Malaysia

Doing Business

Rusu Ionuț-Lucian
Master EAI, Anul II
Malaysians are extremely polite and courteous in their dealings. They aim to create and maintain a
sense of harmony among their business circles. Though they are not known to drive a hard bargain,
Malaysian businessmen are experienced and intelligent. Price is an important point of negotiation and
most Malaysians can spend time on this aspect before they arrive on the agreed amount.

It’s important to establish a personal bond before proceeding with any business with Malaysian
counterparts. The most effective ice-breaker topics include family, soccer, your impressions about their
country and, of course information about yourself, your business and future plans.

1. Business etiquette

Malaysia is a highly multicultural country and you will probably make business not only with
Malaysians but also with Chinese and Indians. They all have different rules of conduct and what might
be seen as appropriate by one group can be considered as offensive by the other.

Handshakes

The different rules for different ethnical groups already apply to handshakes. As Malaysia is a Muslim
country, physical touch between sexes might be seen us inappropriate. Malay women do not necessarily
shake hand with men. To be on the safe side, wait for the woman to reach out her hand first. Only then
is it appropriate to shake it. If the woman does not extend her hand, only bow slightly with your hand
placed over the position of your heart to demonstrate respect.

Dress etiquette

Men should wear a suit, with dark pants, a long-sleeved shirt and a tie. Women have slightly more
freedom regarding their dress etiquette. They can wear skirts, trousers or a traditional dress. Revealing
clothes are inappropriate. Garments, fully covering a woman's body, or headscarves are very common.
Business meetings

When making appointments for a business meeting, avoid scheduling them to a Friday, as this day is
reserved for Muslims to pray. Arrive in time for a meeting but be prepared to wait. Malays usually have
a relaxed attitude to time.

When having a first meeting with a party do not expect business decisions to be made. Initial meetings
are usually used for building rapport as business relationships are based on familiarity and trust. They
are always started with small talk. Personal questions are not very adequate but questions on hobbies or
interests, sometimes also on family, are fine.

Malaysian culture, and this refers to business culture as well, is very hierarchical so make sure to treat
persons of senior ranks with great respect.

When communicating be very polite. Under no circumstances should you show anger in public as this
is considered very rude. Also, never criticize and embarrass a colleague in front of a group. Do not say
“no”, rather use forms such as “I will try”.

It shows good manners if you take a moment of silence before answering a question as this
demonstrates that you are giving the question the appropriate consideration.

When entering a Malaysian home, always take your shoes off. Only use the right hand for eating or
touching another person as the left hand is regarded unclean.

Business presents are not very common, but in some cases where you might have to make a gift pay
attention to the Muslim rules. Do not give alcohol, pork meat or something made of pigskin.

Names and titles

As a general rule, address persons by their title and their surname as using first names is not very
common. Many Malaysians, however, do not have surnames. They often use their father's name adding
it to their surname with the term “bin” meaning “son of”. The term applying to women is “binti”. In
cases where the surname is missing you can use the first name together with a “Mr.” or “Mrs.”

Some Malaysians have been conferred a title by the government. These are usually “Tun”, “Tan Sri”,
“Dato” and “Datuk”. If you know the title, use it!

Business cards

Business cards are usually first given out by the visiting party. When receiving or presenting a card,
hold it with both hands. Hand your card facing your name upwards and when receiving it make sure
you study it briefly before putting it away into your pocket or placing it in front of you on the table.
Have your card translated into Malay.

2. The Art of Negotiation in Malaysia

What are the right negotiation tactics in Malaysia?

Given a rich history of trade since the ancient times, Malaysians can be astute business people. The
following guidelines can help clinch deals in Malaysia:

- Offer long-term advantages;

- Build strong relationships based on your reputation and personal rapport;

- Personal relationships and mutually known third parties can he helpful while negotiating;

- Cross-verify claims made by your prospective customers and vet all business inputs received before
acting on the information;

- Respect elderly business persons;

- Be ready for slow decision making and provide relevant information patiently when asked for;
Malaysians refer to a lot of information before deciding;

- Expect some bargaining and haggling before a deal is concluded.

Contracts

Any contract made between two parties in Malaysia falls under the Contract Act 1950. Contracts are
detailed and precise to avoid any ambiguity. Hence a formal contract is always preferred over an
informal agreement.

What are the arbitration and litigation processes in Malaysia?

