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Malaysia’s capabilities as a preferred global investment hub

Malaysia’s capabilities as a preferred global investment hub

23 Aug 2022

Located strategically at the heart of Asean, Malaysia remains an attractive investment destination for business growth and global expansion. In the last 50 years, the continuous inflow of foreign direct investment (FDI) has been the catalyst of Malaysia’s booming economic development. Such mileage has also fuelled Malaysia’s export-oriented growth strategy and accelerated socio-economic transformation throughout the nation.

As we look forward amidst new challenges, we must zero in on what we can uniquely contribute to the development of Malaysia. The opportunity ahead requires us to reimagine our work done in the past, to execute strategic approaches that will elevate our beloved nation. We have been actively involved in the promotion of Malaysia’s competitive economy, which is paramount in order to provide a stronger foundation for the attainment of sustained growth and development, particularly in the process of transformation towards becoming a developed nation.

Our efforts are focused and concentrated on developing new clusters and industry capacities aligned to global changes and demands, to ensure our position as a regional leader is maintained and strengthened. We achieved RM42.8 billion in approved investments recorded for the first quarter of 2022. Malaysia received the highest ranking by Milken Institute as the No.1 destination for FDI in the Southeast Asia region. This is one of the testaments to the confidence our stakeholders have in our capabilities to attract and facilitate high-value, knowledge-intensive investments.

We aim to create a sustainable investment ecosystem with the right landscape, technology, talent and growth strategies to position Malaysia as a competitive investment destination for global players. The nation, through its long-term strategies like the Twelfth Malaysia Plan (12MP) and the National Investment Aspirations (NIA), is mapping a new path towards economic diversity and complexity. Achieving this objective would also mean the development of domestic investments and facilitating the growth of Malaysian companies. We aim to develop Malaysian conglomerates, help Malaysian companies rise up in the global value chain, scale local companies to achieve international standards and deliver technology acquisition support for Malaysian-owned companies.

Gaining Insights

Malaysian Investment Development Authority (MIDA), through its presence via its 20 global offices, gathers valuable information and insights on emerging industries and sectors that can be leveraged by Malaysia.

Identifying emerging industries is the initial step, which then leads to a wider process of identifying Malaysia’s capabilities and readiness to support these industries in this region.

Our exploratory efforts have consistently led to Malaysia’s expanding economic sectors. From advancing the growth of heavy industries to meeting the demand of a global electrical and electronics supply chain, we have now transitioned our focus to realising a robust digital economy. 

The idea is not only to create a conducive environment for investors in existing and emerging fields, but also to develop sustainable industry ecosystems.

The ecosystem must include investment incentives for the long run, growth policies and roadmaps for each industry, a highly capable workforce, R&D (research and development) capacity, and global supply chain access and quality.

Our unique propositions to the world players extend beyond our geographical and economic strengths to our access and industrial leadership within the region, growth support, homegrown talent and digital landscape, which assures investors that our role extends beyond approving investments. We are invested in the growth and expansion of our investors.

Progressive Growth Targets

The National Investment Aspirations, as announced in 2021, outlines some key structural growth needs for Malaysia to remain competitive in the global market as an investment destination.

The efforts under the NIA will look at increasing economic complexity by exploring the entry of more complex and high-value industry clusters. This has been actively undertaken since 2019 and even through the pandemic, by identifying new clusters that can expand our economic prowess. During the pandemic, sectors which continued to grow and expand included digital economy sectors, medical devices, pharmaceuticals, electrical and electronics (E&E) and food technology.

In support of these new clusters, the talent pool in Malaysia needs to be future-ready. Educational and skill-based development are underway, with emphasis placed on technological capabilities.

The nation’s talent ranked 26th out of 88 countries in the Global Talent Competitiveness Index 2020 (GTCI 2020). NIA aims to provide high-value job opportunities through strategic investments to a growing and ready talent pool in Malaysia.

Another aim is to extend domestic linkages by increasing local vendors’ participation in the global supply chain. Local R&D and innovation efforts will be expanded, alongside negotiated opportunities by investors through proactive vendor management programmes.

Malaysia must adopt new comprehensive approaches to reinvigorating the investment ecosystem, respond adequately to emerging megatrends and the evolving needs of our investors, and drive Malaysia’s economic competitiveness.

The NIA has been central to revitalising Malaysia’s investment climate, attracting high-quality investments into the country and creating high-income jobs. NIA will be the catalyst for Malaysia’s transformation into an ideal regional investment hub. Through the development of the five sectors, identified as economic propellers, namely E&E, pharmaceuticals, digital economy, aerospace and chemicals, we would be able to accelerate the production volume of sophisticated products and services and R&D activities to innovate our offerings, thus increasing our export output and economic diversity.

Moving ahead of our regional counterparts, Malaysia is fully committed to Environmental, Social and Governance (ESG) compliance. In virtue of doing business in Malaysia, we aim to lead our investors and local industry players to adopt and implement ESG proactively. Bound by our zero-carbon commitment, our roles as investment promoters and economic frontliners include efforts to zoom in on investors who can contribute to a better world.

Constant Growth

Transcending the idea of merely being a mill space to churn out mass production, Malaysia has over the last two decades built a stronger foundation to position ourselves as knowledge partners and a regional base for global players in the fields of E&E, medical, automotive, aerospace, chemicals, global service delivery and more.

Some global innovators whom we have had the honour of facilitating the deployment of their new investments recently include Infineon Technologies, Intel, AT&S, Risen Solar, Smith+Nephew, Porsche, Mercedes Benz, SK Nexilis, Nexperia, Dexcom and Microsoft.

MIDA, with over five decades of experience and adaptability, understands the needs of investors and fosters collaborations with relevant and supportive partners in developing an industrial ecosystem and reliable supply chains to cater to business requirements.

Supporting networks like licensing, financing, local suppliers, talents, state government support and more, are carefully cultivated and mobilised for our existing and potential investors, as happy investors mean growing investments and more job opportunities for Malaysians. 

While bringing in global players is a focus, we also want to initiate new Malaysian conglomerates through local investments. Increasing participation of local companies in global supply chains will help strengthen our local ecosystem for each industry. However, in our quest for continuing high growth, we are also taking steps to ensure that ESG considerations are not neglected, in line with our philosophy of sustainable development, as envisaged in the United Nations’ Sustainable Development Goals (UNSDG). A holistic investment ecosystem creates the ability to regenerate and sustain our economic diversity in the long term.

Datuk Arham Abdul Rahman is the Chief Executive Officer of the Malaysian Investment Development Authority (MIDA). 

Source: The Edge Markets

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