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MALAYSIA has come in 45th place in the world economic freedom index this year.

The Heritage Foundation index of economic freedom recorded Malaysia’s overall score as 65.7 which indicates it as a moderately free country in the index.

The index includes 12 aspects of economic freedom measured and grouped into “four broad pillars”, according to the index:

– Rule of law (property rights, judicial effectiveness, and government integrity);

– Government size (tax burden, government spending, and fiscal health);

– Regulatory efficiency (business freedom, labor freedom, and monetary freedom)

– Market openness (trade freedom, investment freedom, and financial freedom)

Property rights in Malaysia this year was recorded at 65.7, judicial effectiveness at 65.5, government integrity at 48.2 and tax burden at 83.9.

Furthermore, government spending was recorded at 81.4 per cent, fiscal health at 42.8, business freedom at 70.5, labour freedom at 58.2, monetary freedom at 79.1, trade freedom at 83, investment freedom at 60 and financial freedom at 50.

Globally, Singapore came in first, surpassing Switzerland at 83.5 per cent while Ireland came in second place at 82.6 and Luxemborg at 79.2.

In the Asia-Pacific region, Malaysia was ranked in ninth place while Singapore came in first place,Taiwan in second place and New Zealand in third place.

Meanwhile in the Southeast Asian region, Malaysia came in third place while Singapore also came in first place and Brunei in second place.

Countries whose economic freedoms were unrecorded in the index were Afghanistan, Iraq, Libya, Liechtenstein, Somalia, Syria, Ukraine and Yemen.

The world economic freedom index has compiled data containing economic policies and conditions from 184 sovereign countries from July 1 2022, through June 30 2023.

Each country’s economic freedom is measured through a score ranging from:

– 80 to 100 (free)

– 70-79.9 (mostly free)

– 60 – 69.9 (moderately free)

– 50–59.9 (mostly unfree)

– 0–49.9 (repressed or not graded)

Source: The Sun

Malaysia ranks 45th place in world economic freedom index

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Malaysia, and to an extent Selangor, is positioned to be one of the primary beneficiaries of the ongoing trade tension between China and the United States (US), particularly in the multibillion ringgit semiconductor industry.

However, to maximise these gains, the Federal government must focus on leveraging Malaysia’s position to move up the semiconductor value chain, according to an economist.

Prof Emeritus Barjoyai Bardai said the country should move away from conventional semiconductor manufacturing and instead focus on sectors like integrated circuit (IC) design.

He said while current investment towards the semiconductor industry in the country is substantial, it is still at the lower end of the value chain.

“Malaysia is in a prime position to place itself as an IC design base for companies that are based in China, for example,” he told Selangor Journal.

“Due to the ongoing tension between the US and China, Chinese companies cannot import IC design from the US and are now looking towards other options.”

Barjoyai said although Malaysia ought to strive to attract these firms to invest and establish their bases here, the country should focus on being the centre for simple IC design and help establish a much more robust downstream semiconductor ecosystem.

This, he said, will add value to the economy overall.

The semiconductor value chain consists of three main parts, namely upstream (IC design), midstream (IC manufacturing) and downstream (IC packaging and testing).

Under the New Industrial Master Plan (NIMP) 2030, Malaysia hopes to raise the manufacturing sector’s value-added by broadening the scope of products being exported.

The Federal government also hopes NIMP can encourage more front-end activities such as semiconductor equipment manufacturing, wafer fabrication and IC design.

Recently, Malaysia has seen major investments by Intel (RM29.12 billion) and Texas Instruments (RM12.9 billion), among others, to engage in more complex manufacturing activities.

Intel’s expansion will include the construction of an advanced 3D chip packaging facility, its first overseas facility for 3D chip packaging.

Creating, retaining skilled workforce

Barjoyai applauded the approach taken by the Federal government to leverage the ongoing chip war between the US and China and engage with major semiconductor players to invest in the country.

He pointed out that Malaysia already has a mature and trusted track record in the semiconductor business, having begun making major investments into the sector since the 1960s.

However, the major challenge now is creating and retaining enough skilled and semi-skilled workforce to meet industry needs.

“Malaysia has a shortage of skilled workers in terms of engineers to fill critical positions. The same goes to the semi-skilled workforce that is required to fill in these gaps.

“That is why technical and vocational education and training (TVET) programmes are crucial to meet demands.

“Having said that, more needs to be done by the government to expose the younger generation to artificial intelligence and the credible opportunities presented by the internet of things,” he said, adding that such a move would spur greater interest among the youth to pursue a career in these fields.

On the same note, Barjoyai said state governments such as in Selangor and Sarawak, which are competing to be the IC design base for many major semiconductor companies, should consistently conduct their own trade missions and engage with major industry players.

“They must do this continuously and continue to advocate the advantages (of investing in their states) to these companies.

“More importantly, state governments can also strike strategic partnerships with learning institutions in their respective states to produce a skilled workforce that meets the demands of the industry,” he said.

Recently, Selangor embarked on a trade mission to China and Hong Kong in an attempt to draw investors from the semiconductor industry there into the state.

State executive councillor for investment and trade Ng Sze Han had said that the move is part of efforts to create a comprehensive semiconductor ecosystem in Selangor.

He also announced the state’s plan to establish an IC design hub in Selangor, in a concerted effort to expand Malaysia’s semiconductor industry.

Similarly, the state government has pledged to improve the TVET ecosystem to prepare more workers for high-paying jobs.

Menteri Besar Datuk Seri Amirudin Shari had, in March, said there is a great need for skilled workers in sectors like electrical and electronics, biotechnology, aerospace and rail manufacturing.

Among other things, he said the state administration plans to upgrade Universiti Selangor into a technical and vocational university and align Selangor Technical Skills Development Centre programmes with industry demands.

Source: Selangor Journal

Malaysia, Selangor must advance up semiconductor value chain — Economist

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The oil-rich Malaysian state of Sarawak in Borneo is aiming to transform itself into a centre for clean hydrogen energy, betting that its ability to harness an abundance of hydropower can help it defy challenges that are clouding the fuel’s prospects elsewhere.

In state capital Kuching, the gambit is well underway after Sarawak plowed US$3.4 billion (RM16.3 billion) into a network of power-to-transport projects. Three fuel-cell buses made in China that are free to ride ply the city’s roads, refuelling at multi-fuel stations that come with hydrogen bays. Officials travel around in Toyota Motor Corp’s Mirai, the world’s first mass-produced hydrogen fuel-cell vehicle.

Authorities in Sarawak “are in a way world leaders in hydrogen activities,” said Gniewomir Flis, a senior advisor at Washington-based climate policy advisory firm Kaya Partners specialising in hydrogen. “They are among the ones getting the ball rolling.”

Sarawak, a state the size of England with a population of 2.5 million, is blessed with the rivers and heavy rainfall needed to create hydropower that can generate clean electricity needed for emissions-free hydrogen. Kuching, meanwhile, is a city of over half a million people where the fuel can be much more easily adopted. The true test of Sarawak’s potential is whether it can help hydrogen commercialise on a larger scale overseas.

“We have the means to help cool down the world,” Sarawak Premier Tan Sri Abang Johari Tun Openg, who formulated the state’s hydrogen blueprint in 2019, said in an interview.

Taking Sarawak’s hydrogen global, however, remains a costly and complex task. For one, it requires the construction of whole new infrastructure to produce the gas, transport it to customers and then burn it. Hydrogen cannot be transported on its own due to its low density, and needs to be converted into another chemical liquid compound first.

Global hydrogen use rose to 95 million tonnes in 2022, and less than 1% of the total was low-emissions fuel, according to the International Energy Agency.

“The fundamental challenge with hydrogen lies in its transportation logistics, as most hydrogen currently used is situated near demand centres,” said Minh Khoi Le, head of hydrogen research at Rystad Energy.

Nonetheless, two Asian countries where hydrogen is seen as crucial to the green transition have already set their sights on Sarawak as a key provider of the fuel.

South Korea’s private sector has pledged to pour billions of dollars into creating a value chain for the clean fuel, while Japan, which created the world’s first hydrogen strategy in 2017, said in the latest update in June that it aims to increase consumption of the fuel to 20 million tonnes by 2050 from about two million tonnes now.

The countries’ biggest energy companies are partnering with Sarawak’s new state-backed entity, SEDC Energy, to build two hydrogen plants in the port city of Bintulu called H2ornbill and H2biscus, named for the state bird and Malaysia’s national flower. The Japan-backed plant, H2ornbill, aims to convert hydrogen into methylcyclohexane, a chemical also known as MCH, to be exported to Japan. H2biscus, meanwhile, plans to convert its hydrogen output into ammonia for export to South Korea.

