A study by KPMG found that Malaysia is placed ahead of countries in the Asian region such as China, Japan, Vietnam and India.
KPMG Malaysia managing partner Datuk Johan Idris said the study indicates that Malaysia’s CoDB Index results from high scores on the Primary Cost Index where Malaysia emerged at the top of the chart, tied with China, Mexico, and Vietnam. “The country had outperformed on three factors — hourly compensation costs, real estate costs and corporate tax rates.”
He added that in analysing the results further, by changing the weight of the primary costs and secondary costs from equal to 70 per cent-30 per cent, Malaysia would be ranked the number one most cost-effective location in the CoDB Index. “Malaysia continues to be a prime manufacturing hub for investors despite uncertainties in the current landscape. This is especially significant in our new reality, where operational stability and cost containment are central in every company’s long-term business survival. The results in this study only substantiate what Malaysian businesses already know and are proud of,” he said.
Datuk Johan added that as an immediate effect out of the Covid-19 pandemic, companies around the world have begun relooking at their supply chains. “A study by McKinsey estimates that 16 per cent to 26 per cent of global exports, worth US$2.9 trillion to US$4.6 trillion, could move to new countries over the next five years if companies reshuffle their supplier networks,” he said.
He also emphasised that the study by KPMG proves that Malaysia has the factors for moving up the production value chain. “This is by acting with agility and building on our resilience that we are able to maintain our competitive advantage and remain a preferred destination for high quality investments. “The promising results of the study support the government’s focus on reviving Malaysia’s investment climate,” he said.
The Malaysian Investment Development Authority recently stated that Malaysia recorded a total of RM64.8 billion worth of investments in the manufacturing, services and primary sectors for the first six months of 2020 despite multiple headwinds on the global front. The manufacturing sector attracted the largest portion of approved investments for the first half of 2020, contributing more than half (55.1 per cent) or RM35.7 billion.