Population: 23,953,136

Economy Overview:

Malaysia, a middle-income country, transformed itself from 1971 through the late 1990's from a producer of raw materials into an emerging multi-sector economy. Growth was almost exclusively driven by exports - particularly of electronics. As a result, Malaysia was hard hit by the global economic downturn and the slump in the information technology (IT) sector in 2001 and 2002. GDP in 2001 grew only 0.5% due to an estimated 11% contraction in exports, but a substantial fiscal stimulus package equal to US $1.9 billion mitigated the worst of the recession and the economy rebounded in 2002 with a 4.1% increase. The economy grew 4.9% in 2003, notwithstanding a difficult first half, when external pressures from SARS and the Iraq War led to caution in the business community. Growth topped 7% in 2004. Healthy foreign exchange reserves, low inflation, and a small external debt are all strengths that make it unlikely that Malaysia will experience a financial crisis similar to the one in 1997. The economy remains dependent on continued growth in the US, China, and Japan, top export destinations and key sources of foreign investment.

General Business Practices.

Malaysia was under the British rule since the 17th century until August 31, 1957 when it gained independence. As such, most of our laws follow the British laws very closely. a). Bahasa Malaysia is the official and the first language. English is the second language. However, most of the business transactions are conducted in English and Chinese. The Chinese businessmen usually conduct business through trust and friendship. But this breed of businessmen is slowly dying. In 1987, the Court proceedings and pleadings are in Bahasa Malaysia, but English is still conducted in Court proceedings, particularly in the High Courts and Court of Appeal.. b.) Malaysian Ringgit (RM) is the currency used in business transactions. For every US$1.00 is equivalent to RM2.54.

Collections.

A. Background of Industry.

(A) Traditionally, more than 99 % of the collections are handled by the lawyers in this country. Some loan sharking and credit businesses uses collection agencies, who use strong arm tactics and harassment. This has caused a bad stigma in the eyes of the business community. In Malaysia, there are more than 10 debt collection agencies. However most of them uses strong arm tactics and harassment, which the police clam down on them. This discourages the business community from assigning collection cases to collection agencies. Credit card companies, particularly managed by the banks, are prevented from engaging collection agencies. This is because of the Banking & Financial Institutions Act, which prevent them from assigning collection cases to third parties. Some credit card companies, not under the banks, assigned cases to collection agencies.

(B) Lawyers in Malaysia must have at least a law degree and pass a CLP examination including reading in chambers for one year under a master who has more than 7 years experience as a practising lawyer. They are regulated by the Bar Council. To be a practising lawyer, one must possess an annual practising certificate. They need to have professional indemnity and contribute to the compensation fund each year to the Bar Council. Whereas the collection agencies do not need any licence or bonding requirement as they are not governed by any law. They are basically a company conducting collection business and are not recognised by the authorities. As such, any assignment passed to the collection agencies is solely at the assignors risk.

C. General Procedures.

1. There are many methods undertaken by collection agencies. Whereas Milliken & Craig's method of collection is to contact the debtor, si