The two projects, slated to start commercial production in 2028 at the earliest, together aim to produce 240,000 tonnes of hydrogen a year. The figure rivals the stated output of Saudi Arabia’s Neom plant, set to be the world’s biggest after announcing last year it would produce roughly 291,000 tonnes a year from 2026.

Malaysia is attractive mainly because of the low cost of production of green hydrogen, expected to be the cheapest among Southeast Asian countries by 2035, according to BloombergNEF forecasts, and roughly 20% less than in South Korea.

“A stable supply of electricity at a low cost are the most important points” for Japan’s hydrogen goals, said Shohei Yasuda, an official at the hydrogen promotion department of Eneos Corp, one of the Sarawak project’s partners.

Despite Malaysia’s low costs, green hydrogen still faces huge price hurdles against much cheaper fossil fuels — natural gas is currently about a quarter the price of green hydrogen produced with Western technology, according to BNEF. And that doesn’t include the cost to liquefy the hydrogen or convert it for export.

Liquefying hydrogen also requires vast amounts of energy — the process is expensive and consumes more than 30% of the energy content of the fuel, according to the US Department of Energy. It’s also less dense than liquefied natural gas, so transporting it at scale would require creating new fleets of ships, infrastructure and technology.

And the technology is still in the midst of proving itself. The world’s largest green hydrogen project, located in western China, is grappling with issues around efficiency and flexibility, according to an analysis by BNEF. Its electrolyzers — machines that strip hydrogen from water — are currently the cheapest in the market but struggle to manage fluctuations in power from sources like solar.

Sarawak touts its access to unfettered hydropower as the key to prevent such problems.

“Our advantage is of course hydropower,” said Robert Hardin, chief executive officer at SEDC Energy. “We don’t have that issue of intermittent supply.”

While hydrogen’s practical use still faces many hurdles, Sarawak is powering ahead at home. Its biggest undertaking yet is a planned autonomous, hydrogen-fuel tram line costing RM5.59 billion that is slated to start operations as early as next year. The trackless tram system, built by a unit of China’s CRRC Corp, has not been put into commercial operation anywhere in the world.

Other plans in the works in Sarawak include hydrogen-powered waste collection trucks and medium-sized boats, which are a common form of commuting in more rural areas, said Robert.

With more than enough water and hydrogen to power these ambitions, Sarawak could end up looking like a model state for hydrogen, but Kaya Partners’ Flis said there is also a risk of the investments not working out and becoming white elephant projects.

Abang Johari admits that the stakes are high.

“It is a risk, but it is a calculated risk,” he said. “There is no other option, we need alternative energy, and hydrogen, ultimately, is the cleanest.”

Source: Bloomberg / The Edge Malaysia

Sarawak aiming to transform itself into a centre for clean hydrogen energy

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Johor is expected to become the most advanced state in Malaysia in the next two years following the establishment of two special economic zones (SEZ), said Prime Minister Datuk Seri Anwar Ibrahim.

He said that the Johor-Singapore Special Economic Zone (JS-SEZ) and the Forest City Special Financial Zone (SFZ) will drive the country’s economic growth further.

“These two special economic and financial zones will drive the country’s economic development more rapidly.

“There is no target at the moment, but the most important thing is that these two zones exist to assist

“The economic growth in Johor is expected to pick up at a faster pace compared to other states in the next year or two,” Anwar told reporters after attending the state-level 2024 Madani Aidilfitri celebration held at the Angsana Mall Johor Baru here today.

Present at the event were Defence Minister Datuk Seri Mohamed Khaled Nordin and Johor Menteri Besar Datuk Onn Hafiz Ghazi.

The Johor 2024 Madani Aidilfitri celebration is jointly hosted by the Defence Ministry and the state government.

Anwar, who is also the finance minister, had earlier chaired the Johor state development meeting at Forest City in Iskandar Puteri.

In his speech, Anwar said the existence of the special economic and financial zones is a sign that Johor is poised to record very rapid growth soon.

“The past year has been a good year for Johor.

“Not only is the Yang di-Pertuan Agong Sultan Ibrahim, who is also the 17th Agong, from this state, but it is also led by young leaders. They have managed to develop Johor well and the state’s economic development is among the best in the country,” he said.

In January, Anwar and his Singaporean counterpart Lee Hsien Loong witnessed the signing of the JS-SEZ Memorandum of Understanding (MoU) between the two countries.

The idea of establishing the zone was first mooted by Economy Minister Rafizi Ramli after a meeting with the Johor government in Iskandar Puteri last May.

Following the meeting, both Malaysia and Singapore agreed to establish a special task force to study the viability of establishing the special economic zone.

Last September, Onn Hafiz said the establishment of the JS-SEZ would be modelled after the Shenzhen Economic Zone in China, which managed to record a Gross Domestic Product (GDP) of RM1.93 trillion in 2021.

Last August, Forest City, a mixed development mega project on four artificial islands in Johor’s western waters, was announced as an SFZ.

The designation will see more than 2832.79 hectares in Forest City allocated to the SFZ as part of foreign investment to boost the economic development of the area.

Source: Malay Mail

PM Anwar: Special financial and economic zones to drive Johor’s growth further

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The Ministry of Investment, Trade and Industry (MITI) is calling for a review of the roles played by the Malaysia Steel Association (MSA) and Malaysian Iron and Steel Industry Federation (MISIF) for a potential merger of the two bodies to strengthen the steel industry as a whole.

MISIF is the association for flat steel players, and MSA is the body for long steel players.

MITI views the iron and steel industry as a strategic sector and continues to be committed to improving the industry in accordance with the New Industrial Master Plan (NIMP 2030), said its deputy minister, Liew Chin Tong.

“MITI looks forward to working with industry players to create a more sustainable, dynamic, and internationally competitive iron and steel sector,” he said in his speech at the recent Malaysia Steel Council (MSC) meeting.

According to Liew, the capacity of steel production in Southeast Asia is expected to increase from 75.3 million tonne in 2021 to 151.9 million tonne in 2026 if all potential investments materialise.

He said that Malaysia has raised the issue of overcapacity in the steel industry in Southeast Asia at the ASEAN Economic Ministers’ Retreat in March 2024, and the ASEAN Secretariat has agreed to elevate this agenda for ASEAN-wide discussion.

A number of important issues concerning the iron and steel sector were discussed, including enforcing government procurement (GP) in construction projects, where local content is mandated at the main contractors’ stage to permeate through the supply chain with the objective of safeguarding the ringgit, enhancing the local supply chain, and ensuring compliance with the local content requirement (LCR).

The other areas include strengthening enforcement by relevant authorities to ensure compliance with export declarations for steel scrap, which are subject to a 15 per cent export tax, Liew said.

“This measure aims to prioritise the use of scrap for local steel mill consumption, thereby bolstering domestic production and reducing reliance on imports, which will contribute to the sustainability and growth of the local steel industry,” he said.

Another key area of focus involves preventing the evasion of imported flat steel and ensuring fair trade practices within the industry.

Liew, who is the chairman of MSC, stressed the significance of implementing comprehensive measures to identify and tackle any attempts to circumvent trade regulations or tariffs.

This includes closely monitoring import activities, conducting thorough inspections of documentation, and working closely with relevant authorities to investigate suspicious transactions, he pointed out.

Moving forward, Liew underscored the collaboration between MITI, the Malaysia Steel Institute, and MSC members to adopt a carbon emission reporting method.

This initiative is set to roll out across the industry in the latter half of 2024, representing the initial stride towards carbon pricing, trading, and taxation.

Meanwhile, Liew observed notable progressions since the preceding Council gathering on July 13, 2023.

These include the establishment of the Independent/Special Committee (ICS) for the Iron and Steel Industry in Malaysia and the imposition of a moratorium on new steel investments.

Additionally, significant strides have been made in addressing steel overcapacity within ASEAN, implementing measures to ensure equitable competition in the steel sector, and instituting a framework for carbon reporting through the Independent/Special Committee for the Iron and Steel Industry in Malaysia.

Source: NST

MITI moots merger of steel industry bodies to strengthen industry

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Cochlear Malaysia is undertaking an expansion exercise of up to RM10 million and is committed to continue grow and broaden its operations in the country.

“The current expansion we are going through is in the range of about RM10 million, excluding all the tools and equipment,” manufacturing and logistics vice-president Samuel Pooranakaran said at a press conference today after a site tour of Cochlear Malaysia’s manufacturing, servicing and corporate facility.

In terms of total investment to date, the company has invested close to RM50 million since 2016 for manufacturing-related activities.

