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StudyTour Preparation

Martijn Gemmink, Wybren Kortstra,

Æde Symen Hoekstra, Jacco Brandt

September 2016

1

1 Introduction

Malaysia and the Netherlands are vastly different countries, both

with their own (distinct) culture and environment. For companies

that are interested in expanding their business to the other country,

these differences can pose unforeseen situations. This report is a

partial PESTLE-analysis, which is used in business to identify risks

and opportunities in a different country. This report focuses on the

three parts of PESTLE-analysis that are listed below.

• Political

• Law

• Environment

This report contains detailed explanation of each of these three

subjects, covering both, the situation in the Netherlands and the situation

in Malaysia. Additional emphasis is placed on the differences

between the two.

Furthermore, insight in these differences can greatly help developing

ones' cultural intelligence. Cultural Intelligence reflects a

persons adaptivity in different cultures, this can be helpful while

travelling and visiting businesses in Malaysia.

2

2 Political

In this section we will compare the political factors of the Netherlands

and Malaysia. The political factors influence the cost of doing

business in a country. We also give a short overview of the different

parties in the country and the interests the parties in power have.

2.1 The Netherlands

The politics of the Netherlands consists of a parliamentary democracy,

a constitutional monarchy and a decentralized unitary state

[Rijksoverheid, 2016]. Political parties strive towards find a consensus

on important issues.

2.1.1 Monarchy

The Netherlands have a King, Willem Alexander, who succeeded his

mother Beatrix on the 30th of April in 2013 [Hoedeman and Meijer,

2013]. The King is head of state and has the following tasks: signing

laws to make them valid, being office of chair of the council of state,

help forming the cabinet and read the throne speech.

2.1.2 The Government

The government of the Netherlands consists of the King and the

cabinet ministers. The ministers can discuss freely about issues and

new laws behind the closed doors of the Trˆeveszaal at the Binnenhof.

The ministers try to make decisions based on a consensus and can

vote on decisions to make. When a decision is made all ministers

must support the policy publicly. The ministers are responsible for

their actions as a collective and must gain the trust of the States

General. The prime minister is the head of the cabinet, currently

this is Mark Rutte of the VVD. The States General, Dutch Parliament,

consists of the Second Chamber (Lower House) and the First

Chamber (Upper House). The Second Chamber contains 150 seats,

3

which are filled to ratio by the votes of the people during the election.

The members of the Second Chamber has the right to initiate

new ideas or changes. Elections for the Second and First Chamber

are once every 4 year, if the cabinet does not fall. The largest

parties together form the government and the cabinet. The other

parties form the opposition. The First Chamber has fewer rights

than the Second Chamber. They mainly check the correctness of

laws and decisions made by the Second Chamber. Elections for the

First Chamber are also once every 4 year.

2.1.3 Political Parties

The Netherlands has 11 political parties either in the Second or

First Chamber. The largest parties in the Second Chamber are the

VVD (People's Party for Freedom and Democracy) (41 seats) and

PvdA (Labour Party) (38 seats), they also form the cabinet and the

government. The largest opposition parties are SP (Socialist Party)

(15 seats), PVV (Party for Freedom) (15 seats), CDA (Christian

Democratic Appeal) (13 seats) and D66 (Democrats 66) (12 seats)

[Nederland, 2012].

2.1.4 Scandals and Corruption

The politics on the Netherlands have not been free of scandals. The

citizen of the Netherlands have the lower trust in the government

compared to other European countries [vrij nederland, 2013]. Most

scandals involve embezzling of money, abuse of power, but also minor

things like watching porn. The corruption index in the Netherlands

is according to International [2015b] 87.

2.1.5 Political Ideas

The Dutch politics are currently controlled by the PvdA and the

VDD who are together in the cabinet. This means that the focal

points are among other thing improving infrastructure, less state

interference, improving education and improving military.

