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CORONA VIRUS – The situation in Malaysia

1. General situation

In response to the COVID-19 pandemic, the Malaysian government reviewed the implemented measures i.e. Movement Control Order (MCO) from time to time, based on the current COVID-19 situation in the country. As of 14th January 2021, there are 147,855 COVID-19 cases in Malaysia, breakdown into 32,377 in hospitalisation cases, 113,288 recovered cases and 578 death cases. On 11th January 2021, the Malaysian Prime Minister Tan Sri Muhyiddin Yassin announced the implementation of Movement Control Order (MCO) 2.0 in five high-risk states, namely Federal Territories (Kuala Lumpur, Putrajaya, Labuan), Johor, Penang, Sabah and Melaka, effective from 13th January 2021 to 26th January 2021. MCO 2.0 aims to stem the spread of the COVID-19 pandemic, recording four-digit daily cases recently. Interstate travel will not be allowed during this period for the whole country. The Malaysian Ministry of Health projected that MCO 2.0 would effectively reduce daily COVID-19 cases by 80%. Only five essential economic sectors are allowed by Ministry of International Trade and Industry (MITI) to operate under strict Standard Operating Procedures (SOPs) during the MCO period, namely manufacturing, construction, services, trade and distribution, as well as plantations and commodities. Effective from 13th January 2021 to 26th January 2021, Pahang, Perak, Negeri Sembilan, Kedah, Terengganu and Kelantan will be under the enforcement of Conditional MCO, while Perlis and Sarawak will be under the enforcement of Recovery MCO.

The country border remains closed and only travellers with approval from relevant agencies are allowed to enter. On 12th January 2021, Malaysia’s King Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah announced a State of Emergency nationwide from 12th January 2021 to 1st August 2021 to contain further spread of the COVID-19 pandemic. Prime Minister Tan Sri Muhyiddin Yassin explained that under the proclamation of a State of Emergency, the government would continue to function and economic activities will operate as usual but subject to SOPs. Prime Minister Tan Sri Muhyiddin Yassin highly emphasised that Malaysia is open for business. The government will remain committed to the 6-Phase Economic Recovery Plan (6Rs) in place since last year for economic recovery.

Prime Minister Tan Sri Muhyiddin Yassin noted that Malaysia expected to receive Pfizer-BioNTech COVID-19 vaccine doses by the end of February 2021. The government has signed a preliminary purchasing agreement with Pfizer, AstraZeneca and the global COVAX Facility to secure COVID-19 vaccines for 40% of the population. The government is also currently in final negotiation with Chinese pharmaceutical companies - Sinovac and CanSino Biologics, as well as Russia’s Gamaleya Institute for their COVID-19 vaccines, to cover over 80% of the population. The leading pharmaceutical manufacturer – Pharmaniaga Berhad has signed an agreement with China’s Sinovac to purchase ready-to-fill COVID-19 vaccines and will subsequently enter into local manufacturing under Sinovac’s license technology and know-how.

2. Preventive measures

  • Phase 1 - Movement Control Order 1.0 (MCO 1.0) from 18th March 2020 till 3rd May 2020
  • Phase 2 - Conditional Movement Control Order (CMCO) from 4th May 2020 till 9th June 2020
  • Phase 3 - Recovery Movement Control Order (RMCO) from 10th June till 31st December 2020
  • Phase 4 – CMCO in the areas with high COVID-19 cases from 14th December 2020 till 31st  December 2020
  • Phase 5 – RMCO nationwide from 1st January 2021 till 31st March 2021
  • Current Measure - MCO 2.0 (Federal Territories (Kuala Lumpur, Putrajaya, Labuan), Johor, Penang, Sabah and Melaka) & RMCO (Perlis and Sarawak) & CMCO (Pahang, Perak, Negeri Sembilan, Kedah, Terengganu and Kelantan) from 13th January 2021 till 26th January 2021

To effectively control the current COVID-19 situation, the Malaysian government has implemented different Movement Control Order (MCO) levels. Conditional MCO for areas with the presence of COVID-19 cases; Enhanced MCO for areas with a high number of COVID-19 cases; Targeted Enhanced MCO for a much smaller space with the high number of COVID-19 cases, such as a residential complex or an office building; and Administrative Enhanced MCO for a specific high-risk area but with fewer restrictions.

