Swedish MNCs continue to view Malaysia, Greater KL as ideal Asia investment destination

Sweden and Malaysia’s ties as trade and investment partners go way back. In the 1960’s, the Swedish companies such as Volvo, Ericsson, Sandvik, Alfa Laval and Scania established themselves in Malaysia. The first car ever produced in Malaysia was a Volvo, made by Sweden at Volvo’s car producing plant in Shah Alam in 1967. In 1979 Sweden became the 7th country to sign an Investment Guarantee Agreement with Malaysia.

Since then, Swedish giants such as Tetra Pak, ABB, H&M, SKF, IKEA, Electrolux, Atlas Copco, SAAB, Husqvarna and many more have made the 7.3 million strong-Greater Kuala Lumpur area their home.

Greater KL and Malaysia is steadily observing more investments in industrial training in light of Industry 4.0, which is driving traditional manufacturing industries to innovate and upscale. Long-term investors have doubled their presence in Malaysia thanks to the capital’s English-proficient youth workforce who are also highly skilled in industrial training.

These investments in Greater Kuala Lumpur’s innovation upside is the culmination of years of successful Malaysian policy-making in creating a business-friendly environment and building human resource capabilities, as well as almost 40 years of trade and investment ties between both Sweden and Malaysia.

High quality investments creating regional jobs in Greater KL & Malaysia

A 2018 survey by Business Sweden found that 74% of Swedish investors in Malaysia plan to invest more in their business operations here. Over 59% of the survey’s participating companies are large industry leaders with annual global turnovers of over €50 million.

Swedish Ambassador to Malaysia Dag Juhlin-Dannfelt believes Swedish companies see Malaysia as a good entry point to Southeast Asia. “The Swedish commercial presence in Malaysia is substantial, and is growing. In addition to MNCs, several smaller and medium sized companies are finding the business and investment environment in Malaysia promising”, says Ambassador Juhlin-Dannfelt. The Swedish embassy counts over 90 Swedish or Sweden-linked companies in Malaysia. Foreign direct investment inflow from Sweden, from 2012 to 2016, amounted to about RM606 million.

Sweden is also Malaysia’s 37th largest trading partner globally, with the majority of Malaysian exports being in the E&E (electrical and electronics) industry. In fact, from 1979 until mid-2017, Swedish multinationals invested in 126 manufacturing projects valued at US$660 million (RM2.7 billion), creating over 8,200 jobs.

The cost-efficiency as well as the trend of IT companies growing in the country has led to more Swedish companies developing into the Southeast Asia region wanting to come here.

In August 2017, IKEA announced a RM907 million investment over five years to establish its Southeast Asian regional distribution and supply chain centre in Malaysia, and will be among the top 10 largest IKEA Regional Distribution Centres globally.

IKEA’s regional hub will also contribute to the growth of Malaysia’s logistics sector, as the furniture giant is expected to spend RM16 million annually on local logistic services to distribute its products.

Skilled youth workforce

As Malaysia moves towards becoming a high-income nation riding the wave of investments in the Fourth Industrial Revolution, it is reaping the efforts of decades prior. Cognizant of European strength in TVET, the Malaysian government kick-started such educational institutes in the 1990s.

Now, with a vibrant local TVET and industrial training ecosystem — including industry-specific training facilities with regards to aviation and maritime sectors — the youth-heavy 7.3-million strong population of Greater Kuala Lumpur has been drawing increased industrial manufacturing investments from Swedish MNCs.

Investing in Industry 4.0

Another long-term Swedish supporter of Malaysia is power and automation giant ABB Ltd, which entered the Malaysian market with its power generators in 1904.

In March 2017, it amplified its presence in Greater Kuala Lumpur, announcing an RM10 million investment in ABB’s first Malaysian production facility for industrial variable speed drives.

These drives, which were previously supplied from ABB’s manufacturing facility in Finland, will now be manufactured locally and shipped to Thailand, Australia, New Zealand, Indonesia and Singapore in addition being used by local oil and gas and pulp and paper companies, among others.

“Our investment in this factory reflects the importance of Malaysia as a strategic base for ABB,” ABB discrete automation and motion division head Pekka Tiitinen said.

Meanwhile, Swedish industrial company Atlas Copco opened its first Southeast Asia training academy centre in Greater Kuala Lumpur in November 2017, aimed at developing the competencies of Atlas Copco technicians.

“With this centre, we will be able to give better service and support, hereby building stronger relationships with our customers in the industries here as well as other countries in the Southeast Asia,” Atlas Copco Malaysia and Singapore general manager Dereck D Devlin said.

The company collaborates with local universities and polytechnics to further enhance the pipeline of technical talents.

Both ABB and Atlas Copco investments are a stamp of approval on Malaysia’s strengths in industrial technology and strides to improve TVET education.

In fact, Greater Kuala Lumpur’s industry-ready skilled youth workforce is simply a sweetener on the already-comprehensive investment package Malaysia offers: a value-for-money base, strategically located on the world’s busiest economic region, first-class transportation and excellent logistics infrastructure.

These factors combine to give Greater Kuala Lumpur significant innovation upside in the Southeast Asian region, making it the first choice for investors looking to make an Asian play with the added support of an existing strong Swedish business community.

Source: ScandAsia

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