Product Spotlight - Arm Holdings - Malaysia gambles on a semiconductor deal

1. Malaysia has signed a strategic partnership with Arm Holdings, a UK-based chip architecture company, to acquire advanced semiconductor design blueprints for US$250m. The agreement, spread over ten years, includes training for 10,000 local engineers and aims to transition Malaysia’s dominant role in chip assembly and testing to high-value semiconductor design. 

2. While Malaysia will gain access to Arm’s blueprints and will be successful in manufacturing more higher-valued semiconductors, EIU believes that the country’s goal of creating its own designs will be challenging.

Smart City Espoo: Co-Creation, Innovation, and Sustainable Solutions

1. Espoo is Finland’s second biggest city. With close to 300,000 inhabitants, it is home to many education and research institutes as well as global corporations including Nokia. Interestingly, all Finnish unicorn startups have emerged in the city. Read more about what makes Espoo smart!

Korea Sees Unprecedented Wave of Small Business Closures

 1. In an online community of more than 1.8 million small business owners, a user in Jeonju, North Jeolla Province, wrote on Friday: “Am I the only one whose business is falling apart?”

2. “The restaurant near my shop went out of business and has since been replaced by a rental space, and the walnut pastry store next to it also shut down,” the user continued. “This feels serious and unsettling.”

3. The post was soon flooded with sympathetic replies, including: “Business is so dead I can’t even think straight” and “I opened my chicken shop at 4 p.m. and only made 120,000 ($87) won by 8 p.m.”

4. These accounts from small business owners offer a vivid snapshot of the hardships many are enduring — struggles that are reflected in the data.

The implications of G7 agreement on the global minimum tax

 1. The G7 countries on 28 June reached a compromise on the global minimum corporate tax. The United States under President Trump had said it would withdraw from the international deal that provided for the tax, brokered in 2021 by the Organisation for Economic Co-operation and Development, and would levy a ‘revenge tax’ on countries applying the global minimum to US companies. The G7 agreement removes that threat for now, but at the price of a ‘side-by-side’ system in which US companies will be to some extent protected.

2. The agreement could be seen as a defeat for Europe and other G7 countries, which have conceded a carve out for American businesses. This concession rewards threats by the US and does not send a signal of power at a time when Europe and other economies face challenges from the US. However, it may contradict the expectations of those who thought the minimum tax would not survive President Trump’s second term.

Global minimum tax | What now after US exemption?

1. The US’s exemption from the global minimum tax, in exchange for the removal of revenge taxes from what President Donald Trump has dubbed his “big, beautiful bill”, has thrown a lifeline to the beleaguered reform championed by the OECD, but its path to success remains uphill.

2. G7 countries agreed to a “side-by-side” solution that “would fully exclude” US-parented groups from the 15% minimum tax on large multinationals championed by the OECD and endorsed by over 140 countries worldwide, according to a joint statement published on June 28.

3. In other words, US multinationals will only respond to US fiscal law and its own minimum thresholds for taxing American profits from abroad.

Malaysia Expands SST from July 1: What Businesses Should Know

1. Malaysia will implement a significant expansion of its Sales and Services Tax (SST) framework starting July 1, 2025. Announced as part of the government’s fiscal consolidation strategy under Budget 2025, the revised SST rules are designed to broaden the tax base without burdening essential goods or lower-income households.

2. For businesses, particularly those in the services sector, the SST expansion introduces new compliance obligations, registration requirements, and tax exposure across a wider range of activities.

Indonesia’s Consumer Stimulus: Impacts for Foreign Investors

1. Indonesia’s bold US$1.5 billion stimulus package, unveiled in late May 2025, is set to ripple through Southeast Asia’s largest economy — and foreign investors should be paying attention.

2. While the measures are aimed at boosting local household consumption, the indirect effects could reshape demand patterns across consumer goods, retail, energy, transportation, and financial sectors, opening fresh opportunities for foreign businesses.

Digital resilience as a practical blueprint for SMEs in Malaysia

1. Over the past two years, Malaysia has counted roughly one million micro, small and medium enterprises (MSMEs). Together, they generate close to two-fifths of national GDP and supply nearly half of all jobs. According to the SME Association of Malaysia, as many as 90-95 per cent of firms with more than ten employees have already moved key operations online. Whether those investments translate into lasting advantage now hinges on how confidently businesses turn digital promise into measurable performance.

2. Government policy is firmly behind them. National programmes such as the Malaysia Digital Economy Blueprint and the forthcoming ASEAN Digital Economy Framework Agreement aim to deepen connectivity, broaden market access and raise the region's collective digital skill base. The opportunity for growing Malaysian firms is therefore to convert high-level ambition into everyday gains that lift productivity at scale.

