Prime Minister Datuk Seri Anwar Ibrahim and his Canadian counterpart Justin Trudeau today discussed the potential for new cooperation between Malaysia and Canada in several fields, including in education and energy sectors.

This was among the matters discussed when the Canadian Prime Minister made a telephone call to Anwar to congratulate him on his appointment as the 10th Prime Minister of Malaysia.

Anwar posted a video of the 4.09-minute telephone conversation on his Facebook, saying: “We also renewed our commitment to enhance Malaysia-Canada bilateral ties to a higher level.”

Malaysia and Canada have been strengthening their bilateral cooperation since they established diplomatic ties in 1957, with two-way trade hitting RM10.58 billion in 2021.

Canadian investments in Malaysia’s manufacturing sector in the past 40 years were worth RM789 million.

During the call, Trudeau expressed interest in enhancing bilateral relations and conveyed his gratitude to Malaysia for its support over the years.

“We are looking forward to more business, trade and investment and working together more on security and even creating tighter ties,” Trudeau added.

Source: Bernama

Malaysia, Canada explore new areas of cooperation

Major foreign investors in Malaysia in the 1990s, Taiwanese businesses have rekindled their interest in the country over the past few years. The US-China trade war, higher production costs in China, Beijing’s zero-Covid policy, reorganisation of the semiconductor supply chain via the Chip 4 Alliance and the latest heightening of tensions in the Taiwan Strait all provide a strong rationale for Taiwanese businesses to recalibrate their existing strategy of banking on China for the production of global consumer goods. Instead, the future trend of Taiwanese investments will be based on a two-pronged approach that serves to capture both China and the global markets separately. By diversifying their know-how, capital and technologies into Southeast Asian countries, Taiwanese investors are circumventing the supply chain disruptions emanating from acute geopolitical rivalry and the fluctuating situations on China’s domestic front.

In the case of Malaysia, the renewed interest of Taiwanese investors has been evidential in recent statistics provided by Malaysian Investment Development Authority (Mida). From 1980 to 2021, Taiwan was the eighth largest source of manufacturing foreign direct investments (FDIs) for Malaysia, just behind heavyweights — the Netherlands, Singapore, Japan, the US, China, South Korea and Germany. Within the same period, a total of RM42.39 billion (US$13.98 billion) investment value from Taiwan was recorded in Malaysia’s manufacturing sector, resulting in 2,577 investment projects and 386,762 jobs for all Malaysians thus far. If measured by the number of investment projects and number of jobs created, only Japan and Singapore surpassed Taiwan in both categories — an indicator that Taiwanese investments are contributing significantly to Malaysia’s economic development and local employment. With the reopening of borders in the post-pandemic period, more Taiwanese investments are expected to flow into Malaysia in the coming months.

Recent Taiwanese high-value investments

What is worthy of note, however, is beyond these quantitative figures. In recent years, the quality of Taiwanese investments into Malaysia has increased, the most representative of them being the Ally Logistics Property (ALP) and Wiwynn Corp. With smart warehousing solutions that are unrivalled by any logistics giants in the world, ALP offers a one-stop centre for customers to “share their stockpiled goods” through the use of advanced software that is able to tailor-make the packaging needs of the customers as well as allowing them to trade their goods in the smart warehouse without the need for transport. By reducing complicated warehouse management into fluid and efficient processes, ALP’s OMega smart warehouse facility in Bukit Raja (Selangor) is slated to draw RM4.14 billion of investment value and create 3,000 skilled job opportunities for Selangorians and beyond.

The other is Wiwynn Corp, which has the potential of making Malaysia the regional hub for the production of infrastructures for global hyperscale data centres. Like the ALP, Wiwynn Corp is another prominent Taiwanese conglomerate that is bringing in RM500 million in investments for its rack integration and printed circuit board (PCB) plants in Senai, Johor. In all, the two plants are expected to produce 1,600 skilled job opportunities for the people of Johor, and Wiwynn is even exploring the possibility of offering skilled training for the graduates of Universiti Teknologi Malaysia (UTM) in the near future.

