Forest City designated Special Financial Zone (SFZ) status will induce Foreign Direct Investment (FDI) into Johor, provided its incentives are strategically programmed.

Globus Holdings Limited (HK) director Faez Jumabhoy said the incentives should align strategically to lower costs and facilitate business operations conducive to Johor’s growth.

The veteran in international real estate and banking, with over 30 years’ experience, shared his views on how Johor would benefit from the SFZ status.

He said Forest City’s SFZ status held potential to complement Singapore, which is a financial hub reachable via the SecondLink, while Johor leveraged on its extensive air and sea-port infrastructure.

SFZs and Special Economic Zone (SEZ) that are supported by neighbouring countries’ respective governments were more likely to succeed in a shorter time frame, due to coordinated planning for mutual advantages.

Singapore and Zurich recently topped the Economist Intelligence Unit’s 2023 Worldwide Cost of Living survey.

With both governments’ sponsorship (Malaysia-Singapore), Johor may serve to ease some of the cost of living and inflationary pressures faced.

“The cost of living in Johor is also significantly lower with diverse educational institutions, retail malls, recreations and water parks, even without taking into account the currency exchange rate,” he said.

He added that Malaysia had a strong and diverse economy that was not solely dependent on any one particular source of revenue.

It also offers excellent air and sea ports in strategic locations that affords opportunities for foreign investors when bundled with the right set of incentives and policies.

Faez said Forest City SFZ would have a multiplier effect on domestic markets and economies, benefiting society in the long run.

Source: NST

Forest City’s SFZ expected to yield economic benefits for Johor

With 2023 drawing to a close, talks and discussions on the outlook for the coming year are commonplace. The CEO Series 2023 Economy and Business Forum, organised by Rehda Institute, tackled topics such as Malaysia’s economic outlook and real estate trends for 2024, and policies to attract foreign direct investment (FDI).

The forum, held on Dec 7 at Le Meridien Hotel in Petaling Jaya, was attended by more than 350 key property industry stakeholders from the government and private sectors. Three sessions were held. In this article, City & Country reports on the third session, which focused on regional real estate and development trends.

In his keynote address, Deputy Minister of Investment, Trade and Industry Liew Chin Tong said Malaysia had been the focus of foreign investors, with the World Economic Forum identifying it as one of six countries that had attracted the most greenfield FDI between January and August this year.

“Malaysia received about US$28 billion (RM131 billion) worth of greenfield FDI projects between January and August, which is more than double the annual average recorded in the decade before the pandemic … That’s a huge amount of investment, and this is unprecedented, as the amount that has come in or been promised is much larger than any time the country has seen,” Liew noted.

Meanwhile, the Malaysian Investment Development Authority (Mida) announced on Dec 6 that Malaysia recorded RM225 billion in total approved investments for the first nine months of 2023. These were in the services (RM117.7 billion), manufacturing (RM99.8 billion) and primary (RM7.5 billion) sectors.

Liew is confident that the record amount of investments this year will complement Malaysia’s New Industrial Master Plan (NIMP) 2030.

NIMP 2030 aims to increase the manufacturing sector’s value added to RM587.5 billion, employment to 3.3 million and the median salary to RM4,510 a month by 2030. These will be driven by six engines of growth — reindustrialisation, green transition, tech up, good life, services and empowering regions.

Liew said: “There are paradigm shifts for an agile, resilient and thriving Malaysia. It is about maximising the indispensable middle position of Malaysia in the global supply chain; shifting from land/resource-based to tech-based capital, and from real estate to real sectors; shifting from labour-intensive to valuing and paying for skills; and from a low-wage workforce to a resilient middle-class society; as well as putting climate at the centre of economic consideration.”

Impact of China Plus One strategy on Malaysia

The first presentation of Session 3, titled “China’s current market trends and their implications for the Malaysian market”, by Property­Guru Group Singapore director of special projects Winston Lee highlighted how the China Plus One strategy has benefited Southeast Asia, particularly Malaysia.

