Before making any foreign investment, it is crucial for investors to ascertain the applicability and protections of Bilateral Investment Treaties (BITs). Global investors from countries having a BIT with Malaysia stand to gain significant advantages by setting up subsidiary companies within the burgeoning Southeast Asian economies. This article provides a comprehensive insight into BITs, foreign direct investment, the legal framework in Malaysia and investor protection, emphasising the multifaceted benefits of investing in this region.

Bilateral Investment Treaties with Malaysia

A Bilateral Investment Treaty (BIT) is an agreement between two countries that aims to establish the framework for private investment by nationals or companies of one country in another. The intention of BITs is to protect investors from non-performance requirements and arbitrary expropriation. BITs are equivalent to an investment guarantee agreement (IGA) that is established to promote greater investment flow between two signatory countries and set out the standards of protection for investors.

With many countries actively seeking to attract foreign investments for economic growth, it is no surprise that the number of BITs has significantly increased since the mid-1990s. One of Malaysia’s earliest BITs was signed between Malaysia and Germany on 22 December 1960 and was effective from 6 July 1963.¹ Since then, Malaysia has entered into BITs with other countries, including France and China.

France and Malaysia entered a Bilateral Investment Treaty in 1975, which has been in force since 1976. Both countries have continued to strengthen bilateral ties with investment opportunities most notably in areas that support the sustainable and green agenda advocated by both countries. The key provisions of the Malaysia-France BIT include clauses related to national treatment, most-favoured-nation treatment and mechanisms for dispute resolution.

The Bilateral Investment Treaty between China and Malaysia was signed in 1988 and has been in force since 1990. China has been Malaysia’s largest trading partner for the past 14 years. In April 2023, Malaysia’s Prime Minister announced that Malaysia secured a record RM170 billion worth of investment commitments from China, solidifying Malaysia’s position as China’s preferred investment destination. We can expect that there will be further strengthening of economic cooperation between Malaysia and China, especially involving the digital economy.² The Malaysia-China BIT protects Chinese investors in Malaysia, covering aspects such as expropriation, dispute resolution and the free transfer of funds.

Benefits of Investing in Malaysia

Both foreign and domestic investors will find that Malaysia is an attractive destination for a variety of reasons:

1. Strategic Location

Malaysia’s strategic location makes it ideal for setting up companies within the Southeast Asian region with several advantages for foreign direct investment. Its location in Southeast Asia provides access to a vast consumer market of over 600 million people. Its well-developed infrastructure, including ports and transportation networks, facilitates regional trade. Mixed with affordable labour costs and investor-friendly tax initiatives, Malaysia has the land and the ecological conditions for the production of farming and agriculture, all contributing to making it an ideal country for investment.

2. Political Stability

Malaysia is recognized for its reasonably stable political environment, contributing to a reliable investment context. The nation holds a record of peaceful power transitions and robust institutions, while political challenges and changes are managed responsibly.

3. Strong Economic Fundamentals

On top of its political stability, Malaysia’s strong economic fundamentals continue to attract foreign investors, including those from France and China. Malaysia’s robust economic fundamentals, including a diverse economy, low inflation rates and a well-educated workforce, make it conducive for long-term investments.

4. Investor-Friendly Policies

Malaysia has several tax advantages and investor-friendly policies offering incentives, tax exemptions and streamlined procedures to attract and retain foreign direct investments.

Direct and indirect tax incentives are available for investment in certain industry sectors, such as manufacturing, trading, tourism, agriculture, education, healthcare, tourism and property development. These tax incentives are provided under the Promotion of Investment Act 1986 and the Income Tax Act 1967.

The Promotion of Investment Act 1986 establishes several different types of incentives. The two most important are the pioneer status incentive and the investment tax allowance. Pioneer status essentially entitles an investor to an income tax holiday for five years. However, the Minister of International Trade and Industry has broad powers under the Promotion of Investment Act 1986 to determine which investments are entitled to which incentives. For example, an investor who is granted pioneer status for investment in certain defined “high technology” projects is entitled to a 100% income tax holiday. In contrast, in general manufacturing activities, investors with pioneer status are only entitled to a 70% income tax discount.

