THE Covid-19 pandemic has brought with its devastating economic repercussions, possibly the harshest that we have seen in recent history. This has necessitated us to strike a delicate balance between safeguarding the health of our people while protecting their economic interests.
The World Trade Organisation (WTO) has predicted that the global economy over the next two years will remain highly uncertain, similar to the predictions from the World Bank, International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD).
Being located in the Asia-Pacific rim, in the centre of many Asean countries, Malaysia has the privilege to remain as an attractive investment destination particularly with the favourable investment environment, including the availability of excellent infrastructure, telecommunication services, financial and banking services, supporting industries as well as a big pool of talents with skills and trainable workforce.
This reveals when Malaysia maintained its strong position globally, ranking second-highest in South-East Asia and 12th out of 169 countries for trade connectivity in the DHL Global Connectedness Index (GCI) report in 2019.
For the first six months of 2020, Malaysia recorded a total of RM64.8bil worth of investments in the manufacturing, services and primary sectors, despite the multiple headwinds on the global front. These investments involved 1,725 projects and will create 37,110 employment opportunities.
Among the recent high-quality investments approved by the Malaysian Investment Development Authority (Mida) include Ultra Clean Holdings, a US-based company in developing and supplying ultra-high purity cleaning and analytical services primarily for the semiconductor industry; Smith and Nephew from UK to produce high-tech pharmaceutical products including knee and hip implants; Bosch, a German entity for setting up a manufacturing facility park in Penang for testing of semiconductor components and sensors; and Bruker, a Swiss company establishing its first facility in Asia to develop solutions for scientist and manufacturers.
This indicate that Malaysia has the ability to meet the stringent demands of highly regulated industries, which showcases the country’s robust and diverse array of supply chains.
In the services sector, there are positive trends where many international companies have chosen Malaysia as their regional hub. Air Liquide, a French company, established its Smart Innovation Operations (ISO) in Malaysia as a remote operation centre which is supported by the local talents for South-East Asia operations; IKEA from Sweden that has established a regional distribution and supply chain centre for South-East Asian and Indian markets; and Standard Chartered established it’s Global Business Services, an Intelligence and Command Centre to serve its operations globally around the clock.
The Covid-19 pandemic has also shaped a new generation of business behaviours and expedites the adaptation of digitalisation by focusing on emerging opportunities from the low-touch economy such as the digitalised tourism, fintech, next-gen smart factories, clinical trial hub for developing countries and global online learning.
Hence, Malaysia will not be spared and we have no choice but to adapt and embrace the new opportunities made available through the Industry 4.0 mainly through the adoption of smart manufacturing processes and technologies to enhance production flexibility and efficiency.
We are now looking at high-tech and emerging fields like a machine-to-machine applications and new opportunities that are available for investors to venture into, especially in the sensor technology.
To further support the current economic situation, Malaysia has introduced the National Short-Term Economic Recovery Plan called Penjana on June 5,2020. This comprehensive package amounting to RM35bil aims to regenerate the national economy, focusing on three main components: empowering the people, propelling businesses and stimulating the economy.
Under this plan, the government through my Ministry, Miti and its agency Mida has introduced various investment measures to revive Malaysia’s economy. Among them are:
> The establishment of a dedicated unit, aptly named PACU or the Project Acceleration and Coordination Unit to facilitate the speedy approval and implementation of investment projects in the country. This initiative, coupled with the new online module e-Manufacturing License (e-ML), enables companies to obtain approvals for their manufacturing projects within two working days.
> Tax exemption of 10 years and 15 years on selected new investments from foreign firms ranging from RM300mil to RM500mil and RM500mil and above, respectively.
> Relocation of existing companies into Malaysia with capital investment above RM300mil will be eligible to apply for a 100% investment tax allowance on qualifying capital expenditure incurred for a period of five years.
Our agency Mida also actively organises various digital investment promotion programmes such as virtual webinars at local and international platforms; trade and investment missions to Europe region, the US, Japan, South Korea and China; engagement sessions with major stakeholders namely international chambers, banks, financial institutions and undertake media blitz.
The government has also established a One-Stop-Centre (OSC) at Mida effective Oct 2,2020 to evaluate and approve applications by eligible business travellers to enter Malaysia for trade and investment purposes.
The initiative led by Miti is managed by Mida with representatives from the Immigration Department, Health Ministry (MoH) to ensure the legitimacy and health status of business travellers prior to their entry into Malaysia. OSC will assume a critical role in ensuring Malaysia to remain steady on the path of economic recovery and growth, by enabling executive and essential personnel to travel to and continue their work in Malaysia.
According to Bank Negara, the Malaysian economy is forecast to grow within the range of 5.5% in 2021, while the IMF and the World Bank expects Malaysia’s GDP to grow between 6.3% and 6.9%. It is expected that the country’s economy will regain its momentum in 2021 with industrial production index (IPI) rates rebounding in the second half of the year in tandem with global demand.
Moving forward, we are optimistic that Malaysia will continue to be a preferred investment destination for world businesses. As of July 2020, Mida has a total of 732 projects with proposed investments of RM35.9bil in the pipeline for the manufacturing, services and primary sectors.
The government, through Miti and Mida, will strive to provide better support through innovative engagements and collaborations with private and public sectors towards broadening prosperity for the country.
This is our commitment to our investors in providing the best facilitation and ensuring the sustainability of the business entities in the new norm.
On that note, I would like to take this opportunity to welcome all multinational companies (MNCs) already in Malaysia to consider expanding their operations here and make full use of the support the Malaysian government has introduced particularly in fiscal and non-fiscal benefits. As for the MNCs that have yet to venture here, the government of Malaysia welcomes you to Malaysia and rest assured, you can do your business with the world – all from the comfort of Malaysia.
Datuk Lim Ban Hong is Deputy Minister, International Trade and Industry. Views expressed here are the writer’s own.