Cross Border Investment (CBI), which involves investing across borders between two or more different countries, is a natural progression in any country that has attained a fairly high level of economic development. Over the years, CBI has become increasingly important particularly from the perspective of expanding business horizon and market growth. Therefore, it is timely for Malaysian companies to explore geographical boundaries to expand their market share, penetrate new investment opportunities and further push local companies globally.
Hence, the Malaysian Government continuously encourages Malaysian companies to venture overseas for market expansion, tap new investment opportunities and acquire new technology or source technology partners. In the long term, CBI will enable Malaysian companies to become part of the global production network. CBI also presents opportunity for access to cheaper and abundant raw materials inputs, parts and components. Malaysian investors could explore investment opportunities overseas as an alternative to competitive production costs, tight labour market conditions and depleting local resources.
Additionally, Malaysian companies will also need to take advantage of the opportunities arising from regional and various bilateral agreements, as well as the current global trends in outsourcing. This will allow local companies to take full advantage of Malaysia’s bilateral and regional Free Trade Agreements (FTAs) which could ultimately lead to more business opportunities.
Competition from new developing economies also makes it imperative for local companies to reassess their operational strategies. Based on a study by the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP), companies undertaking CBI will bring major benefits to the country, among others generating financial earnings, enhancing exports, facilitating more domestic investment, transferring know-how and generating employment.
CBI could bring economic benefits to Malaysia in the form of access to new markets, maintaining market share in traditional markets, creating linkages to support the high-technology and knowledge-based industries which Malaysia is targeting as well as acquiring targeted technologies and investment opportunities abroad which could lead to innovation and growth.
The Government recognises the importance of CBI and will continue to encouraging and supporting Malaysian companies that are eager to invest in overseas. This includes accessing new markets, maintaining market share and diversifying into non-traditional businesses.
This is testified by the efforts of MIDA in intensifying its efforts to attract high quality foreign and domestic investments as well as facilitating CBI for local companies. In carrying out its facilitation function, MIDA plans to organise specific Cross Border investment seminars and missions, familiarisation programmes with Organisation of Islamic Countries (OIC) member countries and undertake the Malaysia Technical Cooperation Programme (MTCP). MIDA will also forge closer alliances with key partners such as Investment Promotion Agencies (IPAs), Board of Investments, foreign embassies, international and local chambers, associations and others.
In conclusion, CBI is a vital component of a thriving global economy. By promoting an environment that is conducive for investment, MIDA will continue to facilitate domestic companies on their business projects which include CBI to further drive the economic growth of the nation.
For more information on how MIDA can facilitate your CBI, please get in touch with the Domestic Investment Division at https://www.mida.gov.my/staffdirectory/domestic-investment-division/