Prohibited activities under Movement Control Order (MCO) (As at 12th January 2021):

  • No interstate and inter district travel are allowed.
  • No social gatherings, such as weddings, wedding receptions, conferences, religious processions (including Thaipusam), meetings, seminars, courses, and group sports activities.
  • Movements are limited to a 10km radius to two people per vehicle. Only two people per household are allowed to go out for groceries at nearby supermarkets or grocery stores.
  • Only 5 essential economic sectors allowed to operate: manufacturing, construction, service, trade and distribution, and plantations and commodities. Only 30% of workers within a company’s management group are allowed to be in the office. Non-essential services staff to work from home.
  • Eateries and hawker stalls may operate but only take-aways are allowed. Food delivery services, supermarkets, healthcare services (including clinics, hospitals and pharmacies) and banks can operate with strict SOPs compliance.
  • For religious activities, only a maximum of 5 mosques/houses of worship committee members is allowed at these premises.
  • Outdoor recreational activities are allowed among people within the same household. No more than 2 people are allowed to jog at any one time and for cycling, only one person is allowed.

Prohibited Activities under Recovery Movement Control Order (RMCO) Regulations (As At 12th January 2021):

  • No interstate travel is allowed.
  • Pubs, nightclubs, theme parks, mass religious gatherings, mass social gatherings.
  • Sports competitions or Games that require mass gatherings of supporters in stadiums.
  • Social gatherings allowed, provided in full compliance of the SOPs.
  • Religious activities are allowed with the minimum number of attendees stipulated in the SOPs.
  • Any activities that require crowds to gather in numbers detrimental to safe social distancing and other measures required by the Health director-general as part of Malaysia’s effort to contain COVID-19.

Prohibited activities under Conditional Movement Control Order (CMCO) Regulations (As At 12th January 2021):

  • No interstate travel is allowed.
  • No social gatherings, such as weddings, wedding receptions, conferences, religious processions (including Thaipusam), meetings, seminars, courses, and group sports activities.
  • Religious activities are allowed with the minimum number of attendees stipulated in the SOPs.
  • Recreational and cultural activities are prohibited, including nightclubs, pubs, theme parks, indoor playgrounds and cinemas.
  • All academic institutions are closed.
  • Contact sports are prohibited, including swimming, football and basketball.
  • All business sectors are allowed to operate with full compliance with the given SOPs.
  • Dining in restaurants is allowed subject to the SOPs.

Prohibited activities under Enhanced Movement Control Order (EMCO) and Targeted Enhanced Movement Control Order (TEMCO) Regulations (As At 7th December 2020):

  • All social activities are prohibited. Screening, testing and quarantine (up to 28 days) are mandatory for all areas’ residents.
  • Movement in and out of premises or areas is prohibited, similar to the stay-at-home-order.
  • Only those providing essential services are allowed in, while only the head of a family can venture outside to buy food or household goods.

Prohibited Activities under Administrative Enhanced Movement Control Order (AEMCO) and (As At 7th December 2020):

  • Residents in areas placed under the order are allowed to move within and travel out of the designated location, subject to clearance by officials stationed there.
  • Screening and testing are mandatory for all residents of the areas.
  • Food and essential services can operate normally.

For more information, please refer to: https://www.mkn.gov.my/web/ms/sop-pkp-pemulihan/

Penalties

Any violation of SOPs that are still in force under the Prevention and Control of Infectious Diseases Act 1988 (Act 342), the offenders could face maximum penalties of MYR1,000 fine and 6 months’ jail for various offences.

Foreign Travel Restrictions  

As of 12th January 2021, international travel is still not permitted as Malaysian borders remain closed. Since last year, Malaysia is in the early stage of discussions with 6 “Green” countries that it would like to open its borders to post-COVID-19. However, the plan is likely to be postponed due to the current spike of COVID-19 cases. The borders between Malaysia and Singapore has reopened from 17th August 2020 onwards for the selected travellers under the Reciprocal Green Lane (RGL) and the Periodic Commuting Arrangement (PCA) travel schemes. RGL is for essential business and official matters involving both countries, while PCA enables Malaysian and Singaporean citizens holding long-term immigration passes (for business and worker purposes) to return home periodically for a short break.

