4 reasons why America likes Malaysia as a base in Asia

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Actually, it’s pretty easy to choose these days if I am an American MNC looking for a base in Asia. If I am an American MNC and I wanted a good base for everything, I would choose Malaysia. Why not Indonesia? Yeah, there’s the ‘feel good’ factor of the new Indonesian President together with a much larger population and thus lower labour cost. However, do you have any HR friends who is hiring in Indonesia or even referred to some of the salary benchmarks for the executives and above? Take a look and then decide if the cost of labour is still low for these higher end workforce. The same thing, do for Thailand too. Many times, the cost of hiring a Country Manager in both countries can be higher than Malaysia simply because of the shortages of choice. I know, many would say this is temporary, soon, they will catch up and Malaysia will fall behind. No wish to debate for now. Just let it happen then.

What are the 4 key reasons stated for them to choose Malaysia as a base in Asia? (According to Deputy chief of mission of the US Embassy in Kuala Lumpur Edgard D. Kagan)

Legal and physical infrastructure – Yes, this is despite the fact that these days anyone mention anything good about Malaysia’s legal infrastructure meant 9,999 other people online would condemn that person. Physical infrastructure wise, even if you focus on the pool of water in KLIA 2 after a downpour etc, reality is we are still way better than many other potential Asian bases today.

Geographical location – Sorry, can’t argue with this. Especially since KLIA is now complemented by KLIA 2 as well. Look at the number of planes of Air Asia versus even Singapore Airlines. Then you would understand why it’s just a matter of time when KLIA and KLIA 2 exceeds Changi Airport.

Capability to undertake research and development (R&D) activities – Log on to JobStreet.com and take a look at the number of jobs available for Research and Development. If you are a Electrical or Electronics or Mechanical Engineering involved in R&D, I can safely say that your pay is definitely higher than those in the supporting functions. There’s even one US MNC which gives their R&D staffs additional 6 months bonus for every 2 years that they stay with the company!  Even my brother who’s working as an Engineer with a US MNC gets stock options which would make many people jealous….

Skilled workforce – We have been a manufacturing hub for longer than many other countries. This is definitely a plus point we have versus others, plus even if the English level is bad, going down and people say that these days education in Thailand and Indonesia is starting to put more emphasis in English etc, etc, etc, sorry yeah, Malaysia is still way ahead of many. Do not jumble thoughts with reality at this point in time.

Long time ago, maybe just 15  – 20 years ago, majority of all the workers in a typical manufacturing plant would be all operators. Today, when we look at the newer plants, we would notice that some plants have even more engineers than operators. This included even my wife’s former company. In fact technicians and operators are minority in their plant! Of course, with more higher end job opportunities, the pay can then be higher. Reason is simple. US$ is 3.3 times higher than Malaysia. Thus, even if they (American companies) were to pay extra 10-20% higher than local companies, they would be able to hire at a much lower cost compared to their home country, America. Once the pay goes higher, well, these engineer couples can then be able to afford an even bigger home which is the reason why these days, the property prices continue to go up. It does not just go up because of cost of materials. It went up because some couples felt that they can afford and thus are willing to pay higher. In the end, prices of course inch higher.

Oh yeah, what happens if these American MNCs closes their plants? Well, in any job at all today, there’s no such thing working till retirement. For that, everyone just have to plan ahead and be ready. There’s no guarantee that these foreign companies would continue to love the bases they love today. Every country is becoming ever more competitive today.

written on 11 Nov 2014

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