Samuel said the company is mindful that it would need to expand its operations space from the current premises within the next few years. “There is growth but it will be driven by the market, but definitely we are committed and we are going to be here for a long time,” he remarked.

Meanwhile, Cochlear (Asian growth markets) general manager Amy Zheng said Cochlear’s investment into its local manufacturing facilities will have a spillover or positive impact on its overall business in Malaysia.

She pointed out that its first implant surgery involving its Cochlear product in Southeast Asia was performed in Malaysia.

“We have really worked hand in hand with the (local) healthcare professionals … we definitely want to work with the government and look into ways so that we can have more patients access it,” she said.

As part of its Australia-Southeast Asia Business Exchange programme, Australia’s assistant minister for trade and assistant minister for manufacturing Senator Tim Ayres led a delegation comprising 23 leading Australian businesses in the maritime, decarbonisation and renewable energy sectors to Malaysia and Singapore.

“There is a very strong record of two way investment and trade between Malaysia and Australia.

“Trade sits at about A$30 billion (RM92.5 billion) a year and our two-way investment is very strong, (with) Malaysian firms investing in Australian industrial capability and Australian firms like Cochlear announcing new expenditure and new expansions here but there’s enormous room for growth,” he said.

Source: The Sun

Cochlear Malaysia spending up to RM10m to expand operations

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High-impact projects such as the Johor-Singapore Special Economic Zone (JS-SEZ) and Special Financial Zone (SFZ) in Forest City can spur Johor’s economy to outpace that of other states in the next one to two years, said Prime Minister Datuk Seri Anwar Ibrahim.

“Both JS-SEZ and SFZ will ensure a more rapid growth (for Johor). They are still being formulated but will help in accelerating the economic growth,” he told reporters during the Johor-level MADANI Aidilfitri celebration at Padang Begonia, Angsana Johor Bahru Mall, here today.

Also present were Defence Minister Datuk Seri Mohamed Khaled Nordin; Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz; Johor Menteri Besar Datuk Onn Hafiz Ghazi; Deputy Works Minister Datuk Seri Ahmad Maslan; and former Deputy Prime Minister Tun Musa Hitam.

Earlier in his speech, Anwar said Johor continues to drive growth and record among the best progress and development in Malaysia.

“We are establishing a special economic zone that can develop a close relationship with Singapore and we are setting up a special financial zone in Forest City. These indicate that Johor will record a very rapid growth,” he said.

He noted that Johor also has a low hardcore poverty level with fewer than 2,000 individuals, and this can be resolved in the short term with hardcore poverty being abolished in the state.

In addition, other programmes such as flood mitigation are also prioritised to address problems that are faced by the people.

“We cannot just strive for big growth. Floods are also sizeable so the flood mitigation programme is given priority. I want the leaders and officials to monitor to ensure that the project is carried out swiftly so that the problem faced by the people is resolved,” he said.

Therefore, he added, leaders in Johor must ensure the state’s administration is free from corruption and the people’s interest is safeguarded.

Meanwhile, Anwar said the development in any state should be in tandem with the human development so that the people’s well-being is safeguarded.

“Do not focus (just) on buildings, industries and highways, while trivialising people.

“What is the meaning of development if we neglect the poorest people who lack opportunities, whether they are Malay, Chinese, Indian or Orang Asli? They are all Johoreans and must be given a place and afforded the utmost protection,” he added.

Some 5,000 people attended the celebration organised by the Defence Ministry together with the Johor state government as host.

Johor is the first of seven states to hold the Aidilfitri MADANI 2024 celebration, to be followed by Sabah (April 20), Melaka (April 22), Kelantan (May 2), Kedah (May 4), Penang (May 5) and Terengganu (May 9).

Former deputy prime minister Tun Musa Hitam, who celebrates his 90th birthday today, was also honoured at today’s event.

Source: Bernama

PM: JS-SEZ, SFZ can help Johor surpass other states economically

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Sabah received investments amounting to RM11.34 billion last year, the seventh highest in Malaysia, said the Yang diPertua Negeri Tun Juhar Mahiruddin.

He said of that amount, RM1.51 billion was from the manufacturing sector which was very encouraging and underscores the sector’s growth and importance as a state economic driver.

Citing SK Nexilis Malaysia Sdn Bhd as an example, he said the company invested RM300 million via subsidiary Curix Sdn Bhd to manufacture copper granules in its Kota Kinabalu Industrial Park factory.

“The State Government will empower the manufacturing investment task force in 2024 to realise and accelerate all approved investments.

“Industrialisation and investments continue to drive the state’s economy,“ he said in the State Government policy speech at the 16th Sabah State Legislative Assembly opening here today.

Tun Juhar said focus will continue to be given to implement initiatives to raise investor confidence in green technology products, biomass and mineral resources downstream sector, food processing and manufacturing, and medical devices sector.

“Other initiatives include drawing up and implementing the policy direction for the manufacturing sector, including preparing a development master plan for two new industrial parks in Kota Belud and Kimanis, and implementing Sabah’s Oil Palm Biomass Industry Policy,“ he said.

He said the Sabah government collected revenue totalling RM6.974 billion in 2023, the highest in history, surpassing 2022’s record collection of RM6.960 billion.

Apart from manufacturing, he said the tourism sector showed encouraging recovery in 2023 with tourist arrivals rising to 2.61 million versus 1.72 million recorded in 2022.

Tun Juhar said the state government is targeting three million arrivals this year and will accelerate implementing various high-impact initiatives and programmes including incentivising industry players.

“The State Government will continue its aggressive tourism promotion and marketing campaign by focusing on various high-impact and high-visibility programmes to develop high-yielding niche market segments.

“The state government has also focused on developing and providing infrastructure and facilities in tourism areas, especially outside the city, including Sabah Parks and Sabah Museum areas to prepare for the Visit Malaysia Year 2026,“ he said.

Source: Bernama

Tun Juhar: Sabah receives RM11.34b investments in 2023

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The Johor-Singapore Special Economic Zone (SEZ) is set to catalyse equity valuations in both Malaysia and Singapore under five themes.

These themes, as identified by Maybank Investment Bank (Maybank IB) Research, are optimising hinterland access; stimulating north-south supply chain shifts; fast-tracking the net-zero transition; expanding infrastructure and property investments; and broadening the small and medium enterprise or SME economy.

Among the sectors that could benefit are banking; property and real estate investment trusts (REITs); industrials; renewables; technology; and telecommunications, according to the brokerage.

“While details are limited, early official statements point to SEZ initiatives focused on better cross-border integration, foreign direct investment facilitation, talent development and entrenching renewables,” Maybank IB Research said in its report yesterday.

Maybank IB Research pointed out that the SEZ could create a regionally differentiated value proposition by its combination of capital access, infrastructure and policy stability.

It noted multiple sectors across Malaysia and Singapore would stand to benefit from the SEZ initiatives.

“Banks are key given already entrenched cross-border positioning, enabling share gain from higher wholesale and retail credit demand and fees from trade.

“Increased infrastructure investments as well as housing and commercial facilities demand could be a boon to Singapore and Malaysia property developers and REITs,” it explained.

“Data centre establishment should be positive for Singapore and Malaysia telecommunications as well as Singapore and Malaysia electronics manufacturing players.

“Increased renewable capacity should spur Singapore industrials and Malaysia renewables,” it said, adding easier travel could ease labour pressures and widen the mass market for Singapore gaming.

Maybank IB Research said its SEZ dozen top picks are those that could potentially see earnings and multiple upgrades from their medium-term gearing to the five investment themes.

Of the brokerage’s SEZ dozen picks, the six that were listed on Bursa Malayia were Axis-REIT, CIMB Group Holdings Bhd, ITMax System Bhd, Solarvest Holdings Bhd, S P Setia Bhd and Telekom Malaysia Bhd.

The remainder were Singapore-listed companies, namely, Frasers Capital Trust, Frencken Group Ltd, Genting Singapore Ltd, OCBC Bank Ltd, Sembcorp Industries Ltd and Singapore Telecommunications Ltd.

The economies of Singapore and Malaysia are already closely integrated, Maybank IB Research said, noting Singapore accounted for nearly 25% of Malaysia’s foreign direct investment (FDI), and it is Malaysia’s second largest trading partner.

“Globally, SEZ’s success is determined by right locations, smooth logistics and strong policy frameworks. Historically, entrenched ties between Johor Baru and Singapore already augment the locational advantage,” it said.

“Now a robust policy framework needs to be established that backs easier movement of capital and people.

“This should bolster Singapore’s role as a financial centre and logistics hub. Concurrently, Johor Baru could unlock substantial value from its access to land, labour and energy,” it added.