Below are some types of tax incentives available for foreign investment, subject to qualifying criteria and adherence to the Promotion of Investments Act 1986:

(a) Pioneer status

A company granted pioneer status enjoys a five-year partial exemption from income tax (usually an exemption of 70% or 100% tax). Pioneer status may apply to companies participating in a promoted activity or producing a promoted product. The power to determine any product or activity lies with the Minister of International Trade and Industry (usually in manufacturing, tourism, agriculture and any other industrial sector).

(b) Investment tax allowance

Similar to the pioneer status incentive, a company granted investment tax allowance also enjoys a five-year partial exemption from payment of tax based on its capital expenditure that generally provides for a deduction (over and above capital allowances).

(c) Special incentive scheme

Special incentive schemes are available for approved projects that fall within specific priority sectors or are located in certain economic regions in the country, such as foreign investment companies that introduce automation and modern machinery.

(d) Green initiative schemes

Green incentives refer to tax exemptions applicable for those who promote or are part of green initiative research in the development of modern technology for clean energy.

(e) Research and development incentives

The Promotion of Investments Act 1986 defines research and development (R&D) as any systematic or intensive study carried out in the field of science or technology to use the study results to produce or improve materials, devices, products, produce or processes. Tax incentives may be applicable for five to ten years with specific qualifying criteria governed and regulated by the Malaysian Investment Development Authority (MIDA).

(f) High technology and strategic project incentives

A high technology company is a company engaged in promoted activities or in the production of promoted products in areas of new and emerging technologies. A high technology company may qualify for pioneer status or investment tax allowance mentioned above.

(g) Double deduction of expenses incurred for promotion of exports

Expenses that are incurred during the process of promoting exports and the supply of goods overseas can be deducted twice from taxable profits. This incentive is available to manufacturing and agricultural companies producing “promoted products” or engaged in “promoted activities”.

(h) Labuan offshore companies

International businesses are attracted to Labuan’s favourable tax structure for non-residents and business-friendly environment, making the territory one of the preferred destinations for offshore company formation. Businesses undertaking “Labuan non-trading activities” continue to be exempt from tax under the Labuan Business Activity Tax Regulations as may be updated from time to time.

(i) Operational headquarters incentives

An approved Operational Headquarters (OHQ) refers to a locally incorporated company that carries on a business in Malaysia, providing Qualifying Services to its offices or related companies outside Malaysia and is subject to certain qualifying services only. Tax incentives include tax exemptions for up to ten years with applications to be submitted to MIDA.

(j) Special economic corridors

The Sabah Development Corridor is a tax scheme companies can apply to boost economic growth in the shipping, production, hotel and education sectors.

Legal Framework for Foreign Direct Investments in Malaysia

Malaysia does not have a centralised or consolidated foreign investment legislation. Instead, legislation on foreign investment participation in Malaysia is sector-specific and regulated by the regulatory authorities supervising these sectors. These industry sectors include financial services, capital markets activities by investment banks, petroleum, communications and multimedia, water and energy. For example, the Industrial Coordination Act 1975 governs the manufacturing sector, which is overseen by MIDA; while the financial services sector is predominantly regulated by the Financial Services Act 2013 and the Islamic Financial Services Act 2013, both of which are overseen by the Central Bank of Malaysia (Bank Negara Malaysia).³

Malaysia does have a framework in the form of the Promotion of Investment Act 1986 that exclusively deals with the incentives applicable to companies and individuals for investment tax allowance and the restrictions and conditions on foreign investment.

The Malaysian government has tasked several governing or regulatory bodies with the responsibility of regulating foreign investment in different industries and sectors. MIDA is one of these regulatory bodies that promote initiatives to increase foreign investments in the manufacturing and services sector, and to further assist the National Committee on Investment to expedite the regulatory process to approve new investments.

