The ASEAN Business Advisory Council (ASEAN-BAC) Malaysia held a consultation meeting last Friday with business associations representing US businesses to discuss Malaysia’s efforts in attracting foreign direct investment (FDI) from the United States and its business communities.
“Malaysia has long been and continues to be a key trading partner with the United States. U.S. companies consistently rank among the largest employers in states like Penang and most U.S. company subsidiaries are managed by Malaysians and employ over 90% Malaysian employees.
In the manufacturing sector, the United States is second only to Japan in investments, at nearly US$25 billion, including from high-tech companies such as Intel, First Solar, and Hewlett Packard.
The continuation of a strong and collaborative relationship between the United States and Malaysia and the enhancement of policy consultative mechanisms will strengthen the business climate enabling Malaysia to continue to attract U.S. economic and commercial activity,” said Ambassador of the United States of America to Malaysia His Excellency Brian D. McFeeters.
1. Malaysia remains an attractive investment destination for US companies but more public-private dialogues needed
“Investment intentions remain healthy and foreign investors’ confidence in Malaysia remains high,” according to Malaysian Investment Development Authority (MIDA) Deputy CEO (Investment Promotion & Facilitation) Mr Sivasuriyamoorthy Sundara Raja.
Malaysia is the fourth-largest economy in ASEAN, strategically positioned in the heart of Southeast Asia where it is well serviced by all primary air and shipping lines. The country was ranked the second most competitive country in ASEAN in the IMD’s World Competitiveness Yearbook 2021.
“Malaysia has made impressive achievements amidst these challenging times, as seen by its over 200% increase in FDI inflows in the first half of 2021. American businesses are encouraged by this positive growth and we hope that Malaysia will continue establishing a conducive business ecosystem with robust and resilient supply chains to spur more investments, jobs and economic opportunities,” said US-ASEAN Business Council (USABC) Senior Vice President and Regional Managing Director Ambassador Michael W. Michalak.
A conducive business ecosystem, he added, would include continuous public-private consultations to ensure that businesses are involved in the crafting of policies that would affect them, in addition to ratifying key trade agreements that Malaysia has signed such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP).
2. Political stability is the first step towards economic growth and recovery
The need for political stability, continuous dialogues between the public and private sector, and ratification of trade agreements such as the CPTPP were common threads echoed by panellists throughout the consultation.
“We are as concerned as foreign businesses are with the dysfunction in government caused by domestic political turmoil on top of the unprecedented crisis caused by the COVID-19 pandemic,” said ASEAN-BAC Malaysia Chairman Tan Sri Dato’ Dr Munir Majid.
“We make business representations, even express personal views. But Malaysia’s attractiveness for foreign investment remains and can be enhanced. We hope that with the new government and understanding with the opposition there will be a much-needed respite for the country to get down to business for economic benefit,” he stressed.
ASEAN-BAC Malaysia Council Member Tan Sri Yong Poh Kon concurred, adding that the ratification of the CPTPP could serve as an anchor and catalyst for change since its provisions would impose a wide range of standards that both the public and private sector would need to comply with.
3. Malaysia needs to be decisive to attract value-added investments in priority sectors
Malaysia has established itself as an attractive cost-competitive investment location in the region and it is fast becoming a preferred centre for shared services and technology industries. The country was ranked the fifth top performer globally in terms of digital legal framework readiness in the World Economic Forum’s Global Competitiveness Report 2020.
“Malaysia remains an important destination for American investment, but headwinds present challenges. Malaysia needs to be decisive to attract value-added investments in priority sectors when U.S. businesses re-evaluate regional investment. This includes sustainability issues on the environment and labour, and the implementation of laws promoting digital services and trade,” said American Malaysian Chamber of Commerce (AMCHAM) CEO Ms Siobhan Das Bachran.
In supporting this view, ASEAN-BAC Malaysia Council Member Mr Raja Singham opined that the country would need a stronger digital workforce if it wants to grow its digital industries.
He added that the Malaysian workforce is talented and can flourish if given the right environment, platform, and training — but this would require input from employers on where the gaps and demand for skills are.
“As a leading investment destination guided by future-proof policies and economic transformation initiatives, Malaysia continues to attract multinationals and fast-growing companies seeking a broad reach into Asia. Greater Kuala Lumpur is home to a growing number of world-renowned U.S. companies and we continue to welcome future-forward companies driven by next-generation industries to realize their vision here,” said InvestKL Corporation’s Director of Investor Relations (Americas) Ms Vivian Sia.
CARI ASEAN Research & Advocacy Executive Director Ms Jukhee Hong, for her part, stressed that there is a need for more policy dialogues to reinforce the voice of the private sector.