• For many Hong Kong companies, Malaysia has proven an attractive business environment thanks to its liberal investment regime and cultural familiarity.
• A growing number of Hong Kong firms are providing value-added services to Malaysian businesses, including infrastructure development, logistics and fintech solutions.

As well as having proven itself to be a prime destination for any Chinese Mainland company seeking to diversify its manufacturing footprint (particularly in certain capital‑intensive sectors), Malaysia is also seen as having considerable potential for Hong Kong's professional services industry. Through such resources, Hong Kong is well positioned to support Malaysia's industrial upgrade, while also making use of the country as a gateway to the wider ASEAN market. In turn, Malaysian companies can leverage Hong Kong's status as an international business platform, as well as its global connectivity, in order to accelerate their own international expansion initiatives.

Notably, when it comes to overseas‑sourced investment, Malaysia has a liberal business environment, with several conducive elements, including:

• 100% foreign ownership permitted in most manufacturing sectors and no mandatory joint venture requirements;
• No forex controls on current and most capital account transactions;
• A corporate tax rate of 24%, and a reduced rate of 15% for Pioneer Status companies;
• A relatively large ethnic Chinese population and a strong Chinese cultural presence, making it one of the easiest countries for Chinese professionals to adapt to when living and working abroad;
• The kind of common law system Hong Kong businesses are familiar with.

Opportunities for Hong Kong

• Infrastructure and rail consulting

Malaysia’s rail industry is at a key development stage, with the focus shifting from simply expansion to expansion, replacement and update. This has been necessitated by many of its existing railway lines, including its monorail and light rail facilities, having been in operation for more than 20 years.

Bolstered by a series of smart city initiatives and a commitment to technological transformation, demand for railway‑focused professional services and technical support has grown rapidly. This has created significant opportunities for overseas railway consultancy companies with international experience, including those from Hong Kong, to enter new markets.

In the case of Key Direction, a Hong Kong‑incorporated integrated railway consultancy, it now operates in more than 20 cities worldwide, while maintaining offices in Hong Kong, Macao, Malaysia, Singapore, Taiwan and Australia. Since entering the Malaysian market in 2010, the company has participated in a number of major rail projects, including Kuala Lumpur’s first MRT line (KVMRT Line 1), KVMRT Line 2, the KL Monorail upgrade, the Kenaya Jaya LRT extension and upgrades, Southern and Northern double‑tracking and electrification projects, and the Johor Bahru–Singapore RTS Link.

Recently, it was also awarded the Independent Checking Engineer (ICE) contract for the Penang LRT project and the ECRL Spur Line Project. In addition, it has taken on the Operations and Maintenance consultancy support contract for the Kuching Transit System using new Autonomous Rail Transit System (ARTS) design.

According to Ir Chang Che Son, Key Direction’s Executive Chairman, as Malaysia’s rail network matures, opportunities have arisen for upgrade and replacement works across a raft of systems and equipment. This very much aligns with Hong Kong’s own current asset replacement programme which is categorised as its “second wave” of railway asset replacement and upgrade, indicating that the market, in general, has entered a phase where demand is both strong and sustainable.

Locally, this is partly down to the fact that ongoing traffic congestion problems in Malaysia have prompted the government to accelerate its public transport development programme. Beyond that, opportunities are also emerging in such areas as smart city development and energy efficiency. Meanwhile, railway operations are evolving towards full automation, comprehensive systems integration, and adoption of artificial intelligence, further enhancing the sector’s technological sophistication and growth potential.

Against this backdrop, Hong Kong companies possess clear competitive advantages. Their familiarity with international standards, particularly European railway standards, enables them to meet stringent safety and regulatory requirements in overseas markets. As global rail systems move towards automation, Hong Kong’s strengths in systems integration and operations can be readily applied.

In addition, as Chinese Mainland companies expand overseas and take on railway infrastructure projects, Hong Kong railway professionals, leveraging their trilingual capabilities, cross‑cultural communication skills and strong project management expertise, can serve as an effective bridge between Chinese suppliers and international clients.

Hong Kong firms are also well positioned to assist clients in developing appropriate technical specifications, ensuring that technologies, comprising hardware and software, sourced from Chinese Mainland and elsewhere can be effectively integrated into local applications, while maintaining high levels of cost‑effectiveness.

Beyond commercial opportunities, there is also clear demand for collaboration in Malaysia. The local academic sector has a strong interest in developing railway engineering and operational talent, opening up avenues for industry‑academia partnerships and training initiatives. At the operational level, Key Direction’s experience also highlights the importance of localisation.

The company initially deployed more than 10 Hong Kong staff out of their 30+ project team to deliver the KVMRT Line 1 Project back in 2012. They have since achieved full localisation, with the Malaysian subsidiary operated by a full team of Malaysian managers and engineers. Since 2025, the Malaysian subsidiary of Key Direction has been established as a centre of excellence for the whole Key Direction Group, supporting projects in Malaysia as well as Hong Kong, the Philippines, Macao and the Middle East.

However, companies should also be aware of market entry requirements. According to Ir Chang, it is important to identify appropriate, qualified and competent local partners to bid and subsequently to deliver on railway projects in Malaysia. Forming such partnerships with suitable local consultancy firms has been a major success factor for Key Direction.

