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Current business situation
The bilateral trade relationship between Australia and Malaysia reached a significant milestone with the signing of the Malaysia-Australia Free Trade Agreement (MAFTA).
Building on the ASEAN Australia New Zealand Free Trade Agreement (AANZFTA), this bilateral FTA guarantees tariff-free entry for 97.6 per cent of current Australian goods exports to Malaysia (99 per cent by 2017), while Malaysian exports benefit from duty-free entry into Australia. Significant gains have also been achieved for services and investment through access to increased foreign ownership in key services sectors where Australia has proven capability.
Malaysia is competing fiercely with other countries in the region to provide a pro-business environment. To this end the government has relaxed foreign ownership laws in the manufacturing sector and has also implemented a range of incentives to attract investors in priority areas such as operational headquarters, regional distribution centres and international procurement centres. The government has also invested heavily in infrastructure to facilitate both efficient business and a high standard of living, particularly in the major centres. It has also recently implemented liberalisation actions within the financial services sector to attract more international players to operate within the market.
Malaysia’s 2020 vision is to achieve developed nation status. The government plans and manages its progress towards achieving this vision through five-year plans.
Face – A vital element of Malaysian culture, as with most Asian cultures, is the concept of face. In Malaysian society to 'lose face', that is to lose control of one’s emotions or to show embarrassment in public, is perceived as a negative behaviour. Malaysians will use a number of methods in order to ‘save face’. Laughter, for instance, is often used to mask one’s true feelings and can reveal numerous emotions including nervousness, shyness or disapproval. Saving face is particularly crucial in business contexts, as causing your Malaysian counterpart to lose face may influence the outcome of your future business dealings.
High context culture – In high context cultures such as Malaysia, meaning is often more explicit and less direct than in many Western cultures. This means that words are less important and greater attention must be given to additional forms of communication such as voice tone, body language, eye contact and facial expressions. In Malaysia, because business is personal and based on trust, developing relationships rather than exchanging facts and information is the main objective of communication. Direct answers, particularly negative ones, are avoided in order to prevent disagreement and preserve harmony; two very important aspects of Malaysian culture.
Business attire – Dress styles in Malaysia range from the traditional to the very modern. To avoid offence, long sleeve shirt and tie for men should suffice for most business meetings. Women can wear pants or skirts, and it is not necessary to wear stockings. A jacket is often necessary for evening cocktails or other events.
Women should avoid showing too much flesh. If you choose to wear clothing which exposes your shoulders, wear a jacket or wrap and decide what is appropriate on arrival. When in doubt, check with your host in advance.
If you receive an invitation with the wording ‘Long sleeve batik’ it refers to a men’s silk shirt made from Malaysia's batik materials. The standard alternative is lounge suit (business wear or early evening for women) unless otherwise stipulated. If you want to make an impression, buy a batik – your hosts will love it and you will feel cool (in more than one sense)! However, understand that the batik is not daily business attire.
Forms of address – Malaysians are often very formal until they know you well. They will normally call you Mr or Mrs unless you insist otherwise. You may hear Malays being referred to in local terms:
Encik – Malay men (unmarried / married)
Tuan (Haji) – For Muslim men, if they carry a title of Haji, they are then addressed as ‘Tuan Haji’
Tuan – If an individual is in a position of high authority, on official duty.
Cik/Puan – Malay women (unmarried / married)
(Tip: cik’ is pronounced chik)
Deciphering Chinese, Indian and Malay names can be a challenge so check the appropriate form of address with Austrade or your host, or else ask the individual how they prefer to be addressed.
Note: Many prominent business people have also been given titles such as Tan Sri, Dato’ or Datuk. In addressing them, one should always use these titles. Whether you use first name or surname with the honorific will vary depending on race. To be on the safe side, just call them by the title (eg. Tan Sri or Dato’) until you are sure what is appropriate.
Greeting / handshake – When meeting your Malaysian counterparts for the first time, a firm handshake is the standard form of greeting. However, you should only shake hands with a Malaysian businesswoman if she initiates the gesture. Otherwise a nod or a single bow is appropriate.
Business cards – Remember to bring plenty of business cards. Usage and exchange of business/name cards is standard in all business introductions in Malaysia. Cards should be handed over to another person with two hands and vice versa. Treat the card with dignity.