The laws of Malaysia are based on the Common Law Legal system owing to its colonial past under the
British rule. The judicial system in Malaysia is efficient compared to most other Asian countries. Any
disputes are resolved within a time frame of about a year. However, legal costs can be substantial.

The Kuala Lumpur Regional centre for arbitration (KLRCA) 2013 arbitration rules form a
comprehensive set of rules, in line with international dispute standards, for the quick and cost efficient
resolution of international trade disputes. Interim relief can be obtained on an urgent basis with
competent and effective arbitrators arriving at decisions quickly, after having taken into account the
concerns of all parties concerned.

As mentioned earlier, litigation can work quickly too, but legal fees tend to be on the higher side. In
other words, legal representation is professional and expensive in Malaysia.

Malaysia - a fair but competitive market is friendly to international trade. Familiarity with negotiation
tactics and knowledge with the contracts of local business environment are the key to your success
here.
3. Malaysian Business Tips

Tip 1

Malaysia presents the visitor with a myriad of different cultures within its business world. There are,
however, certain key similarities which bind the country together.

Tip 2

As Malaysia is very ethnically diverse, try to do as much research on your potential contacts as possible
before entering into negotiations – these factors can have a telling impact on how things proceed.

Tip 3

Although the government has positively discriminated in favor of ethnic Malays, the Chinese and
Indian business communities still play a pivotal role in the Malaysian business world.

Tip 4

Most business structures tend towards the hierarchical with information flowing to the top and most
decisions being made by key senior management figures.

Tip 5

It is important to ensure that you are dealing with the key senior figures as a great deal of time can be
spent debating issues with people who may play little part in the decision-making process.
Tip 6

The manager is expected to manage and to make decisions. Subordinates may feel uncomfortable when
given vague, non-specific instructions.

Tip 7

Tasks may remain undone, unless specific instructions are issued from the boss – even if it is apparent
that the task needs urgent attention.

Tip 8

The boss/subordinate role can be likened to the father/son relationship. The boss is expected to take an
interest in the overall well being of subordinates. In return for this concern, subordinates will offer
diligence and loyalty.

Tip 9

Individual aspirations are seen as secondary to the needs of the group. Rewards and motivation come
from group success.

Tip 10

Meetings can be lengthy, starting with a great deal of relationship- building small talk. It is not unusual
for initial meetings to focus solely on non-business related issues.
Tip 11

Relationships must be firmly established before business can commence. Do not underestimate the
need to allocate time and resource to the relationship-building aspect of a project.

Tip 12

The aim of most meetings is to develop or enhance the relationship. This is generally achieved through
promoting a harmonious atmosphere. Do not destroy the harmony through being overly pushy when
trying to reach a decision.

Tip 13

Do not be surprised if meetings start late or last longer than had originally been scheduled. Build delays
into your timetables.

Tip 14

All of the major cultures you may encounter when doing business in Malaysia are basically group-
oriented. It is important to take into account the needs of the whole group rather than any one
individual. Singling out an individual for praise or specific reward could cause that individual
embarrassment within the group.

Tip 15

Politeness and diplomacy are prerequisites when doing business in Malaysia. Directness can be
misconstrued as rudeness and is seen as the behaviour of people who lack respect. (And those people
will not, therefore, be worthy of respect themselves.)

Tip 16

It is difficult for people to say no or to deliver bad news. Don’t always take the word ‘yes’ to mean ‘I
agree’. It could be merely an affirmation of understanding.

Tip 17

English is widely spoken and very many people have a near-fluent command of the language.
Superficially, therefore, communication is generally much easier than in some other countries in the
region. However, be aware that what is said is not necessarily what is meant. Look for the coded-
meaning behind all communication.

Tip 18

When giving gifts, be sensitive to the cultural background of the recipient. Is your contact a Malay
Muslim or of Chinese origin?

Tip 19

Be aware of the special requirements of the majority Muslim population with regard to such issues as
prayer, diet and fasting.

Tip 20
Women will encounter fewer difficulties when working in Malaysia than in countries such as Japan or
Korea.

Conclusions

It’s important to establish a personal bond before proceeding with any business with Malaysian
counterparts.

When having a first meeting with a party do not expect business decisions to be made.

Price is an important point of negotiation and most Malaysians can spend time on this aspect before
they arrive on the agreed amount.

When giving gifts, be sensitive to the cultural background of the recipient (some people live in
Malaysia but are coming from China actually).