The following are some of the other governmental agencies, bodies and authorities involved in foreign investment tasked with facilitating investments and ensuring compliance in different industries:

(a) Central Bank of Malaysia (Bank Negara Malaysia): financial services and foreign currency controls;

(b) Malaysian Investment Development Authority (MIDA): manufacturing and services sector;

(c) Ministry of International Trade and Industry (MITI): technology, electrical, electronics, machinery, medical devices, aerospace, energy;

(d) Ministry of Trade, Co-operatives and Consumerism: wholesale, retail & trade;

(e) Malaysian Economic Corridors: there are various Economic Corridors with statutory bodies assigned to encourage development in specific regions in Malaysia; and

(f) Economic Planning Unit, Prime Minister’s Department (EPU): foreign entities’ acquisition of land and properties.

Investor Protection

Foreign investors in Malaysia are shielded through various measures including Bilateral Investment Treaties. BITs particularly offer crucial safeguards and incentives, encompassing vital provisions that ensure the protection of foreign investors’ interests. In the discussion below, the critical provisions of BITs are elaborated upon, with the Malaysia-France and Malaysia-China BITs serving as illustrative examples:

1. National Treatment

National treatment is a legal concept requiring foreign citizens to be treated just as favourably by a country’s laws as the host country’s own citizens. National treatment is a cornerstone of BITs, ensuring foreign investors are treated no less favourably than domestic investors in the host country. This provision creates a level playing field and prevents discrimination against foreign investors. An example of this provision is found in the Malaysia-France BIT below:

“Article II

Both contracting parties will grant to the other party’s nationals, private or corporate, the same security and protection for their possessions, rights and undertakings as those secured by their own nationals and apply for taxation treatment no less favourable than that accorded to nationals or companies in similar positions.”

Under Article II of the Malaysia-France BIT above, French investors in Malaysia are entitled to the same treatment as Malaysian investors. This means they can operate on an equal footing with local businesses, enjoying the same rights and privileges. National treatment ensures that discriminatory practices are minimised, creating a more attractive environment for foreign investments.

Similarly, the Malaysia-China BIT provides that investors from either country shall be accorded fair and equitable treatment:

“Article 2. Promotion and Protection of Investments

(1) Each Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to invest in its territory, and, subject to its rights to exercise powers conferred by its laws, shall admit such investments.

(2) Investments of investors of either Contracting Party shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Contracting Party.”

2. Most-Favoured-Nation Treatment

Most-favoured-nation treatment refers to a status conferred in which a country promises to treat another country as well as any other country that receives preferential treatment. The most-favoured-nation treatment clause in a BIT ensures that foreign investors receive the best treatment available, equal to or better than that accorded to investors from any other nation. This provision encourages host countries to maintain a competitive and non-discriminatory environment for foreign investments.

Article II of the Malaysia-France BIT (above) captures both the national treatment and most-favoured-nation provisions. In contrast, the Malaysia-China BIT has a separate Article 3 which provides for the Most Favoured Nation Provisions:

“Article 3 Most-Favoured Nation Provisions

(1) Investments made by investors of either Contracting Party in the territory of the other Contracting Party shall not be subjected to a treatment less favourable than that accorded to investments made by investors of any third State.

(2) Investors of one Contracting Party whose investments in the territory of the other Contracting Party suffer losses owing to war or other armed conflict, a state of national emergency, revolt, insurrection or riot in the territory of the latter Contracting Party, shall be accorded by the latter Contracting Party treatment, as regards restitution, indemnification, compensation or other settlement, if any, no less favourable than that which the latter Contracting Party accords to investors of any third State.”

The most-favoured-nation provision above guarantees that Chinese investors receive the same benefits as any other nation’s investors, ensuring fairness and competitiveness.

3. Expropriation

BITs typically contain provisions related to expropriation, safeguarding foreign investors from arbitrary or unlawful seizures of their assets by the host country. These provisions establish conditions and compensation requirements for expropriation, ensuring investors are adequately protected. The expropriation provisions in the Malaysia-China BIT are more comprehensive than those in the Malaysia-France BIT.

