British companies eye regional hub in Malaysia

British companies looking to expand their operations in South- East Asia are mulling at the prospect of turning Malaysia into their regional distribution hub post-Brexit.

Britain’s largest sports retailer, Sports Direct International plc, has already expanded its retail network in Malaysia to 30 stores and has immediate plans to spend up to US$100 million (RM436 million) to set up a regional distribution hub that will serve markets in Asean.

British Malaysian Chamber of Commerce chairman Andrew Sill said many other companies in the UK have since shown a similar interest to make Malaysia a base for conducting their regional business.

“I think it is one of those things where a couple of companies choose to go down that route, it gets recognised in the UK, and other companies would want to go down similar routes. If it works for one, it will work for others.

“I’m not saying it is a herd mentality but it is a simple equation and as I say, the interest that we’ve been getting from British companies in terms of exploring opportunities in Malaysia would indicate that there are significant interests,” Sill told The Malaysian Reserve in an interview.

Sill cited leading medical equipment manufacturer Smith & Nephew plc as another key example. The company in February had announced the start of construction of its 250,000 sq ft new high technology manufacturing facility in Penang — its first manufacturing facility in South-East Asia.

The new facility will primarily support the company’s orthopaedics franchise and create up to 800 new local jobs over the next five years. “They are here not only because of the great investment climate but also because there is a very good workforce and they need skilled workers,” Sill said.

The UK has a long-standing relationship with Malaysia and is the eighth-largest foreign investor in the country. The UK accounted for RM22.3 billion worth of accumulative investment in 2018, according to data from the Malaysian Investment Development Authority (MIDA).

On trade, Malaysia is the UK’s second-largest trading partner in Asean, second only to Singapore. Total trade between the two countries in 2018 stood at RM15.6 billion with exports to the UK amounting to RM8.6 billion and imports at RM7 billion.

MIDA ED for investment promotion Sivasuriyamoorthy Sundara Raja expects investment from the UK to remain consistent especially in services and manufacturing.

“Our target is very clear. We are looking at about RM200 billion worth of investment in total every year. When it comes to the UK, we have our own target. Overall, out of the RM200 billion target, about RM100 billion will come from the services sector, RM80 billion-RM90 billion will come from manufacturing and the rest from the primary sector,” he said.

Source: The Malaysian Reserve