4

2.2 Malaysia

The Malaysian politics consists of a federal representative democratic

constitutional monarchy. This means thats every of Malaysias

13 states has its own government with one federal government. The

governments are chosen by the people of Malaysia. The head of state

of Malaysia is Yang di-Pertuen Agong. The prime minister is the

head of the government.

2.2.1 Monarchy

The monarch of Malaysia, Yang di-Pertuen Agong (YDPA), also referred

to as Supreme King of Malaysia. He has the power to exercise

based on advise of the government, exercise based on his own judgement

and to pardon, reprieves and respites of sentences. YDPA is

one of the few selected monarchs. Of the 13 states in Malaysia, 9

have hereditary royal rulers. These 9 rulers decide, based on rotation,

once every 5 years who will be the YDPA.

2.2.2 The Government

The government of Malaysia looks a lot like the Westminster parliament

system [FITA, 2006]. The party's leader that gains the

majority of the seats in the Lower House of the parliament during

the elections becomes the prime minister. The prime minister is

confirmed by the YDPA and has to serve a term of 5 years. Prime

Minister holds the executive powers which include implementation

of the law and day-to-day affairs of the country. The cabinet is appointed

by the prime minister from the members of the parliament.

The Lower House or Dewan Rakyat contains 222 seats, and the Upper

House or Dewan Negara 70 seats [commissionar of law revision

Malaysia, 2006]. Based on advise by the prime minister, 44 Senators,

Upper House members, are chosen by the King and 26 by state

legislative assemblies. Senators may only be reappointed once and

the maximum term is 3 years. The Dewan Negara serves mostly to

check the Dewan Rakyat. However, its powers have been limited

5

to only delaying a bill for a maximum of a year. Members of the

Dewan Rakyat can remain for as long as the member wins a seat

during the elections. The maximum term of office is 5 years, after

that there will be elections. Parliament is responsible for passing,

amending and repealing acts of law.

2.2.3 Political Parties

Since the independence of Malaysia in 1957 the United Malays National

Organization (UMNO) is the largest party in the country under

the coalition known as Barisan Nasional. The prime minister has

always been from the UMNO. Opposition parties are: People's Justice

Party (Parti Keadilan Rakyat in Malay, PKR), Pan-Malaysian

Islamic Party (Parti Islam se-Malaysia, PAS) and the Democratic

Action Party (DAP). Barison Nasional has always controlled a large

amount of seats in parliament, with its top in 2004 when they controller

92%. Currently they control 130 of 222 seats.

2.2.4 Scandals and Corruption

Malaysian politics have also seen corruption scandals. In 1998 the

Prime Minister Mahathir bin Mohamad accused Deputy Prime Minister

Anwar Ibrahim of immoral and corrupt conduct. Anwar was

later that year convicted and sentenced 6 years in prison. His conviction

was seen by the international community as an act to silence

the political opponent of Mahathir. Also the judiciary is theoretically

independent of the executive and legislative. However, executives

have some influence in appointing the judges for the courts.

The corruption index of Malaysia is according to the International

[2015a] 50.

2.2.5 Political Ideas

Barison Nasional, the largest party, has its focus in developing the

country. Improving the living standards of citizens by improving

6

living. There are ideas to build a national system for health care.

Also public transport and infrastructure are important [man].

7

3 Law

In this section we compare the legislation in the Netherlands and

Malaysia.

3.1 The Netherlands

The foundation of Dutch law was first introduced by the French,

when Napoleon conquered the Batavian Republic and forged the

Kingdom of Holland. With this kingdom, they introduced their own

legislative system: the Code Civil.

When Napoleon was defeated, the Dutch created a new (civil)

law based on the Code Civil, complemented with small parts of the

old Roman law [Cliteur, 2005].

3.1.1 Religious laws

Besides the regular Dutch law, there is a small part left for some

form of religious law in the Netherlands. However, this law can only

concern cases that deal with internal issues that have not otherwise

been regulated by the regular law, such as testing the validity of a

christian marriage.

