Malaysia is located in Southeastern Asia on the southern tip of the peninsula bordering Thailand just north of Singapore and on the northern part of the Island of Borneo bordering Indonesia, Brunei, and the South China Sea. It is slightly larger than New Mexico and covers an area of 329,750 sq. kilometers. Malaysia’s total population is about 29.628 million and growing at about 1.51% with 72.8% living in urban areas. The Malaysian capital of Kuala Lumpur has a population of about 1.5 million with other major cities including Klang (631,000), Johor Baharu (630,000), and Ipoh (574,000). The people are governed by a constitutional monarchy and are mostly Muslim, but also including a mix of Buddhist, Christian, Hindu, and other traditional Chinese religions. The primary language is Malay, but due to the diverse nature of the country many people speak English, different Chinese dialects, Tamil, and other Native languages. The local currency used is the Malaysian Ringgit.
Malaysia has an emerging, export based economy that has greatly improved since the 1970s when it was solely a producer of raw materials. The governments goal is to attract investment in high technology, but exports, mainly of electronics, gas, and oil, are currently the focal points of its economy. Its main trade partners are the US, Japan, China, Singapore, Thailand, Hong Kong, Taiwan, South Korea, Germany, and Indonesia. Its primary imports are electronics, machinery, petroleum products, plastics, vehicles, iron and steel products, and chemicals. Exports consist of electronic equipment, petroleum and liquefied natural gas, wood and wood products, palm oil, rubber, textiles, and chemicals. Malaysia’s GDP (Purchasing Power Parity) is $506.7 billion and is growing at a real rate of 4.7% with an inflation rate of 1.7%. Malaysia ranked 12 out of 185 countries in the World Bank Group’s Ease of Doing Business Ranking.
Franchising Laws Overview
- Franchisor must provide prospective franchisee with a disclosure document at least 10 days before any franchise agreement is signed.
- Franchisee is given 7 working days of “cooling off” period after the agreement has been signed.
- Minimum term for franchise agreement is five years.
- Compensation to franchisee if franchisor refuses to renew.
- No termination of the agreement except for good cause.
- A franchisor must register a franchise before making an offer to prospective franchisees. The registration must include a disclosure document, operations manual, training manual, financial documents, and a sample franchise agreement.
Click the links below for articles with more information on Franchising in Malaysia
Doing Business in Malaysia (2010)
Malaysia: Franchise Industry (2009)
* CPI Score is published by Transparency International and relates to the perceptions of the degree of corruption as seen by business people and country analysts and ranges between 100 (highly clean) and 0 (highly corrupt).
**Ease of Doing Business Ranking is determined by the World Bank Group and is ranked out of a possible 185 countries. www.doingbusiness.org
Most recent statistics have been taken from the CIA World Factbook unless noted otherwise.
International Franchising Opportunities
After you have finished researching the international markets, learning international expansion strategies and best practices, and understanding the basics of international franchising law, IFA provides numerous opportunities for franchising internationally.