According to Lee, the strategy, driven mainly by the US-China trade war and Covid-19 pandemic, encourages China-based companies to reduce their dependency on China and diversify in terms of investment and manufacturing into other countries. Southeast Asian countries have been the most popular choice of investors.

He noted that Malaysia had positioned itself well to capture the opportunities from the strategy, as it has a policy of “continuing to build and strengthen the cross-border economic trade ties between Malaysia and China”.

Lee cited the example of a trip to China by Prime Minister Datuk Seri Anwar Ibrahim in April, during which he secured RM170 billion worth of projects from Chinese companies.

In fact, data from Mida shows that Chinese investment in Malaysia has exceeded that from the US and Singapore. “With the sheer size of the manufacturing base in China, there are tremendous opportunities for Malaysia to capture from the industrial, commercial and residential sectors to serve the needs of everyone in Malaysia,” he added.

Local property market outlook for 2024

In his presentation titled “Malaysia’s 2024 real estate outlook (residential, retail, office, industrial): NIMP 2030 + NETR + ESG: Impact to Malaysia’s real estate sector”, CBRE | WTW group managing director Tan Ka Leong gave his take on the outlook for the commercial, office and residential sectors for next year.

For the retail sector, he pointed out that more purpose-built retail spaces will embrace environmental, social and governance (ESG) elements while more retailers will have multiple uses for retail space to cater for an omnichannel shopping experience. These channels include in-store, mobile and online, and retail space can be used as fulfilment centres, goods collection points and hubs for online returns.

In addition, he expects the trend of concept stores for products, experiences and services to continue. Over the past 12 months, there has been an increase in the number of such concept stores, particularly for electrical and electronic products. These include the SenQ concept store at Cheras Leisure Mall, Machines Apple Premium Partner stores and the Samsung & ESH Consumer Electronics Premium Experience Store at Bangsar Shopping Centre.

In the purpose-built office sector, Tan said there was rising demand for green-certified prime building office space as more companies undergo a flight-to-green process to enhance their portfolio agility. Meanwhile, tenants will continue to expect more flexibility in terms of space layout, size and lease terms from building owners.

As such, Tan foresees that while rental price will remain the same, office supply and vacancy rates will increase, owing to more incoming supply, which will widen the gap between older and newer purpose-built office buildings.

For the residential sector, he highlighted a few catalysts that will support sector growth in 2024 — the relaxation of the Malaysia My Second Home requirements, as proposed in Budget 2024; an increase in allocation from RM5 billion to RM10 billion for Skim Jaminan Kredit Perumahan, which will benefit around 40,000 borrowers; and continued demand driven by owner-occupiers for competitively priced properties in good locations. Additionally, Tan foresees there will be greater demand for multigenerational and senior-friendly spaces owing to Malaysia’s ageing population. 

Meanwhile, Far Capital CEO Faizul Ridzuan said residential projects that promote a good lifestyle and have unique selling points and smaller units would be in demand next year.

In his session titled “2024 consumer real estate buying trends in Malaysia and Indonesia”, Faizul explained that smaller units would continue to be a trend in 2024 because single-family households are the fastest-growing in Malaysia. He emphasised, however, that high-rise projects that focus on smaller units should offer attractive common areas and lifestyle facilities to draw buyers.

Bridging Johor-Singapore gap

In his presentation titled “Singapore real estate market trend updates: Real estate demand spillover effect towards Johor real estate demand”, Knight Frank Singapore head of research Leonard Tay spoke about the performance of the Singapore residential market and its spillover effect on Johor. He highlighted that the cooling measures in Singapore, which have made its properties more expensive for foreign buyers, have presented an opportunity for Johor.

“We have seen renewed interest among buyers and brokers [for property in Johor]. However, this is only anecdotal, not translating into historical transactions yet. Singapore and Johor have a special relationship that can benefit each other. The one thing that prevents Johor and Singapore from unlocking their potential, however, is the traffic congestion at the Causeway,” Tay pointed out.