Malaysia-France BIT

“Article III

In case of expropriation, nationalisation or any other measure of dispossession direct or indirect, of possessions, rights and interests mentioned in Article II, the party taking any of these actions must make provision at the time of execution, for the prompt payment of an effective and transferable compensation without any unjustified delay.”

Malaysia-China BIT

“Article 5 Expropriation

(1) Neither Contracting Party shall take any measures of expropriation nationalisation or any dispossession having effect equivalent to nationalisation or expropriation against the investments of investors of the other Contracting Party except under the following conditions:

1. The measures are taken for a public purpose and in accordance with the legal procedure of each Contracting Party taking the expropriatory measures;

2. The measures are non-discriminatory;

3. The measures are accompanied by provisions for payment of fair and reasonable compensation.

(2) Such compensation shall be computed on the basis of the market value of the investment immediately before the expropriation is proclaimed or become publicly known. Where the market value cannot be readily ascertained, the compensation shall be determined in accordance with generally recognized principles of valuation and on equitable principles taking into account, inter alia, the capital invested, depreciation, capital already repatriated, replacement value and other relevant factors. The compensation shall be freely transferable in freely convertible currency and be paid without unreasonable delay.”

Both provisions discourage arbitrary actions and promote a stable investment environment for foreign investors.

4. Free Transfer of Funds

The free transfer of funds provision allows foreign investors to repatriate profits, dividends, and other financial assets freely and without delay. This provision ensures that investors can efficiently manage their finances and mitigates the risk of capital controls.

Malaysia-France BIT

“Article IV

Each contracting party shall allow the nationals, private or corporate concerns of the other contracting party, the transfer of:

(a) invested capital;

(b) interests, dividends, royalties and other income deriving from the invested capital, and

(c) compensation for the expropriation, nationalisation or dispossession mentioned in Article III.”

Malaysia-China BIT

“Article 6 Repatriation of Investments

(1) Each Contracting Party shall, subject to its laws and regulations, allow without unreasonable delay the transfer in any freely convertible currency:

1. The net profits, dividends, royalties, technical assistance and technical Services fees, interest and other current income, accruing from any investments of the Investors of the other Contracting Party;

2. The proceeds from the total or partial liquidation of any investment made by investors of the other Contracting Party;

3. Funds in repayment of loans given by investors of one Contracting Party to the investors of the other Contracting Party which both Contracting Party have recognized as investments;

4. Payment in connection with contracting projects; and

5. The earnings of nationals of the other Contracting Party who are allowed to work in connection with an investment in its territory.

(2) Such transfer mentioned in paragraph 1 of this Article shall be made;

1. In respect of Malaysia, at the exchange rate prevailing at the time of transfer and

2. In respect of the People’s Republic of China, at the official exchange rate of the People’s Republic of China on the date of transfer.

(3) The Contracting Parties shall undertake to accord the transfer referred to in Paragraph 1 of this Article a treatment as favourable as that accorded to the transfer Origination from investments made by investors of any third State.”

Under this provision, Chinese investors in Malaysia have the right to transfer their profits and earnings back to China without encountering unnecessary bureaucratic hurdles. This financial flexibility encourages foreign investors to commit capital, knowing they can efficiently repatriate their returns.

Other International Agreements on the Protection of Foreign Investments

There are further safeguards for foreign investors beyond Bilateral Investment Treaties.

Malaysia is a member of the Multilateral Investment Guarantee Agency (MIGA) and a signatory to the MIGA Convention, which protects and assists investors in dealing with risks by ensuring eligible projects against losses related to expropriation, currency inconvertibility and transfer restrictions, war, terrorism, breach of contract and non-honouring of financial obligations.

Malaysia’s investment agreements contain provisions allowing for international arbitration of investment disputes and has signed the Convention on the Settlement of Investment Disputes in 1965 (ICSID) including adopting the Convention on the Settlement of Investment Disputes Act 1966.

Malaysia is also a party to seven bilateral investment free trade agreements with Japan, Pakistan, New Zealand, India, Turkey, Australia and Chile and six regional free trade agreements through its membership in ASEAN.

