Malaysia – Palm, Rubber and Tourism & Foreign capital ….

Malaysia is one of the hot emerging market countries now.After the Asian financial crisis a few years, Malaysian government has implemented many market-friendly policies while at the same protecting the domestic currency and stock markets from adverse effects of foreign direct investment.The infrastructure in Malaysia is very good when compared to other countries like India, China etc. The capital city of Kuala Lumpur (KL) has a neat Skytrain system that connects pretty much the whole city. The photo below shows one such train running thru downtown KL.

The people in Malaysia are conservative and save a lot of their income. The country has Malay, Chinese and Indian populations with the Malay and the Chinese forming the majority. Though the country is very close to Singapore, it is still a developing country while the city state of Singapore is a developed country. Malaysia is trying hard to become a developed nation.

Only the western part of Malaysia is well developed. The eastern part of the country is still very underdeveloped. The city of KL attracts huge capital inflows for may projects such as apartments, hotels, tourist related attractions etc. The city seems to expand constantly.

There is a major toll expressway that runs all the way from the north to the South connecting Singapore. This highway is well maintained and has made land travel within Malaysia much easier and faster.

There are a couple of options to invest in Malaysia:

One is the iShares Malaysia ETF – EWM.
This fund has grown nicely over the years and has now an assets size of over $1.0B.

Another option is to pick up a few of the Malaysian ADRs listed in the OTC market.

The following are the Malaysian ADRs listed in the US markets:

1. Genting – Travel and leisure –
2. Malayan Banking – Banks –
3. Resorts World – Part of Genting –
4. Tenaga Nasional –

There a few well-run companies in that list such as the Genting and Resorts World. Both run the Genting resort and the many hotels within it. This hillstation tourist spot attracts millions of tourists each year including many of Chinese from Mainland China visiting Malaysia for the first time.
The picture below shows the cable run that runs from the base of the mountain to the resort.
This cable car seems to one of the fastest and longest in the world.

Some other companies available in the OTC are electric utility Tenega Nasional the banking group of Malayan Banking. In general Malaysia ADRs are very few to choose from.

Malaysia used to be a big producer of Rubber. Many years ago that changed. Now Palm Oil is the major commodity in Malaysia. Many of the old rubber plantations have been converted to grow Palm trees.

Malaysia has a few disadvantages as well.The country failed to launch and become a leader in the IT and other “knowledge” based industry due to many reasons. The spectacular “Petronas Towers” were actually built to launch an IT park where IT companies would set up shop and engage in all things IT. However that effort failed and now those towers are occupied by multinational corporations in addition to Petronas.

However Malaysia has succeeded in the electronics manufacturing space. All kinds of electronic items such as computer chips, watches etc. are now assembled in Malaysia. Malaysians are proud of this sector’s achievement.

For the foreseeable future, commodities such as Palm Oil, Rubber and tourism industry will remain the key engines of the Malaysian economy.

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