Keeping the leading edge

As noted by the “Standard Chartered for Borderless Business: Taiwan-ASEAN Corridor” survey in 2021, the arrival of these high-end Taiwanese investments is an indicator that Malaysia continues to be an attractive destination despite the absence of diplomatic relations since 1974. That said, such status is not without its set of challenges ahead: the rise of Vietnam as a strong competitor for Taiwanese high-value investments; the deficit of a local technical workforce in Malaysia; and lack of technological upgrading among Malaysian small and medium enterprises (SMEs) within the manufacturing sector. In order to respond to these challenges, there are three measures which Malaysia should take to keep its leading edge in the region.

First, Malaysia should encourage local higher education institutions (HEIs) to establish high-impact vocational programmes with the Taiwanese investors on the local scene. As highlighted by the Federation of Malaysian Manufacturers (FMM), a shortage of skilled manpower is the long-standing problem affecting Malaysia’s economic recovery in the post-pandemic era. With business costs that are higher than Vietnam’s, having a large pool of technical manpower remains Malaysia’s best bet to keep its leading edge against its northern neighbours.

But with Vietnam vigorously capitalising on the large presence of Taiwanese investors to train and employ their workforce through the list of 70 vocational programmes established with Taiwan’s HEIs, there is no way for Malaysia to continue its business-as-usual approach. Instead, Malaysia has to up the game and distinguish itself from Vietnam through strategic deliberations on specific training programmes in high-end industries that have existing Taiwanese investments but lack the skilled workforce to man the operation lines. One potential entry point would be establishing tailor-made vocational programmes (including job placement arrangements) for industries that are related to semiconductor production, considering that Malaysia is deeply connected to the semiconductor supply chain as the lower- to medium-end producers.

Second, as a traditional destination for Taiwan’s investments, Malaysia’s ties with the Taiwanese business community can be traced to the 1980s. Malaysia should utilise this unique advantage to attract more Taiwanese big names — especially those high-end manufacturing companies — to choose Malaysia over its neighbours as their investment destination.

Since Malaysia has a sizeable pool of Taiwanese companies that supply their lower- to medium-end goods to top clients in the manufacturing supply chain, Mida could readily enlist the support of the Taiwan Chamber of Commerce and Industry in Malaysia (TWCHAM) to network with these manufacturing giants and bring them to Malaysia for high-value investments. Joint business matchings, seminars and even sports competitions are the events that Mida can consider co-organising with TWCHAM in the long run.

Lastly, Malaysia has to ensure that Malaysian SMEs are benefiting from a certain level of technological transfer through cooperation with the Taiwanese companies. Given that Taiwanese technologies are cheaper, reliable and transferrable to the local partner companies in the long term, Malaysia should capitalise on these three advantages to achieve industrial upgrading in the manufacturing sector. As in Taiwan’s case, having a huge pool of SMEs is absolutely crucial in providing low- and medium-end support to Taiwanese manufacturing giants that dominate the higher echelon of the supply chain. Likewise, Malaysia can draw valuable lessons from the Taiwanese experience by building a strong pool of local SMEs that place technological transfer as their cornerstone for any industrial cooperation with the Taiwanese companies.

Faced with an increasingly disruptive regional order today, both Taiwan and Malaysia can benefit from each other by strategising their business cooperation for mutual benefit. Whereas Malaysia acts as a buffer for Taiwanese investors who wish to diversify their production away from mainland China in order to continue serving the global consumers, the former should take this opportunity by “opening” the Taiwanese window further. This entails attracting Taiwan’s know-how, capital and technologies into Malaysia to upgrade the country’s manufacturing industries.

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Lee Chee Leong is senior lecturer at the Institute of China Studies (ICS), University of Malaya. Lin Kai Min is president of the Taiwan Chamber of Commerce and Industry in Malaysia.

Source: The Edge Markets

‘Opening’ the Taiwanese window for Malaysia’s industrial upgrading

Datuk Seri Tengku Zafrul Abdul Aziz, who was recently appointed minister of international trade and industry (Miti), today met the Japanese Chamber of Trade and Industry, Malaysia (Jactim) and Malaysian Consortium of Mid-Tier Companies (MCMTC).

