Question

One of the primary reasons MNCs are eager to set up a business base in Malaysia is due to the lower operational costs involved. Malaysia is the third largest economy in South East Asia and has now become an upper middle income and export-oriented economy.

Being a multi-ethnic, multilingual and multicultural society certainly has opened a lot of doors for Malaysia, and the fact that Malaysia has received a high ranking for the ease of doing business by the World Bank has certainly helped.

Malaysia is one of the top locations in the world, especially for offshore manufacturing and service-based operations. It comes as no surprise than that multinational corporations from more than 40 countries all across the globe are currently invested in over 5,000 companies in Malaysia.
Malaysia is one of the top locations in the world for FDI by MNC's. Examine the 'Determinants of Culture' which affect MNC's in their choice.

Answer 1

MNCs choose Malaysia due to cultural factors like a diverse talent pool and business-friendly environment, strategic location, and modern infrastructure. Malaysia's high ease of doing business ranking and the influence MNCs can exert on local economies make it attractive for foreign direct investment.

Step-by-step explanation:

Determinants of Culture Affecting MNC's Choice in Malaysia

Malaysia's strategy of leveraging its strategic location on major shipping lanes has been instrumental in transforming its economy into a manufacturing powerhouse. With a history enriched by the export of tin, rubber, and palm oil, Malaysia has expanded its agricultural and extractive industries, thus elevating its economic status. The transition into an age of electronics and heavy industries during the prosperous 1980s and 1990s paved the way for the seamless entry and growth of multinational corporations (MNCs) in the country.

In considering the determinants of culture that affect MNCs when choosing Malaysia, several factors stand out. Malaysia's multi-ethnic, multilingual, and multicultural society offers a diverse talent pool that can effectively engage in a global business environment. The high ranking in the ease of doing business by the World Bank is indicative of a business-friendly environment with accommodating regulations. Moreover, the country's modernization efforts, epitomized by the construction of world-class infrastructure like Kuala Lumpur's central business district (CBD), have facilitated an attractive environment for investment.

Economic globalization incorporates forces that MNCs must consider as they strategize their international operations. In this environment, Malaysia stands out as an appealing location for MNCs due to its political stability, a gateway to ASEAN markets, and the presence of trade-favorable legislation influenced by these corporate entities. MNCs, by virtue of their financial prowess and the jobs and infrastructure they bring, also have the clout to shape local economies by partnering with NGOs or directly investing in community development—which further entices them to Malaysia.