Malaysia ranks fourth among top economies in cost of doing business: KPMG study

Members of the public pose for pictures at the Saloma Link Bridge in Kuala Lumpur on the first day of Syawal May 24, 2020. — Picture by Choo Choy May. Sketched by the Pan Pacific Agency.

KUALA LUMPUR, Nov 3, 2020, Bernama. Malaysia has been placed fourth among 17 economies in an assessment comparing the economy’s competitiveness as a manufacturing hub in cost of doing business (CoDB), according to a study by KPMG, Malay Mail reported.

The study found that Malaysia is placed ahead of countries in the Asian region such as China, Japan, Vietnam and India.

KPMG Malaysia managing partner Datuk Johan Idris said the study indicates that Malaysia’s CoDB Index results from high scores on the Primary Cost Index where Malaysia emerged at the top of the chart, tied with China, Mexico, and Vietnam.

“The country had outperformed on three factors: hourly compensation costs, real estate costs and corporate tax rates,” he said in a virtual media briefing together with InvestKL today.

He added that in analysing the results further, by changing the weight of the primary costs and secondary costs from equal to 70 per cent-30 per cent, Malaysia would be ranked the number one most cost-effective location in the CoDB Index.

“Malaysia continues to be a prime manufacturing hub for investors despite uncertainties in the current landscape. This is especially significant in our new reality, where operational stability and cost containment are central in every company’s long-term business survival. The results in this study only substantiate what Malaysian businesses already know and are proud of,” he said.

Johan added that as an immediate effect out of the Covid-19 pandemic, companies around the world have begun relooking at their supply chains.

“A study by McKinsey estimates that 16 per cent to 26 per cent of global exports, worth US$2.9 trillion to US$4.6 trillion, could move to new countries over the next five years if companies reshuffle their supplier networks,” he said.

He also emphasised tbat the study by KPMG proves that Malaysia has the factors for moving up the production value chain.

“This is by acting with agility and building on our resilience that we are able to maintain our competitive advantage and remain a preferred destination for high quality investments.

“The promising results of the study support the government’s focus on reviving Malaysia’s investment climate,” he said.

Meanwhile InvestKL chief executive officer Muhammad Azmi Zulkifli said Malaysia offers a thriving ecosystem for companies looking to locate their operations.

He said that Malaysia has the strength of having a pro-business government administration which has pushed the business community further while office rentals are affordable.

“We are boosted by our access to markets, world-class connectivity, infrastructure and highly skilled talent. Greater Kuala Lumpur pivots towards ‘Industries of the Future’ and there is a strong focus on advance manufacturing and services which aims to push the industry up the value chain towards high-impact, high-tech and sustainable activities,” he said.

Muhammad Azmi also said that with the increase in business interest, more high skilled jobs can be created from time to time.

The Malaysian Investment Development Authority (Mida) recently stated that Malaysia recorded a total of RM64.8 billion worth of investments in the manufacturing, services and primary sectors for the first six months of 2020 despite multiple headwinds on the global front.

The manufacturing sector attracted the largest portion of approved investments for the first half of 2020, contributing more than half (55.1 per cent) or RM35.7 billion.

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