He said it was to ensure Malaysia remains a major investment destination in Southeast Asia and is competitive to support regional and global supply chains.

“Hopefully this kind of meeting can benefit the economy and maintain our growth momentum, given that the global environment is expected to be more challenging next year,” he said on his twitter page here today.

Previously, he had also met with the American Malaysian Chamber of Commerce (Amcham) and the Federation of Malaysian Manufacturers (FMM).

Tengku Zafrul has discussed and exchanged ideas about initiatives that can increase international trade, investment and industrial development, which are the cores of Miti.

“Hopefully this cooperation can spur Malaysia’s economic development,” he said.

He has also held several meetings and discussions with Miti and several agencies under the ministry such as the Malaysian Investment Development Authority (Mida), the Malaysia External Trade Development Corporation (Matrade) and the Standard and Industrial Research Institute of Malaysia (Sirim).

Mida has successfully recorded net foreign direct investment (FDI) amounting to RM48.2 billion in 2021 and RM54 billion in the first nine months of this year. Mida has also approved RM309.4 billion in investment for 2021 as well as RM123.3 billion for the first half of this year.

“I believe that the cooperation between Miti and Mida will be able to effectively support economic growth and create more business opportunities,” he said. 

Source: Bernama

Tengku Zafrul meets Jactim, MCMTC to ensure Malaysia remains top investment destination in SE Asia

Last Wednesday, Perak Transit Bhd scrapped its plan to undertake limestone and silica sand-mining, a deal it entered into more than two years ago. The agreement was inked with Gemas Perunding Sdn Bhd, which is involved in the mining and quarrying of limestone and silica sand.

The termination is part of the transport terminal and bus operator’s strategy to improve its sustainable environmental, social and governance (ESG) standards, according to its filing with Bursa Malaysia.

ESG investing has been a hot topic in recent years, but it may not be easy for companies to strike a balance between maximising their profits and fulfilling corporate social responsibility. Corporations, especially those that are listed, need to answer to their shareholders.

That said, it is comforting to see more companies taking ESG seriously in line with the global commitment to achieve a low-carbon economy.

In August, Bursa Malaysia Bhd launched two new ESG-themed indices under the FTSE Bursa Malaysia Index Series, namely the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Index and the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Shariah Index. The move expands the stock exchange’s benchmarking offerings in the ESG, low carbon and climate risk index space to cater to evolving investor demand.

From the investment point of view, corporates are also well aware of more institutional funds taking the ESG criteria as a core consideration when they make investment decisions. Global money keeps rolling into ESG funds, and Bloomberg reported that there had been a net US$44 billion (RM193.5 billion) inflow into ESG-labelled exchange-traded funds this year.

Today, however, the adoption of ESG practices among small- and medium-size companies is still low. But economic pressures will exert an influence over time and more small companies will start reviewing their business model in order to be more ESG-compliant. After all, it will become a motivation for them to attract institutional investors.

Source: The Edge Markers

ESG a motivation to lure institutional investors

THE Selangor government’s Selangor Aviation Show (SAS) is part of its strategy to strengthen high-end investment in the state. So far, Selangor has held two SAS events with the first being in 2021 and the second from Sept 8 to 10 this year.

The show is part of the Selangor Aerospace Action Plan, which is aimed at turning the state into an aerospace hub by 2030. State industry and trade committee chairman Datuk Teng Chang Khim said the turnout this year exceeded expectations.

“We drew 10,563 visitors, which surpassed our target of 8,000 people, to the event over the three days. The SAS also recorded potential transactions worth RM1.174bil,’’ said Teng.

He added that the event had a total of 62 exhibitors from five countries that were the world’s best in the various aerospace and aviation industries.

“The total number of aircrafts displayed in SAS 2022 was 30, which was double the number of aircraft on display in 2021,” he said.