Currently, entry for all new international students and dependents is on hold until further notice. Only returning students are allowed to enter Malaysia, subject to ongoing travel restrictions. For student pass/special pass expired during the MCO, the institutions can submit students’ passports to Education Malaysia Global Services (EMGS) request for an extension, subject to terms and conditions.  

On 10th September 2020, the Malaysian government announces a Temporary Entry Ban of citizens from 23 countries until further notice, except for certain travellers. For entries from other countries, travellers need to obtain approval from the relevant Malaysian authority. Below are the allowed entries from Non-Banned countries:

  • Foreign diplomats and ambassadors.
  • All members of Malaysia My Second Home (MM2H) programme. The Immigration Department of Malaysia will manage the procedure to re-enter Malaysia.
  • Expatriate/ Skilled worker/ Knowledge worker/ Dependents/ Foreign Maids with an active pass. They are exempted to obtain Entry Approval from the Director General of Immigration Malaysia (DGIM).
  • New Approved Pass for Expatriate/ Skilled worker/ Knowledge worker/ Dependents/ Foreign Maids. They are exempted to obtain Entry Approval from the Director General of Immigration Malaysia (DGIM). The company is required to submit the expatriate application through the Approving Agency.
  • Expatriate/ Skilled worker/ Knowledge worker with an Active Pass / Exited Malaysia During MCO, who is currently stranded abroad. The company is required to submit the expatriate application through the Approving Agency.
  • Expatriates under the employment pass (EP) Category one, Professional visit pass and Resident pass-talent, who hold senior management posts in Malaysia-based companies would be allowed into Malaysia. Expatriate Committee (EC) or relevant authorities must give approval for the foreign talent to fill a position before the issuance of an expatriate Employment Pass can be made by the Immigration Department of Malaysia.
  • International students studying at Malaysia-based Public and Private higher learning institutions and international schools. They are required to apply for a Student Pass from the Department of Immigration Malaysia.
  • Foreigners seeking medical treatment under the medical tourism industry. Malaysia started allowing medical tourists from six countries including Singapore, Japan and Australia to enter from July 2020.

On 10th September 2020, the Malaysian government announced entry ban of citizens from 23 countries with over 150,000 COVID-19 cases: United States, Brazil, India, Russia, Peru, Columbia, South Africa, Mexico, Spain, Argentina, Chile, Iran, Bangladesh, United Kingdom, Saudi Arabia, Pakistan, France, Turkey, Italy, Germany, Iraq, the Philippines and Indonesia until further notice. Certain groups of travellers are allowed to enter Malaysia with approval from relevant Malaysian authorities and they can only make a one-way journey into Malaysia. The list of allowed travellers are as follows:

1.          Residence Pass-Talent (RP-T) and their dependant/s

2.          Employment Pass (Category EP I, II and III)

3.          Professional Visit Pass (PVP)

4.          Dependant Pass to expatriate for all categories

5.          Long Term Social Visit Pass (LT-SVP) to expatriate for all categories

6.          Foreign Maid to expatriate for all categories

For more information, please refer to the link below:

rT-PCR COVID-19 Test

Prior to entering Malaysia, the applicant is ENCOURAGED to undergo rT-PCR COVID-19 Test abroad within 3 days and must be medically confirmed to be tested negative for COVID-19. All entries into Malaysia are COMPULSORY to undergo (another) health screening at the Point of Entry (POE) - the entries shall bear rT-PCR COVID-19 test and the costs. For those transit in less than 24 hours at KLIA and continuing their journey to Sabah, Sarawak and Labuan will have to do RTK Ag test. Entries will be direct to the hospital if entries exhibit severe symptoms of COVID-19.