The SEZ could make it easier and more attractive for Singapore companies, multinationals and SMEs to invest in Johor, and it can also complement and sharpen Singapore’s FDI competitiveness.

Similarly, investors will have access to Singapore’s world-class financial centre and logistics infrastructure, as well as Johor’s more affordable labour pool, abundant land and cheaper energy resources, Maybank IB Research said.

Source: The Star

SEZ set to catalyse equity valuations

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Robust capacity expansion plans and medical equipment tenders are set to drive UMediC Group Bhd’s (UMC) earnings growth in the near term.

Hong Leong Investment Bank Research (HLIB Research) said the medical device maker has relocated its warehouse to a newly built plant, making room for manufacturing-capacity expansion at its existing site, following the completion of the group’s new facility.

The new facility is awaiting regulatory approvals.

“Production capacity is expected to reach 420,000 bottles per month by April 2024 (from 300,000 units per month currently), which is then expected to increase to 600,000 bottles per month by December 2024,” the research house said in a report yesterday.

HLIB Research said the necessary equipment to produce up to 600,000 bottles has been successfully installed at UMC’s production facility.

Currently, UMC is conducting thorough test runs to ensure adherence to quality standards, before a gradual ramping up of production.

“Considering the robust demand for its HydroX prefilled humidifier, we acknowledge the potential for further capacity expansion beyond the completion of the ongoing expansion,” the research firm said.

Apart from that, UMC’s medical equipment tenders for new hospitals and expansion projects continued to remain strong, alongside the emergence of tenders for routine medical equipment replacement.

HLIB Research noted that some of the tenders are taking on a leasing model as opposed to upfront lump-sum payments upon equipment delivery.

A leasing model entails staggered payment for equipment, either with a monthly or quarterly payment.

“This signals the government’s initial venture into the leasing model and if successful, we anticipate a potential increase in similar tenders in the future.

“This transition could prove advantageous for UMC, as it would necessitate the participation of suppliers with solid financial standing due to the lengthened payment period, potentially side-lining smaller competitors,” the research house said.

UMC has also recently diversified into healthcare services with the establishment of the UMC Care Centre.

This is a brand new venture, complementing its core business of medical-equipment distribution.

“The care centre will occupy a four-storey shoplot spanning 7,427 sq ft in Batu Kawan, Penang. It will offer a range of services including aged care, short-term care for post-surgery patients and long-term care for individuals with illnesses,” HLIB Research said.

The research house added that approval for the facility’s floor plan has been obtained from local authorities and renovation work is currently in progress, with completion expected by the end of May. Operations are slated to commence in July 2024.

UMC also recently secured approval to transfer to the Main Market of Bursa Malaysia. The exercise is expected to be completed by the first half of 2024.

“While this transition does not entail any fundamental changes within the company, we regard it as a positive development as it would make UMC more investable, improving participation from institutional investors,” the research house said.

HLIB Research maintained a “buy” call on UMC with a target price of 91 sen. It also advocates investors eyeing long-term growth to accumulate the company’s shares on price weakness.

Source: The Star

Capacity expansion, diversification to boost UMediC

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The setting up of the Energy Exchange Malaysia (Enegem) platform to facilitate cross-border trading of renewable energy (RE) is being viewed positively.

This is because RE exports are potentially a new revenue source and a driver of capacity growth for the industry, said analysts.

A pilot plan to export 100 megawatt (MW) of RE to Singapore was announced although details on a timeline and the source of RE supply were not disclosed by the Energy Transition and Water Transformation Ministry on Monday.

Interested RE bidders, who hold generation licences and/or retail electricity supply licences in Singapore, have been invited to register their interest on Malaysia’s Single Buyer website.

“The establishment of the Enegem platform represents another milestone achieved for the eventual cross-border trading of RE.

“We note that RE exports are potentially a new revenue source (via RE sales and other charges) and capacity-growth driver for Malaysia’s RE sector, which is currently reliant on domestic large-scale solar (LSS) and Corporate Green Power Programme (CGPP) schemes,” said Maybank Investment Bank Research (Maybank IB Research).

While the pilot 100MW export capacity is small, analysts noted that Singapore is looking to import up to 3.5 gigawatts (GW) of green electricity by 2035.

As for potential beneficiaries, Maybank IB Research said local solar players like Solarvest Holdings Bhd, Cypark Resources Bhd, Sunview Group Bhd, Pekat Group Bhd and Samaiden Group Bhd would benefit from increased job flows from RE-capacity growth.

The research house added that utility majors such as Tenaga Nasional Bhd (TNB) and YTL Power International Bhd could also benefit from RE exports via RE sales and “wheeling charges”, the amount charged by one electrical system to transmit energy to another system.

“Overall, we remain positive on the RE sector, for which engineering, procurement, construction and commissioning (EPCC) order book replenishment from the 800MW CGPP and 2GW of LSS5 projects.”

Meanwhile, CGS International Research (CGSI Research) said the establishment of Enegem adds to the good progress being made on initiatives under the National Energy Transition Roadmap (NETR), which was launched eight months ago, and this should help address investor qualms about its implementation.

“It also marks a key step towards realising the country’s energy-export potential.

“We see TNB, via grid upgrade requirements, and YTL Power via ownership of a generation/retail licence in Singapore as potential key beneficiaries,” said CGSI Research, which maintained an “overweight” rating on the Malaysian utilities space with the NETR having introduced a structural growth element to a sector that has traditionally been viewed as more defensive.

However, MIDF Research keeps its “neutral” stance on the sector. Although the development is positive, it said valuations are stretched, relative to the historical mean following the strong share price performances in the past year.

“But we still like the RE EPCC sub-sector, with Samaiden, Pekat and Sunview as key immediate-term beneficiaries of Malaysia’s RE initiatives.

“In the asset-owner space, we still like YTL Power for a potential earnings recovery at its British subsidiary Wessex Water Services Ltd, expansion into data centres and as a potential beneficiary of LSS5 and RE exports,” added MIDF Research.

The research firm added that the extent to which TNB will benefit from grid-upgrade requirements in the mid-term hinges on the approved capital expenditure under Regulatory Period 4, as well as allowable returns which will be determined towards end-2024.

Source: The Star

Renewable energy emerges as growth driver

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The semiconductor strategic plan should encompass the industry’s ecosystem for Malaysia to achieve its goal of becoming a preferred investment destination for the industry, said an expert.

Putra Business School analyst Associate Professor Dr Ahmed Razman Abd Latiff said it was important for the plan to have investor-friendly policies and enough skilled workers for the industry rather than just being a masterplan.

“It is essential to ensure that the strategic plan encompasses the ecosystem of the industry and that it also covers the supply chain.

“We want to make sure that we will not only have the right infrastructure and facilities, but must also have investor- friendly policies and enough skilled workers for investing companies.”

Malaysia must facilitate knowledge transfer to promote innovation, thereby creating added value for companies and the industry, he said.

Yesterday, the National Investment Council instructed the Investment, Trade and Industry Ministry to develop a semiconductor strategic plan to sustain Malaysia’s status as a preferred investment destination.

Prime Minister Datuk Seri Anwar Ibrahim said this was crucial to attract semiconductor companies to establish high-quality semiconductor manufacturing facilities.

Centre for Market Education chief executive officer Carmelo Ferlito said while an attempt to preserve Malaysia’s competitiveness was welcomed, in particular in a crucial sector like semiconductors, the effectiveness of the masterplan was questioned.

Instead, he said, the government should focus on designing a broad, comprehensive pro-competitiveness bill to establish the nation as a regional investment hub.

“I tend to be sceptical about the usefulness of masterplans, blueprints and strategic plans, which often turn out to be not much more than well-crafted wish lists.

“Instead, the government should move more in the strategic direction of designing a broad and comprehensive pro-competitiveness bill, similar to what Indonesia did with its Omnibus Law.

“In fact, Malaysia should aim to restore its place as a preferred regional investment destination not only for semiconductors, but in general.

“What I have in mind is what was designed in the past with schemes like the principal hub designed by the Malaysian Investment Development Authority and which needs to be upgraded in light of the regulations that came afterwards.”

A principal hub is a locally incorporated company that uses Malaysia as a base for conducting its regional or global businesses and operations to manage, control and support its key functions, including management of risks, decision making, strategic business activities, finance, management and human resources.

Ferlito highlighted Malaysia’s potential as a regional hub, emphasising the need for a holistic approach that included simplifying business registration, fair taxation, access to labour and a robust banking system.

Source: NST

Semiconductor strategic plan should include investor-friendly policies, says expert

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Malaysia attracted investments worth RM329.5 billion last year – the highest since the establishment of the Malaysian Investment Development Authority (MIDA) in 1967, said its outgoing chief executive officer Datuk Arham Abdul Rahman.

