PETALING JAYA: Investments into Malaysia from the United States are on the rise, based on a new survey as well as official data from the Malaysian Investment Development Authority (Mida), as US-China trade tensions continue to drag on.
A survey by the American Malaysian Chamber of Commerce (Amcham) on American electrical and electronics (E&E) companies based in Malaysia found that 76% of the companies intend to invest further in the country over the next five years.
The 12th Edition of the Malaysian American Electronics Industry (MAEI) Economic Impact Survey, conducted on 37 of Amcham’s members, also found that more than two thirds, or 68%, of the surveyed companies are expecting their businesses to expand in the coming years.
At the same time, Mida said that the country had approved a total of US$5.62bil (RM23.6bil) worth of investments from the US in the first half of the year compared to US$113mil in the previous year, according to a Reuters report.
The increased investments, the news report said, was a possible sign of a business diversion from the US, as trade tensions with China continue to escalate.
“US and Chinese companies alike are looking at moving some of their manufacturing out of China to escape tit-for-tat tariffs imposed on each other’s products, ” the report read.
During the first half, RM1.69bil worth of US investment proposals were approved in the manufacturing sector, compared with RM307mil in the previous year, with the US replacing China at the top of the investment list.
In the services sector, it said proposed US investment jumped to RM11.52bil from just RM42.3mil during the same period last year.
Meanwhile, Amcham said the findings of its survey were testament to the longstanding nature of investments by the US into Malaysia’s E&E sector.
“This being the case, it must be recognised that Malaysia has fast-growing competitors for foreign investment, both within Asean and further afield.
“The global supply chain is fiercely competitive and global multinational companies (MNCs) must take a wide range of cost and capacity variables into account when deciding where to deploy their investments, ” it said in the report.
The report noted that the Malaysian E&E sector is well-equipped to compete on the world stage, with the country currently ranked as the seventh-largest E&E exporter in the world.
In the midst of new trade challenges, it said, the E&E industry had remained resilient and was the only manufacturing sub-sector to register a trade surplus in 2018.
Amcham’s MAEI committee chairman, Datuk Seri Wong Siew Hai, said two of the survey’s findings stood out as they addressed some common misconceptions about the Malaysian E&E industry.
The first, he said, relates to Malaysia’s place within the global supply chain.
“Over the past year, I’ve been asked many times about which new American companies are considering investing in Malaysia as a result of the US-China trade tensions.
“While some new investments may well be under consideration, perhaps of greater significance is the movement of volume or new product lines towards facilities that are already here, ” he said.
Wong noted that the survey identified 12 new product lines relocating to Malaysia within the past year, as well as six research and development (R&D) centres and centres of excellence.
Some of these R&D centers, he said, had relocated from developed countries such as Japan.
“Secondly, our survey addresses the misconception that MNCs do not contribute to government revenues.
“While it is true that many companies enjoy corporate income tax exemptions as part of the investment incentives offered to them by the Malaysian government, it is also important to consider the 100,000 well-paid jobs that we create and the resulting personal income taxes paid on those salaries, ” he said.
In total, the chamber’s member companies contributed close to RM2bil to the country’s treasuries last year, he said.
In terms of financial performance, the report stated that 2018 was a mixed year for Amcham’s member companies, with around half enjoying revenue growth, 25% remaining flat and another 25% experiencing a decline.