Quarantine Information

Prior to entering Malaysia, the applicant is ENCOURAGED to undergo rT-PCR COVID-19 Test abroad within 3 days and must be medically confirmed to be tested negative for COVID-19. All entries into Malaysia are COMPULSORY to undergo (another) health screening at the Point of Entry (POE) - the entries shall bear rT-PCR COVID-19 test and the costs. For those transit in less than 24 hours at KLIA and continuing their journey to Sabah, Sarawak and Labuan will have to do RTK Ag test. Entries will be direct to the hospital if entries exhibit severe symptoms of COVID-19. For more information, please refer to the link: Guidelines Entry And Quarantine Process Person Under Surveillance (Pus) Arriving From Abroad (24th July 2020)

MySejahtera Application

All Malaysians and foreigners who wish to return to Malaysia are COMPULSORY to download and install the MySejahtera application on their mobile phones. MySejahtera is an application developed by the Malaysian government to assist in managing the COVID-19 pandemic in the country. It allows users to perform health assessments and also monitor their health progress throughout the COVID-19 pandemic. MySejahtera enables the Ministry of Health (MOH) to monitor users’ health conditions and take immediate actions to provide the treatments required. Please go to the link below to download the application:  https://mysejahtera.malaysia.gov.my/

3. Exit strategy

The control of the COVID-19 pandemic in Malaysia is still tightened as well as other actions are taken following the WHO exit strategy. However, according to the Director-General of Health Malaysia, Dr. Noor Hisham Abdullah said Malaysia is not poised to enter COVID-19 “Exit Strategy Phase”.

4. Economy

a. Economic impact

Prime Minister Muhyiddin Yassin mentioned that Malaysia’s economy is losing an estimated MYR 2.4 billion daily during the MCO, a total of MYR 63 billion, as all the business activities are suspended. According to the Malaysian Ministry of Finance, Malaysia’s gross domestic product (GDP) is expected to contract by 4.5% in 2020, before regaining its growth in 2021 of 6.5% to 7.5%. The implementation and subsequent extension of the Movement Control Order (MCO) have greatly affected Malaysia’s economic performance:

  • The broad-based travel restrictions and travel risk aversion have affected all tourism-related sectors.
  • Global supply chain disruptions pressured the production and trade activities of the manufacturing sector. The cumulative losses incurred by the Electrical and Electronics (E&E) sector are estimated at MYR 7.28 billion of GDP, while the impact on exports is estimated at MYR 29.12 billion.
  • The decline in private consumption and investment due to reduced household spending.
  • Heightened financial market volatility due to ongoing external uncertainties may lead to tighter domestic financial market conditions.
  • According to the Department of Statistics Malaysia (DOSM), as of 1st May 2020, 67.8% of the total 4,094 Malaysian companies responded that no sales/revenue during the MCO period. The companies’ main challenges are the financial source for salary and rental payment and low customer flow.
  • The unemployment rate is expected to rise to 4.2% in 2020 due to the closure of business operations during MCO.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz mentioned that the online sales of fast-moving consumer goods growing rapidly by 40% due to the pandemic. Malaysian consumer behaviour has possibly changed due to the COVID-19 pandemic and making the new normal permanent, such as become more comfortable buying online and cashless/ contactless payment transactions. Postal and Courier Services are recognised as one of the sectors least impacted by the COVID-19 pandemic.

Apart from the pandemic, the domestic economy will also be affected by the sharp decline and volatile shifts in crude oil prices and continued supply disruption in the commodities sector due to unfavourable weather conditions, continued maintenance works and to a certain extent, reduced operating capacity due to the MCO.

b. Trade barriers

There are no new trade barriers added at this time.

As gazetted in the Control of Supplies (Prohibition on Export) (Amendment) Regulations 2020, the Malaysian government has banned exports of Face Masks as listed below:

  • Face Mask (Surgical/Medical) 1 Ply (Ear Loop)
  • Face Mask (Surgical/Medical) 2 Ply (Ear Loop)
  • Face Mask (Surgical/Medical) 3 Ply (Ear Loop/ Head Loop/Head Tie-On)
  • Face Mask (Surgical/Medical) N95

A letter of approval issued by the Controller of Supplies, Ministry of Domestic Trade and Consumer Affairs under the Control of Supplies Act 1961 is required for any export of prohibited goods.

