MALAYSIA, DOING BUSINESS IN

Malaysia is a major developing nation in Southeast Asia. It is comprised of two distinct regions: Peninsular Malaysia and East Malaysia. The South China Sea separates the two regions by over 540 miles. The nation's total land area is 127,317 square miles, or just over the size of New Mexico. Of the two regions, East Malaysia—consisting of the two states of Sabah and Sarawak on the northern half of the island of Borneo—is disproportionately the larger, covering well over 76,400 square miles. East Malaysia is sparsely populated and relatively undeveloped. By contrast, more than 80 percent of Malaysia's 19 million (1994) people live in the rapidly developing Peninsular region. Peninsular Malaysia comprises the southern portion of the Malay Peninsula, bordered on the north by Thailand. Directly off the peninsula's tip is the island nation of Singapore. Just to the west, the Straits of Malacca separates the peninsula from Sumatra in Indonesia.

Since its independence in the wake of World War II, Malaysia had transformed itself from a British colony with an economy almost completely dependent on rubber plantations, tin mining, and agriculture, to emerge as a growing industrial and commercial force in the world economy. The nation remained one of the world's most rapidly expanding economies throughout the 1980s and well into the 1990s, before succumbing to the East Asian economic crisis.

MALAYSIA AND THE EAST ASIAN
ECONOMIC CRISIS

When Thailand's currency collapsed in July 1997, the economic crisis it spawned spread rapidly to its neighbors, including Malaysia. To some extent, Malaysia was better prepared to face the crisis. At $29 billion, Malaysia's foreign debt was significant but considerably less than such other affected nations as Indonesia ($59 billion) or Thailand ($69 billion). Also, while Malaysia had, like Thailand, fallen victim to a real estate and building frenzy, much of the development (such as the port facilities at Klang) created much needed infrastructure beyond the confines of the capital. While the real estate speculation had caused unsustainable projects in the capital Kuala Lumpur, in short, the development was not limited to one city. This differentiated Malaysia from the development fever in Thailand that had centered primarily on the Thai capital, Bangkok.

As a consequence, the Malaysian prime minister, Mahathir bin Mohamad, was able to avoid calling on the International Monetary Fund (IMF) for help, while Indonesia and Thailand did. Yet Prime Minister Mahathir's general economic policies seemed mostly centered on scapegoating external sources and denial of the actual issues of outstanding debt and unrestrained development. Mahathir asserted that simply by refusing to accept IMF assistance, Malaysia could avoid the economic collapse that Thailand and Indonesia had experienced, indicating that it was the IMF austerity measures that caused (rather than solved) the problem.

By August 1997 Malaysia's worsening economic situation could no longer be ignored. In response, Mahathir focused his attentions on foreign currency speculators, announcing Malaysia's intention to institute currency controls to limit speculators. In response, Deputy Prime Minister and Finance Minister Anwar Ibrahim openly spoke out against Mahathir, and several key banking ministers, including the central bank governor, resigned in protest. Regardless, on September 1, 1997, Malaysia instituted controls. Immediately after this, Mahathir insisted that Anwar resign. When Anwar refused, the government fired Anwar on grounds of sexual misconduct. Since the charges were widely believed to be false and since when Anwar appeared for trial later in the month, he was bruised from obvious beatings, the incident provoked widespread political unrest with police having to battle thousands of demonstrators in Kuala Lumpur.

By October, Mahathir was in an increasingly weak position politically from pro-Anwar groups, the Malaysian stock market was in crisis and its currency, the ringgit, had fallen by 35 percent. Seeking another scapegoat, Mahathir claimed that "We may suspect that they, the Jews, have an agenda, but we do not want to accuse." Blaming the economic problems of Malaysia on a Jewish conspiracy was difficult since Malaysia has no Jewish community. Mahathir, however, indicated that U.S. currency speculator George Soros was Jewish, and gave the rationale that Jews would not want to see a predominantly Moslem nation prosper (this despite the fact that most other nations affected by the crisis were not Moslem). Mahathir's anti-Semitic comments received worldwide condemnation and shook foreign confidence in his leadership.

Ironically, as Malaysia grew economically more stable in early 1999, it became politically more unstable. On April 4, 1999, Anwar's wife, Wan Azizah Wan Ismail, formed an opposition multiethnic party, opposed to Mahathir's New Economic Order, which among other policies has required preferential treatment for Bumiputeras (ethnic Malays). On April 14, 1999, Anwar was sentenced to prison. Awaiting the verdict for the trial, followers erupted in widespread rioting which continued after his sentencing; the trial was widely condemned as highly questionable.

