Malaysia lags behind China, India and Vietnam when it comes to cheap labor, but it is an ideal location for U.S. companies looking for a highly-skilled, educated workforce and government supportive of foreign investment, said Marc Mealy, vice president of the U.S.-ASEAN Business Council Inc.
After a breakfast meeting on Feb. 24 at the World Trade Center Atlanta, Mr. Mealy told GlobalAtlanta that Malaysian companies are moving manufacturing facilities to other countries in Southeast Asia.
“Companies in Malaysia … have packed up and left Malaysia and gone to China or Vietnam because the labor is cheaper,” said Mr. Mealy, who is also senior director of Malaysia, Philippines and Brunei affairs for the council.
Meanwhile, the government is focusing on developing its service sector and revising its foreign ownership laws to attract multinational, service companies that do not require cheap labor.
The U.S.-ASEAN council facilitates business with the Association of Southeast Asian Nations for its members including the Coca-Cola Co., Exxon-Mobil Corp., General Electric Co., and Microsoft Corp.
Mr. Mealy joined Arham Rahman, director of the Malaysian Industrial Development Authority in New York, at the breakfast to talk about business opportunities in the country.
Both said that U.S. companies looking for low-wage workers would be better served in neighboring China or Vietnam where labor cost are cheaper and the labor forces are larger.
According to the CIA World Factbook, China and Vietnam have labor forces of 819.5 million and 46.4 million, respectively, while Malaysia’s labor force is just 11.6 million.
They said technology-based companies such as Dell Inc., Intel Corp., and Google Inc. have already found skilled, educated employees in Malaysia. In January, Google announced that it would open an office in Malaysia’s capital, Kuala Lumpur.
Malaysia’s trained personnel come from more than 150 universities, colleges or training institutions with engineering or technology-based programs, according to the Malaysian Industrial Development Authority, which works to promote the country’s service and manufacturing sectors.
Mr. Mealy said that the Malaysian government is creating incentives to keep the talented workforce in the country and to bring Malaysians abroad back home.
One of these incentives is Talent Corp. Malaysia Bhd., which connects prospective employees with companies. The organization was started as part of the government’s plan to lift the gross national income by six percent from 2009 to 2020, transforming the country into a high-income nation.
Mr. Rahman said the authority wants to facilitate U.S. investment in the service sector, which includes the logistics, education, healthcare and professional/business services.
“The service sector is the new engine of growth for the Malaysian economy. So we want to see more participation (and) more investment from the U.S.,” he said.
In 2009, the Malaysian government also began the process of the “liberalizing” the economy by removing certain restrictions on foreign investment, including a regulation that prevented U.S. companies from having full-ownership in Malaysia.
These amended regulations were also part of the government’s attempt to bring in international companies and expand its service sector, said Mr. Mealy.
Mr. Mealy said there may be more opportunities for investment in and trade with Malaysia if the Trans-Pacific Partnership, a multilateral trade agreement, is finalized at the Asia-Pacific Economic Cooperation meetings this November in Honolulu.
The free trade agreement would include Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S.