He said besides tackling the physical accessibility between the crossing points, collaboration between the two governments on infrastructure and policy that will benefit both countries is equally important. These include the Johor Bahru-Singapore Rapid Transit System, the Iskandar Malaysia Bus Rapid Transit and the revival of the Kuala Lumpur-Singapore high speed rail.

“More than infrastructural solutions, strong collaboration between the two governments is even more pertinent. There must be political will on both sides to make [the bridge] closer. Policies such as the Special Economic Zone (SEZ) will help too. When the details of the SEZ are announced in a month or two, it will harmonise this and bring both columns together,” Tay said.

The SEZ aims to improve the flow of goods and people between both sides of the Causeway and enhance the ecosystem of the Iskandar development region and Singapore.

ESG increasingly important

Rehda Malaysia vice-president and Sime Darby Property Bhd group managing director Datuk Azmir Merican, who was the moderator of the panel discussion for the session, raised the topic of ESG and what it means to be ESG-compliant.

CBRE | WTW’s Tan and Knight Frank Singapore’s Tay concurred that a large number still do not fully understand what it means to be ESG-compliant even though many companies have jumped on the bandwagon, as ESG has become more relevant over the last few years.

“In Malaysia, ESG is more for commercial buildings [such as offices] … When MNCs come in, ESG is a requirement. They require landlords to tell them their plans to transform the building into an ESG-compliant building. It takes time for landlords to plan it because they need to strike a balance between the cost and return. At the same time, we have seen tenants move out of a building because it is not ESG-compliant,” said Tan.

Source: The Edge Malaysia

Opportunities and trends in 2024

The potential investments worth RM6.56 billion from Japanese firms secured during Prime Minister Datuk Seri Anwar Ibrahim’s recent working visit to Japan in conjunction with the Asean-Japan Commemorative Summit reflect a strong vote of confidence in Malaysia’s future.

Anwar, who just concluded a successful five-day working visit to Tokyo from December 16 to 21, said that it is expected to increase Japanese investment in Malaysia to at least RM30 billion this year.

“This is a very strong vote of confidence in Malaysia’s future. These high-value investments will create equally high-quality jobs for more Malaysians, in line with the government’s priorities under the Ekonomi Madani framework and the New Industrial Master Plan 2030.

“Our heartfelt gratitude goes to Japan’s willingness to participate in rebuilding Malaysia,” he said in a statement released by the Prime Minister’s Office (PMO) today.

Anwar said that he is confident about Malaysia’s shared future in 2024, where the Ekonomi Madani envisages a shared prosperity for all who commit to the Madani government’s reform agenda.

“I am optimistic that if all Malaysians work together as one in realising this vision, there is no challenge we cannot overcome,” he said.

According to the PMO, Anwar’s packed schedule is a testament to Japan’s long-time friendship with, and excitement for, Malaysia’s renewed political stability and bright prospects for its economic growth and transformation.

During the trip, it was also announced that the official Japan-Malaysia relationship is to be elevated to Comprehensive Strategic Partnership status. This important distinction is reserved for Japan’s most important, strategic relationships.

Under this strengthened new partnership, cooperation between Japan and Malaysia is anticipated to expand, across a broad swath of economic, defence, science, technology, innovation, environmental, and cultural spheres.

“The first tangible product of the new Comprehensive Strategic Partnership is a ¥400 million (RM13 million) Official Security Assistance Grant Aid from Japan to enhance Malaysia’s maritime security.

“This is in addition to a collaboration pact signed between the Malaysian Space Agency (MYSA) and the Japan Aerospace Exploration Agency (JAXA),” the PMO said.

During the working visit, the prime minister held one-on-one meetings with Japanese corporations RoHM Wako, NEC Co Ltd (Toshiba) and Mitsui & Co Ltd and participated in a roundtable with 25 Japanese companies, which expressed further interest in increasing their investments in Malaysia.