3.1.2 Europe

Furthermore, The Netherlands is a member of the European Union,

whose purpose is to regulate several matters on an international

level. This means that the European Union can introduce laws to

the Netherlands. If those laws interfere with national legislation,

the European law will be more important than the (possibly older)

Dutch law. Besides these laws, the European Union can also introduce

guidelines on certain subjects. These guidelines are not enforced

immediately, but have to be implemented by the Netherlands,

within two years, as a law that covers those guidelines [Rijksoverheid,

2014].

8

3.1.3 Labour laws

In 2015, the Dutch government replaced the labour law to make it

easier for companies to fire their employees. However, the Dutch law

does still not allow dismissals without a valid reason. Each involuntary

dismissal of an employee is evaluated by a specific government

institution, to check whether it was done with valid reasoning. Examples

of this valid reasoning include: serious misbehaviour (such as

theft) and a not functioning employee. It is, however, the responsibility

of the company to try and educate, guide, or (if possible) even

relocate the not functioning employee. Even if a company needs to

let employees go because of their financial situation, this should first

be evaluated by a qualified judge [NationaleAdviesbalie].

Furthermore, if the employee did not leave voluntarily and did

not misbehave seriously, he or she is entitled to a compensation up

to his or her annual salary [Rijksoverheid, 2015].

When an employee gets sick, this cannot immediately be a reason

to fire this employee. He or she is the first two years of illness entitled

to his or her salary. If, after those two years, there is still no change

of the employee returning within half a year and the employer has

done everything it can to help the employee get back, the employer

is entitled to fire this employee [JuridischLoket]. Working overtime

is most often not mandatory, but optional (with exceptions). These

exceptions are branch-specific and are described within the collective

employment agreement. This collective employment agreement also

specifies the reward or compensation that should be awarded to the

employee. This compensation can be the usual hourly wage, an

increased hourly wage, hours off on other days or simply nothing

(like in branches where someone is being paid for the work done,

not for the hours worked) [Loonwijzer.nl].

3.2 Malaysia

The law of Malaysia is based on the common law legal system which

was introduced during the British colonisation. Later, in the post

9

colonial era, Malaysia adopted the common law system in the law

system but also adopted the Islamic law into the law system.

3.2.1 Syariah courts

The constitution of Malaysia states that the federation has no jurisdiction

in respect of any matter within the jurisdiction of the

Syariah courts . This provides the basis of the dual justice system cite

in the country. The Syariah court system practices the Islamic law

known as the sharia law and applies to Muslims only. The Syariah

court is limited in what punishments they can issue, any offence can

be punished with at most three years of imprisonment, a fine of at

most five thousand ringgit or at most six strokes from the whip [sya,

2006].

3.2.2 Common law

Apart from the written laws, there are also unwritten laws that

can only be found in case decisions. These laws are known as the

common law or case law. These laws apply in situations when there

are no laws governing that particular situation. First Malaysian

case law is applied and when no suitable Malaysian case law can be

applied, British case law is applied . cite

3.2.3 Government policies

The Malaysian government is aiming to become a global leader in

the tech-industry. For this reason, they have introduced the so-called

MSC Malaysia status. This status is awarded to tech-companies that

comply to some requirements which are easy-to-match for foreign

companies, such as proximity to a research centre and infrastructurereadiness.

Companies with a MSC Malaysia status acquire benefits,

such as tax-exemption for 10 years and easy ways to hire foreign

talent [MDEC].

10

3.2.4 Consumer laws

The Consumer Protection Act 1999 is an act which provides legislation

for strict protection for consumer. Under the act, consumers are

protected from products, services, and manufacturing processes that

may cause harm to health and life. The Ministry of Domestic Trade

and Consumer Affairs has the right to make the manufacturer recall

unsafe products, prohibit sale and marketing, and disclose all information

related to the unsafe product to purchasers. Manufacturers

can be imposed to repair or replace the product or to refund. The

act also imposes that consumers have the right to claim damages for

unfair practises of the distributor or manufacturer.

