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Malaysia second most favourable country for foreign investment in Southeast Asia — Standard Chartered

Malaysia second most favourable country for foreign investment in Southeast Asia — Standard Chartered

24 Mar 2021

European and US companies have ranked Malaysia as the second most favourable Southeast Asian country for opportunities to establish or expand their sourcing, selling or operations over the next six to 12 months, according to study commissioned by Standard Chartered. 

In a report titled “Borderless Business”, Standard Chartered revealed that chief financial officers (CFOs) and treasurers in the US, the UK, Germany and France indicated that despite uncertainty caused by the global pandemic and its associated economic repercussions, overseas markets remain key to growth.

Geographically, Standard Chartered said, respondents see Asia remaining a growth region with over 85% operating and implementing in Asia or considering it for business activities. 

Among respondents who considered Asia as the most promising growth region, Japan topped the list (42%) as the most preferable destination for foreign investment, followed by China (36%) and Australia (34%) 

Malaysia was ranked ninth in the list, three notches below Singapore which was ranked sixth. 

Meanwhile, Africa and the Middle East also saw a marginal increase (up 4%) as potential growth markets over the next six to 12 months. 

Despite the ambition to expand internationally, the study also showed that understanding the regulatory requirements in overseas markets remains the greatest obstacle (35%) for companies that are looking to expand or strengthen their international operations.

This is followed by the need to build relationships with suppliers and adapt supply chain logistics (21%). 

“With regulations noted as the number one concern among respondents looking to expand overseas, it could suggest an opportunity for Malaysia to potentially increase foreign investment through greater awareness of the ease of doing business locally,” said Standard Chartered. 

Additionally, the study also revealed incremental emphasis towards investing in digital technology, unlocking trapped cash and increased focus on environmental, social and governance (ESG) issues in relation to trade and supply chains.

In 2020, the Malaysian Investment Development Authority (MIDA) reported that foreign direct investment (FDI) in Malaysia stood at RM64.2 billion.

Standard Chartered said that the government’s newly launched Malaysia Digital Economy Blueprint (MyDIGITAL) is poised to accelerate Malaysia’s ambition to become a technologically advanced economy, bolstering support for high-profile foreign investment projects, including Fortune 500 companies in the manufacturing and services sector. These will account to a combined potential investment value of RM81.9 billion.

Standard Chartered Malaysia managing director and chief executive officer (CEO) Abrar Anwar said: “Building on our strong legacy of 146 years in Malaysia, we are deeply committed to facilitating economic growth of the nation.

“Malaysia is an important growth market for Standard Chartered, and we will continue to invest in technology to help our retail, commercial and institutional banking clients prosper and grow. 

“Such increased confidence in the country, coupled with Standard Chartered’s strong presence in Asia, Africa and the Middle East – right at the heart of global trade routes – readily connects the world to Malaysia and Malaysia to the world.”

Abrar added that sustainability, digitisation and the need to understand regulation are not just key to how business will be conducted as they are also opportunities for companies to increase operational efficiency, grow internationally and stay ahead of the competition. 

The study was conducted in November to December 2020, with 1,000 CFOs and senior treasury professionals of companies with a turnover exceeding US$500 million (RM2.06 billion) in the US, the UK, Germany and France taking part in the survey.

Source: The Edge Markets

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