KUALA LUMPUR: Malaysia is a key investment destination and a preferred choice for international companies that are based in Singapore.
According to HSBC commission report by the Singapore Business Federation (SBF), Malaysia’s growing consumer market and relative ease of doing business are the factors for investors interest to the country.
HSBC Malaysia county head of commercial Andrew Sill said the report show many businesses are looking to double down on demographic as Malaysia’s growing base is well recognised by Singapore corporate.
“Beyond the consumer piece, Malaysia’s manufacturing – whilst already strong – is now entering into the higher-end space of automation and innovation, developing more complex and diverse products,” he said in a statement today.
Sill said many corporate may base their treasury and other back-office functions in Singapore, while a lot of revenue-making operations are being driven out of Malaysia.
“This is only expected to ramp up with Malaysia’s widening along the supply and value chain,” headed.
The report sought the insights of 1,036 local Singapore-based companies on their interests in Asean expansion, also highlighted that Malaysia is a clear favourite destination for internationally oriented Singapore-based companies.
86 per cent of those surveyed were considered small or medium sized enterprises (SMEs) defined as those with annual turnover of S$100 million or less than 200 workers.
“Increased trade and investment activity from Singapore is good news for Malaysia,” it said adding that Singapore was Malaysia’s third largest source of investment after China and Switzerland in 2017.
The Singapore Economic Development Board (EDB) also shared that Singapore’s inbound investment into Malaysia includes companies founded in the republic.
Of the 37,400 international companies in Singapore, 7,000 multinational corps (MNCs), while more than half run their Asia Pacific operations out of Singapore.
According to the report, 80 per cent of respondents with Malaysian expansion cited potential customer demand with 75 per cent highlighting the ease of building relationships, and 73 per cent referring to its overall investment climate.
The report indicated that most of the Singapore-based SMEs who are entering Malaysia or expanding will have or are seeking an in-country relationship.
Malaysia in specific has the highest penetration rate amongst the companies surveyed with a third of the companies’ surveyed operations through their own subsidiaries or joint ventures.
“Singapore-based SMEs can make a significant contribution to Malaysia’s economy as they look to expand beyond their domestic markets and can benefit from the cross border activity that was previously seen as the domain of larger corporations,” said Sill.