OECD Investment Policy Reviews: Malaysia 2013

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Malaysia stands out as one of the economic success stories in Asia. Foreign direct investment (FDI) has played a major role in the growth and diversification of the economy, and has been a key part of an outward-oriented development strategy. As an early mover in terms of export-led development, Malaysia has traditionally received significant amounts of foreign investment relative to the small size of its economy. Today, Malaysia is a net outward investor, with its companies increasingly becoming regional and global players.

In spite of this enviable performance, the Malaysian economy is confronting numerous inter-related challenges as it strives to attain developed country status by 2020. Private investment as a share of GDP has declined, and FDI as a share of total FDI in ASEAN has decreased since the early 1990s.

The government has engaged in ambitious reforms across the board which have led to increased liberalisation and more efficient regulations and have contributed to a strong enabling environment for business. Malaysia will also continue to benefit from a dynamic and rapidly integrating region, thereby retaining the attention of investors.

OECD Investment Policy Reviews: Malaysia presents an assessment of the investment climate in Malaysia, including the institutional and legislative framework for investment. It focuses on policy options in the areas of investment, infrastructure, finance, responsible business conduct, corporate governance and green investment and discusses measures to help revive both foreign and domestic investment.


Policies for promoting responsible business conduct

Public policies promoting recognised concepts and principles for responsible business conduct (RBC), such as those recommended in the OECD Guidelines for Multinational Enterprises, help attract investments that contribute to sustainable development. Such policies include: providing an enabling environment which clearly defines respective roles of government and business; promoting dialogue on norms for business conduct; supporting private initiatives for RBC; and participating in international co-operation in support of responsible business conduct.The government of Malaysia’s efforts to promote RBC can be seen as part of the overall corporate governance reforms over the past decade. While the RBC culture is relatively new in Malaysia, recent measures, such as high-level endorsement of RBC initiatives, and the emergence of new non-governmental advocates play an important role. This chapter looks at these efforts and recommends ways of driving Malaysia’s RBC agenda forward, including by adhering to internationally recognised principles, such as the OECD Guidelines for Multinational Enterprises.


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