Pavilion Kuala Lumpur, one of Malaysia’s most extravagant shopping malls, is a symbol of the country’s strong economic performance and attractive investment climate. (Photo by Chen Mei-ling)

From chocolate to cooling tower companies, Malaysia offers an increasingly appealing business environment for Taiwan investors.

Teaching tourists how to make chocolate orangutans is one of the more creative business ideas that has helped Teng Sze-choong transform his confectionery company into one of the largest chocolate retailers in Malaysia, and it is all thanks to lessons he learned when he was in Taiwan.

The 65-year-old founder of Harriston said he got the idea for his chocolate workshops from Taiwan’s tourism factory model. “This operation has worked well in attracting large numbers of visitors and boosting our brand awareness.” To counter competition from low-cost rivals in China and elsewhere, Taiwan initiated a tourism factory model in 2003, in which small and medium enterprises are encouraged to open their premises to visitors as a way of generating extra revenue.

Teng’s five chocolate stores have welcomed 7.5 million visitors from 85 countries and territories since 2005, the Malaysian businessperson said. That was the year he opened his first chocolate shop; in 2012 he started manufacturing his own brand chocolates. For 35 ringgit (US$8.60) each, visitors learn how to mold bars, pipe out lollipops, paint cookies, craft a white and dark chocolate orangutan and then of course, eat the fruits of their labor.

The entrepreneur’s ties to Taiwan go deeper than tourism factories. He got his grounding in the world of business while studying international trade at Fu Jen Catholic University in New Taipei City in the 1970s. This meant Taiwan was a natural choice when he started looking for new suppliers and business ideas this year. He is currently exploring buying cacao beans from a farm in Pingtung County in southern Taiwan and also working with handicraft makers in the country to add to his stores’ product lines.

Southbound Vision

Teng’s plans to start working with Taiwan companies coincide with the government’s New Southbound Policy (NSP). A key component of President Tsai Ing-wen’s (蔡英文) national development strategy, the initiative seeks to deepen Taiwan’s agricultural, business, cultural, education, tourism and trade ties with the 10 Association of Southeast Asian Nations (ASEAN) member states, six South Asian countries, Australia and New Zealand.

The initiative is already bearing fruit. Taiwan trade with Malaysia enjoyed year-on-year growth in 2017, with statistics compiled by the Ministry of Economic Affairs’ Bureau of Foreign Trade (BOFT) showing bilateral trade volume surged 24 percent to US$17.55 billion. Malaysia was Taiwan’s seventh biggest trading partner as well as eighth largest export and import market last year.

Taiwan External Trade Development Council (TAITRA) is one of the organizations responsible for the economic side of the NSP. In Malaysia, it has begun channeling more resources into growing Taiwan’s presence in the country. Tasha Hsiao (蕭春雁‬), director of TAITRA’s Taiwan Trade Center (TTC), Kuala Lumpur, said her agency is promoting Taiwan brands with matchmaking services, exhibitions and publicity campaigns, as well as inviting Malaysian buyers to Taiwan to attend trade shows and procurement meetings. The NSP, she said, has made things a lot busier for her office. In 2017, they invited more than 850 Malaysian buyers to Taiwan, up from less than 500 in 2015, before the initiative was launched. To cope with the increased workload, she has had to double staff numbers to 10 employees over the past year.

One of the new projects is the TAITRA-run Taiwan Halal Center, which opened last year in Taipei City. It helps Taiwan businesses interested in exploring Malaysia’s status as a Muslim-majority nation by providing them with market intelligence and assisting them in applying for halal certification. More than 800 halal-certified products are made in Taiwan and halal food and cosmetics in particular show good prospects in the Malaysian market, said Chang Chi-ping (章計平‬), who completed his tenure as head of Taipei Economic and Cultural Office (TECO) in Malaysia in July.

There is also the BOFT-run annual Taiwan Expo in Malaysia that showcases Taiwan products and services including those that are halal certified. More than 870 one-on-one trade meetings were organized at the inaugural event last year, which attracted about 20,000 visitors, with an estimated US$36.2 million in business deals reported by participating firms, according to Hsiao. This year it will be held in October at the Kuala Lumpur Convention Centre.

“Local consumers have positive impressions of Taiwan-made goods, perceiving them as higher quality, and are willing to pay more for them,” Hsiao said. Information and communication technology products, integrated circuits and machinery are Taiwan’s major exports to Malaysia.