Notably, Arham, who was appointed to lead the agency back in April 2021, said it was indeed a remarkable success for the country in attracting foreign and domestic investments as well as achieving a favourable ranking in the US economic think tank Milken Institute’s Global Opportunity Index (GOI) 2024 last month.

“This success is a testament to our collective efforts. Not only MITI and MIDA, but this is about the whole country and also the government’s approach and initiatives that involve other ministries and agencies,“ he told Bernama in an interview here today.

The 61-year-old chief executive officer, who has served MIDA for 34 years and eight months, reminded that they should not rest on their laurels in boosting efforts to promote Malaysia’s attractiveness as other neighbouring countries are also eyeing a piece of the investment cake. “Even though we have achieved a good record in terms of the investments secured, especially in 2023, my advice is that we should not be complacent because there is still a lot of work to be done,“ he added.

Creation of jobs, economic resilience

On accomplishing objectives of the New Industrial Master Plan 2030 (NIMP 2030), Arham said the profile of investments has moved towards higher value-added and innovation-focused activities. Malaysia is very focused on attracting quality investments. He said this is to ensure that Malaysians can benefit from the jobs created and to secure the economy’s future and resilience.

“Malaysia is no longer dependent on low-skilled, labour-intensive investments but is focusing more on capital, knowledge and technology-intensive investments to create high-paying, high-quality jobs and contribute to sustainable investments aligned with Net-Zero objectives.

“Quality investment will spur the domestic investment landscape through knowledge and technology transfer,“ he added.

Therefore, Arham said MIDA would continue to attract targeted strategic projects with incentives under the National Committee on Investment (NCI) to develop local talents through internship programmes and to develop local vendors through the Vendor Development Programme (VDP).

He highlighted that the NIMP 2030 would guide Malaysia in attracting quality investments over the next six years, complementing broader national policies including the Mid-Term Review (MTR) of the 12th Malaysia Plan and the MADANI Economy Framework.

He said Malaysia’s targeted approach to foreign investments has so far been very effective in maximising the benefits while mitigating potential risks.

“It allows us to strike a balance between openness to foreign capital and safeguarding national interests, ultimately contributing to sustainable and inclusive economic development,“ he said.

Source: Bernama

Arham: Investments worth RM329.5b in 2023 the highest since establishment of MIDA

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CAPITAL A Bhd, the parent company of budget airline AirAsia, is considering a spin-off and separate listing of its engineering arm Asia Digital Engineering Sdn Bhd (ADE), say sources. An initial public offering (IPO) of ADE has been part of the group’s plan all along, they observe, adding that deliberations are still ongoing.

“The group is either going to list ADE separately or together with its other aviation services, including in-flight service provider Santan and shared services business DARTS,” says a source.

While it is not immediately known how much Capital A plans to raise from the listing of its aviation services, another source points out that ADE could be spun off on its own.

For the financial year ended Dec 31, 2023 (FY2023), Capital A’s aviation services posted RM887 million in revenue and RM162 million in earnings before interest, taxes, depreciation and amortisation (Ebitda). ADE — Capital A’s wholly-owned subsidiary involved in aircraft maintenance, repair and overhaul (MRO) — doubled its revenue to RM576 million while its Ebitda jumped 137% year on year to RM146 million.

When contacted by The Edge, Capital A says: “Listing the entities under Capital A, including ADE, has been part of the management’s long-term strategy. We will announce once we have significant developments on our end.”

ADE CEO Mahesh Kumar recently said there was a potential IPO in the pipeline.

“We aspire to get ADE listed. You know, but you never say no. In terms of listing plan, Capital A has various businesses under its portfolio that have listing potential,” Bernama quoted him as saying in a report last month.

In an interview with The Edge recently, Capital A CEO Tan Sri Tony Fernandes said that after selling its airline business to AirAsia X Bhd, Capital A will be left with four companies — Teleport, Capital A Aviation Services, MOVE and Capital A International.

On Jan 8, Capital A entered into a non-binding letter of offer with AAX for the proposed disposal of AirAsia and AirAsia Aviation Group Ltd (AAAGL) for a disposal consideration to be agreed upon by the parties at a later date. AAAGL operates passenger airline services, providing air transport through its subsidiaries in Indonesia, Thailand, Cambodia and the Philippines.

Once the proposal to sell Capital A’s aviation business to AAX is approved by Bursa Malaysia, the balance sheet of the aviation business can be leveraged to raise the capital needed for the aviation group to take off.

At the same time, the sale of the aviation business will further strengthen Capital A’s balance sheet and is another step towards lifting the company out of Practice Note 17 status, said Fernandes. However, the definitive agreement is currently in the works, which means the valuation of the aviation business is yet to be made available.

Fernandes also said the aviation services segment could potentially take over the listing status of Capital A following the exercise.

It is worth noting that in April last year, ADE secured a US$100 million (RM473 million) investment from OCP Asia Ltd, which is earmarked for the construction and operationalisation of a state-of-the-art 14-line aircraft maintenance hangar facility in Sepang. This is in addition to its existing facilities at klia2. ADE has projected that the group could be one of the largest aircraft MRO service providers in the region once the new facility is completed as it also has operations at Subang Airport in Selangor and Senai Airport in Johor.

Once completed, the new facility is expected to speed up the listing of ADE. The facility spanning more than 8.19 acres is being constructed in two phases, with the first phase expected to be completed as early as next month and the second phase sometime in October.

The US$100 million investment will also be used for ADE’s further business expansion in other verticals and geographical markets.

ADE was founded in 2020, using AirAsia’s engineering division as its foundation. The subsidiary is handling 45% of AirAsia’s heavy maintenance. The intention is to eventually take over all of the group’s base maintenance requirements as well as pursue third-party work.

Source: The Edge Malaysia

MRO arm listing part of Capital A’s long-term strategy

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Rising electricity demand from data centres (DC) projects and artificial intelligence (AI) will lift Tenaga Nasional Bhd’s (TNB) long-term profitability.

But they may have limited impact on TNB’s immediate earnings, according to Affin Hwang Investment Bank.

In Malaysia, TNB has received 74 supply applications from DC customers with total maximum demand in excess of 11,000MW (40.6 per cent of Peninsular Malaysia’s installed capacity).

“We do not expect all the projects to be implemented. TNB added that the group delivered electricity for nine DC projects with a total energy demand of up to 635MW in 2023,” said Affin Hwang in a note today.

For 2024, TNB expects to connect to nine DC projects with 700MW of total energy demand.

In the long run, TNB sees potential maximum demand from DC in excess of 5,000MW by 2035 (18.5 per cent of Peninsular Malaysia’s installed capacity).

“We believe Malaysia will need to invest further in the power infrastructure and this should improve TNB’s long-term profitability (via higher capex under the Income-Based Repayment framework),” it said.

The International Energy Agency (IEA) estimates that DC, cryptocurrencies and AI consumed about 460 TWh of electricity worldwide in 2022, almost 2.0 per cent of total global electricity demand.

IEA forecasts global electricity consumption of DC, crypto and AI to range between 620TWh and 1,050TWh in 2026 (up 35 per cent-128 per cent), with a base case of 800TWh (up 74 per cent from 2022).

The rising DC projects should also benefit TNB’s non-regulated business units such as Allo (fibre connectivity) and GSpark (rooftop solar).

“We continue to like TNB – a direct beneficiary of Malaysia’s energy transition initiatives and indirect beneficiary of rising DC and AI demand,” Affin Hwang said..

It maintained a “Buy” call on TNB with an unchanged price target of RM12.80.

Source: NST

Data centres, AI initiatives to boost electricity demand & lift TNB’s earnings

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As a linchpin in advancing Malaysia’s economic development, the Malaysian Investment Development Authority (MIDA) is strategically driving top-tier investments into the nation.

Amid shifting global economic landscapes that challenge conventional resilience and supply chain strategies, MIDA distinctively aligns its efforts with the ambitious New Industrial Master Plan (NIMP) 2030, aiming to foster a complex and sustainable economic structure.

Under the visionary leadership of MIDA chief executive officer Datuk Arham Abdul Rahman, the organisation has dynamically crafted and pursued a strategy to secure high-value investments.

Concentrating on pivotal sectors such as aerospace, electrical and electronics (E&E), specialty chemicals, pharmaceuticals, medical devices, and the fast-evolving electric vehicle industry, MIDA is setting the stage for Malaysia to emerge as a global industrial powerhouse.

“Each sector is integral to our comprehensive strategy, positioning Malaysia as a competitive player in the global industrial arena,” Arham emphasised.