BUSINESS PRACTICES

MALAYSIA AND ITS ETHNICITY.

Malaysia is a multicultural nation with three dominant ethnic groups: ethnic Chinese, ethnic Indian (primarily Tamil), and Bumiputera (comprised of ethnic Malays as well as Dayaks and other indigenous people of northern Borneo). Under British rule, the ethnic Chinese grew economically dominant in Malaysia's business sector. This led to tensions between ethnic Chinese and Bumiputera Malaysians following independence. Interethnic tensions grew so marked that predominately Chinese Singapore broke with the Malaysian Federation soon after independence.

In an attempt to equalize business power more equitably between the dominant Chinese minority and Bumiputeras, the country adopted the New Economic Policy. The New Economic Policy was instituted by Mahathir bin Mohamed soon after he first gained office in 1981. The policy gave preferences to Bumiputeras over ethnic Chinese; for example, companies over a certain size were required to have a Bumiputera partner. While the policy was, expectedly, not welcomed by the ethnic Chinese minority, and was liberalized in the early 1990s, the system of preferences may have contributed to the absence of anti-Chinese sentiment after the 1997 economic crisis. Indeed, Malaysia was an exemplary model of interethnic harmony during the economic crisis, especially when compared to Indonesia where thousands of Chinese Indonesians were massacred in anti-Chinese rioting in May 1997.

LANGUAGE.

The official language of Malaysia is Bahasa Melayu (literally, "the language of Malaysia"). This is a standardized form of the many Malay dialects and is—with mild differences—nearly identical to Bahasa Indonesia spoken in neighboring Indonesia.

While Bahasa Melayu is the language required in all governmental communication, and most advertising, it is not the only language of the country. Approximately 29.7 percent of Malaysia's population are Chinese, speaking various dialects of Chinese. Additionally, just over 8 percent of Malaysians are ethnic Indians, primarily Tamil-speaking but encompassing a wide range of other Indian languages as well.

Additionally, because of long association with Great Britain, most Malaysians of all ethnic groups speak English as their second language. Indeed, government documents generally have an English translation following the Bahasa Melayu version, both for foreigners and for Chinese and Indian Malaysians.

VIEWS OF TECHNOLOGY AND THE ENVIRONMENT.

The attitudes of the three main Malaysian ethnic groups—the Bumiputeras, the Chinese, and the Indians—regarding technology significantly differ from that of the United States. The United States is a control culture, while both Bumiputera and Indian Malaysians traditionally are a subjugation culture. This means that U.S. culture views technology as consistently positive and reinforces a belief that people can control their environment to conform to their needs. By contrast, Malaysian groups traditionally view technology with some skepticism and conform their behavior to existing environmental conditions. This traditional view of technology, though still present, is changing toward the control stance in the most-developed urban and industrial areas around the capital city of Kuala Lumpur. These traditional norms, however, remain firmly in place in most of the rest of the country.

Chinese Malaysian culture is more accurately described as a harmonization culture. Here the emphasis is on one's integration into a natural order rather than one's control of that order. This is most evident in the ethnic Chinese following of feng shui (an ancient geomancy dealing with the balance of spiritual forces). The importance of location, lucky or unlucky dates, and numerous other factors determined by feng shui experts guide many of Malaysia's Chinese community. For example, many Chinese would confer with a feng shui expert before deciding on an office location or signing an important agreement. Such practices are important to those who adhere to them, and should be accorded the same respect one would give to a religion, rather than be misinterpreted as the equivalent of minor superstition.

The location of the nation tends to affect certain aspects of Malaysian behavior as well. Work—particularly that conducted outdoors or in areas without air conditioning—is affected by the climate. Malaysia is tropical with high temperatures year-round and unrelentingly high humidity. Additionally, the wet season consists of daily and often torrential rains from roughly September to December.

SOCIAL ORGANIZATION

Social organizational factors in Malaysia affecting business include the importance of religion, the concept of family, and group ties.

RELIGION.

Religion plays an important role in Indonesian business. Virtually all Bumiputeras and many of the ethnic Indians are Moslem. Most Malaysian Moslems take Islam very seriously, and follow its precepts as a lifestyle as much as a religion. Because the mosque is regularly visited, it may serve as a place to socialize and nurture business contacts within the Moslem community. Additionally, Moslem sensibilities affect attitudes toward business attire, with most Malaysian women dressing more modestly than their U.S. counterparts.

