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MIDA helping Malaysian investment with a Midas touch

Interview - January 14, 2014
MIDA - or the Malaysian Investment Development Authority - is the government's principal agency for the promotion of investment, and as its chairman Tan Sri Amirsham A. Aziz tells PM Communications, with Malaysia gearing up for the formation of the ASEAN Economic Community (AEC) in 2015, the country has the infrastructure, the talent and the technology in order to take advantage
With regard to AEC 2015, considering that as soon as the barriers come down there will be free flow of trade, labor and there are going to be huge pressures, what role do you feel will Malaysia play within ASEAN? How is it going to set itself apart?

You know, of course we are all looking towards getting an opportunity of growth in this part of the world.

The real question is in which of the countries within this area investments will be allocated. MIDA have worked very hard to ensure that Malaysia is the first choice for investors. We have set ourselves a tremendous target in terms of what is the size of investments we’re looking at for the next five years as we walk towards 2020. And I think we should do well to achieve an incoming investment of about USD50 billion (RM148 billion) per year, which represents a gross 10.9% growth rate in private investments. The top priority of MIDA is to make Malaysia a preferred investment destination.

Secondly, we are not just considering any investment, what Malaysia is focused on are quality, high-value investments in terms of high technology, high-value knowledge, research and development and skills intensive. We are not promoting Malaysia as a better investment place because labour is cheap, but we are promoting the country as a location where you can drive your business through technology.
It is quite obvious to see, there are huge infrastructure projects right now in the ASEAN region. In recent years you’ve been focusing on infrastructure development, are you working with any international partners to do so, and how is connectivity a factor?

Well, infrastructure development is essential to get investors confident about investing in this country [and] we provide first class infrastructure throughout the country. The physical connectivity within the country works through rails and roads and seaports.

We talk about infrastructure in terms of capacity - like in ports and airports - we have all of our facilities in the locations where we think investors should be. As for connectivity within ASEAN, that is really something Malaysia is looking forward to implement because intra-ASEAN trade itself is huge, so connectivity between Malaysia, Thailand and most part of ASEAN is something we share. Especially in this bigger economy we’re dealing with.
Looking within ASEAN as well is not always good news, certainly there are going to be a lot of pressures with a single marketplace. In what way are you preparing so that as an entity MIDA can address the pressures of inflow of labour and expertise? How do you plan to support the actual work force here to ensure that there’s no division and everyone gets a fair opportunity? 

The most important thing is talent. Malaysia is a great place where we build talent that we’re able to fit into the system, to provide all the jobs and support the industry. So yes, I would say that talent is cheaper here if compared to some other countries in this part of the world but it is also of a high quality. Human capital is very much easily trainable for many sectors of the economy. We speak English in order to get a wider perspective and at the same time the education process that we have ensures continuous flow of the right talents based on the needs of the industries. The government also ensures that the industries have access to foreign expertise through a well managed approach.
In terms of investment trends there has been a recovery following the 2008 crisis. So, looking at investment trends and patterns, what do you think is changing right now? Obviously China and India are big players globally, but looking at Malaysia specifically, how has the investment trend evolved over the last few years?

Well, if we consider investment coming from abroad, electrical and electronic industry is one of the biggest segments that we are fostering. We’ve been in this industry for more than 40 years, this means that it is skilled, and the eco-system that we have created – a reliable and good supply chain that supports new investment coming to the country – will facilitate local sourcing of new investors and support the growth of local industry. Same thing with the talent that we’re talking about, we are continuously supplying talent for this group of industries.

So, we are focusing on specific areas that we have identified in our national economic plan, i.e. the 12 key economic areas that include sectors like the oil and gas, electronic and electrical, services, tourism, education, and these are among the 12 industries we consider to have competitive advantages on and a strong talent pool. So we’re not opening ourselves to any other industry that is too much dependent on high foreign labour content.
As more and more investors come to the country, what kind of protection do you offer in terms of governance, accountability, and transparency in setting up operations here? How does MIDA perhaps facilitate and aid these companies?

I guess that, from an investor perspective, if I look at the feedback that we got, we are a perfect choice in terms of investment. MIDA is a very transparent organisation, very focused on assisting companies investing in our country to ensure that they are able to drive their business without any difficulty. So we provide supportive actions for many of the companies that are coming to Malaysia; we assist them with all the licenses and legal requirements from the federal government perspective, the state government perspective, and the local government perspective.
Investments in Malaysia through MIDA have increased by 90% last year. What have been the main innovations and the main strategies that produced such an increase?

Well, I think that many aspects are due to the world economic situation. After 2008, investors came back to this part of the world, the Americans and the East-Asian investors are flowing in all sectors. In addition to this, we have taken an ecosystem approach to identify key companies in the ecosystem of specific industry to ensure the effective development of the sectors.
What about the UK? I know MIDA attended the World Investment Forum two years ago there and obviously London is still the main hub. In what way might you work with the UKTI or what kind of cooperation have you had directly with the UK to attract more investments here?

MIDA deals in all investment fields except for financial and utilities services. The UK is still one of our major investment partners. As of June 2013, UK investments in Malaysia stand at USD 1.9 billion in the manufacturing sector alone. It is not that big, of course we hope there will be more UK investments coming in but you know certainly that many of the investors, other than from the UK, have seen more capital opportunities here in this area.

These include the Singaporeans, Japanese, Koreans, and Americans. We believe the longstanding ties between the UK and Malaysia will further boost both investment and trade. MIDA will continue to work with key UK entities to assist UK based companies to explore investments in Malaysia.
But internationally the UK is still the second biggest institutional investor. After the FDI analysis they are second only to the US; and obviously there are other places like Thailand or Philippines, which are of interest. I was wondering in such a competitive region perhaps more could be done for Malaysia to attract this investment?  Could more be done from, let’s say, the public and the private sectors together?

Well, sometimes I throw that question back to the people in the UK - “What are you exactly looking at?” - Because the rest of the world has taken note of important Malaysian investments in good infrastructure and good locations, to continue their expansion here, both in the manufacturing and the services industries. Well, I think that UK’s advantage is mainly in the financial sector. I’m still proud to see that Malaysia is one of the leading banking and financial services destination, the regulators are very committed, we have very clear rules and regulations and we have a strong compliance to the twelve principles.

On the collaboration between the private and public sectors, we have seen close partnership between the government and private enterprises in various projects in Malaysia. Certainly, there is room for further collaboration and we see this strengthening going forward.
We are also quite curious about Malaysia’s so called ‘Five Corridors’, which prove to be high-tech, diversified economic areas. What would you say are the key benefits of investing in these five particular areas?

Well the Five Corridors we’re talking about are a structure to promote geographical destinations within Malaysia and each one has its own competitive advantage.

For example, the Southern region is very focused on education and what we call leisure and tourism industry. The reason for that is because it is located near Singapore, which has got a lot of traffic movement from the rest of the world. So we strategised that location for that kind of industry. On the other hand, the Northern corridor has been blessed with talent and infrastructural ecosystem, which allows a continued growth in the electronic and electrical industry, medical devices and so forth. All things considered we know that certain locations in Malaysia have got certain advantages and we’re trying to dive into those segments to make the best for the return on investments for investors. 
Finally, what do you think should be the last message? It doesn’t have to concern economic ground necessarily, but what should investors know about Malaysia?

It is a country that counts on 50 years of independence.  We’ve barely had any major problem in terms of political upheaval, we are now moving forward to a greater stability and that’s what I look forward to. We are a peaceful country with good infrastructure that is working very hard to prove itself and be a better performing country.