Anwar also participated in the Asean-Japan Commemorative Summit, and met the Japanese Emperor Naruhito and Empress Masako; Japan’s Prime Minister Fumio Kishida; as well as the Malaysian diaspora in Japan.

He also spoke at the Asia Zero Emission Community Summit.

This was Anwar’s first visit to Japan since becoming prime minister on November 24, 2022.

He was supported during this trip by a high-level Malaysian delegation including Foreign Minister Datuk Seri Mohamad Hasan; Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz; and senior government officials.

Source: Bernama

PM Anwar: Potential RM6.56b Japanese investments a strong vote of confidence in Malaysia’s future

Malaysia’s Look East Policy with the inclusion of China will increase trading and investment cooperation between both countries, resulting in higher economic growth and revenue for Malaysia, the Malaysian Institute of Economic Research (MIER) said.

Economist Shankaran Nambiar said this would narrow Malaysia’s fiscal gap and potentially make Malaysia the new hub for investment in Asean.

“This is a clear signal that Prime Minister Datuk Seri Anwar Ibrahim wants to intensify economic cooperation with China but without sacrificing national interests as China is a humanistic country that has no interest in domination and control.

“Besides, we have a history of trade that goes back couple of centuries. Now with China’s rise as a global player, it only stands to reason that Anwar wants to leverage on history.”

Nambiar said Malaysian companies should leverage China’s expertise in various fields and pursue joint ventures, especially in artificial intelligence (AI), robotics, superfast trains, drones, electric vehicles (EV), electric batteries and quantum sensors as China is a leader in these new technologies.

On December 17, 2023, Anwar, who is also the finance minister, told Asahi Shimbun in an interview in Tokyo that Malaysia, which has long looked to Japan and South Korea as models for economic development, is now also interested in learning from China.

“I wouldn’t say ‘East’ (in this policy) means Japan and South Korea minus China. Now, when we say ‘Look East,’ it’s East (including China),” Anwar was quoted as saying by Japanese newspapers.

Echoing Nambiar, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said Malaysia and China could have a symbiotic relationship to broaden the market reach and transfers of technology, which would help to improve Malaysia’s productivity and competitiveness.

He said the idea to include China in the Look East Policy was wise as China has the economies scale in terms of the size of its home markets and they have proven themselves in respect to technological prowess.

“I believe that a smart partnership between China and Malaysia will undoubtedly create opportunities for the people of Malaysia to gain access to technological advancements capable of enhancing the competitiveness and productivity of the country.

“An example is the field of technology, where China has already made significant strides due to their efforts in allocating substantial resources for research and development (R&D),” he said.

Meanwhile, Putra Business School economic analyst Assoc Prof Ahmed Razman Abdul Latiff said the move would also increase the confidence in Chinese businesses to invest in Malaysia and at the same time encourage more visitors and tourists from China to Malaysia.

He said it was the right move to include China in the policy, which was first introduced by former prime minister Tun Dr Mahathir Mohammed 41 years ago, considering the current economic situation where China is Malaysia’s largest trading partner and going to remain an important market in the foreseeable future.

“There are many areas that Malaysia should leverage on China’s expertise such as technological product, agro-food and rare earth elements extraction, refining and manufacturing technology.”

Additionally, he said Malaysia must ensure that there would be greater access and ease of business between the two countries via multiple corridors meant for international land-sea-air trade.

Malaysia University of Science Technology professor and dean Prof Geoffrey Williams believed Malaysia would certainly benefit from the land-sea corridor to ease trade and investment from China.

He said China is a major trading partner for Malaysia with 14 per cent of exports in November 2023 compared to 10.6 per cent for the United States while Asean remained the biggest with just under 30 per cent of exports.

“In practice, Malaysia always works with China in trade and investment so what Anwar has said is simply to clarify what already happens.

