Greater Kuala Lumpur, The Regional Headquarters Location For Multinational Companies In Asia
Innovation & Talent

KL STREETWISE: Kuala Lumpur continues on a competitive streak

27 Oct 2017, I have just returned from a Europe trip accompanying the Minister of International Trade and Industry (MITI) Datuk Seri Mustapa Mohamed. Besides discussing the proposition of Kuala Lumpur and Malaysia to potential investors (which was the main objective of the trip, of course), there were also interesting chats on the sidelines on global uncertainties such the Catalonia referendum in Spain, Brexit, the Japan elections, China’s Party Congress, our own election and how they will affect investment decisions.

Also just last week, MITI announced that Malaysia recorded a 28.2% year-on-year drop in approved investments for the first half of 2017. My conclusion is that investments will be cyclical in nature moving forward. What’s important therefore, is good content and outcomes when investments do occur. In the past few weeks, we greeted news of international giants Oracle Corp and Honeywell International Inc announcing the setting up of regional centres here, deepening their presence in the nation. The decisions by the two multinational corporations (MNCs) were pretty momentous for Kuala Lumpur, as a city, and Malaysia, as a nation. These major international players chose to base themselves here to serve their customers regionally.

This proves that despite the uncertainties, our fundamentals remain strong and we continue to see high quality investments, front and in, attracting big MNCs. The development came on the heels of some good news on the competitiveness front. The World Economic Forum (WEF) has just recently released the Global Competitiveness Report 2017-2018. Malaysia moved up two notches to the 23rd position, in its Global Competitiveness Index 2017-2018 rankings.
Oracle, Honeywell
Surely, the likes of Oracle and Honeywell would have considered all factors, including competitiveness, when charting their way forward. In September, Oracle opened its first Digital Sales Hub in South-East Asia in Kuala Lumpur. The new facility allows Oracle to support small and medium enterprises (SMEs) in Malaysia and 21 other countries in Asia Pacific to get access and support to the cloud solutions and resources they need to power digital transformation.

We are delighted that Oracle chose Kuala Lumpur. Needless to say, it is very much in line with our government’s focus on digital economy. It will generate a positive impact on the local ecosystem in terms of talent identification and development.

Oracle said it will be hiring over 200 people for this hub in order to better connect with regional customers. They picked Kuala Lumpur as the central location based on its cultural diversity and the available local talent pool. It will also directly benefit SMEs and forge collaboration with local universities. These are areas crucial for the continued development of the nation.

Honeywell, a global Fortune 100 softwareindustrial company, chose Kuala Lumpur for its new Asean regional headquarters. They will be providing specific solutions to industries in aerospace, home and building technologies, safety and productivity solutions, and performance materials and technologies.

At this juncture, Honeywell has a workforce of 1,500 in Malaysia, with more than 4,000 employees across the region. To date, Honeywell has invested over US$500 million (RM2.12 billion) in Malaysia over the past decade.

The new Asean regional headquarters in Kuala Lumpur totalling 74,000 sq ft has over 400 employees from four business groups. They will continue to hire and develop local talents to support Honeywell’s businesses across the region. Looks like Honeywell has hit the ground running.
WEF Global Competitiveness Index
The two major MNCs making Kuala Lumpur as their regional headquarters support the numbers coming out of the WEF index. Malaysia is second only to Singapore when measured for overall competitiveness in Asean, far outstripping the other nations in the region. Thailand stands at the 32nd spot and Indonesia at 36th. In a nutshell, the index tracks the performance of 137 economies on 12 pillars of competitiveness.

It assesses the factors and institutions identified by empirical and theoretical research as determining improvements in productivity, which in turn is the main determinant of longterm growth, and an essential factor in economic growth and prosperity. The 12 pillars are: Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

Malaysia did well in a number of areas. For business sophistication, our nation did well for the extent of marketing (10th) and state of cluster development (13th). We also had an equally impressive score, at the 15th spot, for local supplier quantity and value chain breadth.
Innovation and Business Sophistication
Malaysia performed well when it came to innovation and sophistication factors, ranking 21st in the global index. Under innovation, Malaysia scored extremely well for government procurement of advanced technology products, and the availability of scientists and engineers, ranking fourth and seventh globally respectively. This is very encouraging. International firms have certainly recognised this as an encouraging nod for them to park themselves in Kuala Lumpur.

It is heartening to observe that the nation is making strides in these areas. Moving up two spots in the WEF’s Global Competitiveness ranking is a good sign. This result proves that Kuala Lumpur continues to move on an upward trend to become a beacon of competitiveness. It is clearly moving towards the aspirations of MITI and Mustapa. He said recently: “I want Kuala Lumpur to be the No 1 city in the world. I hope Malaysia would be a country that is respected, and we can walk tall for the substance that we have.”

Let us strive to ensure that we continue to be consistent and to be the best at what we do, now and in the future.

Datuk Zainal Amanshah, InvestKL CEO since 2011, brings with him 20 years of private sector experience in senior positions at MNCs, Malaysian companies and startups. You can follow Zainal on Twitter: @Zainalamanshah.
Source: The Malaysian Reserve