Malaysia is a signatory to the following international investment agreements/treaties with investment provisions protecting investors:

Dispute Resolution

Bilateral Investment Treaties also include provisions for resolving disputes between investors and the host country through international arbitration. This offers several advantages, including neutrality, flexibility and the enforceability of arbitral awards.

Historically, there was a time when investors whose investments were expropriated or nationalised by a foreign state had little to no option to enforce their rights in the national courts of the foreign state or appeal to their own state to place commercial, diplomatic, or military pressure on the foreign state. Since then, the international community has created avenues for foreign investors to protect their rights, which started with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States in 1965, and the establishment of the International Centre for the Settlement of Investment Disputes (ICSID) as a division of the International Bank for Reconstruction and Development (World Bank).

The number of investment treaty arbitrations that have been filed with ICSID has increased over the years as more foreign investors rely on the protection afforded in BITs to enforce their rights. The Malaysia-France BIT provides that investors may refer to the ICSID. In contrast, the Malaysia-China BIT states that investment disputes ought to be settled amicably or referred to an international arbitral tribunal.

Parties are given the discretion to choose the dispute resolution mechanism they wish to adopt. While investment disputes may be referred to the ICSID or any other body with the jurisdiction to hear international disputes, other disputes, including commercial disputes, may be resolved in Malaysia through litigation or alternative dispute resolution. As there are numerous options, it is crucial to seek legal consultation to decide which mode best suits the nature of the investment and the countries involved.

Compliance and Due Diligence

Complying with local laws and performing due diligence are critical for investors. Those investing in countries under a Bilateral Investment Treaty should fully grasp its implications. Although BITs offer national and favoured-nation treatment provisions safeguarding investors, they also outline investors’ responsibilities. Therefore, foreign investors must adhere to the host country’s laws and regulations, which may be impacted by BIT provisions.

Legal and Financial Consequences of Non-Compliance

Non-compliance with local laws, regulations, or Bilateral Investment Treaty provisions can have severe legal and financial consequences for foreign investors. Violations of local laws can result in fines, legal actions and the loss of licences or permits. Additionally, non-compliance with BIT provisions could lead to disputes with the host country, jeopardising the investor’s interests. Additionally, failure to adhere to local tax regulations or labour laws can result in financial penalties and the erosion of profits. In contentious cases requiring dispute resolution, the investor may incur legal fees and face the possibility of financial awards to the host country. Given these possibilities, it is crucial to note the foreign investment-related requirements and restrictions below:

1. Compliance Guidelines for Industries with Foreign Investment in Malaysia.

Generally, there are minimal restrictions imposed on foreign investments in Malaysia. Some restrictions imposed on certain industry sectors include the requirement of minimum Bumiputera ownership or equity in companies involved in those certain industry sectors. However, there are certain restrictions imposed by the relevant authorities in certain industry sectors, some of which are as follows:

(a) Trade

Foreign investors seeking to engage in the trading sector in Malaysia must follow the Guidelines on Foreign Participation in the Distributive Trade Services under the Ministry of Domestic Trade and Consumer Affairs which requires foreign involvement to be approved by the Ministry.

Companies carrying on business on a larger scale, such as hypermarkets, must have at least 30% equity participation by Bumiputera, which includes the Malays, the Orang Asli of Peninsular Malaysia and various indigenous people of East Malaysia. This means that, to comply with guidelines under the trade industry, foreign investors may only hold 70% equity in companies carrying on business such as hypermarkets. The guidelines also restrict foreign involvement in other distributive trade businesses including mini markets and convenience stores.

Further, all foreign business operators engaged in distributive trade services in Malaysia are encouraged to apply to obtain approval from the Ministry of Domestic Trade and Consumer Affairs prior to the commencement and operation of a business.

Business operators, whether local or foreign, must adhere to the Guidelines on Foreign Participation in the Distributive Trade Services and any other applicable laws and regulations to the relevant industry. The failure to comply may result in the future rejection of applications to open a new business branch or revocation of a previous approval granted by the Distributive Trade Committee of the Ministry of Domestic Trade and Consumer Affairs.