Strategic Impact of the Delivery Management Office

Highlighting its comprehensive role, MIDA is directly involved in 36 of the 62 action plans outlined in the NIMP 2030.

Given this extensive involvement, he said it was essential to establish an internally structured unit, known as the Delivery Management Office, that is dedicated to coordinating, monitoring, and reporting on the implementation of these action plans under MIDA’s purview.

This structured approach underscores MIDA’s commitment to ensuring effective and efficient execution of its strategic objectives, of which key roles include coordinating efforts across governmental and industrial sectors, monitoring progress, and ensuring effective communication of updates.

Arham said MIDA’s influence on Malaysia’s investment landscape is profound.

Through the development of conducive policies and attractive incentives, it has successfully lured significant investments into its targeted sectors, he added.

In 2023 alone, Malaysia saw a surge in investments, drawing RM329.5 billion across services, manufacturing, and primary sectors — an impressive 23.0 per cent increase from the previous year.

The E&E industry, particularly, has seen substantial growth, driven by MIDA’s strategic focus.

In 2023, notable E&E projects included significant expansions by companies like Infineon and X-Fab, which contributed to the highest-ever recorded investment figures in this sector.

“Our focus on the E&E sector not only caters to current global demands but also strategically positions Malaysia in the high-tech industrial space,” said Arham, who is retiring today.

Navigating Global Economic Uncertainties

Despite prevailing global economic uncertainties, MIDA’s strategies are deftly crafted to leverage these conditions to the country’s advantage.

“We don’t just react to global trends; we anticipate them to ensure Malaysia remains at the forefront,” Arham asserted.

These strategies include the integration of digital technologies and bolstering international collaborations, aligning with global innovation and investment patterns, he added.

The Malaysian government has already invested huge resources into becoming more digitally-focused while encouraging companies, particularly small and medium enterprises, to do the same.

“Our country is ahead of the curve on its digitalisation roadmap.

“Having a plan is one thing; executing it should go hand in hand. As such, with ongoing government support and international collaboration, we are poised to achieve the ambitious objectives
outlined in NIMP 2030,” said Arham.

As these strategic initiatives unfold, MIDA is steering Malaysia towards becoming a global leader in high-value industries, marking a significant stride in the nation’s economic development trajectory.

Source: Bernama

MIDA’s Strategic Role in NIMP 2030 to Attract High-Value, Quality Investments

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Malaysia’s trade and investment prospects with Singapore will likely be bolstered with the passing of the republic’s leadership from Prime Minister Lee Hsien Loong to his deputy Lawrence Wong.

Economists contacted by Business Times also said Singapore was expected to use Johor even more to support its investments in the country, particularly given the republic’s good relations with His Majesty Sultan Ibrahim, King of Malaysia.

Lee, 72, is stepping down on May 15 after two decades in office, handing the reins over to Wong, 51.

Malaysian Institute of Economic Research economist Dr Shankaran Nambiar expects Wong to continue Lee’s policies, particularly when it comes to trade and investment.

The emphasis will continue to be on growth, and that will mean ensuring that trade and investment are given serious consideration, Shankaran added.

“Therefore, Wong is expected to devote more attention to attracting foreign direct investment (FDI) and keeping the growth numbers on track. This will be more pronounced given the challenging external environment.

“Singapore will want to deepen trade relations, although Malaysia’s exports are already being re-exported via Singapore,” he told Business Times.

Nambiar highlighted that given the good relations the King has with the government of Singapore and since Johor is a convenient hinterland for Singapore’s investments, one can expect greater use to Johor to support Singapore’s investments.

This may take the form of housing and land development, but it will also extend to the location of investments in Johor.

Wong might also see value in being a partner in Johor’s development as a hub for service providers, he said.

Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun said the bilateral trade and investment relations had remain very stable over many leaders on both sides.

So, he noted that it would continue into the future under Wong’s administration.

“Singapore has an established and tested set of domestic and foreign policies. But it is also famous for being pragmatic and innovative. The persistent global economic slowdown affects not only Singapore but all trading nations in Southeast Asia.

“So, all of us would have to figure out how to transform our economies into more resilient ones and Singapore is usually the leading example in this,” he added.

The total trade between Malaysia and Singapore for the first half of 2023 amounted to US$301.2 billion (about RM1.29 trillion), reflecting a 4.6 per cent decrease compared to the same period in 2022.

Singapore and Malaysia were each other’s second-largest trading partners in 2022, with bilateral trade reaching U$83.53 billion.

Singapore also ranked as one of Malaysia’s top sources of foreign direct investment, contributing 8.3 per cent to Malaysia’s total investments in 2022.

Early this year, Malaysia and Singapore signed an agreement to work together on the creation of the Johor-Singapore Special Economic Zone to be located in the state of Johor.

Additionally, both countries are also working on the proposed high-speed rail project that would connect Malaysia to Singapore. The project is currently being revived after being cancelled in 2021.

Meanwhile, Nusantara Academy for Strategic Research senior fellow Dr Azmi Hassan said there would not be much difference in trade and investment relations with Singapore under Wong.

He noted that however, Wong represents the fourth generation, which is a departure from Lee’s generation and therefore, his administration style will likely be significantly different.

“More importantly, Wong needs to demonstrate his capacity to serve as PM, and he doesn’t have much time, perhaps less than a year before the general election in Singapore, possibly by the end of this year or early 2025.

“To prove his capability, he will likely adopt a stricter approach and prioritise policies that benefit Singapore over its neighbors. This marks a notable difference, particularly in the context of relations with Malaysia and Singapore,” he added.

With Wong assuming office on May 15, Azmi said the era of Lee Kuan Yew’s family legacy in the political arena comes to an end.

However, he noted that we must pay attention because Wong needs to demonstrate his ability to lead Singapore toward a better future.

While Wong has displayed leadership as the deputy prime minister, these instances occurred under Lee’s administration.

“When a leader needs to establish their capabilities, they may implement policies that prioritise Singapore’s interests over those of its neighbours. It’s worth noting that Wong wasn’t the first choice to succeed Lee Hsien Loong, adding more pressure on him,” he said.

Source: NST

Incoming Singapore PM may use Johor as launch pad for more investments, says analyst

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The East Coast Rail Link-Economic Accelerator Projects (ECRL-EAPs) is set to boost socio-economic activities in various sectors such as construction, tourism, trade and industrial development, says the Malaysian Investment Development Authority (Mida).

The ECRL-EAP is an infrastructure project which started in April 2019 in collaboration with Mida and China Communications Construction Co.

Mida emphasised that the ECRL is replete with opportunities for local companies and it would be a huge loss if these were to go untapped.

Given that the project is the largest ever to be undertaken along the East Coast alignment, it would be ideal for all companies to seize opportunities that arise.

“Areas that could be further explored – being EAP enablers – are construction (products and services); renewable energy; sustainability products and services; education and training centres; shared utility service like waste management and research and development.

“This will create more economic opportunities and new jobs at each of the EAPs,” the agency told Bernama.

Mida also said that the successful implementation of the ECRL requires cooperation and collaboration among all stakeholders including local governments, key transportation players, government-linked investment companies (GLICs), financial institutions and local communities.

“Mida is eager to support businesses eyeing ECRL-EAP investments. This will enhance the project’s allure for investors.

“This effort is crucial in maintaining an edge over competing initiatives, like the proposed Thailand’s Kra Land Bridge.

“We are calling on more companies to join forces with the government via Mida, amplifying this groundbreaking initiative,” it said.

Mida will also promote programmes in Kelantan, Terengganu, Pahang and Selangor related to the ECRL-EAPs.

It has also initiated engagements with key stakeholders including local governments, industry associations, park managers and developers, GLICs and real-estate investment trusts to raise awareness of the EAPs and to reach a wider audience among potential investors.

“Participation from all stakeholders is highly important. Issues like environmental challenges – such as floods, infrastructure, utility readiness, zoning restrictions and land categorisations – have been identified.

“To address these concerns, Mida is currently working closely with key stakeholders such as utility providers, state governments, associations and developers and other key stakeholders to make sure that the issues are addressed and an enabling environment is provided for development and investment along the route,” it said.

Mida, through the domestic investment coordination platform (DICP), which is under the domestic investment division, plays a role in connecting investors with financiers.

According to the agency, the DICP facilitates direct engagement between investors and financiers, allowing them to discuss funding options, negotiate terms and explore alternative financing arrangements.

The ECRL is a Malaysian project costing RM50.27bil. It is currently under construction and aims to connect the east coast city of Kota Baru in Kelantan to Port Klang, Selangor, on the the west coast.

The electrified train will run on a standard gauge double-track railway connecting the East Coast Economic Region states of Pahang, Terengganu and Kelantan to the central region.