3.2.5 Labour laws

Working hour laws are strict in Malaysia. An employee may not

work more than 8 hours per day and a maximum of 48 hours per

week. Employees have the right on a half hour break each 5 hours.

Also the laws on overtime are strict, an employer cannot require an

employee to work overtime, although, there are a few exceptions.

When it is agreed to work overtime, the employee is paid at least

1.5 times the normal pay.

Each employee has right on paid annual leave in addition to

regular holidays and off days, eight days every twelve months if the

employee has been employed for less than two years, twelve days

every twelve months if the employee has been employed more than

two years but less than five. If the employee has been employed for

more than five years, he has the right on sixteen days paid leave

every twelve months. Employees have also the right on paid sick

leave, when no hospitalisation is required, fourteen days, eighteen

days and twenty-two days for the same employment durations as

paid annual leave. When hospitalisation is necessary, the sick leave

may be up to 60 days every year.

It is relatively easy for both the employer and employee to terminate

a contract of service. Either party has to give notice that

11

he intents to terminate the contract of service. The time of notice

depends on the length of the employment. The time is four weeks if

the employee has been employed for less than two years, six weeks

if the employee has been employed between two and five years and

eight weeks if the employee has been employed for over five years.

There are special cases in which the time of notice does not hold.

Such cases include not appearing at work for several days without

notice.

3.2.6 Cyber laws

Like other countries, the Internet usage has grown rapidly in Malaysia

in the past decades. In 1999 the Communications and Multimedia

Act 1998 act was in acted in order to provider a regulatory framework

for telecommunications and computing companies with in mind

to make Malaysia a global hub for digital services. The country also

has also thorough laws to prevent copyright infringement. It is illegal

to transmit copyrighted material over the Internet without authorisation.

It is also illegal to circumvent technological measures aimed

at restricting access to copyrighted material.

12

4 Environmental

There are large environmental differences between The Netherlands

and Malaysia, in this section these differences are identified and investigated.

Things that are considered here are the geographical

location, the climate, waste disposal laws, energy consumption regulation

and people's attitude towards the environment.

4.1 The Netherlands

4.1.1 Geographical location

The name of this country in West-Europe literally means 'lower

countries', this is because of its low and flat geography, with only

50% of its land exceeding one meter above sea level. The capital

of the Netherlands is Amsterdam with a population of 900 thousand.

The Netherlands has around 17 million inhabitants in total

and a land mass of almost 42 thousand square kilometres, therefore

the country has a large population density (410.5 per km2

). The

Netherlands are part of the Kingdom of the Netherlands that also

includes three island territories in the Caribbean. Because large

parts of the country (26%) are below sea-level the changing environment

and its effects are posing real threats. After the devastating

North Sea flood of 1953, The Netherlands began on a large project

to protect the country from the sea. The Delta Works were born,

the project consists of dams, sluices, and storm surge barriers that

shorten the Dutch coastline, so fewer dikes had to be raised. The

largest and most famous storm barrier is the Oosterscheldekering

which is 9 kilometres long. The Dutch are internationally seen as

experts on the area of water management, helping other governments

around the world against the dangers of the changing environment.

4.1.2 Climate and weather

The main climate in the Netherlands is a moderate maritime climate,

with cool summers and mild winters, and typically high humidity

13

along the coastline. The differences in temperature are therefore

much smaller along the coastline than in the southeast of the country.

Ice days usually occur from December until February.

4.1.3 Waste

The waste disposal regulations in the Netherlands are on of the best

of the European Union as stated in a recently published report [EU,

2015]. But they can still improve the situation by intensifying the

decoupling of waste from consumption and the usage of pay-as-youthrow

(PAYT) systems for municipal waste.

4.1.4 Energy consumption

The Netherlands rely heavily on natural gas for heating, 40% of the

energy consumption in the Netherlands is from natural gas. The

country itself also has gas fields, primarily in the North, but because

of earthquakes the production has been reduced. As part of

an European Union wide plan to reduce the greenhouse gasses The

Netherlands need to reduce their greenhouse gasses by 20% in 2020.

