This post was written by Sarah Rees

Kuala Lumpur can rival the powerful cities of Hong Kong and Singapore in terms of offering profitability, and Sarah Rees delves into the facts and figures.

Making money is, to all intents and purposes, what drives most people on the planet to get up and go in the morning. As the recession and economic downturn plunges parts of the world into gloom, moneymakers become more eager than ever to source out the profitable ventures and protect themselves against the storm.

Eyes have shifted to Asia for answers to the money problems, and Malaysia is something of an untapped reserve of opportunity for investment. The profits available here to savvy investors can be far greater than those obtainable in other Asian capitals. Places like Singapore and Hong Kong may have been the golden cities in the years passed, but times are changing, and those with business sense are realising that money is to be made elsewhere.

Eating into Profits

Singapore and Hong Kong attract those with a nose for the flashy lifestyle that is so well-publicised in the media, but the opportunities for profitability in these two places are limited by the high costs involved in being there.

Hong Kong lives up to its reputation as an expensive place to live and work, mainly due to the shortage of land space and therefore high cost of property. This translates into high rents for both living and working environments; neither of which are conducive to making profit. Ranked at number nine in the Mercer’s worldwide cost of living survey, high prices in Hong Kong mean wages have to be that much higher, which eats into profits. Companies pay around HK$ 20,000 per month to a HR assistant (US$2,500) and up to HK$125,000 per month (US$16,000) for a senior director in the finance department. (Source: www.morganmckinley.com)

Businesses in Singapore don’t fare much better when it comes to maximising returns, as this city is three places higher than Hong Kong in the Mercer ranking – two places up from last year. Property prices are sky-high in Singapore, and salaries are rising to match those available in Hong Kong. The Ministry of Manpower’s 2011 Report (published June 2012) shows that the unit labour cost continues to rise despite the slightly slower rate of economic growth reported and despite the fact that less private companies reporting profits in 2011 than the previous year. All this translates as tricky environments for investors.

Kuala Lumpur Delivers

When compared to these profit-leaking rivals, Kuala Lumpur performs so superbly that it is a wonder why more people aren’t flocking in. Placed right down at 102 on Mercer’s ranking, the low cost of living only serves to boost the expat satisfaction; Malaysia continues to place highly in list of best places for expats to live, coming in just one place behind Hong Kong in HSBC’s recent survey (www.expatexplorer.hsbc.com).

Housing costs, as always, make all the difference, and with a 3-bedroom apartment in a prime, central location costing around US$2,000-3,500 per month, salaries can sit a lot lower. An HR manager would be earning around RM7,000 (US$2,200) per month, while the minimum monthly salary that must be paid to secure a work visa for a foreigner is just RM3,000 (US$1,000) per month.

The economic climate further enhances Malaysia’s assets, and the GDP continues to grow at a 5% rate while a stable rate of inflation (3%) is projected for the year to come (Source: Bank Negara Malaysia).

Opportunities for investment are multiple and profitable, ranging from industries such as pharmacuticals, metal products, and medical equipment to the most lucrative industry of all: petrochemicals. Malaysia has the 14^th largest gas reserves in the world, and the 23^rd largest crude oil reserves, and the country is able to produce 730,000 barrels of oil each day.       

Government’s Helping Hand

Building a successful, profitable business in Malaysia is further aided by the government, who have been showing a determination to support foreign investors and make Malaysia accessible by cutting through red tape and smoothing the path to success.

The Government Transformation Programme (GTP) and Economic Transformation Programme (ETP) are both major forces driving this effort, and the recent GTP2.0 Roadmap (results published July 2012) has shown that progress is already being made in key areas, despite only two years passing since the GTP was launched.

Crime levels are already sliding down thanks to the government’s initiatives – there has been a 39% drop in street crime reported – while fighting corruption continues to be a high priority. The government are entering into the school system to educate early on the ills of corruption to ensure that the changes that are made, are made to last.

These positive efforts from the government only further boost Malaysia’s status as a top place to invest and do business, and Kuala Lumpur seems set to rival its flashy neighbours as word spreads.

InvestKL

Any business looking to set up headquarters in the capital should make a beeline for InvestKL – a team put together in line with the GTP to meet the goal of attracting 100 multinationals to set up their headquarters in the country by 2020.

Aside from providing advice and support, InvestKL can offer assistance in every step of the process, and help the decision to invest in Malaysia an even simpler one. More information can be found on www.investkl.com.

Kuala Lumpur is, it seems, on the rise, and wise investors should turn their attentions to this Asian nation where money can be made as life is enjoyed, in a tropical paradise that offers so much in terms of lifestyle and opportunity.

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Source: Senses of Malaysia Sept-Oct 2012

Read more:

• An Interview with Dr. Marceline Lemarie, a Marketing Visionary
• INTRADE Malaysia 2012
• The Road to Less Corruption in Malaysia

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