“China is also a big investor and collaborator with the Geely-Proton link being very successful,” he added.

Source: Bernama

China inclusion in Look East Policy will boost trade, investment — Economist

Government-linked investment companies (GLICs) and government-linked companies (GLCs) should mobilise efforts to support the country’s aspirations as a world-class Islamic economic hub and investment destination, said Prime Minister Datuk Seri Anwar Ibrahim.

Anwar, who is also the finance minister, said GLICs and GLCs should also increase investments in the digital and renewable energy sectors, as well as encourage the micro, small and medium enterprise sector (MSME) to expand their market to regional countries as outlined in the national aspirations.

“Yesterday I chaired a meeting with the chief executive officers of GLICs. This discussion is a prelude to the reform of GLICs and GLCs so that they are more focused on the development and well-being of the people as outlined in the framework of Madani Economy: Empowering the People.

“I welcome the recommendations of the chief executive officers of GLICs to improve the well-being of the people and the progress of the local economy,” he said in a post on Facebook today.

Among the suggestions that have been made are making better use of expenses from corporate zakat collection, establishing collaboration with the private sector to develop student accommodation and mobilising more funds for investment in unlisted companies in the small and medium enterprise (SME) sector, he said.

Anwar added that he also mandated GLICs to increase their respective domestic direct investments because GLICs have a responsibility to work together with the government in driving economic growth and expanding the income of the people.

He noted that with the total size of assets under management worth RM1.84 trillion, which is almost equal to the size of Malaysia’s nominal gross domestic product (GDP) this year, GLICs are capable of moving and accelerating Malaysia’s economy.

“To ensure that these missions are achieved, the government will continue to hold regular meetings chaired by me or Finance Minister II Datuk Seri Amir Hamzah Azizan to monitor the achievements and progress of initiatives led by GLICs.

“God willing, with this approach, Malaysia will move faster towards sustainable and equitable progress,” he said. 

Source: Bernama

PM Anwar tells GLICs, GLCs to increase investments, expand markets to support national aspirations to empower the people

Malaysia and China must capitalise on the Regional Comprehensive Economic Partnership (RCEP) to further strengthen their ties, said the World Trade Centre Kuala Lumpur (WTCKL).

WTCKL group managing director Datuk Seri Dr Irmohizam Ibrahim said the RCEP, with its expansive reach across the Asia-Pacific region, provided an unparalleled opportunity for collaboration and economic growth.

“By embracing this agreement, we can deepen our economic integration, facilitate smoother trade and foster an environment conducive to innovation and sustainable development,” he said in his speech at the fourth Belt and Road China-Malaysia Business Dialogue held in Shenzhen, China, recently.

Irmohizam said the collaborative efforts over the years have strengthened the ties between Malaysia and China, paving the way for mutually beneficial partnerships.

He noted that 2023 marked the 50th anniversary of the establishment of diplomatic relations between the nations, a testament to the enduring friendship and fruitful collaboration that has flourished over the decades.

“The economic and trade cooperation between our two nations has not only contributed to the prosperity of our people but has also fostered a spirit of unity and understanding,” he said.

Irmohizam added that the Belt and Road initiative has played a pivotal role in connecting Malaysia and China’s economies, creating opportunities for businesses on both sides and enhancing the cultural exchange between the nations.

Meanwhile, WTCKL has consistently been a preferred venue for hosting trade exhibitions organised by Chinese entities, such as the Malaysia-China Trade Expo, Game Times International and OCTF Shenzhen, showcasing its international appeal but also underscoring its commitment to fostering collaboration and promoting bilateral trade.

Irmohizam noted that the collaborations facilitated by WTCKL served as a testament to the potential for mutually beneficial partnerships between Malaysian and Chinese businesses.

“These efforts contribute significantly to the broader objectives of the Belt and Road initiative, promoting cooperation and fostering innovation within the business communities of our two nations,” he added.