• Fintech

Fintech is another area where Hong Kong companies should consider exploring the opportunities available in Malaysia. On the consumer side, for instance, Malaysian shoppers tend to rely on instalment payments when purchasing higher‑value items, a reflection of the relatively moderate local income levels. As a result, retailers are increasingly open to adopting innovative payment solutions – particularly any that support instalment‑based online bank transfers – in order to broaden their customer reach. In addition, there is strong demand for multi‑currency transaction solutions, as these facilitate participation in cross‑border e‑commerce for consumers and retailers.

In his role as Managing Director of venture capital specialists Gobi Partners Malaysia, Hisham Ibrahim has noted that many ASEAN‑expansion‑minded Hong Kong fintech and blockchain companies are setting up offices in Kuala Lumpur as they look to leverage Malaysia's educated, multilingual workforce and benefit from the country’s lower cost base. Essentially, he believes this, this reflects Malaysia’s standing as Southeast Asia‑lite – a relatively easy regional entry point for foreign companies and a springboard to the regional ASEAN markets.

Beyond that, such moves are also being driven by the rapidly developing nature of Malaysia’s fintech ecosystem. According to the Malaysia Fintech Map (as produced by Singapore‑headquartered Fintech News), the country was home to 360 active fintech firms in 2025, a notable rise on the 289 recorded for 2024. Overall, payment‑related businesses (81 companies) comprised the largest segment, followed by e‑wallet providers (43).¹

In 2025, BlueOnion, a FinTech / RegTech start‑up based in Cyberport, Hong Kong’s digital tech hub, signed an MoU with ESG Malaysia, a non‑profit dedicated to prioritising environmental, social, and governance provision. This will see them working together closely across multiple areas, including ESG capacity building and training, policy advocacy and engagement. In addition, another Cyberport‑based start‑up, Coded Solution, has partnered with a Malaysian fintech company, VSure Tech, to launch a pilot programme, which seeks to integrate traditional insurance with Web3.0 blockchain technology. ²

Hong Kong: A gateway for Malaysian companies

• Trade-related services

In addition to niche services such as rail and infrastructure consulting, Hong Kong businesses can provide a wide range of other services to their Malaysian counterparts. The prospect of such collaborations has been welcomed by Jacob Lee Chor Kok, President of the Federation of Malaysian Manufacturing (FMM). Speaking to HKTDC Research, he said that while the direct supply of intermediate goods from Hong Kong may be limited, the city’s role as a re‑export and trading hub, facilitating regional sourcing activities for Malaysian buyers, is significant, especially with regard to electronic components, precision parts and speciality materials.

Other Hong Kong sectors seen as having particular value include freight forwarding, customs brokerage and multimodal logistics infrastructure, particularly with regard to air cargo. In more specific terms, specialised Hong Kong‑based logistics providers already facilitate time‑sensitive shipments of high‑value components for Malaysia’s electronics manufacturers.

Overall, Hong Kong’s role in Malaysia’s trade landscape is significant, with a strong commercial linkage having emerged between the two economies. Hong Kong is Malaysia’s fourth‑largest export destination, and also serves as a key intermediary for Malaysian trade with the Chinese Mainland. In 2025, 73% of Malaysian‑originated goods re‑exported through Hong Kong were destined for the Chinese Mainland.

In the same year, merchandise trade between Malaysia and the Chinese Mainland routed via Hong Kong was equivalent to 8.5% of direct trade between the two economies, further illustrating Hong Kong’s role as a vital gateway linking Malaysia to the Mainland market.

Lee very much foresees Hong Kong’s role as a financial and logistics centre connecting Malaysia and the Chinese Mainland become more significant as more Chinese companies expand their footprint in Malaysia.

• A platform for F&B players

In addition to providing services in Malaysia, Hong Kong can also serve as a valuable testbed for Malaysian F&B brands seeking to build international recognition. GT Food Asia, a Malaysian food manufacturing company has participated the Hong Kong Food Expo previously, aiming to find distributors and bring their products to the Hong Kong market. GT Food currently has exposure in the different parts of the world such as Chinese Mainland, Korean, UK and Saudi Arabia. Calvin Koh, founder of the company explained that they want to expand into Hong Kong because the city is a gateway of Asia, entering Hong Kong does not only provide reach to local Hong Kong consumers, but millions of tourists from all around the world. Moreover, Hong Kong food market is premium. Establishing a presence in Hong Kong can enhance a brand’s image, gain recognition from overseas consumers, and help drive further expansion into other markets.

Related articles:

Malaysia's Economic Transformation: Opportunities and Growth Sectors

Leveraging Malaysia's Evolving Supply Chain Ecosystem

Hong Kong’s Role in Malaysia’s Industrial Upgrade

Johor-Singapore Special Economic Zone: A Key ASEAN Expansion Platform

Securing Success in Malaysia's Consumer Market
 

Source:

¹ Malaysia Fintech Report 2025: 6.5M BNPL Users Mostly Rely on Three Providers

² Cyberport Leads Start-ups to MyFintech Week in Malaysia