It is expected to spur economic growth in areas along its route.

Spanning 665km, the ECRL is poised to be a game changer for Malaysia, linking the country closely to the Pan-Asia railway network and enhancing connectivity with Asean and Eurasia regions.

The project is targeted for completion in December 2026 and operational in January 2027.

The ECRL is expected to raise Malaysia’s gross domestic product by 3.8% in 2047 by enhancing trade, boosting tourism and stimulating regional development.

The ECRL-EAPs are anticipated to generate RM1.4 trillion for the Malaysian economy by 2047, with a focus on industrial parks, logistic hubs and transit-oriented developments.

“This strategic initiative aims to improve connectivity and economic activities along the ECRL route and to ensure inclusive growth across all participating states.

“The EAPs seek to tackle income and wealth disparities by fostering a shared prosperity agenda,” said Mida.

As of February 2024, the project had reached 62.4% completion, with each state’s alignment progressing steadily.

Source: The Star

Opportunities in ECRL-related projects

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South-East Asia could unlock US$300 billion (S$407 billion – RM1.43 trillion) in additional annual revenues from green investments by 2030 if governments step up cooperation on regional grids and carbon markets and offer better incentives for clean energy and clearer rules on green financing, says a report released on April 15.

The rapidly growing region of nearly 700 million people remains heavily dependent on fossil fuels for energy. However, it faces a narrow window of opportunity to step up green investment to rein in the rapid growth of greenhouse gas emissions that are driving climate change, says the report by Bain & Company, GenZero, Standard Chartered and Temasek.

Titled South-east Asia’s Green Economy 2024 – Moving The Needle, the report outlines a range of opportunities for the region to cut greenhouse gas emissions and meet national climate targets, while also improving energy and food security. What is missing is US$1.5 trillion in finance, policy incentives and regional cooperation to make this happen, according to the authors.

A key theme of the report is that many of the green investments can be deployed now and rapidly scaled up to make a real difference in cutting planet-warming emissions that are also causing air pollution across the region.

“In South-east Asia, we’re seeing opportunities that are extremely actionable in the near term,” said Ms Kimberly Tan, head of investments at GenZero, an investment platform founded by Temasek that is focused on accelerating decarbonisation. “We believe that investments into the green economy could generate as much US$300 billion in annual revenues by 2030.”

Nature and agriculture, transport and power generation represent US$220 billion of the total revenues. For example, investments in sustainable rice cultivation could cut water use and emissions of methane, a powerful greenhouse gas. Nature-based solutions such as protecting rainforests and replanting mangroves could suck planet-warming carbon dioxide (CO2) out of the air while benefiting local communities – mangroves are excellent fish nurseries and protect coastlines from storms.

Ramping up deployment of wind, solar and battery storage could help the region cut its reliance on coal and gas for power generation, while mandates on energy efficiency in buildings could also reduce electricity demand growth.

These are among 13 investable ideas across four sectorial themes: nature and agriculture, power generation, transport and buildings highlighted by the report, which was released on the sidelines of Ecosperity Week 2024 at the Sands Expo and Convention Centre.

But the financing gap remains vast. The report says green investments in the region rose 20 per cent year on year in 2023 to US$6.3 billion. But this is a fraction of the US$1.5 trillion needed to accelerate South-east Asia’s green transition and to meet its 2030 climate pledges under the United Nations Paris climate agreement.

Mr Dale Hardcastle, director of the global sustainability innovation centre at Bain & Company, told a media briefing on April 11: “Immense potential exists to accelerate the energy transition and build the green economy. We need to start with what we can do here and now, and not miss the opportunity at hand.”

The region’s 10 economies are rapidly growing and will need major investments in energy, especially renewable energy for power generation, in the decades ahead.

For instance, the 7th Asean Energy Outlook, a 2022 report by the Asean Centre for Energy, estimates that electricity generation capacity will more than double between 2025 and 2050 based on the region’s current climate policies. Total energy-related greenhouse gas emissions will also double by 2050 to four billion tonnes of CO2 equivalent.

But with the jump in emissions come growing climate risks, notes the report, with Asean already one of the regions highly vulnerable to increasing heat, more intense storms and floods, and rising sea levels.

By 2030, the region needs to cut emissions by a total of 2.4 billion tonnes of CO2-equivalent if it is to meet national climate pledges, the report says.

Asked what is holding the region back, Mr Hardcastle offered three reasons.

“There’s the challenge of competing priorities for governments,” he said. “Leaders not only have to balance thinking about the post-Covid-19 world, but they also have to balance rapidly growing economies and the need to increase energy.” He pointed to millions of people still without access to the power grid.

The second challenge is incumbency, which is the region’s deep dependency on fossil fuels for energy. And in some Asean nations, coal, oil and gas are also major sources of export earnings.

Mr Hardcastle pointed to the region’s large and young fleet of coal-fired power stations. Closing these down early and replacing them with renewable energy is a very costly challenge, though efforts are under way to try to figure out how to do this.

“Thirdly, we’ve still not had sufficient incentives or access to capital to be able to move at the pace that we want,” he said. But he noted progress in new types of financing that help lower the cost and risk of green investments, such as blended finance. This combines public and private money, such as grants, concessional loans and commercial capital.

“The change and the transformation we’re seeking… is unprecedented,” he added.

Ms Tan pointed to the region’s low level of renewable energy deployment and nascent electric vehicle industry. Much of its agriculture also remains unsophisticated compared with the large-scale farms in the West, mainly because many smallholders do not have access to technology.

“Many of these decarbonisation investment ideas will take time, but you definitely need to act as soon as possible,” she said.

Sorce: The Straits Times/ANN/The Star

Asean could reap RM1.43 trillion in extra revenues if green investments are scaled up, says report

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The Ministry of Investment, Trade and Industry (Miti) will draw up a comprehensive semiconductor strategic plan to ensure that Malaysia continues to be the chosen investment destination for this strategic industry, said Prime Minister Datuk Seri Anwar Ibrahim.

Anwar, who is also the finance minister, said the matter was decided in the third National Investment Council meeting this year, which he chaired earlier on Tuesday.

Anwar said the strategic plan will include a more attractive incentive package to enhance the inclusion of strategic investments in high-tech semiconductors, particularly to encourage more front-end activities in the semiconductor industry in Malaysia.

“Rightly, this is important to attract the interest of various international semiconductor companies to establish high-quality semiconductor manufacturing facilities in Malaysia,” said Anwar through a post on his official Facebook page on Tuesday.

Anwar said the meeting, among other things, also examined the country’s current position and future prospects for the semiconductor industry, including support for various expansion proposals that had been submitted to the prime minister.

“The meeting also discussed a proposal for the development of the Kerian Integrated Green Industrial Park (KIGIP), and agreed that it should be implemented as a joint venture by the government-linked investment company, in collaboration with the federal government and the Perak government.

“This is a starting point for the Madani government’s efforts to accelerate the development of the KIGIP, which is seen as one of the main catalysts to attract green investments into the country.

“Furthermore, the operation of the KIGIP will be entirely generated with renewable energy, in line with the country’s aspirations towards achieving carbon neutrality as early as 2050,” added Anwar.

Meanwhile, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz through a separate post on his Facebook page said the strategic plan to be launched will be in line with initiatives under the New Industrial Master Plan 2030 (NIMP 2030).

“The NIMP 2030 set investments in wafer fabrication activities as one of the projects to further strengthen Malaysia’s position as a major player in the semiconductor sector in the region,” he said.

Tengku Zafrul said the strategic plan to be drawn up is important to attract the interest of various international semiconductor companies to transfer or establish their respective high-quality semiconductor manufacturing facilities to Malaysia.

Source: Bernama

Anwar: MITI to draw up comprehensive semiconductor strategic plan

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The Malaysian Investment Development Authority (Mida) has appointed Sikh Shamsul Ibrahim Sikh Abdul Majid as its new chief executive officer, effective April 18, 2024.

Sikh Shamsul will be succeeding Datuk Arham Abdul Rahman who retires on April 17, Mida said in a statement today.

“Since joining Mida in 1996, Sikh Shamsul has occupied various leadership roles, including executive director for manufacturing development and investment promotion, and most recently, senior executive director of investment policy advocacy.

“He brings approximately 28 years of dedicated service to Mida, during which he has been pivotal in defining the strategic direction of the agency and elevating Malaysia’s investment environment,” said the agency.

Mida said Sikh Shamsul has led initiatives that significantly bolstered both domestic and foreign investments, showcasing his profound grasp of economic trends and policy advocacy.

