Investing in Malaysia

Depends what you mean by investment. And by Malaysia there is KL, Penang and the rest.

Generally divided into
1. Long term investments in stock markets
2. Buying property to rent
3. Building up a business  either as owner manager or more of as a source of funds

1. Is best done internationally, the Malaysian stock market is a shark pool of fraud. Trackers in cheap US funds like Vanguard are best. Fund pickers and actively managed funds are 99.9999% scams! Either invest yourself if you know what you are doing, or realise that 90% of returns are from asset allocation. Use trackers with fees as low as 0.15% is best. Use an yearly rebalancing strategy.

2. Has to be local. Asset inflation and over supply of condo makes this an area to be careful in now, I remember properties for sell for 150k 17 years ago that now sell for 2 million, be careful NOW especially as a foreigner, as the best yields are for lower priced housing expats can't legally buy. Buy to live in - landed property. I would never buy a condo in Malaysia as most are declining assets eg are annuities but over supply is hurting yields in KL. Savvy Malaysians I know sold their portfolios of condos in Penang as prices bloated.

3. Many lose their money through not knowing what they are doing. Even those who do, get cheated, scammed and corruption is so high, judges are easily bought in a legal dispute. Yes you can make money, but when I see people say "have you got any businesses I can invest in" you know they will be cheated. Best to stick to what you know, and most that are successful have a Malaysian spouse and set up a business in an area where they worked before and have extensive local knowledge and contacts.

I remember screening some fund managers for a Malaysian bank once as a consultant. They were all cowboys selling snake oil! Of course they offered incentive payments..... cough splutter

Agree with Nemadot concerning property business. The lower priced apartments are easier to rent out because they are affordable to more tenants. When the government started increasing the minimum limits that foreigners need to pay for a property it meant that that rental business became more difficult as the percentage of tenants who can afford more expensive rents was a much lower percentage.

Also, as we all know, the location and indeed the specific building and it's reputation is important. Even some older condos with poor public transport options but with reasonable rents and great facilities and which are family friendly can rent more easily than those with poor facilities.

My last purchase was for around RM750k and has a shopping mall beneath it, great facilities, LRT station beside it and close to the city. My others have either been in Bukit Bintang or walking distance to Petronas Towers or walking distance to Sentral Station or in the heart of Bangsar. So location is so important.

I don't invest in the stock market but do place money in FD accounts for higher interest and that can mean changing banks every 3 or 6 or 12 months to maintaining higher than normal interest rates.

As for either starting or investing in a business in Malaysia, I have never been very interested because I feel that in Malaysia there are plenty of people that would rip you off if they got the chance. Perhaps doing an online business from home is the way to go, and start small and grow.

Diksha wrote:

What are the promising sectors to invest and do business in Malaysia?

According to the sectors of activity and the projects, what budget should be foreseen for an investment in Malaysia?

What do you think are the pitfalls to avoid and what advice would you give someone who wants to invest?

Promising sectors in Malaysia from the Macro point of view is in Semiconductors as China will scale back on Manufacturing while CAGR for semiconductors is forecasted between 20-50% and Malaysia is one of the more favourable locations for manufacturing it. Lower labour cost and weak ringgit for the near term. Other sector is latex products; rubber gloves and condoms. Solar Panel providers are also another sector to look into but will share more with you privately. 

In terms of Pitfalls, there are a rising number of companies raising funds via crowdfunding; You might want to be extra careful when offered an "investment" opportunity by peer 2 peer or crowdfunding platforms. I always ask "If their businesses are projected for such growth, why can't they secure funding from bigger players like MDEC, Magic and Cradle?"

Which brings me to my next point, if your risk appetite is bigger, you might want to consider signing up as an Angel Investor with proper channels such as Cradle. One of its success stories is Common Ground, the co working space that beat an American Co Working provider for funding.

I am Rei who work as an investment advisor who has worked closely with Venture Capitalists, Private Equity Firm, and is currently managing MYR 350million asset for local clients and several corporates.

Investing in Real Estate is good timing now in Malaysia especially those run down 2nd house (run down but good in value) .

I have a plan. pm for more details if someone is interested thanks.