But because of the lower production of natural gas, electricity production

became more reliant on the more polluting coal. In 2015

The Netherlands even reported a 5% rise in greenhouse gasses, this

makes the goals for 2020 even more complicated. In a recently published

report the Dutch Government also acknowledges the fact that

coal energy plants are not part of the future energy supply and they

see a lot of opportunities for wind, solar and water renewable energy

sources.

4.1.5 Attitude towards the environment

As a country with more bikes than people and to the outside world

the Netherlands is generally assumed to be one of the most ecoconscious

countries in Europe. However, compared to other European

countries, the Dutch are not very green at all. The Dutch

14

people have great intentions to buy environmentally friendly products

and with good schools people are also more likely to become

‘green' customers. People in the Netherlands believe that the environment

is an important factor for the quality of life. The Dutch

people trust scientists and environmental protection organisations

as sources of environmental information [EU, 2008].

4.2 Malaysia

4.2.1 Geographical location

Malaysia is a tropical country located in Southeast Asia and is divided

by two similar sized regions separated by the South China

Sea. The first region is called Peninsular Malaysia and it shares its

land borders with Thailand and Singapore. The second region is

called East Malaysia and it shares its borders with Indonesia and

Brunei. With a land mass of around 331 thousand square kilometres,

Malaysia is almost 8 times larger than the Netherlands. But

with a population of 31 million inhabitants the population density

is much lower at only 92 per km2

. The capital city of Malaysia

is Kuala Lumpur, which is located in Peninsular Malaysia and has

around 1,6 million inhabitants.

4.2.2 Climate and weather

The two parts of Malaysia share a similar landscape with both regions

feature coastal plains rising to hills and mountains. The main

climate in Malaysia is a tropical rain forest climate that lasts the

entire year. But what is really astonishing is the huge biodiversity

of Malaysia which is estimated to contain 20% of the world's animal

species. Deforestation is a large problem in Malaysia, for example

over 80% of the Sarawak's rain forest has been cleared. Floods in

the country have been worsened by the loss of trees. With the current

rates of deforestation the forests are predicted to be extinct

by 2020! The Malaysian government has been accused of favouring

large businesses over the environment.

15

4.2.3 Waste

The rapid economic development of Malaysia and the population

growth makes the management of municipal solid waste become

one of Malaysia's most critical environmental issues [Agamuthu and

Fauziah, 2010]. Recently a new institutional and legislation framework

has been structured with the objective to create a holistic, integrated,

and cost-effective solid waste management system, with

an emphasis on environmental protection and public health. In

2015, Malaysia reported an recycling rate of 17.5%, Singapore and

Thailand for example have a recycling rate of around 60%. Even

though Malaysia has a long way to go for environmental sustainability,

new legislation improves the situation each year. With the new

promotion of solid waste management plan Malaysia not only en- Cite

hances social, economic and environmental efficiency, and promotes

sustainable development, but it can also help resolve the dual crisis

of nonrenewable resources and environmental degradation. The

main goal of Malayasia's Vision 2020 [Mohamad, 2001] is to modernize

and develop the country based on its own model and develop

that nation economically, politically, socially, spiritually, psychologically

and culturally. The main goals of Vision 2020 is to modernize

and develop our country based on its own model and develop that

nation economically, politically, socially, spiritually, psychologically

and culturally.

4.2.4 Energy consumption

Almost half of the GDP of Malaysia is generated by the state-owned

oil and gas company Petronas (45%). Malaysia therefore is very

reliant on fossil fuels but in recent years tourism is becoming more

and more important. Because of the rapid growth of the country,

the energy consumption per household is rising to values found in

developed countries. In 2010 36% of the electricity production came

from burning coal. It is estimated that the energy consumption of

Malaysia reaches 18,947 MW in 2020 and that renewable energy

16

only accounts for 10% in that year. For a developing country however,

Malaysia is an important subscriber to the reduction of climate

change and promoting a sustainable environment. In overall we see

that Malaysia is aware of its role in formulating national development

policies, sensitive towards cause and effect in the country's development

to the environment and utilization of energy resources, as

well as conscientious and responsive towards the call for sustainable

development not only domestically but also internationally [Chua

and Oh, 2010].