(b) Manufacturing

Pursuant to the Industrial Coordination Act 1975, companies engaged in manufacturing activities with an equity capital of more than RM2.5 million and more than 75 full-time employees are required to apply for a manufacturing licence from the Malaysian Investment Development Authority.

(c) Oil and Gas

The Petroleum Development Act 1974 provides that only Petronas may conduct oil and gas business on processing, refining, marketing, distributing or manufacturing petroleum.

Any person seeking to engage in the upstream sector of Malaysia’s oil and gas industry must obtain a licence from Petronas pursuant to the Petroleum Regulations and the Petronas Licensing Guidelines. Petronas has imposed local incorporation and equity requirements for certain activities in the industry, therefore all corporations intending to have involvement in such activities must comply with such requirements and obtain the necessary licences from Petronas. For example, foreign companies seeking to participate in exploration operations are required to enter into production sharing contracts with Petronas, which will contain imposed requirements or engage in a joint venture with local companies provided there is Bumiputera equity control and the company needs to have a minimum paid-up capital of RM100,000 in order to apply for a licence from Petronas.

There are two main regulatory bodies overseeing the oil and gas industry, namely (i) the Ministry of International Trade and Industry, which regulates the processing or refining of petroleum and the manufacture of petrochemical products; and (ii) the Ministry of Domestic Trade and Consumer Affairs, which regulates the marketing and distribution of petroleum and petrochemical products in the country.

2. Restrictions of Foreign Investment in Real Estate/Property/Land in Malaysia

The Guideline on the Acquisition of Properties issued by the Economic Planning Unit on 1 March 2014 provides the terms and conditions for the acquisition of real estate by foreign investors in Malaysia. The Guideline also provides the procedure for applying for consent from the Economic Procedure Unit to acquire property.

In some instances, foreign investors may not need to apply for the consent of the Economic Planning Unit. However, they may still be required to apply for state consent to acquire the property. Foreign investors should be aware of the following for any consent application to be approved:

(a) The property is above the minimum purchase price as prescribed under the State Land Rules which vary from state to state;

(b) The residential property is not classified as low-cost housing as determined by the respective state authority;

(c) The property is not located on designated Malay reserved land;

(d) The property is not allocated as Bumiputera interest or the particular unit in a property development project is not allocated as a Bumiputera unit as determined by the respective state authority; and

(e) Any further restrictions on the type of property in the respective state to acquire the property.

3. Sanctions or Restrictions on Investors from certain Countries

While Malaysia is typically known for its favourable attitude towards foreign investors, it is important to note that there are specific limitations and bans in place regarding business interactions involving investors from particular nations. For example, Malaysia enforces a trade embargo against Israel, forbidding any individuals, whether residents or non-residents in Malaysia, from participating in any form of business dealings or transactions with Israel, its residents, or any entities under direct or indirect ownership or control of Israel or its residents.

Investors from certain sanctioned countries or high-risk countries may find it difficult to set up bank accounts with banks in Malaysia. The Central Bank of Malaysia issues periodic circulars to advise reporting financial institutions under its purview on measures and steps to be taken in dealing with customers from higher-risk countries in line with anti-money laundering and counter-financing terrorism regulations (AML/CFT).

4. Licence, Permit and Consent from Authorities

Some industry sectors are subject to foreign ownership restrictions. Before commencing business in these industry sectors, companies must obtain approvals from the governmental authorities in the form of either a licence, permit or consent. Some of these are as follows:

(a) Manufacturing – some manufacturing companies are required to obtain a manufacturing licence with certain restrictions;

(b) Trade – trading companies with foreign equity may be required to obtain a Wholesale, Retail & Trade (WRT) Licence, which is issued by the Ministry of Trade and Domestic, Co-operatives, and Consumerism where there may also be a minimum capital contribution requirement depending on the type of trade.

