Tuesday, August 23, 2005

Strong Lead for Offshore Outsourcing

THE American Malaysian Chamber of Commerce (Amcham) is bullish about Malaysia's prospects as a business process outsourcing (BPO) and shared services hub for foreign players. Despite the intense competition for BPO and shared services foreign direct investment (FDI) among regional countries such as China, India, and the Philippines, Malaysia is said to be one of the leading candidates, given factors such as ease of doing business. Amcham's president Vince Leusner said Malaysia is an attractive place for foreigners to set up call centres given factors such as its low cost, multi-lingual population, great infrastructure, and political stability. According to Leusner, while manufacturing investment is still an important component of overall American FDI in the country, American companies are increasingly looking at Malaysia and other Asian markets as possible regional/global centres for BPO or shared services investment. The recent Malaysian American Electronic Industry (MAEI) Annual Survey 2005 revealed that a number of American firms have relocated other back- end business functions, including IT support services to Malaysia. Meanwhile, Malaysian Industrial Development Authority (Mida) will continue to promote BPO and shared services within and outside the Multimedia Super Corridor (MSC) to foreign investors, given that the segment is the country's next growth sector. Its Foreign Investment Promotion Division director Yeow Teck Chai said to boost FDI in this area, Mida will continue to provide various incentives to foreign investors such as the 10-year tax exemption. According to Yeow, Mida will also provide creative incentives to foreign investors such as grants, duties exemption as well as expatriate employment and land acquisition benefits. He added that Mida will seek out the foreign investors or they could approach the agency with a wish list.

After China and India, Malaysia has been ranked as the third most attractive destination for BPO and shared services activities in the region. According to analysts, the global IT services market is worth US$580 billion (RM2.09 billion), of which only US$19 billion is outsourced, with India enjoying 80 per cent of the offshore market.

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