4.2.5 Attitude towards the environment

It is often said that Malaysia and its people are more focused on

economic growth than on environmental sustainability, for example

the construction of new dams that have a huge impact on the

environment do not translate into large demonstrations. Because

the Malaysian people are on average not very wealthy, it is more

understandable that they often choose for cheaper, more polluting

products instead of environmentally friendly products.

17

5 Conclusion

The Netherlands and Malaysia both have a democratic constitutional

monarchy. The monarch in the Netherlands is defined by

heritage and once stepped down its first descendant takes over. In

Malaysia there are 9 sultans who take turns in being King of the

country. Also in the Netherlands the king has no real power, whereas

the King in Malaysia can influence the government by accepting or

denying laws.

Both the Netherlands and Malaysia have multiple parties. Malaysia

has one party, or coalition, who is at power, the Barisan Nasional.

In the Netherlands there is always a group of different parties, with

different ideas that must work together to have a majority.

The government structure in both countries are similar. Both

have an Upper and a Lower Chamber. Where the Lower Chamber

make the laws and decisions and the Upper Chamber checks if there

are no mistakes or contradictions with the constitutional laws for

instance. Both countries have a cabinet and a prime minister. The

election of the government is also similar.

The difference between policy in Malaysia and the Netherlands

can be explained by the development of both countries. The Netherlands

are further developed than Malaysia. The policy with the

Malaysian parties lie more in developing and improving the basic

life needs, whereas the policy in the Netherlands is concentrated on

improving the existing systems.

With very different climates The Netherlands and Malaysia do

not have anything in common, this also holds true for their environmental

concerns. In The Netherlands the rising sea-level and

the fact that 26% of the land mass lies below it is posing a real

threat for the future. Meanwhile they fail to reduce their emission

of greenhouse gasses and increase the percentage of renewable energy

sources to reach the 2020 20% reduction compared to 1990.

Both The Netherlands and Malaysia share this problem, the lack of

using renewable energy sources. Both countries (compared in 2010)

18

only produce about 1% of their energy in a renewable sustainable

manner. The environment of Malaysia is suffering from extreme deforestation

and the resulting floods. As almost every country in the

World, Malaysia and The Netherlands are struggling to create a sustainable

environment that is economically feasible. As a developed

country The Netherlands have an almost optimal waste management

system whereas Malaysia is struggling with the growth and the waste

that it is producing. But also the people and their perspectives are

more economically minded instead of environmentally. Interestingly

The Netherlands is often marked as an eco-friendly country with its

many bikes and wealthy population, but they under perform compared

to other to other West-European countries like Germany or

France. The Malaysian government on the other hand do value economic

growth more than the environmental deprecation.

A big difference between the law in The Netherlands and Malaysia

is that, besides the regular courts, Malaysia also knows the Syariah

courts, a court enforcing Sharia (Islamic laws). The Syariah court

can deal with issues that the regular court would usually deal with

for non-muslim people. The only religious court in the Netherlands

can, on the contrary, only deal with faith-associated issues

that have not otherwise been regulated by law. Another big difference

is that Malaysian courts can sentence people to caning or

even death, besides the 'common' sentences as imprisonment and

fines. A big plus for ICT-companies in Malaysia is the regulating

regarding the Malaysian MSC status, which ICT-companies can acquire.

This regulation gives companies huge benefits, such as a 10

year tax-exemption, which can certainly boost their performance.

This Malaysian MSC status is something that both local and foreign

companies can get, and was introduced in order to boost the

ICT-industry in Malaysia. labour law

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