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c. Measures for economic relaunch

a. Malaysian Budget 2021

Budget 2021 themed “Stand United, We Shall Prevail”, with the allocation of MYR322.5 billion expenditure to revive the economy and help Malaysians weather the COVID-19 pandemic. The 2021 Budget has three key areas of focus: ensuring the wellbeing of the people, business continuity, and resilience of the economy. 73.30% of the total budget is allocated for Operating Expenditure, 21.40% for Development Expenditure and a special allocation of 5.30% for the COVID-19 fund. Budget 2021 extends the support provided in the earlier announced economic stimulus packages. Key highlights of Budget 2021:

  • Tax Incentive for Global Trading Centre: 10% income tax rate for a period of 5 years and renewable for another 5 years.
  • Extension of Principal Hub Incentive: Extended for another 2 years to 31st December 2022.
  • Relocation Incentives for Selected Services Sector: Income tax rate of 1% to 10% for 10 years for a new company, and 10% for 10 years for existing company with new service segment.
  • Relocation Incentives for Manufacturing Sector: Extended for another 1 year to 31st December 2022. Income tax rate of 0% for 10 or 15 years for new companies, or 100% investment tax allowance for 5 years for existing companies.
  • Tax Incentive for Manufacturers of Industrialised Building System (IBS) Components: Extended for another 5 years to 31st December 2025. Investment tax allowance of 60% on qualifying capital expenditure incurred within 5 years to be set off against 70% of statutory income.
  • Tax Incentives for Bionexus status company, Economic corridor developments, MRO activities for aerospace, and Building and repair of ships: Extended for another 2 years.
  • Tax Incentives for Manufacturers of Pharmaceutical Products including Vaccines: 0% to 10% income tax rate for the first 10 years and 10% for the subsequent 10 years.

For more information, please refer to: https://www.treasury.gov.my/index-en.html  

b. National Economic Recovery Plan – PENJANA (Pelan Jana Semula Ekonomi Negara)

The Malaysian government plans to revive the economic activities by formulating a comprehensive Short, Medium and Long-term Economic Recovery Plan, which will complement the various announced economic stimulus packages. On 5th June 2020, Malaysian Prime Minister Tan Sri Muhyiddin Yassin announced the Short-term National Economic Recovery Plan – PENJANA (Pelan Jana Semula Ekonomi Negara). Malaysia is currently in the 4th Phase: Recovery, under the 6-Phase Plan (6Rs): Resolve, Resilience, Restart, Recovery, Revitalise and Reform. PENJANA has 40 initiatives worth MYR35 billion, focusing on 3 key thrusts - Empower People, Propel Businesses and Stimulate the Economy. PENJANA is expected to stimulate Malaysia’s economy, save over 2.4 million jobs, reduced the cash flow burden of around 10 million people and support over 300,000 companies.

For more information, please refer to: 

c. Kita Prihatin Economic Stimulus Package

On 23rd September 2020, Malaysian Prime Minister Muhyiddin Yassin announced that the government is rolling out the Kita Prihatin Economic Stimulus Package, which is a special initiative aimed at helping micro-entrepreneurs, the country’s workforce and those from the lower- and middle-income groups. Under the Kita Prihatin Package, the government allocated  MYR600 million for the Special Prihatin Grant that is expected to benefit 200,000 micro-entrepreneurs in Malaysia, MYR2.4 billion for Wage Subsidy Programme 2.0 and MYR7 billion for the Bantuan Prihatin Nasional (BPN) 2.0 – cash aid for the eligible Malaysians.

For more information, please refer to: https://www.treasury.gov.my/index.php/kitaprihatin2020.html

d. Prihatin Rakyat Economic Stimulus Package (PRIHATIN)

On 27th March 2020, Malaysian Prime Minister Tan Sri Muhyiddin Yassin announced Prihatin Rakyat Economic Stimulus Package (PRIHATIN) worth MYR250 billion, aimed to preserve Malaysian’s welfare (MYR128 billion), support businesses including small and medium-sized enterprises (SMEs) (MYR100 billion) and strengthen the economy (MYR2 billion) and support implementation of measures announced under the 1st Economic Stimulus Package (MYR20 billion). To date, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz mentioned PRIHATIN had helped to relieve Malaysia economic pressures in the past few months.

