KUAL LUMPUR: The challenging global economy and rising operational costs in traditional markets are pushing many multinational companies (MNCs) to explore Southeast Asia, particularly Malaysia, as a strategic alternative.

Malaysia offers an attractive balance of cost-effectiveness and quality infrastructure, which appeals to companies aiming to manage risk and boost efficiency, according to Tan Ka Leong, Group Managing Director of CBRE | WTW.

Tan noted a significant increase in enquiries from MNCs, especially for shared services and business process outsourcing (BPO) operations in Malaysia.

"Compared to other Southeast Asian countries, Malaysia stands out with its highly skilled workforce, proficient in English, which is critical for MNCs aiming for smooth and effective operations," he told Business Times.

Regarding rental rates for prime office spaces, particularly in Kuala Lumpur, Tan said that rates are likely to vary by location.

"In certain areas, like prime office spaces in fringe Kuala Lumpur, we're seeing a bit of an uptick in rental rates. Offices with high occupancy are also likely to see some rent increases due to their strong demand in the market," he said.

Juwai IQI co-founder and group chief executive officer Kashif Ansari said Kuala Lumpur has witnessed a notable influx of MNCs this year.

He said that companies from around the globe are setting up operations in Malaysia to take advantage of the country's strategic location and favourable business environment.

According to him, Malaysia's appeal lies in its skilled workforce, business-friendly infrastructure, and proximity to major markets in Asia, making it an attractive hub for both manufacturing and regional headquarters.

"We work with MNCs who want to set up operations in Malaysia, whether for manufacturing or headquarters, especially from China," Kashif said.

He also highlighted significant investments by U.S. companies, including Alton Industry Ltd Group, which is committing RM2 billion to a manufacturing facility, and GlobalFoundries, which is opening an office that will create 300 high-value roles.

Kashif noted that global supply chain disruptions and rising operating costs have prompted MNCs to look beyond single-country dependencies.

"It's China plus one," Ansari explained, referring to the strategy of building supply chains separate from mainland China to protect against potential disruptions. 

"The pandemic taught companies not to rely on a single supply chain," he noted, adding that this strategy has made Malaysia an appealing alternative for businesses seeking resilience and stability in their operations.

Despite increased demand, Ansari does not foresee a dramatic spike in rental costs across Malaysia, though he acknowledged that rents might rise in specific segments. 

"Occupancy isn't tight enough yet to worry about rents skyrocketing," he said. 

However, he anticipates that competition could increase for high-quality office spaces and land suited for manufacturing, particularly in sectors like semiconductors.

https://www.nst.com.my/business/economy/2024/11/1132613/malaysia-attracts-more-mncs