Historically, for a long time Malaysia did benefit from it's geographical position as a trade hub between different nations. Well-placed geopolitically, mainland part of Malaysia follows the coast among with one of the most strategically vital shipping routes on the globe. Malaysia has used its geographical location as an advantage in order to turn into one of the biggest exporters of several resources, such as tin, rubber and palm oil.
Malaysia has managed to quickly transform its economy from dependence on raw materials and agriculture to a quite modern, competitive country. Services and manufacturing sectors now estimate roughly 75% of country's GDP (51% in services and 22% in manufacturing in year 2014), while agriculture sector currently estimates roughly 9% percent of the GDP.
Malaysian market overview Malaysia's overall trade worth back in year 2015 estimated US $376 billion. China remains Malaysia's top trading partner having almost 16% market. The second place belongs to the Singapore having about 13% market share, closely followed by the European Union having 10%. Almost 55% of Malaysia's imported goods are brought from eastern part of Asia, with the largest part being imported from China. Other countries with global economy (the United States, EU, and Japan) estimate for 26% of the overall imports in Malaysia.
Business challenges you might face Malaysia often restricts free trade industries with special protection, for example, the automotive and agricultural sectors. The country is willing to protect strategic industries by setting higher duty rates and various excessive taxes. Malaysia is using a system of import permissions in order to lower imports in protected domestic sectors.
Government restrictions disturb foreign participation in different sectors of economy, including government issued contracts; financial, business, and banking services; and telecommunications. Quite often it is compulsory to maintain a local business partner, usually a Bumiputra (ethnic Malay-owned) company, in order to effectively compete in the market.
Malaysia's level of economic development is a key factor for both consumer and business demand for products and services. Malaysian consumers are quite price sensitive, despite that they are currently used to several decades of rapid economic development. As a result, consumers are attracted to and are familiar with global brand products, high standards of education, quality healthcare products and services, as well as eco-friendly and bio-clean products. The World Bank currently considers Malaysia an upper-middle income country.
Malaysian market entry strategy guide Many international businessmen think that using services of a local distributor or agent is one of the most efficient first steps to be taken in order to enter the Malaysian market. A local distributor is usually responsible for taking care of custom issues, dealing with the local wholesalers and retailers, marketing the goods directly to big corporations having a big share on the market, as well as taking care of after-sales service. International service providers usually also do benefit from dealing with local partners.
Sales directly to the Government of Malaysia, Government Linked Companies (GLC), or for procurement in strategic sectors of economy constantly favors Malaysian agents or a joint business partners that are classified as a Bumiputra (Malay) company. The word Bumiputera itself defines a group of people who are ethnically Malay. A company can be classified as a Bumiputra company, in case it meets the following requirements:
Incorporated under the Companies Act, 1965; Share capital starting from RM 25,000; Shareholders are 100% Bumiputra; Board of Directors are controlled by at least 51% by Bumiputra; Upper management are at least 51% Bumiputra; Supporting Staff are at least 51% Bumiputra. In sectors of economy, which are not considered strategic neither are controlled by the government, companies, agents, or distributors should be selected strictly based on competitive considerations. However, since the Malaysian market is a very relationship-oriented market, having a local presence or local agent can influence the final outcome.
Given that within the European Union there are no withholding taxes on IP royalties between member states, we can suggest a number of countries where royalties are particularly advantageous.
CYPRUS The intellectual property royalties tax regime in Cyprus has changed as a result of the recommendations of the Organization for Economic Co-operation and Development (OECD) Action Report 5 and the Ecofin Council conclusions published on 8 December 2015. Legislation has been changed to limit the companies that can benefit from research and development (R&D) exemptions, but the tax rate in Cyprus is still one of the most favorable in the EU for foreign companies using Cyprus intellectual property want to license -resident companies (intermediaries), where this right is then sub-licensed to the end user. Overall, the effective tax on IP royalty income should be less than 2.5%.
IRELAND In 2015 Ireland introduced an effective corporation tax rate of 6.25% on intellectual property income based on an allowance for research and development costs borne by the company. By linking the two components in this way, Irish law encourages companies to conduct R&D directly within the EU - leading to the creation of intellectual property - while discouraging them from acquiring licenses without directly committing to R&D.
