Investing in Malaysia Malaysia is an open economy and is looking to relax rules to attract foreign investment. In a recent survey conducted by ASEAN – BAC Survey on ASEAN Competitiveness, Singapore was ranked as the most attractive for investment for 45% of respondents intending to invest in the country, followed by Malaysia (42%). (Competitiveness, 2013). Malaysia is also considered the gateway to expand not only in the ASEAN region, but throughout Asia. The government is striving to achieve developed nation status by 2020 and to build momentum, the government has put in place policies such as the Government Transformation Plan (GTP), the New Economic Model (NEM), the 1st Malaysia Plan and the 10th Malaysia Plan (RMK10). Malaysia is also politically stable and has good relations with all countries in the world.Risks1. Malaysia has an affirmative action program aimed at reducing poverty among the local population. A key requirement of this program is that at least 30% (Euromonitor, 2014) of ownership of service sector companies should belong to Malay or indigenous groups. The Malaysian government has taken steps to liberalize the economy and relax the controversial rule requiring businesses to be partly owned by ethnic Malays. Ownership progressively decreased from 50.0% to 30.0%. The country's Prime Minister recently announced that listed companies will no longer be required to have Malaysian participation. The country realized that the policy was not benefiting the Malaysians.2. Most businesses in Malaysia are on a personal basis and the deal may take time to materialise. There are cultural and social barriers and most businesses are family-run. Malaysia is moving away from traditional financing and gearing up for PE investments. However, the country must ensure that regulations and guidelines are effective. The Securities Commission recently revised its guidelines for equity investors. PE Investments in Malaysia. The government is giving a boost to private equity investment in Malaysia. Local companies depend on state-owned companies for financing. The government now aims to reduce this dependency by encouraging funding from private equity investors to help small businesses expand. Malaysia's state pension fund is also allocating more funds for private equity investments. Most companies in Malaysia prefer to borrow as the cost of debt is 3.0% maintained by Bank Negara Malaysia (BNM) for the past 10 years, and thus has neglected financing from private equity and IPO.