Source: Bernama

WTCKL: Malaysia-China must capitalise RCEP to strengthen ties

Norway hopes to conclude the European Free Trade Association (EFTA)-Malaysia free trade agreement (FTA) by 2024 to foster more opportunities for Norwegian and Malaysian companies.

Norway’s deputy minister of trade and industry Tore O. Sandvik said with the negotiations going on and off for about 10 years, it is time to finalise the agreement as the EFTA has concluded its FTA with neighbouring countries in this region.

“Malaysia and Norway share some similarities where it is rich in natural resources and is attached to big oceans, and thus, there is a great possibility to collaborate in oil and gas (O&G), maritime, and satellite-based offshore surveillance to protect the environment.

“Which is why we must be pushing for the FTA with Malaysia. Norwegian businesses are telling us to come here because we want to share, learn and build cooperation with Malaysian businesses in various sectors,” Sandvik told Bernama during his one-day visit to Malaysia on Friday.

The EFTA member states are the non-European Union (EU) member countries that include Iceland, Liechtenstein, Norway and Switzerland.

He said Norway is closely following the development of Malaysia’s green transition plan such as the National Energy Transition Roadmap (NETR) and is interested in carbon capture and storage as well as green hydrogen.

“We (Norway) have been doing carbon capture for about 30 years and in terms of technology, the knowledge is easily transferable to Malaysia. We can share our experience in green transition, and together we can learn from one another about decarbonising our countries.

“We think Malaysia has the potential to become a hub in Asia for storing carbon and we would very much like to participate in that journey because that is also our mission for Europe,” said Sandvik.

Besides, he said the strong focus on sustainability is also another common agenda for industries which could benefit companies in both countries.

According to the Malaysia External Trade Development Corporation (Matrade), Malaysia’s trade with Norway grew 21 per cent year-on-year with exports to Norway amounted to RM807.19 million and imports at RM1.05 billion in 2022.

Key to Norway’s success and what Malaysia can learn

Norway was ranked seventh in the World Happiness Report 2023 published by the Sustainable Development Solutions Network.

As one of the happiest countries in the world, Sandvik said the key is to be sustainable and inculcate a culture for equal wealth distribution for the people and foster close cooperation with various stakeholders including trade unions, employers, government, and have responsible policies on wages and the financial system.

“Equal distribution also equals trust. When you trust each other, it is easier to grow and develop healthily, hence, easier to be happy and safe.

“You cannot divide people such as in terms of gender, race and land. You have to politically be responsible and provide equal opportunities including in talent as well, which is also in our welfare system,” Sandvik said.

Norway, which has only about 5.5 million population, also provides free healthcare treatment and education. 

Source: Bernama

Norway optimistic FTA with Malaysia will foster more business opportunities

Malaysia has emerged as the most favourable location for businesses worldwide, surpassing other countries in terms of both cost-effectiveness and fast corporate processes by local authorities, reported Mercator Entity Management Report 2023.

The report cited Malaysia’s electronic filing options, minimal documentation requirements, and swift registration processes as key factors contributing to its top position.

It highlighted that it is common practice to approve corporate decisions by written resolutions instead of requiring an actual meeting.

Additionally, there are no nationality requirements for directors, the incorporation process is quick and not complex, and there are not a lot of annual reporting requirements, thus less chance a pending filing will cause issues or delays with corporate changes.

Physical presence at local authorities by the attendee is not required, signing in counterpart or e-signatures are acceptable, and notarisations or legalisations are not required as well.

Following Malaysia, Australia, Singapore, Portugal, and the United Kingdom secured the subsequent positions in the global business-friendly environment for 2023.

Kariem Abdellatif, head of Mercator by Citco, Citco C&T Holdings, said, “Overall, we continue to see the digitalisation drive revolutionising the way in which multinationals manage and maintain their global portfolio of entities and 2023 has seen more jurisdictions across the world embrace digital tools to streamline processes and increase efficiency.”