For more information, please refer to: https://pre2020.treasury.gov.my/index_en.html

d. Economic outlook

It is known that the COVID-19 pandemic has greatly impacted the Malaysian economy, more so, the global economies. Malaysian has been recognised as one of the most successful countries in handling the socio-economic impact of the COVID-19 pandemic. According to the Malaysian Ministry of Finance, Malaysia’s gross domestic product (GDP) is expected to contract by 4.5% in 2020, before regaining its growth in 2021 of 6.5% to 7.5%.

All manufacturing sectors are projected to experience slow or contract growth in 2020 before rebounding in 2021. The construction industry is one of the most impacted industries by the COVID-19 pandemic and is expected to contract by -18.7% in 2020 and rebound at an estimated growth rate of 13.9% in 2021. In terms of trade, the total trade is projected to decrease by 5.7% to MYR1.74 billion in 2020. Gross export is forecasted to decline by 13.4% due to global restriction and supply chain disruptions and expected to rebound by 8.7% in 2021. Gross import trade is projected to decline by 11.9%, mainly due to lower imports of intermediate and capital goods, and is expected to rebound by 9.2% in 2021.

Due to the Movement Control Order imposed by the Malaysian government to contain the COVID-19 pandemic, most business sectors are not allowed to operate as usual or at full capacity. Over 66% of businesses experienced a drastic drop in demand that made it difficult to sustain a business due to the decline in private consumption. In 2020, private consumption is forecasted to decrease by 0.7% in 2020 due to reduced household spending. The Malaysian government has proactively taken many initiatives to stimulate and boost the economy and increase private consumption, such as the Prihatin Rakyat Economic Stimulus Packages and National Economic Recovery Plan etc.

e. Short term opportunities

a. Manufacturing Sector

Malaysia has a well-established Manufacturing Sector but has too much reliance on the Oil and Gas Sector. Malaysia remains an attractive investment destination, with the availability of well-educated labour, investor-friendly policies and incentives, well-developed Infrastructure and preferred gateway to enter the ASEAN market. Malaysia’s technologically-inclined economy is proven by the country's involvement in advanced industries such as E&E manufacturing, R&D, biotechnology, photonics, logistics, design, innovation, automotive and others.

The COVID-19 pandemic has triggered the Malaysian Government’s actions in ensuring smooth supplies of medicine, food and other essential goods. This shows short and long-term opportunities for the Manufacturing sector, especially for the Medical & Health industry and the Food & Beverages industry. The Malaysian government announced many attractive tax incentives for the manufacturing sector, including:

  • Tax Incentive for Global Trading Centre: 10% income tax rate for a period of 5 years and renewable for another 5 years
  • Principal Hub Incentive
  • Relocation Incentives for Selected Services Sector: Income tax rate of 1% to 10% for 10 years for a new company, and 10% for 10 years for existing company with new service segment.
  • Relocation Incentives for Manufacturing Sector: Income tax rate of 0% for 10 or 15 years for new companies, or 100% investment tax allowance for 5 years for existing companies.
  • Tax Incentive for Manufacturers of Industrialised Building System (IBS) Components: Investment tax allowance of 60% on qualifying capital expenditure incurred within 5 years to be set off against 70% of statutory income.
  • Tax Incentives for Bionexus status company, Economic corridor developments, MRO activities for aerospace, and Building and repair of ships
  • Tax Incentives for Manufacturers of Pharmaceutical Products including Vaccines: 0% to 10% income tax rate for the first 10 years and 10% for the subsequent 10 years.

For more information, please refer to: https://www.mida.gov.my/home/

b. Manufacturing Sector - Electrical and Electronic Industry

The Electrical and Electronics (E&E) industry is poised to remain firm in 2020, despite the COVID-19 crisis, thanks to the Malaysian Government‘s proactive measures during the MCO period. According to Ms. Bee Bee Ng, President of SEMI Southeast Asia, Malaysian E&E landscape will remain robust in 2020, supported by the immense opportunities offered by the industry, especially with the rise in remote working, virtual learning and e-commerce. The increasing demand for smart manufacturing capabilities, automation and technological innovations would potentially stabilise the E&E industry.

