Infrastructure and transport to Malaysia

Trends and opportunities

The market

Malaysia has historically invested significantly in infrastructure, and today the majority Malaysians have access to essential amenities and services such as transport, communications, electricity and clean water. Developments in these infrastructure assets including roads, rails, logistics, ports, airports, digital infrastructure (high-speed broadband), connected water services and electricity supply have helped establish connectivity within the nation, improving productivity and standards of living nationally.

As Malaysia moves closer to its vision of becoming an advanced economy by 2020, the focus will not only be on expanding the physical reach of these networks to all communities, but to improve the efficiency, productivity, and affordability of these services inclusively.

During the 10th Malaysia Plan (2011-2015), the government made large investments in transport, digital, and energy infrastructure. Malaysia’s road network grew 68 per cent between 2010 and 2015; two major national ports were categorised in the world’s top 20 container ports as the volume grew by 23 per cent; a new airport runway and terminal were opened driving passenger growth by 46 per cent, and more than 55,000 kilometre of fibre connectivity was rolled out, increasing broadband penetration up to 70 per cent.

Currently on the 11th Malaysia Plan (2016-2020), the transport and logistics sector will continue to remain a crucial driver of growth – leveraging new investments in roads, rails, and air services to boost regional development. Expansion of these networks will create new corridors of economic activity and further strengthen the existing economic corridors. The government will work with the private sector to create an integrated logistics coupled with an efficient trade facilitation that will boost Malaysia’s trade (Source: The Economic Planning Unit, Eleventh Malaysia Plan 2016-2020).

Opportunities

The scope of opportunities for Australian products and services is broad, responding to market demand, government initiatives and incentives, and where there is a lack of expertise in certain areas in the market. Australian companies can take advantage of the many gaps between supply and demand in the Malaysian market, as well as Malaysia’s increasing appreciation for high-quality services and products, as developers gradually become less cost sensitive in certain niche areas. The following are areas where there is demand and potential for Australian organisations in the Malaysian market.

Competitive environment

The scope of opportunities for Australian products and services is broad, responding to market demand, government initiatives and incentives, and where there is a lack of expertise in certain areas in the market. Australian companies can leverage on their expertise to fill the gaps in the Malaysian market, especially looking into the government focus areas including:

Building an integrated need-based transport system
  • enhancing connectivity across transport modes and regions by optimising transport planning
  • improving road and rail safety, shifting to preventive maintenance, and upgrading air navigation
  • expand port accessibility and capacity through establishing a port community system
  • strengthening regulatory and institutional framework for the transport industry.
Unleashing growth of logistics and enhancing trade facilitation
  • strengthening institutional and regulatory framework through the National Logistics Task Force to regulate off-dock depots, warehousing activities, and commercial vehicle registrations
  • enhance trade facilitation mechanisms by reducing cargo clearance time and by going paperless
  • building freight infrastructure efficiency and capacity by improving last-mile connectivity and expanding air and rail freight infrastructure
  • deploying technology in the logistics chains through development of virtual selling platforms and supporting logistics infrastructure for e-commerce
  • strengthening the capabilities of logistics service providers through training and accreditation.
Improving coverage, quality, and affordability of digital infrastructure
  • expanding and upgrading the broadband infrastructure
  • increasing the affordability and protection for consumers
  • migrating to digital terrestrial television
  • strengthening the infrastructure for smart cities.
Continuing the transition to a new water services industry framework
  • raising the financial sustainability of the water services industry
  • expand network and treatment plant capacity through infrastructure investment and technology
  • increase efficiency and productivity of water and sewerage services
  • strengthen the regulatory framework of the water services industry establishing a master plan.
Encouraging sustainable energy use to support growth
  • strengthening stakeholder coordination and collaboration in the energy sector
  • ensuring security and reliability of supply of the oil and gas subsector
  • enabling growth in the oil and gas subsector in downstream refining
  • managing supply diversity of security of the electricity subsector
  • improving the sustainability, efficiency and reliability of the electricity subsector.

Tariffs, regulations and customs

The Malaysian market is well regulated and driven by policies that drives government initiatives and encourages the establishments of public private partnerships (PPP), allowing private firms – local and foreign – to work together on those planned initiatives. With its free trade agreement commitments, it opens the market to regional and global competition, allowing foreign firms to participate in the development of the nation, especially within specialised niche areas and on project advisory roles.

The Malaysia-Australia Free Trade Agreement (MAFTA) came into force on 1st January 2013, offering benefits and encouraging Australian business operations especially within the infrastructure sectors.

Infrastructure development

Market access for infrastructure development is under the following conditions:

  1. A representative office, regional office or locally incorporated joint venture corporation with Malaysian individuals or Malaysian controlled corporations or both. Aggregated foreign shareholding in the joint venture corporation shall not exceed 49 per cent.

  2. Foreign companies that are not locally incorporated may carry out projects jointly with local counterparts, on project-by-project basis:
    • projects wholly financed by foreign investments and/or grants
    • projects financed by loans of international tendering according to the terms of loans
    • projects with foreign investments equal to or more than 50 per cent with no local expertise
    • 100 per cent Malaysian funded projects where there is no local expertise.

Marketing your products and services

Market entry

Companies thinking of entering the Malaysian market especially in matured sectors will need to be highly competitive in nature and able to articulate what differentiates their product from others in the market. As the Malaysian market can be highly price sensitive, more often than not business opportunities arise in the form of joint ventures, strategic partnerships and consortia.

In certain sectors such as water treatments, green building technology, facility management, the Malaysian market is very much in its infancy stage, providing opportunities for Australian providers to enter the market through investing in wholly or partially owned subsidiaries in these areas, while the market demand for such services gradually picks up.

Links and industry contacts

Infrastructure

Land Public Transport Commission (SPAD)
Logistics and Supply Chain Association of Malaysia
Malaysia Institute of Transport (MITRANS)
Malaysian Construction Industry Development Board
Malaysian Green Building Confederation
Master Builders Association Malaysia

Government, business and trade

Australia Malaysia Business Council
Malaysia Australia Business Council
Royal Malaysian Customs Department

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