Teng also said 14 Memorandums of Understanding (MoUs) on various aerospace industry sub-sector collaborations were signed during SAS 2022.

During his speech at SAS 2022, Selangor Mentri Besar Datuk Seri Amirudin Shari had shared that SAS 2021 had received 5,000 visitors, with 13 MOUs signed and business deals amounting to some RM100mil made.

At this year’s event, opened by Raja Muda of Selangor Tengku Amir Shah Sultan Sharafuddin Idris Shah, Amirudin also said the state was the location of choice for aerospace and aviation companies.

In his speech at the event, Teng had said that Selangor had identified the aviation industry as a high-impact industry for the state.

He added that high-impact industries were among the catalysts to propel Selangor’s economic growth within the next 10 years.

When contacted, he said the state’s focus was more on business and general aviation as opposed to civil aviation.

“Civil aviation covers the airline industries while business and general aviation covers private jets, chartered flights, helicopters, small aircrafts and drones,” he noted.

Besides the SAS, Selangor also held the sixth Selangor International Business Summit 2022 (SIBS 2022) in October.

Teng said SIBS 2022 had a total of 906 exhibition booths and occupied eight expo halls, four conference halls, two plenary halls and two banquet halls at the Kuala Lumpur Convention Centre.

The summit drew 44,342 visitors, mostly business owners, importers, wholesalers, distributors, retailers, and hypermarket purchasing departments, he added.

“A total of 380 buyers from Malaysia and 18 other countries participated in business matching sessions,’’ said Teng, adding that 60 countries had participated in the event.

He pointed out that SIBS 2022 also recorded the highest potential negotiated sales amounting to RM1.45bil.

Being the most developed and prosperous state in Malaysia, Selangor actively pursues business endeavours through its investment arm Invest Selangor.

Teng recently revealed that the state had received some RM30.82bil in domestic and foreign investment from January 2020 to June 2022.

Out of that total, local investment stood at RM19.160bil while foreign investments came up to RM11.659bil, said Teng.

The state also approved 689 manufacturing projects during the same timeframe with 39,287 potential job opportunities created.

Source: The Star

Strengthening high-end investment

THE economic competition is getting stiffer each year. And the world is getting smaller.

Investors, on the other hand, are becoming more demanding, voting with their wallets to access markets that could provide them with the biggest growth opportunities.

For Malaysia to stand strong and stay relevant in the face of such an increasingly tough environment, it has no choice but to continuously reinvent itself, says newly-minted International Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

“I think we are lucky to be where we are today because of good policies of the past, but we cannot take that for granted…our competitors are catching up,” he says.

“We need to continuously reinvent ourselves, lest we lose out; and create a competitive edge that can set us apart from other economies. It is like selling a product – how do we repackage Malaysia as a top investment destination to the rest of the world,” he tells StarBizWeek in a language-exclusive interview. On that note, Tengku Zafrul and his team at the International Trade and Industry Ministry (Miti) have prepared a 100-day plan to delve deeper into the issues and challenges facing the nation, and come up with a solution to address any shortcomings.

“At the end of my first 100 days (as Miti minister), I must come up with something concrete. But along the way, within this period of time, we will continue to solve the ‘low-hanging fruit’ issues before moving on to the more complicated ones for the long-term benefit of the nation,” he says.

“Essentially, I want this to be an outcome-based ministry, not just one that looks at policies,” he stresses.

The process to restore Malaysia’s glory, though, is a journey, and not a sprint, concedes the former Finance Minister, who took on the new role as Miti Minister just last Saturday.

Ministerial path

Sworn in as a senator for the second time on Dec 3, 2022, after being named the new Miti Minister, Tengku Zafrul’s appointment did not come without any controversy.

Despite having lost while contesting the Kuala Selangor Parliamentary seat in the recently-concluded 15th General Election (GE15) under Barisan Nasional, and not holding any significant position in a political party, he managed to make the cut to join the “slimmed-down” Cabinet line-up of Malaysia’s 10th Prime Minister Datuk Seri Anwar Ibrahim.

