UK Investors’ Confidence Remains High As Malaysia Shows Growth & Resilience

2 June 2021

The importance of improving and developing the ease of doing business for Greater Kuala Lumpur (Greater KL) and Malaysia was highlighted by Muhammad Azmi Zulkifli, Chief Executive Officer of InvestKL in a recent webinar. Solid fundamentals such as strategic location, cost competitiveness, availability of talent, British education system, strong connectivity and infrastructure are key to attracting global multinational companies.

Malaysia remains an attractive investment destination in Asia for high-value manufacturing and global services in Asia, said Muhammad Azmi quoting a February statement by the Malaysia Investment Development Authority (MIDA).

He said 240-high-profile foreign investment projects, including Fortune 500 companies in the manufacturing and services sectors have been identified with a combined potential investment value of RM81.9 billion. In term of its global ranking, Malaysia was ranked the 12th with 81.50 points amongst 190 global economies in the World Bank Doing Business 2020 Report, recording an improvement from 15th position in 2018.

“As part of the plan of helping companies sustain during these unprecedented times, the Federal Government announced three stimulus packages in order for companies continue to operate and for the people to survive, whilst ensuring the people’s mobility, particularly in the manufacturing sectors.

While competition is rife for investments from neighbouring countries, Muhammad Azmi noted that execution of plans was indeed key and that the agency has an imperative role under the 12th Malaysia Plan (2021-2025) to position GKL Life Lab for research and development and innovation to MNCs, as well as collaborate with the public and private universities, and the SMEs.

Meanwhile, Deputy Trade Commissioner of South East Asia George Thomson said the United Kingdom (UK) was making a decisive tilt towards the Asia Pacific region since leaving the European Union (EU) at the end of January 2020.

Thomson noted that Asean represents the epicentre and will be the focus of progressive trade, adding that UK’s entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would bring a deal that covers nearly 20% of the global GDP

“In 2021 we hope to see the establishment of six working groups, examining how we can further grow trade in the education, legal services and the food and beverage sectors, which covers halal products, among others,” he stated, adding that this would see greater corporation and conformity notably among the SMEs, as well for the next level in trade.

On UK-Malaysia trade relations, he highlighted that total trade in goods and services was worth 4.7 billion sterling pounds in 2020, 5% down from the year before. UK exports to Malaysia, meanwhile, was worth 2.4 billion sterling pounds, which is considered quite a high performance.

Sports Direct Malaysia managing director Paul Gibbons felt that Malaysia was still the right place to grow the business since it offered cost advantages aside from other favourable factors such as the talent pool, British judicial system, English language widely spoken, strategic location within Asean, and the strong logistics and infrastructure.

“Personally, Malaysia is a good place to experiment retail and we made Malaysia our principal hub status about 19 month ago with the intention of growing from Malaysia into the Asean region. We built our servers, server rooms, and infrastructure in Malaysia to support China, Thailand, Hong Kong and Taiwan supply chains offices.. “Although the economic climate had put some pressure on retail sector overall, Malaysia’s long-term growth still looked positive” said Gibbos.

Sports Direct Malaysia invested about RM300 million since it started operations in Malaysia in 2010. Its parent company is UK’s Frasers Group Plc (formerly Sports Direct International Plc), renowned for trading, and operates 1500 stores in 20 countries, with over 30,000 employees.

BAE Systems, Malaysia has been the headquarters for its operations in Asean. The company is the largest international defence and security supplier to Malaysia, and has increased 10 fold in terms of manpower since its inception in 2013.

Its managing director for Asia Natasha Pheiffer said its operations in Malaysia makes up 10% of BAE System’s global footprint, and is the second largest outside of the UK.

BAE Systems chose Malaysia as it provided good diversity and infrastructure, competitive real estate prices, government support tax exemptions, widely spoken English language, among other positive factors.

“It is also timely to come up with innovative ideas and at BAE Systems, instead of recommending the purchase of new equipment to our forces in the government, we are offering upgrades in the defence and security fields. Being able to do that is already great.” Pheiffer noted.

Pheiffer highlighted that BAE System was looking at transferring technology and doing local productions here with its local partners. Interestingly, its global engineering centre witnessed an increase in productivity even during the pandemic, despite the majority working from home.

Moving forward, Pheiffer viewed Malaysia as a good hub for BAE Systems, and may potentially think of setting up a manufacturing plant in Malaysia for Asean, but Malaysia has to step up and start developing some of the programmes.

“As all the other regions in Asean proves to be competitive, Malaysia has to take the next step and ensure existing plans that have been laid out previously will stay, despite possible changes to the government as this provides some form of stability,” Pheiffer conceded.

Meanwhile, Muhammad Azmi concluded the session, stating that InvestKL was banking on three strategies, which include – protect, retain and attract, which prioritizes on protecting the current investments, ensuring that the MNCs and the small and medium enterprises (SMEs) encircling the companies are operating, retaining the existing jobs, and attracting investments,” adding that the agency has an appetite for more high tech, high impact and digital type of companies, as this would further strengthen Greater KL’s position in Asean and its investment portfolio.n

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