“This strategic appointment underscores Mida’s commitment to fostering economic growth and diversification, in line with its mission of building dynamic and sustainable investment ecosystems to attract quality investments,” it said.

Meanwhile, MIDA also lauded Arham for being instrumental in steering the agency towards groundbreaking achievements since becoming its chief executive officer on April 1, 2021.

“Under his leadership, Mida has seen historical achievements in approved investments and unprecedented growth in areas such as high-tech investments and digital transformation.

“These have significantly enhanced Malaysia’s economic resilience and competitiveness on the global stage,” it added.

Source: Bernama

MIDA appoints Sikh Shamsul as new CEO

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The Malaysian Investment Development Authority (Mida) plays an instrumental investment facilitator role in removing obstacles for prospective investors, said Investment, Trade and Industry (Miti) Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

He noted that Mida, which was established in 1967, has now transformed into Malaysia’s key investment promotion and marketing agency, a strategic move to strengthen the country’s investment landscape, ensuring that the nation remains a competitive and attractive investment destination.

“It is on that note that I would like to further expand on Mida’s contribution to Malaysia’s socio-economic growth, and what better way to recognise Mida’s valuable legacy than through the coffee-table book that we are launching,” he said at the launch of the coffee-table book, titled “Stepping Stones: Mida’s Journey”, here on Tuesday.

Also present was Mida’s chief executive officer (CEO) Datuk Arham Abdul Rahman and Hong Leong Bank (HLB) group managing director and CEO Kevin Lam.

The book was penned by Malaysian National News Agency (Bernama) former chairman Datuk Seri Azman Ujang and former editor-in-chief Datuk Yong Soo Heong, along with biographer and publisher Bernice Cynthia Narayanan.

Tengku Zafrul said that the book is a must-read for anyone looking to delve into Malaysia’s industrial policymaking and nation-building journey, post-independence.

“I was told that the ‘Stepping Stones: (Mida’s Journey)’ book project began a decade ago, so I must say well done to Datuk Arham, whose leadership eventually brought Mida’s stories from concept to print.

“The collaboration with Mida also goes deeper than a simple partnership; banks like Hong Leong [Bank Bhd] (HLB) have a key role to play in supporting a vibrant industrial and investment ecosystem, and in advancing Malaysia’s socio-economic prosperity,” he added.

Meanwhile, in a joint statement on Tuesday, Mida and HLB said they have inked a memorandum of understanding, forming a strategic collaboration that pledges to support the overall investment ecosystem and provide comprehensive financing and banking services for businesses entering the Malaysian market.

The collaboration is aligned with the government’s commitment to making Malaysia the chosen investment destination for foreign and domestic investors and businesses, the joint statement said.

The agreement marks a commitment by both parties to foster a strategic alliance that promotes sustained business growth and engagement across Malaysia’s small and medium enterprises and commercial sectors, Mida and HLB said.

Source: Bernama

Tengku Zafrul: MIDA a vital instrument to remove obstacles for prospective investors

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Hong Leong Bank Bhd (HLB) has formed a strategic collaboration with the Malaysian Investment Development Authority (Mida), pledging to support the country’s overall investment ecosystem and provide comprehensive financing and banking services for businesses entering the Malaysian market.

Malaysia approved RM329.5bil in investments across various economic sectors for 2023.

Boosted by the recent injection of investments and a robust economic framework, the government hopes to elevate Malaysia’s standing on the global stage, establishing the country as a prime investment destination by ensuring a seamless and integrated investment process, the two parties said in a joint statement.

The agreement also marks a commitment by both parties to foster a strategic alliance that promotes sustained business growth and engagement across Malaysia’s small and medium enterprises and commercial sectors, said HLB and Mida.Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, who witnessed the signing of the memorandum of understanding (MoU) for the collaboration, said the key to all development activities is partnership.

“Partnerships with government, civil society and the private sector are crucial for nation-building as well as regional cooperation. Through such partnerships, we are setting the stage for Malaysia to shine as a preferred investment destination.

“The Mida-HLB MoU aligns with our roadmap for a thriving economy, with opportunities for all, enabling us to look forward to a future where we build on our proud achievements, and collaborate towards more economic innovation and success,” Tengku Zafrul added.

“The collaboration with Mida also goes deeper than a simple partnership; banks like HLB have a key role to play in supporting a vibrant industrial and investment ecosystem, and in advancing Malaysia’s socio-economic prosperity,” he added.

Tengku Zafrul noted that Mida, which was established in 1967, has now transformed into Malaysia’s key investment promotion and marketing agency, a strategic move to strengthen the country’s investment landscape, ensuring the nation remains a competitive and attractive investment destination.

Source: The Star

Hong Leong Bank signs MoU to promote investments in Malaysia

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The plans to establish an integrated circuit (IC) design hub in Selangor are in place as part of the state administration’s efforts to expand Malaysia’s semiconductor industry, said Ng Sze Han.

Following a recent trade visit to several of China’s tech-savvy cities and Hong Kong, the state executive councillor for investment, trade, and mobility said the move is a step forward in creating a comprehensive semiconductor ecosystem, and hinted that more announcements on the industry expansion are expected soon.

“Selangor will be stepping forward to build a more complete semiconductor ecosystem in the country by setting up an IC design hub, which houses a few hundred IC design engineers.

“Stay tuned for more exciting announcements soon,” he said in a Facebook post yesterday.

During the six-day trade visit, Ng said Selangor engaged with semiconductor industry players in the cities of Suzhou and Shenzen, as well as in Hong Kong, where they were encouraged to invest in the state.

“In a short six-day visit, we traveled from Suzhou to Shenzhen and lastly to Hong Kong. We attended 21 meetings, as well as engaged with 16 semiconductor companies and ten agencies,” he said.

Previously, during the State Legislative Assembly sitting, Ng said the Selangor government will unveil its plan to develop the semiconductor industry in the state.

The strategy, which will be announced by Menteri Besar Dato’ Seri Amirudin Shari, will focus on semiconductor manufacturing and include its design aspects.

Similarly, Amirudin said the state government’s position will focus on the semiconductor industry this year in a bid to enhance its economy and better compete against countries in Southeast Asia.

Selangor is embarking on a strategic move to attract more businesses involved in the industry to invest in the state amid the ongoing trade tensions between China and the United States.

He added that the state government is currently engaging in discussions with industry players from both China and Taiwan to realise this goal.

Source: Selangor Journal

Exco: Selangor to set up chip design hub for semiconductor industry expansion

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EP Manufacturing Bhd (EPMB) said it has teamed up with China-based BAIC Motor Corporation Ltd to assemble and manufacture BAIC’s authorised model vehicles in Malaysia.

The auto parts maker said its wholly-owned unit PEPS-JV (Melaka) Sdn Bhd (PJVM) had a week ago signed an agreement with BAIC, which is part of Beijing Automotive Group Co Ltd, a Fortune Global 500 company and one of China’s largest carmakers.

Under the 10-year agreement, PJVM’s responsibilities include assembling and manufacturing the vehicles in Malaysia, ensuring that the assembly plant has a capacity of at least 5,000 vehicles per year by Sept 1, and at least 10,000 vehicles per year by March 1 next year, said EPMB in a bourse filing on Monday.

PJVM must also procure all necessary devices, equipment, permits, or approvals for vehicle assembly and manufacturing and bear relevant expenses.

BAIC’s obligations, meanwhile, involve authorising PJVM to assemble and manufacture the vehicles, providing technical support and training for assembly and manufacturing, and overseeing the assembly process.

EPMB said the agreement replaces a memorandum of understanding between the group and BAIC entered into in August last year, for the development of BAIC’s BJ40P and X55II sport utility vehicles and right-hand drive electric vehicles for Malaysia and other Southeast Asian right-hand drive markets.

EPMB noted that the latest agreement allows vertical integration of the group’s operations to tap into the expanding automotive market, expanding its income stream, and enhancing the group’s financial stability and long-term prospects.

“The strategic collaborations with original equipment manufacturers from China signify our commitment to charting a course towards better profitability for our stakeholders,” added EPMB executive chairman Hamidon Abdullah in a statement.

Notably, EPMB announced an investment of over RM100 million in October last year to construct an automotive manufacturing plant in Melaka for BAIC and Great Wall Motor vehicles at the Hicom Pegoh Industrial Park in Alor Gajah.

The facility, developed in multiple phases, is expected to create about 1,000 new jobs once fully operational, and will initially produce up to 30,000 vehicles annually.

Shares in EPMB closed 1.5 sen or 2.21% lower at 66.5 sen on Monday, giving the group a market capitalisation of RM146.49 million.

Source: The Edge Malaysia

EP Manufacturing inks deal with China’s BAIC for vehicle assembly in Malaysia

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