Tengku Zafrul took over the role from former Senior Minister Datuk Seri Mohamed Azmin Ali, who failed to defend his Gombak Parliamentary seat in GE15.

When asked how he would respond to his detractors, Tengku Zafrul says he serves at the prerogative of the Prime Minister.

“To me, being criticised is part of life. As long as your intention is clear and right, I think one doesn’t need to take things too personally…for us, the focus is on the task at hand, addressing the fundamental issues that truly matter.

“I welcome criticism, especially if it is constructive in nature because I believe we need to take into account the ideas that are out there, and listen to various stakeholders and understand their concerns, so that we can ultimately find a resolution that works for the benefit of the country in the short run, and the medium to long term,” Tengku Zafrul says.

A banker by training, Tengku Zafrul’s path to the ministerial office began at a time when Malaysia – and, in fact, the global economy – was entering an unprecedented economic crisis because of the Covid-19 pandemic and the ensuing lockdowns worldwide.

He was sworn in as a senator on March 9, 2020, following his appointment as Finance Minister under the 8th Prime Minister Tan Sri Muhyiddin Yassin. He was reappointed to the same role on Aug 27, 2021 after Datuk Seri Ismail Sabri Yaakob took over as the country’s 9th Prime Minister.

During his tenure as Finance Minister, Tengku Zafrul oversaw the implementation of eight economic stimulus packages worth RM530bil to address the fallout of Covid-19. He was also in charge of the National Economic Recovery Plan (Penjana) aimed at reviving Malaysia’s economy, as well as the Economic Stimulus Implementation & Coordination Unit Between National Agencies (Laksana) to ensure the effective implementation of the stimulus programmes.

“The good thing is during my tenure as Finance Minister, I had a lot of opportunities to engage with Miti, and therefore, the opportunity to understand well its function,” Tengku Zafrul points out.

“In addition, I had the opportunity to meet up with various economic stakeholders – from the chambers of commerce to business associations and diplomats – during the annual budget consultations. They are the same stakeholders that I have to deal with under my new role, and this time, I can delve deeper into the issues that they face,” he notes.

The objective is to ensure that Malaysia sustains and improves its competitive, business-focused trade ecosystem in the medium to long term, he adds.

Ready for the economic storm

Representing three key pillars of the economy, namely, investment, international trade and productivity, Miti indeed plays a critical role in driving Malaysia’s growth. Its portfolio directly accounts for a huge chunk of the country’s RM1.4 trillion gross domestic product (GDP).

For perspective, private investments alone currently represent about 16% to 17% of Malaysia’s GDP, while net exports contribute around 6% to 7%.

According to official forecast, the country’s GDP is expected to grow between 6.5% and 7% this year before moderating to 4% to 5% in 2023 amid an anticipated global slowdown in the year ahead.

“We need to be ready for what’s coming next year, as all indications are showing that global demand is going to go lower. We are a very open economy, so we have a correlation to the world’s GDP.

“On Miti’s side, however, we see that as an opportunity, as investors usually invest when times are slower to put themselves in a better position to capture the market when the economy eventually recovers,” Tengku Zafrul says.

“Our mission is to convince investors why Malaysia is the right market to invest in and how they can benefit when the economy picks up again in 2024,” he explains.

In a statement last Sunday, Tengku Zafrul said restoring investors’ confidence was among his top three priorities as the country navigates the economic storm in 2023.

Besides that, he would work on ensuring that trade remains a robust key growth driver. He would also look at the various bilateral and multilateral agreements to ensure that their formulation and/or implementation is of real value and advantage to participants in the Malaysian supply chain, particularly the micro and small and medium-sized enterprises (SMEs).

“In the year ahead, I will be undertaking a lot of discussions on free trade agreements (FTAs) and bilateral and multilateral agreements to see how we can benefit from further opening up trade,” Tengku Zafrul says.

On the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), he reckons there is a reputational risk if the country pulls out from the controversial FTA. More importantly, he points out, the cost-benefit analysis shows Malaysia has more to gain as a member of CPTPP than out of it.