Asia-Pacific (Apac) emerged as a region of contrasts, with both the cheapest and most expensive jurisdictions. While Apac benefits from pre-pandemic adoption of digital processes, certain jurisdictions like South Korea, China, and Taiwan present higher costs. Malaysia stands out as a cost-effective business hub in this diverse landscape.

Overall, Malaysia, Sri Lanka and Jersey are the most inexpensive countries for multinationals. In all three jurisdictions, notarisations or legalisations are not required meaning documents do not require translation and no extra costs are incurred. In addition signing in counterpart or via e-signatures are acceptable, online filing options are widely available and the physical presence of the attendee is not required to enact changes. All these factors significantly reduce the cost to complete tasks.

Furthermore, it said multinationals operating in places such as Vietnam, Taiwan and South Korea are faced with a commensurate number of rules and conventions to follow.

In contrast, Apac’s financial hubs – such as Singapore, Australia and Malaysia – are business-orientated with simplified and digitalised processes. The pace at which multinationals can manage entities in these jurisdictions significantly boost the region’s overall average time to complete tasks.

It said multinationals should expect to complete the most tasks in the Philippines, Malaysia and India. All three have a considerably higher average number of tasks per entity, compared to the global average of 3.85 tasks per entity.

Source: The Sun

Malaysia the most favourable location for businesses worldwide: Mercator report

Malaysia’s Look East Policy with the inclusion of China is a wise and necessary move given the latter’s rapid economic rise, said the Federation of Chinese Associations Malaysia (Huazong).

“The time has come for us to fine-tune and further expand (the policy),” said its president Tan Sri Goh Tian Chuan.

The same policy with Japan as the role model was first introduced by former Prime Minister Tun Dr Mahathir Mohammed in 1982 — 41 years ago.

Goh said with China’s rapid economic growth over the past decades which saw it overtake Japan as the world’s second largest economy 13 years ago, it is timely for Prime Minister Datuk Seri Anwar Ibrahim to include China in Malaysia’s Look East Policy.

“This is especially appropriate, as China overtook Japan as the world’s second largest economy 13 years ago with the United States (US) remaining the world’s largest economy. Hence, for any nation (including Malaysia) to ignore China’s economic prowess would be unwise diplomatically and economically,” he told Bernama.

With Malaysia being the first Asean nation to establish diplomatic ties with China in 1974, which will be celebrating the 50th anniversary of diplomatic relations with China next year, Goh emphasised that it is an opportune time for Anwar to moot the idea.

Anwar, who is also the finance minister, told Asahi Shimbun in an interview in Tokyo on Dec 17, 2023 that Malaysia, which has long looked to Japan and South Korea as models for economic development, is now also interested in learning from China. “I wouldn’t say ‘East’ (in this policy) means Japan and South Korea minus China. Now, when we say ‘Look East,’ it’s East (including China)”, Anwar was quoted as saying by Japanese newspapers.

Anwar’s era

Goh noted that since Anwar became Malaysia’s prime minister in November 2022, he had conducted two official visits to China this year alone and has successfully brought in a host of advanced Chinese technologies and financially strong investors to set up operations and collaborate with Malaysian businesses.   “I strongly believe that with a strong and stable strategic partnership in Anwar’s era, diplomatic relations between Malaysia and China will be at its peak,” he said.

He added that more China investors are expected to invest in Malaysia following the positive shift in the present government’s stance towards Chinese investments, coupled with closer bilateral ties under Anwar’s leadership.

Malaysia-China bilateral trade hit a record high of US$203.6 billion in 2022.

For the first nine months of 2023, trade with China was recorded at RM410.01 billion, with exports at RM174.55 billion, mainly comprising shipments of electronics and electrical (E&E) products, palm oil and palm oil-based agriculture products as well as iron and steel products.

Moving forward, Goh said Malaysia could boost its collaboration with China in the field of advanced technologies, such as aerospace, automotive, high-speed rail, artificial intelligence, drone technology, e-commerce, logistics and packaging as well as environmental technologies.