Five of Malaysia's states (Perlis, Kedah, Kelantan, Terengganu, and Johore) follow the Islamic workweek. In these five states, business offices are open six days a week, Saturday through Thursday, with business closing after a half day on Thursday and the Islamic Sabbath (Friday) off. In the remaining states, the workweek follows non-Islamic norms of Monday through Friday, and half days on Saturdays. Still, employers give Moslems time to go to the mosque on Thursday afternoons and part of the day on Friday. As in all Moslem nations, the Islamic holy days are followed. For example, the fasting month of Ramadan is followed, with a resulting effect on work performance.

The ethnic Chinese generally follow a wide range of Buddhist and Taoist practices blended with the precepts of Confucianism. Their observances range from strict adherents to loose practitioners. The Chinese New Year and the importance of feng shui, however, are nearly universally observed.

Most of the non-Moslem Indians are Hindu. The Thomian Indians, however, are among the world's oldest practitioners of Christianity. Additionally, the Sikhs follow their own religion, and some followers of nearly all of India's religions are evident among some Indian Malaysians.

Additionally, because of the influence of Hindu and Chinese spiritual beliefs, Malaysian Moslems (like their Indonesian coreligionists to the south) are more likely than Moslems elsewhere to believe in ghosts and the spirit world. While remaining true to the essential monotheistic beliefs of Islam, Malaysians nonetheless recognize spiritual forces or attributes of the soul in a variety objects. The presence of ghosts, witches, and other spiritual entities remain a real part of life for many Malaysians, and the need to placate these spirits affects all aspects of life, including work. A common mistake of foreigners is to view Malaysia as a traditional Islamic society and therefore to play down the importance of these supernatural forces, to criticize such beliefs, or to mistakenly reduce their importance to that of mere superstition. Fear of ghosts or the believed presence of spiritual forces can prevent employees from coming to work or prevent the conclusion of a business deal.

FAMILY AND GROUP TIES.

Most Malaysians hold considerably stronger and more extended kinship bonds than those in the United States. Family connections and obligations influence hiring, deal making and other business issues. Moreover, the definition of immediate relationships reaches far beyond the nuclear family to those who would be considered distant relatives in a North American conception.

For all Malaysian ethnic groups, nepotism extends beyond direct kin relationships to clan ties. This is particularly the case for the various clans of the ethnic Chinese communities.

CONTEXTING

Malaysia is a high context society and the United States is a low context culture. This means that Malaysians are more likely to rely on implicit communication rather than on explicit messages. Malaysians as a result read more into what is said than the words themselves may actually mean. For most Malaysians, what is meant matters more than what is actually said.

In Malaysia, meaning is usually communicated indirectly, especially in the delivery of bad news. As a result, Malaysians are likely to agree to things with which they disagree, allowing the context of the discussion or past relationship to convey their disagreement. This is clear to Malaysians but to those from low context cultures such as the United States, such indirect communication is often misread as dishonesty. Conversely, the direct style of communication practiced by most U.S. businesspeople in Malaysia is perceived as rude and often causes others to lose face.

Malaysians, as a high context culture, place a strong value on face saving, while most North Americans place little emphasis on face-saving. The Malaysian conception of face-saving takes the form of the avoidance of shame. Most low context U.S. business practice is controlled by the following of the law and adherence to written agreements. In Malaysia, one commonly holds to a contract to maintain appearances rather than from fear of a lawsuit.

The North American businessperson in Malaysia is thus viewed as lacking honor, having no sense of face (and therefore dangerous to deal with) and being foolishly litigious. The Malaysians in turn are viewed by their North American counterparts as dishonoring their contracts and ignoring their own laws. In reality both perceptions are accurate when viewed through the context of the values of the other's culture.

Still, to succeed in business in Malaysia, the foreigner will need to view contracts and other legally binding arrangements as ongoing rather than definitive. Moreover, the foreigner will have to be willing to allow some inconsistencies to stand at times to maintain appearance and avoid shaming the Malaysians who would otherwise terminate the business relationship.

TEMPORAL CONCEPTION

Malaysia is a polychronic culture. Time is more fluid than in monochronic societies such as the United States. The Malaysians value friendship, personal commitments and the completion of tasks at hand at the expense of preset schedules.

Time is seen as malleable. Appointment times are approximate. Work hours are variable. Consequently, the monochronic foreigner needs to adjust his or her concepts of scheduling, deadlines, and other time-linked activities in Malaysia.