
The mere fact that according to the results of the study on the cost of living, which was carried out by Mercer in 2006, out of 144 cities Kuala Lumpur (the capital of Malaysia) took 114-th place, Bangkok - 127-th, Manila - 141-st. Therefore, we can safely say that Kuala Lumpur is one of the cheapest capitals in the world, but it has the infrastructure comparable with many European countries. Facts about the availability of monorail trains, the route which passes through the city centre, as well as an automatic subway, operating on their own without the driver and many other technological innovations in the country speak for themselves.

To buy property in Malaysia is lucrative because the cost of houses and apartments compared to the prices in many other countries is relatively cheap.

For example, an apartment in the prestigious low-rise housing complex area of 100 square meters can be purchased for around $ 100.000. Malaysian housing estates - "condominiums" typically have the following amenities: 24-hour security surveillance, at least one underground parking for each apartment, tennis court, swimming pool for adults and wading pool for children, mini-garden and ground floor for shops, laundries and etc. For utilities and condominium management fees you will have to spend about 300 ringgits per month (about USD$84).

A foreigner has the right to buy property in Malaysia, if its value is not less than 1.000.000 ringgit (about $ 250,000) in Kuala Lumpur (can be less or more in other states). For details and information, you can contact Mr. Michael by e-mail: michael@embassyalliance.com and we will be glad to provide a package of documents explaining in detail the process of buying real estate, and Embassy Alliance subsidiary will be pleased to help in providing assistance in finding appropriate projects.

There is a program called "Malaysia - My Second Home". It involves the issuance of multiple 10-year visas to foreigners who have an account in any Malaysian bank with the amount of 300,000 ringgits (about $ 80,000), and have a stable monthly income abroad for at least 10,000 ringgits (about $ 2800). You can also open a visa for your family members on the basis of this visa.



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