Standard Chartered: Malaysia is the top market for expansion among Middle East firms
12 Apr 2022
Standard Chartered said Malaysia has been named as the top expansion market for Middle East companies focusing on ASEAN.
The bank said the latest survey for its Borderless Business: Middle East-ASEAN Corridor found that Middle East companies are positive about business growth in the region – and a significant 78 per cent viewed Malaysia as the top location.
Key growth sectors for Malaysia in the report’s growth watchlist that are attractive to Middle East companies are refining and petrochemicals, renewable energy and retail and consumer goods.
Malaysia has established integrated petrochemical zones that offer centralised utilities, storage services and a comprehensive transportation network, to help reduce capital and operations costs for companies.
It has also emerged as a major hub for solar photovoltaic (PV) production and is a key market for halal goods as it works towards building a stronger halal ecosystem between ASEAN and the Middle East.
Standard Chartered said all surveyed Middle East companies expect business growth over the next 12 months, with over 80 per cent of them projecting an annual increase in both revenue (82 per cent) and production (81 per cent) of over 10 per cent.
A similar sentiment is shared in another survey conducted in the Borderless Business: India-ASEAN Corridor survey, where Malaysia is tied with Singapore as the top three most preferred destination among Indian companies looking at expansion in ASEAN.
Key growth sectors in the report’s growth watchlist that are drawing Indian companies to Malaysia are digitalisation, renewable energy and electric vehicles (EV).
India-based technology companies have made inroads into Malaysia as part of the national MyDIGITAL initiative and the country’s response to the pandemic that included measures to boost digital payments and e-commerce.
Malaysia has also emerged as a major destination for the manufacturing of PV systems among Indian firms.
As ASEAN governments start offering incentives and building support infrastructure to facilitate growth, such as Malaysia’s tax incentives to EV buyers under its National Automotive Policy (NAP 2020), new economy Indian companies have expressed plans to expand their footprint in Southeast Asia in the coming years.
All respondents expect their business to increase production in ASEAN while more than 90 per cent of them project growth in revenue (93 per cent) over the next 12 months.
Standard Chartered said the Regional Comprehensive Economic Partnership (RCEP) is also expected to attract more investments into the 10-nation bloc from both corridors.
All Middle East respondents agreed that the ratification of the RCEP agreement will lead to more investments from their companies, while some 63 per cent of Indian respondents indicate that their companies will increase investments in ASEAN over the next three to five years.