Singapore Is Warning of a Recession: Here’s What to Look For

 1. After a better-than-expected start to 2025, the government is warning of a growing risk that the economy may slip into its first technical recession since the pandemic.

2. Beh Swan Gin, permanent secretary at the trade ministry, emphasized that such a contraction — defined as two consecutive quarters of contraction — “doesn’t necessarily equate to a full-blown economic recession.” The government maintained its full-year growth forecast at a cautious 0% to 2%.

3. As the impact of the US-led tariff escalation begins to bite, Singapore is the first Southeast Asian country to flag the risk of a technical recession, an event that has only happened twice in the past 20 years — at the start of the Covid-19 pandemic in 2020, and during the global financial crisis, when the city-state had four straight quarterly contractions beginning in June 2008.

4. The newly re-elected government of Prime Minister Lawrence Wong is already spending billions of dollars in subsidies and handouts to help households cope with the rising cost of living and create more jobs. But with such a high dependence on global trade, the nation’s economic path this year is likely to be dictated by the unpredictable trade battle between the US and China.

Should investment promotion agencies focus more on attracting research, development, and innovation?

 1. While tariffs (or the risk of them) dominate headlines, and governments and companies globally fret about the consequences, one simple and obvious fact is worth remembering: tariffs only affect physical goods. Although some services trade and investment will get caught up in the turmoil, the same does not hold true for most cross-border investment into research, development, and innovation (RD&I). RD&I activities involving sensitive technologies may be subject to outbound FDI screening, such as the US Outbound Investment Security Program. Otherwise, companies remain free to conduct research (almost) anywhere in the world.

2. For many investment promotion agencies (IPAs), attracting manufacturing investment remains the ultimate prize. ‘The bigger, the better’ still applies for the investment that many IPAs seek to attract. Large manufacturing projects are prioritized because of their job creation and supply chain impacts and potentially transformative nature.

3. However, manufacturing’s share of global FDI has been declining for decades and represented only 13% of greenfield projects globally between 2020 and 2023 (source: UNCTAD). At the same time, corporate expenditures on R&D have been growing rapidly, with data from the World Intellectual Property Organization (WIPO) showing an increase of roughly 40 percent between 2019 and 2023. In most countries, corporate R&D now significantly exceeds R&D spending by governments and academia, reflecting the importance of innovation for companies of all sizes.

Malacca Emerges as Malaysia’s Electric Vehicle Manufacturing Hub

1. Malacca is stepping into the spotlight as one of Malaysia’s most promising electric vehicle (EV) manufacturing hubs. With billions in investment commitments, growing local job creation, and government-backed incentives, the state is positioning itself as a key driver of Malaysia’s green mobility ambitions under the National Energy Transition Roadmap (NETR).

Robotics cluster in Odense, Denmark

 1. What makes a robotics cluster successful? Proximity to university research and talent, government support of entrepreneurship, and a focus on industry end users are all important. Around the world, regions have proclaimed initiatives to become “the next Silicon Valley.” However, there have been relatively few metrics to describe robotics hubs — until now.

2. This week, Odense Robotics in Denmark released a report on the economic returns generated by its member companies. Both the amount of exports and the number of employees have increased by about 50 percent, according to Mikkel Christoffersen, business manager at Odense Robotics.

3. At the same time, the report is realistic about the ongoing challenges facing every robotics cluster, including finding qualified job candidates. As locales from India to Israel and Canada to China look to stimulate innovation, they should look at their own mixes of people, partnerships, and economic performance.

mckinsey on MSME - Part 1 - How MSMEs fuel economy-wide production and jobs

1. MSMEs create enormous value for economies around the world. They account for roughly half of global GDP. That share varies significantly among economies. In Portugal, Israel, Indonesia, Italy, and Kenya (ordered by decreasing share of value added), the share is larger than 60 percent. In the United States, Nigeria, and India, it is less than 40 percent.

2. They are also significant employers, accounting for roughly 40 percent of all employment and 70 percent of employment in the business sector, which we define as excluding the farm, government, and finance sectors. That share is as high as 96 percent in Kenya, where MSMEs account for half of all employment.

Medicon Valley: how the initiative shaped biotech ecosystems in Denmark and Sweden

1. With a combined market value of over $7 billion, the life science sectors in Sweden and Denmark are thriving, with over a thousand healthcare companies being set up over the past few years. Much of this is owing to the cross-border cluster that spans regions of eastern Denmark and southern Sweden, the Medicon Valley.

2. Racking up more than DKK 45 billion ($6.64 billion) in investments, the Medicon Valley is home to Danish multinational company Novo Nordisk, which runs the world’s largest insulin plant. A driver in diabetes treatment, its diabetes pill Rybelsus was approved by the U.S. Food and Drug Administration (FDA) as a first-line treatment to lower blood sugar levels, earlier this year.