(c) Real Estate – to obtain the respective state consent as mentioned under Section 433B of the National Land Code 1965 and the consent from the Economic Planning Unit (if necessary).

Limitations on equity ownership may be imposed as a condition on the licences in these restricted sectors.

Our Expertise and Experience

At MahWengKwai & Associates (MWKA), we take pride in our experience and track record of advising and assisting foreign investors in realising their investment goals in Malaysia. Our comprehensive understanding of Malaysian laws, regulations and market dynamics has allowed us to guide investors from around the world, including France, China and other countries, towards successful and profitable engagements.

Our firm’s extensive expertise in foreign direct investment is underscored by our commitment to providing tailored advice to our clients. We understand that each investor and investment is unique and we leverage our deep knowledge of the Malaysian market to offer customised solutions. Below are select examples illustrating our pivotal role in empowering foreign investment in Malaysia

  1. French Manufacturing Company: We assisted a French manufacturing company in establishing its presence in Malaysia. Our team facilitated the incorporation process, ensuring compliance with local laws and regulations. By guiding the client through the complexities of setting up operations in a foreign land, we helped them achieve a seamless transition and a solid foundation for growth.
  2. Chinese Technology Start-Up: We provided comprehensive due diligence services for a Chinese technology start-up’s investment in a Malaysian tech firm. Our in-depth legal, financial and regulatory analysis allowed our client to make an informed investment decision, ultimately leading to a successful partnership.
  3. Manufacturing Facility: We assisted a Singaporean manufacturing conglomerate in establishing a state-of-the-art production facility in Malaysia. Our guidance ensured compliance with local regulations and eased the company’s entry into the Malaysian market. The result was a successful operation that contributed to local employment and economic growth.
  4. Infrastructure Investment: With expertise in infrastructure investments, we advised an international consortium on a major infrastructure project in Malaysia. Our comprehensive legal support enabled our clients to navigate complex procurement processes and achieve a mutually beneficial agreement with the Malaysian government.
  5. Real Estate Ventures: We assisted a Chinese investor in acquiring prime commercial real estate in Kuala Lumpur, ensuring due diligence, contract negotiations and compliance with property laws.

Partner with Us

​​Our diverse portfolio demonstrates our ability to adapt to different investment landscapes and deliver favourable outcomes. By leveraging our extensive experience and intricate knowledge of Malaysian regulations, we empower foreign investors to make informed decisions, mitigate risks and capitalise on opportunities.

The Malaysian business environment is subject to evolving regulations and our firm remains at the forefront of these changes. We keep our clients well-informed about policy shifts and compliance requirements to ensure their investments remain aligned with the law through our retainer, monthly newsletters, weekly educational talks and complimentary consultation.


Bilateral Investment Treaties can be powerful tools for foreign investors in Malaysia, offering protection and incentives. Key provisions like national treatment, most-favoured-nation treatment, expropriation and free transfer of funds provide a robust legal framework that encourages foreign investors to enter new markets with confidence. However, these treaties also have responsibilities that require a thorough understanding of local laws and regulations. Non-compliance can lead to legal and financial repercussions.

Partnering with the right law firm in Malaysia is essential for foreign investors. At MahWengKwai & Associates, we offer invaluable guidance on compliance requirements, due diligence procedures and the implications of BITs. By ensuring adherence to local laws and BIT provisions, investors can minimise risks, protect their interests and maximise the opportunities the Malaysian market offers. In the complex world of international investment, legal expertise is a critical asset that can make all the difference in achieving successful and compliant ventures.

By Cassandra Nicole Thomazios and Anis Mohd Sohaimi 


Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

¹ For more information you may visit
³ For context, “financial services” is defined by the Financial Services Act 2013 to be financial services developed, offered or marketed, by a financial service provider or for and on behalf of another person by a financial service provider. Meanwhile, “capital market activities” have been categorised and broken down in Schedule 4 of the Capital Markets Services Act 2007, which includes, but is not limited to, dealing in securities, advising on corporate finance, investment advice, fund management and dealing in derivatives.