Malaysia set to draw more carbon neutral FDI
06 Mar 2023
Malaysia stands the chance to attract more foreign direct investment (FDI) into its carbon neutral projects with the Asean region doubling down on sustainability commitments, according to HSBC Malaysia.
Its head of global banking Christina Cheah told StarBiz the country’s persistent drive to develop and upgrade its infrastructure and align it with the region’s sustainability targets is opening up wide-ranging opportunities.
“In the recent Budget 2023 announcement, the government highlighted that it has earmarked a total of RM99bil for development expenditure, and we expect a substantial portion will be geared towards specifically sustainable projects which fit with global investor appetite.
“Malaysia also plans to increase the share of renewable energy sources in its installed capacity to 31% by 2025, and 40% by 2035 under its power generation plan.
“The country’s commitment to large-scale solar power growth as the main source of the renewable energy mix, in addition to hydropower, gives the private sector a market signal to back projects in this space,” she said.
On a different note, she said one of the plus points for Malaysia to attract more FDIs is because the country is one of the net energy exporters in Asia, noting that it continues to benefit from the recent commodity upcycle.
This is particularly the case as demand strengthens for oil and gas while at the same time, geopolitical matters have led to supply chain issues, she noted.
HSBC Global Research predicts that despite a global slowdown, the supply squeeze and China’s reopening would likely keep commodity prices elevated in 2023.
This would create significant opportunities for investors looking to invest in the commodities sector in the country.
She said the electrical and electronics (E&E) industry specifically continues to contribute significantly to the nation’s manufacturing ecosystem.
According to Malaysian Investment Development Authority, (Mida) from January to September 2022, E&E products contributed 39.8% or RM57.41bil of Malaysia’s total exports, which amounted to RM144.31bil.
Cheah said the country already has a robust E&E ecosystem and houses prominent multinational corporations.
“This has been instrumental in establishing its position as a major hub for global chip assembly, chip testing and packaging process. Additionally, a deep supply chain already exists and is becoming deeper all the time.
“Data centres too are gaining traction as a prospective investment asset in Asean.
“In Malaysia, the rollout of 5G and the accelerated move to digital has considerably boosted the amount of data being transmitted and stored, resulting in an increasing demand for data centres and opening up new opportunities in this space,” she said.
Meanwhile, HSBC head of global banking for South Asia and global head of real asset finance Stuart Lea said Asean needs to reignite FDI against an already shrinking global supply.
He said ways to achieve this could be through reforms to make it easier for multinationals to invest in the region, and Malaysia continues to enhance incentives to encourage quality investments.
To grasp the opportunities that digital presents, he said Asean is working to create an integrated digital ecosystem.
For digital to play a key role in driving the development of new industries and new growth at a local and international level, national standards need to converge on a regional standard, he said.
Lea added: “Banks will continue to play a key role in working with the governments across the region to build the ecosystem and administration essential to attract more FDI into preferred sectors.
“Banks also continue to provide essential services for companies looking to expand abroad and invest in the region.
“This includes merger and acquisition advice, capital markets financing, project finance, working capital, cash management, trade finance and foreign exchange.”
HSBC has played an active role in the development of the economies and infrastructure of Asean for the past 150 years.
And as a key connector in the business community with an unparalleled international network, he said it has been fostering the development of trade and investment between Malaysia and the wider world.
“The bank’s extensive collaboration with the federal and state government investment promotion agencies, chambers of commerce and business communities in Malaysia, inclusive of Mida, InvestPenang and Malaysia Digital Economy Corp, is a demonstration of our significant support of the government’s growth ambitions,” Lea said.
Source: The Star