3. In the frontline of this cluster is the Medicon Valley Alliance, a non-profit organization that works to strengthen collaboration between the Danish and Swedish life science sector, with an interest in promoting the hub as an attractive destination for setting up healthcare companies, according to David Zepernick, director, member engagement and communication at Medicon Valley Alliance.

'Brainport is an economic success story, but also the place where everyone should have opportunities'

1. The success of the Brainport region is leading to significantly more jobs and residents in the coming years. The region is gearing up for a jump in scale, putting pressure on society. Every resident must be able to participate, but that does not happen by itself. In addition to support from the national government, the business community is investing in measures in the areas of talent development, accessibility, housing and equal opportunities through the Brainport Partner Fund. NXP is one of the companies that have joined the fund. Director Jean Schreurs of NXP Netherlands: “Brainport should not only be an economic success story, but also a place where everyone gets opportunities.”

Malaysia’s Global Minimum Tax: Key Implications for Multinationals

 1. Malaysia has implemented the Global Minimum Tax (GMT) as part of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

2. Under Malaysia’s GMT framework, two key tax mechanisms have been introduced to ensure compliance with the 15 percent minimum effective tax rate. The Domestic Top-up Tax (DTT) applies to Malaysian entities, ensuring they meet the required tax threshold, while the Multinational Top-up Tax (MTT) is designed for MNEs operating in Malaysia to align their global income taxation with international standards.

3. Companies falling below this threshold must file a top-up tax return, with transitional penalty relief available to support businesses during the initial implementation phase.

4. This framework, effective from January 1, 2025, is part of Malaysia’s commitment to aligning its tax policies with OECD guidelines and maintaining competitiveness within the ASEAN region.

What you need to know about China’s green energy certificate regime

1. Following China’s release of guidelines for the promotion of GEC, here is what companies should know if they plan to enter the trading market.

2. Citing GEC rules, global law firm Norton Rose Fulbright noted that these certificates serve proof of the environmental attributes of green energy electricity. One GEC unit corresponds to 1,000 kilowatt-hours of green energy power, with a validity period of 24 months.

3. These certificates are being issued by the Qualification Management Center for Electricity Business of the National Energy Administration.

Aftercare by investment promotion agencies – overlooked or overrated?

1. Aftercare by investment promotion agencies – overlooked or overrated?  

2. Aftercare is key function of investment promotion agencies (IPAs) and most IPAs claim to provide some level of support to existing foreign investors in their location. IPAs should approach aftercare in a targeted way to use their resources effectively and generate the greatest results.

3. There are good reasons for IPAs to focus on aftercare. Helping existing investors to expand can sometimes be easier than attracting new ones, resulting in higher returns on the IPA’s efforts compared to bringing in new investors. Positive relationships with existing investors can lead to “repeat business”, as companies continue to add new (and often higher value) activities to their operations with the IPA’s support. Satisfied investors can also be valuable allies for attracting new investors, by providing testimonials or even referrals to their own corporate networks. In some cases, aftercare interventions by IPAs can prevent companies from leaving or at least mitigate the impact of relocations or closures.

4. Despite the many benefits, our experience shows that only few IPAs place significant emphasis on aftercare. Attracting and supporting new investors typically consumes most of an agency’s resources while aftercare is often done sporadically, when time allows or when changes in the investment environment make focusing on existing investors expedient (for example, during a pandemic).

5. Are IPAs missing an opportunity by not focusing more on aftercare? The answer depends on how an IPA approaches aftercare and what results it wishes to achieve.

What Foreigners Need to Know About Taxable Income in Malaysia

Malaysia operates a territorial tax system, meaning income derived from within the country is subject to taxation. For foreigners living or working in Malaysia, understanding taxable income is crucial to ensure compliance and avoid unnecessary liabilities.

Trump effectively pulls US out of global corporate tax deal

 1. President Donald Trump on Monday declared that a global corporate minimum tax deal "has no force or effect" in the U.S., effectively pulling America out of the landmark 2021 arrangement negotiated by the Biden administration with nearly 140 countries.

2. Trump, in a presidential memorandum issued hours after taking office, also ordered the U.S. Treasury to prepare options for "protective measures" against countries that have - or are likely to - put in place tax rules that disproportionately affect American companies.

3. The European Union, Britain and other countries have adopted the 15% global corporate minimum tax, but the U.S. Congress never approved measures to bring the U.S. into compliance with it. The U.S. has a roughly 10% global minimum tax, part of Trump's landmark 2017 tax cut package approved by Republicans.