To date, Malaysia has seen strong recovery of trade since coming out from the Covid-19 pandemic-led disruption.

For the first 10 months of 2022, exports expanded 28.5% year-on-year (y-o-y) to RM1.3 trillion, while imports 35.4% y-o-y to RM1.1 trillion, resulting in a trade surplus of RM205.6bil, up 1.3% y-o-y. The numbers are expected to remain encouraging for the remaining part of the year.

As for investments, Malaysia attracted a total of RM123.3bil worth of approved investments in the manufacturing, services and primary sectors for the first six months of 2022. This involved 1,714 projects that are expected to create 57,771 job opportunities in the country, according to the Malaysian Investment Development Authority (Mida), an agency under Miti.Overall, foreign direct investment (FDI) remained the major contributor at 70.9% of the approved investments, while investments from domestic sources accounted for 29.1% of the share.

Tengku Zafrul notes there continues to be a need to increase FDI, which has been a key building block of economic resilience, providing the country with one of the largest sources of foreign exchange.

Growing competition for FDI

However, attracting FDI is not easy in the new era of globalisation.

Competition for FDI is intense in the Asean region, as nations dish out aggressive incentives, while at the same time accelerating reforms to turn their countries into attractive investment destinations.

As it is, Singapore, Indonesia and Vietnam are way ahead of Malaysia in terms of attracting FDI, while Thailand and the Philippines are not far behind.

“It is certainly a concern to us that others have caught up or are catching up with us. We need to identify the reasons for this – is it because of the incentives, bureaucracy or political stability – and address those issues accordingly,” Tengku Zafrul says.

“On the other hand, we also need to identify what is our main selling point and why we are better than others. This is something my team and I will intensely look into in the next couple of weeks so that we can repackage Malaysia into a ‘product’ that is hard for investors to refuse,” he adds.

The game plan is simple: First, get the story right. Then, get the all stakeholders – from industry leaders to other government agencies and the people – to understand and buy-in to the vision, and then, go out and sell the story.

“It has to be a team effort. If Miti does it alone, it won’t work. Everyone has a role to play.

“When we are coherent and concerted in our efforts, others will believe in our story. But of course, we must also be able to execute our plan, otherwise, we will lose our credibility,” Tengku Zafrul says.

Going for quality

While boosting the FDI number is a priority, it is even more critical to ensure that the inflows that are coming in can generate real value to Malaysia’s economy and benefit her people.

In other words, it is the quality that counts. This is to serve the nation’s aim to move up the value chain.

“We have to be more focused this time on the areas that are important to us. We may be ahead in some sectors, but what we need is to be ahead in the ‘future’ sectors.

“Therefore, I will revisit the list of sectors under the National Investment Aspiration (NIA) to ensure those are the right sectors for the future. It is important to identify these sectors so that we know what are the skills we need and what incentives to give out,” Tengku Zafrul explains.

In an earlier statement, he revealed that Miti would propose the creation of a special investment fund under the new 2023 budget, scheduled for tabling in Parliament on Dec 19.

This objective of the fund is to attract more high-value-added investments to generate higher-paid professional employment opportunities in Malaysia.

The statement highlighted several industries as focus areas. These include the electronics and electrical sector, aerospace, chemical and petrochemical, nanotechnology, health-tech, medical devices and smart manufacturing.

These efforts, Tengku Zafrul says, will be matched with human capital development measures to contribute to the restructuring of Malaysia’s trade ecosystem in the medium and long term.

“It is well-documented that one of the major issues we face is the lack of the ‘right’ skills and talent to support high-value-added investments that we are trying to attract. So, we have to be innovative in our approach to rectify the situation,” Tengku Zafrul says.

Among the things that can be done, he notes, is to open up to foreign talent, as other economies such as Singapore and Dubai have done to address their talent gap. It could well be a medium-term solution for Malaysia, as the country waits for the supply of the “right” local talent to come along to fill the gap.

There’s much to do. But it is not an impossible task to make Malaysia a roaring economic tiger again as long as everyone works together.

Source: The Star

Rebranding Malaysia