“Other sectors that are worth collaborating include higher education, human resources, culture and tourism, which would ultimately boost bilateral trade and social relations between Malaysia and China,” he added.

Goh said the Malaysian business sector hopes that the government will continue to strengthen its diplomatic ties with China.

Source: Bernama

Anwar’s Look East policy plus China a wise, necessary move — Huazong president

Small and medium enterprises (SMEs) play an instrumental role in Malaysia’s economy. They represent a remarkable 97% of its companies and contribute half of the country’s employment. However, the Covid-19 pandemic laid bare vulnerabilities within this ecosystem, impacting productivity and emphasising the imperative for sustainable strategies. In response to this transformative event, seasoned business owners have begun to look beyond the boundaries of their organisations.

Mergers and acquisitions (M&A) have come to the forefront as a possible strategic avenue, aligning personal aspirations seamlessly with overarching business objectives. External partners and investors can help address pressing challenges, including the intricate management of cash flow and the vital process of digital transformation.

Japan’s corporate leaders have increasingly shown a strong interest in Malaysia. This magnetic allure is deeply rooted in various factors that harmoniously converge to create a unique opportunity. The region’s rapid economic growth, coupled with a burgeoning middle class and escalating consumer expenditures, paint a canvas of promise.

What makes Malaysia so attractive?

In this landscape, Japanese enterprises perceive Malaysia not only as a strategic gateway but as a dynamic launchpad into the rapidly expanding Southeast Asian market. They adeptly harness Malaysia’s abundant resources and robust connectivity to achieve their ambitions. Positioned as one of the region’s most accessible economies, Malaysia’s business-friendly and multilingual environment and competitive operational costs further sweeten the proposition.

Japan’s significance to Malaysia’s economy is undeniable. It is, in fact, one of the country’s most prominent sources of foreign direct investment (FDI), injecting an impressive RM91 billion (US$27 billion) in 2022, leading to the creation of 336,000 jobs, according to Malaysia’s Ministry of Finance. Japan is Malaysia’s fourth-largest trading partner with a trade volume of RM181 billion (US$41 billion).

The great momentum of growing intra-Asian trade flows is uplifting Malaysia’s SMEs. However, many small business owners find themselves devoid of the resources and insights needed to fully harness the potential of international trade. Strategic expansion, such as through acquisitions, becomes a challenge that seems elusive.

Beyond that, concerns have arisen over business succession risks, financial constraints, and the complexities of regulatory compliance. In the face of these multifaceted challenges, a crucial question arises: how can the cherished legacy of small Malaysian businesses be fortified in an era defined by increasingly globalised economies?

Japanese investors appreciate the repertoire of skilled workers and professionals, as well as the agility to meet the demands of thriving industries, particularly in manufacturing. This prowess has been meticulously nurtured through Malaysia’s robust emphasis on technical and vocational education, ensuring that its youth is equipped with the aptitudes and skills that are so pivotal in the contemporary economy.

The cultural component

The promising partnership hinges not only on the tangible aspects of economic prowess but also on the intangible bedrock of culture, values and business etiquette. It encompasses a deep-seated respect for hierarchy, an appreciation for decision-making processes and a reverence for seniority.

The relationship thrives upon the nurturing of enduring relationships. As Japanese investors engage with their Malaysian counterparts, the importance of forging robust personal connections takes centre stage. These interactions manifest not only within formal meetings, but also find resonance within the nuances of informal gatherings, underpinning the foundation of effective engagement within the intricate sphere of Japanese business culture.

Japanese counterparts offer solutions to many of these challenges, given their shared affinity with Malaysia’s small business sector. In Japan, SMEs account for approximately 99% of all enterprises, mirroring their significance within Malaysia. These entities play a central role in upholding local economic stability and community livelihoods.

However, the ageing management and the scarcity of potential successors strain many firms. