BRIEFING ON MALAYSIA'S INVESTMENT CLIMATE TO CNAIC BOARD MEMBERS

Briefing on Malaysia’s Investment Climate

by Ms. Sharon Ho, President of MFTC

to CNAIC Board Members, 3 June 2020

Good morning Chairman Lin Por-Fong,

Board Members of CNAIC

First and foremost, I would like to thank Chinese National Association of Industry and Commerce (CNAIC) for giving me this opportunity to present an overview on the current Investment climate in Malaysia.

Today, I would like to highlight five key points in my presentation:

First, I would like to introduce MIDA (Malaysia Investment Development Authority) which is the first point of contact for companies wish to do business/investment in Malaysia. MIDA is the principal agency of Malaysia which has 20 representations abroad. For Taiwan, Syakella Zakaria is the MIDA representative based at the Malaysian Friendship and Trade Centre. MIDA is unique from Investment agencies worldwide. Apart from promoting investment, MIDA has the approving authority for manufacturing licenses, tax incentives, import duty exemptions and expatriate post.  Finally, MIDA is also responsible to ensure that projects approved are implemented on schedule.

Second, I would like to highlight the primary objective of Malaysia’s investment policy, which we have put in place for the last 20 years. Our objective is to position Malaysia as a hub for R&D, High Technology Industries and Global Services. The end game, we hope to achieve out of this policy:

1. Malaysian would like to increase economic complexity where we want  foreign  companies like Taiwan to set up operations in Malaysia that produce high value added products and services;
2. Create High Value Jobs for our graduates and talents in Malaysia. Currently, there are more 11,000 Malaysians students in Taiwan studying in a range of fields in various universities in Taiwan. According to the Ministry Labor of Taiwan, Malaysia is ranked as the second largest foreign professionals in Taiwan after Japan. We hope our investors can provide job opportunities to our Malaysian graduates from Taiwan.
3. Malaysia would like to integrate its local companies into global value chain;
4. Malaysia’s local companies to grow their businesses and eventually become MNC on their own. It is hope that these Malaysian companies would also eventually invest in overseas like Taiwan.
5. Malaysia is looking at new technologies or cluster of technologies.  Taiwan has a competitive edge in digital technologies, Artificial Technology, IoT, Big Data, etc in various economic sector. Malaysia looks forward to having collaboration with Taiwanese companies.

Third, 2019 economic performance and the impact of COVID-19 on Malaysia’s 2020 economy.

• In 2019, Malaysia’s GDP grew by 4.3 percent. Investment approved in 2019 totaled USD 50 billion (RM 207.9 billion). This investment is the whole approval for services and manufacturing sectors.

• As for manufacturing sector is concerned, In 2019, Taiwan is ranked as Malaysia’s 4^th largest investor. A total of 28 projects valued at USD 1.28 billion with participation from Taiwan has been approved. These projects are expected to create 3,642 jobs opportunities, with focus on various industries in the manufacturing sector including electronics and electrical products, scientific and measuring equipment, chemical &chemical products, plastics products and fabricated metal products.

• In the face of COVID-19 in 2020, no countries including Malaysia are excluded from the impact of COVID-19.  Like many countries, production, sales and exports of various economic sectors are severely affected and encountered billions of losses in economic output during the first quarter of 2020. Therefore, Malaysia’s Central Bank has now projected Malaysia’s economic growth in 2020 at the range between -2 percent to 0.5 percent.  According to the latest release by Central Bank of Malaysia, Malaysia’s GDP grew at 0.7 percent in the first quarter of 2020. We hope this encouraging sign would continue at the subsequent quarter of 2020.

• If not due to COVID-19, Malaysia’s 2020 economic growth is projected to be at the range between 3.9 percent to 4.2 percent.

Fourth, Malaysia’s approach in combating the pandemic and mitigation measures that the country has put in place;

• Like most countries, Malaysia implemented the Movement Control Order starting 18 March to prevent further spreading of the virus. With this measure, Malaysia has achieved more than 80 percent recovery cases. During the current period of conditional restricted movement, almost all economic sectors have been allowed to operate, subject to strict compliance to health and safety guidelines.

• To shore up domestic economy and assist businesses, Malaysia announced a stimulus package valued at USD 58 billion, which is about 18 percent of Malaysia’s GDP. It is considered one of the largest stimulus package. This package, not only addresses the health and social impact resulted from COVID-19 but large portion is dedicated to support businesses including small and medium enterprises.

Fifth, how to spearhead our economy in the face of current pandemic and what are the areas we must look beyond the current uncertainties.

• This global pandemic has given us much reflections of our business outlook in the past and present as well as for future gains. Most companies are now exploring new ways of conducting businesses and also diversify their existing businesses.

• During this period of pandemic, we recognize the importance to be self-sufficient in the supply of raw materials. we commend the excellent efforts of Taiwan in mitigating and containing the COVID-19. Taiwan’s exemplary efforts in this regard serves as a good model to many countries worldwide. Taiwan’s success affirms the amount of expertise and competencies of Taiwan’s digital technologies in healthcare and medical sector.

• We also recognize that there are emerging opportunities arises from the low-touch economy.

1. reorientation of global supply chain from low efficiency to resiliency;
2. higher demand from medical product
3. greater reliance of technology – infact digital technology has become a necessity rather an option for many companies

• Having said that, the Government of Malaysia has drawn-up two major policy documents which intend to address the short term and long term impact of COVID-19. Our policy interventions and incentives intend to:

1. retain existing investments – we don’t want our existing companies to redeploy or relocate their operations to other countries or even at the worst case scenario to our neighbouring countries

2. revive domestic investments – why? becoz most more 90 percent of companies in Malaysia are SMEs  and these companies are badly hit by global pandemic. Therefore, policy measure is necessary to 

3. attract new investment and encourage reinvestment by existing companies.

4. attract new investments in selected industries that are classified as strategic in developing the entire local ecosystem

medical devices and pharmaceuticals identified as strategic industry – provide incentives for the whole supply chain. Our policy interventions aim to providing support mechanism for the whole entire sector which we have identified as strategic industry

5. Improve the approval mechanism of investment projects.

Improve the delivery system to ensure all projects are approved at a shorter pace. Position Malaysia as new alternative base for companies wish to relocate their business from another countries to Malaysia.

Director Investment, Madam Syakella Zakaria would provide a quick briefing on Malaysia’s friendly investment policy and incentives offered by Malaysia in potential industries.

Malaysia has good international standing -  Malaysia ranked as the World’s Best countries to invest according to CEO Magazines

Malaysia is also ranked 8^th in exports of High Technology Products, with  total export of high tech products valued at USD 90 billion. This would not possible without a mature ecosystem, talented human resource, infrastructure, and strong engineering supporting industry. Therefore, World Bank predicted that Malaysia is resilient. The World Bank and IMF projected that Malaysia’s GDP growth at a rate of 9 percent in 2021.

Conclusion

Despite these challenges and travel restrictions in place, I would like to welcome and look forward to having investments from Taiwan. 

Thank you.