BELGIUM Belgium has introduced a tax system that favors those with income from acquired copyrights. This tax regime can have many different applications and can be used to protect artworks as well as a useful tax break for IT developers. Income from IP rights royalties is taxed at 15%. This income is not taken into account when calculating social security contributions. In addition, these taxes are reduced by 50% for imports due to the application of standard import costs. The first €15,000 that a copyright owner earns in a year is therefore taxed at 7.5%, and the next €15,000 at 11.25%. This tax system applies to people with a total annual income of up to 56,450 euros.
LUXEMBOURG In general, corporate tax in Luxembourg is 29.22%, but for IP licensing income it can be as low as 5.8%. This is due to an 80% corporate income tax exemption. Interestingly, this exemption also applies to companies that have registered a patent for use in connection with their own business, which then calculate a notional net income as if they had received the licensing income.
ITALY Italy is a larger market compared to the other countries discussed and can be a very attractive place for a company to invest in R&D since 2015 companies have been able to deduct intellectual property income from their taxable income base. The tax deduction was set at 30% in 2015, 40% in 2016 and 50% from 2017. Businesses will therefore enjoy a significant tax rebate by reducing their taxable income.
THE NETHERLANDS Since 2010, IP income has been taxed at only 5% in the Netherlands. Except for patents, there is no income limit. Patent holders can actually have access to this tax regime if their share of the expected revenue is between 30% and 70%, taking into account the total combined revenue from patents and other sources. These rates also apply to foreign companies owning intangible assets or companies that have received research and development accreditation from the Dutch Ministry of Economic Affairs if they are owners of software IP or trade secrets. The only other caveat to this favorable tax regime is that it doesn't apply to marketing and branding-related assets.
In terms of political and civil liberties, Nepal is 2nd. Citizens in Nepal experience partial freedom. While the majority of citizens in Nepal are able to exercise their free will to some extent, some political engagement may be limited and certain population groups may be barred from certain freedoms or expressions of opinion. The companies of Nepal are 4 in terms of economic freedom. The citizens of Nepal are considered to be largely unfree when it comes to their economic decisions. The government has complete control over the majority of businesses and there is a high level of corruption in the economy. For these reasons, this country is considered unsafe for foreign investment as lenders may not exercise complete control over their own financial decisions. In terms of journalistic freedom, the media of Nepal is in a 3. In Nepal, journalists face a difficult situation. Censorship is widespread and media not favored by the ruling authorities can be banned.
The Marshall Islands are considered a large nation because of their total area. Its total land area is 11,854 km² (about 4,577 mi²). The continental shelf of the Marshall Islands is approximately 18,411 km² (about 7,108 mi²). The Marshall Islands are in Oceania. Oceania is a region that includes many of the islands in the tropical Pacific. It is sometimes referred to as Oceanica. Countries in Oceania include New Zealand and the Solomon Islands, among others. The Marshall Islands are not a landlocked country. It means it is bounded by at least one major body of water. The average elevation range of the Marshall Islands is 5 m (16 ft).
Neighbors The total length of land borders of Marshall Islands is 0 kilometers (~0 miles). The Marshall Islands have no land borders, which means they also have no neighboring countries in the traditional sense of the word.
Cities The capital of the Marshall Islands is Majuro. The largest city in the Marshall Islands is Majuro.
Elevation The average elevation range of the Marshall Islands is 5 m (16 ft). The highest point in the Marshall Islands is an unnamed site with an official elevation of 10 m (33 ft). The deepest point of the Marshall Islands is the Pacific Ocean. The difference in elevation between the highest (an unnamed location) and lowest (Pacific) point in the Marshall Islands is 10 m (2 ft).
Area The total land area of the Marshall Islands is 11,854 km² (about 4,577 mi²). and the total Exclusive Economic Zone (EEZ) is 1,990,530 km² (~768,544 mi²). The continental shelf of the Marshall Islands is approximately 18,411 km² (about 7,108 mi²). Including landmass and EEZ, the total area of the Marshall Islands is approximately 2,002,384 km² (~773,121 mi²). The Marshall Islands are considered a large nation because of their total area.
Forest and farmland There is 20 km² of arable land in the Marshall Islands, which makes up 0% of the total land area.
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