Eating with Malaysians – Malaysians are extremely hospitable. Food is a Malaysian pastime and a part of standard business. Accept a little bit of any food that is offered to you. If you are interested to eat Malaysian food but find that your host keeps ‘treating’ you to Western food, ask them if you can eat Malaysian – they will be relieved and complimented!
Malays are generally Muslim and follow a Halal diet. They do not eat pork or drink alcohol. Most Malaysian restaurants are halal. Most Indians do not eat beef, and some are vegetarian. If you are arranging a set meal for a number of races, include lots of vegetables, chicken, lamb and fish (in place of pork and beef).
At many events, particularly official events, alcohol will not be served. The host (who has invited the guests) will normally pay.
Gifts – Gifts are not usually exchanged as they may be perceived as a bribe. However, in the event that you are presented with a gift, it is customary to accept it with both hands and wait until you have left your Malaysian counterparts before opening it. Be sure to reciprocate with a gift of equal value in order to avoid loss of face.
For Australian Government officials, remember to follow the relevant policies of your agency.
Communication style – Malaysians often communicate in an Eastern or cyclical style. Often it feels that they are taking a long time to get to the point. Malaysians avoid confrontation. Yes does not always mean yes.
- Avoid being too abrupt or direct.
- Slow down – remember they are often communicating in a second language.
- Be patient – you will get a better understanding of the situation if you avoid interrupting and driving your point. It takes practice and discipline but it’s worth the effort!
There are many cultural rules that you will hear, such as: don’t point with your index finger, don’t touch people on the head, don’t use your left hand, and don’t cross your legs. Malaysians are a highly international race and do not expect you to know every nuance of their culture.
Malaysian business etiquette
- DO be patient with your Malaysian counterparts during business negotiations. The process is often a long and detailed one that should not be hastened.
- DO remain polite and demonstrate good etiquette at all times. Elderly Malaysian business people for example should be treated with respect and always acknowledged before younger members of the organisation. This is an essential part of achieving successful business dealings in Malaysia.
- DO take time to establish productive business relationships with your Malaysian colleagues. Initial meetings are generally orientated towards developing such relationships and will be maintained throughout and beyond the negotiations. Without them, your business plans may be fruitless.
- DON’T assume that a signed contract signifies a final agreement. It is common for negotiations to continue after a contract has been signed.
- DON’T be surprised if your Malaysian counterparts ask what you may consider to be personal questions. In Malaysia, asking people about their weight, income and marital status for example, is not uncommon and is viewed as an acceptable approach to initial conversations.
- DON’T enter into business with a Malaysian company without conducting due diligence about the company and its management.
Setting up in Malaysia
Malaysians are generally open to exploring new business. Depending on the industry, all forms of entry modes are allowed (100 per cent or majority ownership). It is best to get to know the market and the key players prior to deciding on a partner. Legal documentation is also necessary should a partnership be formed to protect the interests of both parties.
Depending on the industry, a local partner may be necessary to facilitate doing business in Malaysia. For example, many government procurement projects require a certified ‘bumiputra’ status company with prior approval from the Ministry of Finance before a business can be considered for the project.
Banking and finance
The Malaysian banking sector is very much similar to that of the Australian banking sector. Both domestic and international banks are based in Malaysia and Labuan offers offshore banking services.
Links and resources
Government, business and trade
Department of Environment – www.jas.sains.my
Kuala Lumpur Regional Centre for Arbitration – www.klrca.org.my
Kuala Lumpur Stock Exchange – www.klse.com.my
Malaysia Australia Business Council – www.mabc.org.my
Malaysian External Trade Development Corporation – www.matrade.gov.my
Malaysian Franchise Association – www.mfa.org.my
Malaysian Industrial Development Authority – www.mida.gov.my
Ministry of Agriculture – www.moa.gov.my
Ministry of International Trade and Industry – www.miti.gov.my
Multimedia Super Corridor Malaysia – www.msc.com.my
Royal Customs and Excise Dept of Malaysia – www.customs.gov.my
Securities Commission of Malaysia – www.sc.com.my
News and media
Malaysian National News Agency – www.bernama.com
Malaysia’s White & Yellow Pages – www.yellowpages.com.my
The Edge Daily – www.theedgemalaysia.com
The Star – www.thestar.com.my
New Straits Times Press – www.nst.com.my
NSTP e-media group of publications – www.nstp.com.my
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.