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Selangor, the economic powerhouse of Malaysia

Selangor, the economic powerhouse of Malaysia

28 Aug 2020

Year after year, Selangor has never failed to contribute the biggest slice of the cake to the nation’s GDP compared to other states.

Despite grappling to contain the after-effects of Covid-19 for a good part of this year, according to the state’s investment promotion agency, Invest Selangor Bhd, it has already secured several projects involving multinational corporations (MNCs).

CEO Datuk Hasan Azhari Idris (picture) said although the state is not excluded from the economic damage caused by the pandemic, Selangor remains an attractive investment destination.

“Despite the ongoing pandemic, we have seen aggressive domestic business expansion this year in industries such as food and beverages, and plastics and rubber products. We are expecting more in the coming one-year period.

“We look forward to assisting expansions of existing players in Selangor, while also attracting new ones to complete our industrial ecosystem,” he told The Malaysian Reserve (TMR) recently.

Hasan said while Invest Selangor emphasises on attracting foreign direct investment (FDI) into the state, it has not neglected domestic direct investment (DDI).

According to the statistics by the Malaysian Investment Development Authority last year, Selangor was the highest recipient of DDI as Invest Selangor successfully obtained RM6.63 billion.

“That is approximately 39% of total investment obtained in 2019 and we hope the trend will continue this year,” Hasan added.

Selangor over the Years

Selangor has always been Malaysia’s economic powerhouse and the highest contributor to the national GDP for over a decade.

“For many years, Selangor’s economy has been growing at a higher pace than the national rate. 2019 was no different, seeing a nationwide highest growth of 6.7% compared to the national growth rate of 4.3%.

“This translated into a remarkable contribution of 24.2% to the national GDP, up from 23.2% in 2017 and 23.7% in 2018,” Hasan said.

Over the last five years, the state has seen a steady growth in its number of total manufacturing capital investment, number of approved projects and the resulting potential employment.

In 2015 and 2016, there were RM7.96 billion and RM7.88 billion in total manufacturing capital investment that led to 222 approved projects (14,139 jobs created) and 242 approved projects (16,427 jobs created) respectively.

For 2017, Invest Selangor recorded RM5.59 billion in total manufacturing capital investment with 202 approved projects (10,031 jobs created) and in 2018, a total of RM18.95 billion manufacturing capital investment led to 241 approved projects (18,475 jobs created).

“Selangor’s most impressive economic performance was recorded in 2019 with 315 approved projects, leading to 21,085 jobs created.

“Undoubtedly, this admirable track record backs Selangor’s reputation as the preferred investment destination in Malaysia.”

Hasan said the manufacturing sector continues to be the state’s prime mover.

“Selangor has RM17.04 billion in total manufacturing capital investment, an amount that is the highest in 2019 and the second highest in the past 25 years,” he shared.

Addressing the Impact of Covid-19

Global FDI flows are expected to plunge 40% this year from the US$1.54 trillion (RM6.55 trillion) registered in 2019.

As for Asia, FDIs are forecast to fall between 30% and 45%. The Asean region including Malaysia are expected to face downward pressure on FDI inflow as well.

However, Hasan believes the future outlook is still highly uncertain.

“The prospects of FDI flow will depend on how long the health crisis will last and the effectiveness of policies mitigating the pandemic’s economic impact.”

The pandemic’s immediate impact on FDI can be seen when the lockdown measures slowed down the implementation of existing investment projects.

Falling corporate earnings, a slump in global and regional demand, and economic slowdown are seen as the short- and medium- term impacts that have led MNCs to reassess and postpone new investments.

“The long-term impact, on the other hand, is when diversion of investments ultimately leads to increased supply chain resilience and higher degrees of autonomy for critical supplies,” Hasan shared.

As the Movement Control Order (MCO) was seen as a necessary measure to curb the spread of the virus, the state’s investment promotion agency continued to provide facilitation and assistance to companies in Selangor in these times of uncertainty.

“It is crucial for us to be able to bolster the aftercare aspect of our services to foreign investors as an attempt to retain their presence in the state and restore their confidence,” Hasan told TMR.

During the MCO, the assistance provided by Invest Selangor included setting up a special task force to communicate with the industry and investors, as well as providing clarification and recommendation to the Ministry of International Trade and Industry on the essential manufacturers and their supply chain suppliers’ applications for operation.

Selangor Business Hub

Invest Selangor will be rolling out its own digital transformation through a virtual hub to engage and network with stakeholders.

Known as the Selangor Business Hub, it will be launched in mid-September, comprising four components including the Invest Selangor Investment Promotion Programme, Virtual Selangor International Business Summit (SIBS), Selangor Information Technology and E-Commerce Council (SITEC) Virtual Hub, as well as the Selangor Halal Business Hub.

The first programme is a portal used to host all virtual conferences and webinars organised by Invest Selangor in its online trade and investment promotional activities. The portal will also host any virtual meetings and business-matching sessions with potential partners or investors.

As for the Virtual SIBS, it is an alternative online format of the annual summit, which will run parallel with the physical summit.

“However, the Virtual SIBS will also offer programmes and activities beyond the official dates of the physical summit, making it a more comprehensive proposition to the summit stakeholders and participants,” Hasan said.

Meanwhile, the SITEC Virtual Hub is an information and webinar hub for programmes conducted by the council with the aim of expanding the outreach of the audience internationally.

Hasan said the hub will also become the platform to introduce start-ups who participated in SITEC programmes to the international market.

The Selangor Halal Business Hub will offer assistance to entrepreneurs to comply with and apply for halal certification online, as well as to obtain the latest updates on the industry from the state authority.

The hub also provides virtual seminars and training programmes related to the halal ecosystem.

“The virtual hub will expedite the migration of activities that we normally undertake physically into a virtual format.

“We will constantly refine our goals and strategies in Invest Selangor to be in line with the state government’s efforts in realising our Smart Selangor vision, as well as in becoming the Smart Gateway to Asean,” Hasan said.

Source: The Malaysian Reserve