Martijn Gemmink, Wybren Kortstra,
Æde Symen Hoekstra, Jacco Brandt
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.
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.
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.
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,
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)
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.
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.
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
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
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
living. There are ideas to build a national system for health care.
Also public transport and infrastructure are important [man].
In this section we compare the legislation in the Netherlands and
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
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,
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].
The law of Malaysia is based on the common law legal system which
was introduced during the British colonisation. Later, in the post
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,
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
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
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
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.
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
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
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.
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
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
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].
4.2.1 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.
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
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
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.
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
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)
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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