Familiar Faces

The NSP in Malaysia is operating off the back of an economic relationship that has flourished for decades, in part because of people like chocolatier Teng. Malaysians who studied in Taiwan have helped make the business environment more accessible. “The many Taiwan-educated Malaysian professionals from all walks of life are an important pillar of the bilateral relationship,” Chang said.

Pharmaceutical firm Yung Shin Industrial Co. (YSP), set up in central Taiwan’s Taichung City in 1965, is a shining example. The family-run business expanded to Malaysia in 1987 because they could easily find workers who understood Taiwan. “Malaysia was chosen as our first location in Southeast Asia because of its Taiwan-educated workers,” said Lee Fang-hsin (李芳信), president of the company’s Malaysian operations. “We can communicate with them easily. Moreover, they know the culture, language and market so they can help us gain a quick understanding of local business practices.” YSP Southeast Asia Holding, which sells generic medicines to clinics, hospitals and pharmacies, went public in Malaysia in 2004.

There are many advantages to investing in Malaysia other than its Taiwan-savvy locals. The country is considered to be open and politically stable; it has sound infrastructure; and an ethnic Chinese community that offers a familiar language and cultural landscape. In addition to crediting Malaysia’s Taiwan-educated workers, Lee also appreciates the country’s inherent qualities. “Doing business in Malaysia has several advantages such as market openness, a multilingual workforce and political stability.”

Sun Hao-wen (孫浩文), general manager of Lien Eki Rubber Industrial in the state of Selangor, is another Taiwan businessperson who found Malaysia a profitable place to invest. “I made the right decision to set up a manufacturing plant in Malaysia in 1992,” said Sun, who hails from southern Taiwan’s Kaohsiung City. “The country has reliable electricity, water supplies and extensive highway networks, and these are all helpful to my business operations.” Sun’s factory produces rubber seals for the construction of aluminum electrolytic capacitors used in cars and home appliances.

The Liang Chi Group, headquartered in northern Taiwan’s Taoyuan City, likewise spotted the advantages early on, expanding into Malaysia back in 1994. Dave Lin (林永昌), managing director of Liang Chi Cooling Tower, also in Selangor, said business is so good he is planning to add a new factory onto his existing one to keep up with rising demand. “Financial systems, investment policies, political stability and public infrastructure are the main factors that my group considers when establishing branches in foreign countries,” he said. “Malaysia scores high on these criteria.”

Springboard to ASEAN

Lin, who also heads the Taipei Investors’ Association in Malaysia, said another plus for firms looking to invest in the country is that it is a great base from which to reach the rest of the region and beyond. And with most of the world’s emerging economies centered in Asia, that means excellent growth prospects. “While investing in Malaysia, we’re not only looking at domestic demand, but also the whole ASEAN market as well as the Middle East,” Lin said. “By taking advantage of its close economic ties with those major emerging economies and through support and technological innovations, it’s my belief that we’ll be successful.”

Many Taiwan companies that moved to Malaysia in the 1990s have done just that. YSP’s pharmaceutical holding company has set up subsidiaries in eight ASEAN member states. Sun’s rubber seals are also exported to Indonesia, Thailand and Vietnam. “A steady rise in spending power and population growth in ASEAN countries have pushed up demand for all kinds of products,” Sun said. “With its strategic location in the heart of Southeast Asia, educated workforce and pro-business environment, Malaysia can be a manufacturing and operational base for distributing goods to other regional markets.”

For Allen Chiang (江文洲), president of Inmax Holding Co., which makes nail guns used in the construction industry, Malaysia has proved to be the best location to reach his growing list of clients in other ASEAN countries such as Indonesia, the Philippines and Thailand where construction is booming. Inmax, founded in 1989 in Taichung, relocated to Malaysia in 1993 where it now has two factories in the state of Negeri Sembilan, Chiang said. “Malaysia is comfortable and safe and allows me to serve my customers in ASEAN countries quickly.”

Back at the Harriston chocolate factory, the sheer variety of produce on display—swirls of red, brown and white; sweets flavored with chili, ginger and even durian—is breathtaking. Teng’s Taiwan-inspired business idea has worked a treat and offers a mouthwatering example for Taiwan firms that might be mulling a move to Malaysia.