Today, the Malaysian Investment Development Authority (MIDA) is looking into attracting investments in new and high technology areas post-COVID-19 supported by the well-developed infrastructure and numerous incentives for potential investors. MIDA is focusing on the companies from countries that are affected (by the trade war), to shift their operations to Malaysia and utilise Malaysia as a hub to penetrate the South-East Asian market.

c. Food Agriculture (Agri-food) Sector

The COVID-19 pandemic has triggered Malaysian Government actions to address food security issues, as the country is highly relying on the imports of F&B products, animal feeds for livestock and poultry sectors and raw materials for further food processing. The emphasis on food security has opened up promising opportunities in the Agri-food Sector for FDI, such as knowledge exchange and assistance in modernising the Agri-food Sector. This has sparked Malaysia to invest in the R&D of the Agri-food Sector to develop a food self-sufficient nation. The available opportunities including potential collaboration between Malaysian and Flemish companies in Agri-related knowledge transfer, adoption or selling of advanced technologies and machinery to modernise the Sector.

The PENJANA Short-term Economic Recovery Plan announced on 5th June 2020 has highlighted few supports for the Agriculture and Food sector, including:

  • 100% exemption on export duty on Crude Palm Oil, Crude Palm Kernel Oil and Refined Bleached Deodorised Palm Kernel Oil (Effective date: 1st July 2020 – 31st December 2020).
  • Incentives to pioneer companies to train and educate the people to venture into agriculture and plantation.
  • Special Reinvestment Allowance for manufacturing and selected agriculture activity, from YA 2020 to YA 2021.
  • Micro Credit Financing for Agro-preneurs under Agro-bank (including commodity players) totalling of RM350 million with an interest rate of 3.5%.

d. Drivers of the Logistics Sector

Malaysia has the 2nd highest E-Commerce penetration rate in the ASEAN region. During the COVID-19 pandemic, Malaysia’s E-Commerce Industry has expanded at a fast pace. The accelerated E-Commerce industry’s growth is mainly due to the increase in the number of online shoppers. The growth has also triggered the transformation of the Malaysian retailers’ business strategy toward E-Commerce and Internet-Of-Things (IoT). This has open opportunities for the main logistics drivers in the country such as Manufacturing, Pharmaceuticals, Food and Beverages, E-Commerce, and Third-Party Logistics sectors.

f. Long term opportunities

While Malaysia is concentrating on the immediate economic outcomes after COVID-19, TAPiO Management Advisory (a leading advisory company in Malaysia) has an alternative view that Malaysia should be seriously look into revamping future-ready sectors to stay competitive:

  • Diversify and modernise the Healthcare Sector by invest in the R&D Sector and establish partnerships with key foreign stakeholders.  
  • Enhance the quality of Malaysia’s Education system.  Partnering with foreign higher education institutions to promote students’ international perspective.
  • Diversifying and modernise the sectors related to Food, Farming and Agriculture. To diversify from simply planting commodities to a new/existing commodity with wider job opportunities and downstream activities.
  • Diversify the Foreign Direct Investments (FDI) into the country, which is mainly contributed by the Oil and Gas Sector. This can be done by promoting the adoption of innovative and advanced technologies in all existing or new industries.
  • Encourage foreign investors to establish or relocate subsidiary in/to Malaysia. Malaysia could take advantage of the current disruption in the global supply chain, as several Multinational Corporations looking to relocate their companies from China.
  • Despite the current economic uncertainties, Malaysia still firmly preparing for the implementation of the National Fiberisation and Connectivity Plan (NFCP), which aims to improve the country’s digital connectivity by rolling out 5G in Q32020. Minister of Communications and Multimedia mentioned that a reliable and affordable high-speed broadband connectivity is the key catalyst for bringing in FDI into Malaysia’s digital economy. The NFCP is also expected to give a positive impact on the Global Business Services (GBS) in Malaysia by empowering the employees to work from home.
  • In the COVID-19 aftermath, the Malaysian Government is expected to improve the national competitiveness, in terms of FDI by introducing more investor-friendly policies and incentives.

5. Useful links

6. Dossier Coronavirus

Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.

FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.

In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.

Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij exportadvies-corona@fitagency.be.

13 december 2020