Investing in Malaysia

Hello everyone,

During your expatriation in Malaysia, you might have been made aware of interesting investment schemes (local or international). Whether one wants to make money grow, protect oneself or prepare for retirement, investment is always an attractive option. It is, however, never free of risk. Would you, therefore, like to share some practical information for other expats and expats to be?

Is the Malaysian economy open to foreign investment? Do local authorities encourage investment (through formalities, tax etc.)?

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

Who do you turn to for information before investing your money? (organisation, professional, lawyer, consultant)

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?

Thanks in advance for your feedback,
Diksha

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.

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