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1.1. PESTLE analysis Malaysia

2.2. PESTLE analysis PEST analysis (Political, Economic, Social and

Technological analysis) describes a framework of macro-environmental factors

used in the environmental scanning components of strategic management. 

The assumption is that if the country is able to audit its current environment and

assess potential changes, it will be better placed than its competitors to respond

to changes.

3.3. Malaysia (Political analysis) Malaysia is a multi-party democracy country. 

The ruling Barisan Nasional party has been in power over 25 years. (This fact

provided the country with a high degree of stability, which is important factor for

businesses investing in the country.) Corruption does exist in the country. (This

fact may become a barrier to foreign businesses as it adds to firms costs and can

cause problems). Transparency International ranks Malaysia 47th of 180

countries in its Corruption Perceptions Index.

4.4. Malaysia (Economic analysis)

 Malaysia’s main attraction as a location forbusiness is its vibrant economy. Over the last 10 years, economic growth has

averaged 7% per year. This rate of growth has lead to a large increase in

consumer incomes and therefore demand, which has attracted retailers such as

IKEA, Tesco and Carrefour. Malaysian location makes it ideally placed to

engage in international trade. Exports account for 37% of Malaysia’s GDP and

the country achieves a healthy current account surplus.

5.5. Malaysia (Social analysis) The Malaysian population consists of three main

groups: Malay (60%), Chinese (30%) and Indian (10%). This mix of

populations gives Malaysia a rich and vibrant culture, and the country is seen as

an example of racial harmony as the different populations have existed peacefullytogether for years. The country is predominately Islamic in its religion but it’s

only the Malay muslims who are bound by Islamic laws; the rest of the population

are free to practise their own religions.

6.6. Malaysia (Social analysis) cont. The mixture of religions in the country gives

rise to a large number of religious celebrations - Malaysia has more public

holidays than any other country. The cultural differences mean that businesses

entering the country will have to adapt their products and business practices to

suit the needs of the population.

7.7. Malaysia (Technological analysis) The Malaysia is still need to develop its

technology to enable it to compete in international markets. In 1996, the govt.initiated the ‘Multimedia Super Corridor’ (MSC), which is a strip of land stretching

from the central business district of Kuala Lumpur to the out-of-town Kuala

Lumpur International Airport. This corridor hosts more than 360 multinationals,

including foreign-owned and home-growth Malaysian companies, all focused on

multimedia and communications products. It continue to expand and attract

world-leading ICT companies.

8.8. Malaysia (Technological analysis) cont. The high levels of investment in

training and education, including the creation of a number of ‘Smart Schools’, and

an excellent infrastructure, including a brand new town called Cyberjaya. 

Cyberjaya is a ‘self-contained intelligent city with world-class IT infrastructure’. 

It’s this level of technological support that makes Malaysia an attractive place for

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foreign firms to do business. In fact, Cyberjaya is considered one of the top

three destinations for business support services and outsourcing in the world.

9.9. Malaysia (Legal analysis) The Malaysian legal system is based on British

common law, although Islamic law is applied to the Muslim population. The

British law element can be seen as an advantage to firms investing in the country

as the law will be familiar to them. However, although the legal basis of the

system is British, many of the punishments for those who break the law are far

harsher - the death penalty and flogging are still widely used. Therefore,

investing in a foreign country need to be familiar with the laws there and confident

that they will be applied fairly.

10.10. Malaysia (Environmental analysis) The rapid development of Malaysia has

come with high environmental costs (negative externalities). According to a

data from the UN, Malaysia’s deforestation rate is increasing at a faster rate than

other tropical country. Since 2000, the country has lost an average of 140,200

hectares – 0.65% of its forest area – per year.

 Much of the country’s land thatwas once rainforest is now given over to the production of palm oil, which is used

for the processing food we eat and as a source of biofuel.

11.11. Malaysia (Environmental analysis) cont. Malaysian environmental impact

has been criticised by environmental groups as it has a devastating effect on the

habitats of some rare wildlife. Malaysians, and particularly the govt. have little

time for these criticisms and see them as evidence of Western hypocrisy over

environmental issues. However, Western companies need to be careful that

they aren’t seen to be participating in this environmental damage as they may

face demonstrations and protests from pressure groups such as Greenpeace and

the World Wildlife Fund.12.12. Sources http://www.cipd.co.uk/hr-resources/factsheets/pestleanalysis.aspx

 http://en.wikipedia.org/wiki/PEST_analysis The article ‘ Emerging markets’

The case for Malaysia. Peter Imeson analysed Malaysia as a destination for

foreign direct investment using PESTLE analysis. September 2010.

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