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In a stress test conducted in early 2014, the central bank found that Malaysia’s banks would be able to hold up even if the system faced shocks greater than those in the 2008 crisis. After a number of years of consolidation and in an environment of tight regulation, Malaysia’s commercial banks have continued to improve. Local banks have been ordered by Bank Negara to increase their collective assessment ratio to 1.2% by the end of 2015. The ratio was previously called the general provisions ratio and was set at 1.5%. Macroprudential measures will help the country get its household debt under control while small and medium-sized enterprise financing is likely to improve over time. The vision of creating a regional banking giant remains unfulfilled for the time being; nevertheless, organic growth opportunities exist and banking targets may become available from time to time, allowing some of Malaysia’s larger players to cobble together a regional footprint. This chapter contains an interview with Kelee Kam, Group Managing Director, RHB Capital.

Sabah is a dynamic area for growth, new discoveries and investments. Sabah is one of the five regional development corridors and hosts a number of sectors that fall under the federal government’s National Key Economic Areas, such as oil palm and rubber, among others. Services accounted for 47.4% of the state’s 2012 GDP, followed by agriculture with 20.8%; mining and quarrying, 20.7%; manufacturing, 7.9%; and construction, 2.9%. Tourism is also a growing sector; the state brought in $1.98bn in tourism revenues in 2013, up from $1.72bn in 2012. To encourage further development the government has put a set of tax incentives in place. However, varied terrain and inadequate transportation networks make coordination difficult and hinder development efforts. Bolstering infrastructure and talent is key to moving Sabah forward, and there are plenty of indicators that the state and federal governments are active on these fronts. This chapter contains interviews with Musa Aman, Chief Minister of Sabah; Mohd Yaakub Johari, President and Chief Executive, Sabah Economic Development and Investment Authority (SEDIA); Abdul Kadir bin Abdullah, CEO, Sipitang Oil and Gas Industrial Park (SOGIP); Faisyal Hamdain Diego, Chairman, Suria Capital Holdings; Johnson Koh Yong Siang, Executive Director, Waterfront Urban Development; and KP Kuok, Executive Director, Pacific Sanctuary Holdings.

Malaysia is supported by abundant natural resources, in particular offshore oil and gas, and foreign investment-friendly policies have nurtured a globally competitive electrical and electronics industry, while a strong banking system has financed rapid growth in consumer sectors and construction. The country has much reason for optimism through its successful transition to the top-tier in the World Economic Forum’s “Global Competitiveness Report 2013-14,” which ranked Malaysia 24th of 148 countries. The ranking implies the country already has policies and business conditions in place that are comparable to many advanced economies. The country’s biggest challenge is to channel its growing financial capital into more entrepreneurial companies able to compete against peers in the global arena. This chapter contains interviews with Ali Hamsa, Chief Secretary to the Government; and Johan Mahmood Merican, CEO, TalentCorp. It also includes a viewpoint from Syed Haizam Jamalullail, Vice-President, Malaysia-America Foundation (MAF).

Already one of the most trade-oriented economies in the world and an established regional leader in attracting foreign investment, Malaysia now aims to compete with Singapore as an alternative regional trade and investment hub for rapidly developing ASEAN. Although it boasts a liberal investment environment, foreign investment is restricted in certain sectors, especially retail, banking, agriculture and energy. The government is working to persuade multinationals to locate in Kuala Lumpur with a target to attract 100 firms from the Forbes 2000 list to invest in the Greater KL area by 2020. Negotiations for the Trans-Pacific Partnership have been ongoing since 2010, but have been delayed by disagreements between the various economies involved. However, a text could now be concluded by the end of 2014. Likewise, the ASEAN bloc’s integration process has significant momentum, and, with its well-funded banks and deep corporate equity and bond markets, Malaysia is well positioned to play a greater role in the entire region’s development. This chapter contains an interview with Anifah Aman, Minister of Foreign Affairs; Ratan Tata, Chairman Emeritus, Tata Group; Le Luong Minh, Secretary General, ASEAN; Zainal Amanshah, CEO, InvestKL; and Wan Saiful Wan Jan, CEO, Institute for Democracy and Economic Affairs. It also contains a viewpoint from US President Barack Obama.

This chapter features an overview of the law for both local and foreign investors, as well as an outline of regulations on owning property for non-GCC nationals. It covers up-to-date laws on intellectual property and copyright, as well as environmental guidelines for construction projects and some new standards for disclosure of financial information. This chapter includes a viewpoint from Salman Al Sudairi, Managing Partner of Riyadh Office, the Law Office of Salman M. Al-Sudairi in Association with Latham & Watkins.