Adding to Malaysia’s appeal as a global investment destination, a recent study by KPMG sees Malaysia ranking fourth among 17 economies in an assessment comparing their competitiveness as manufacturing hubs. This puts Malaysia ahead of countries in the Asian region such as China, Japan, Vietnam and India. The joint study by KPMG and The Manufacturing Institute in the US, entitled “Cost of Manufacturing Operations around the Globe”, provides a current assessment of how the manufacturing sector in the US compares in competitiveness to its main trading partners.
This study evaluates a total of 23 cost factors that impact the cost of operations (Cost of Doing Business or CoDB) of a business conducting manufacturing operations in the United States relative to sixteen other countries that are leading manufacturing exporters to the US. These factors include costs that directly impact a firm’s bottom line (Primary Costs) and factors that impact overhead costs and the ability to operate efficiently, typically related to the business environment or ease of doing business (Secondary Costs).
The overall CoDB Index scores are determined at equal weightage of the Primary and Secondary Costs. The study indicates that Malaysia’s ranking on the CoDB Index results from high scores on the Primary Cost Index, where Malaysia emerged at the top, tied with China, Mexico, and Vietnam. The country had outperformed on three factors: hourly compensation costs, real estate costs and corporate tax rates.
“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,” says Johan Idris, Managing Partner of KPMG in Malaysia during a virtual media briefing on the study.
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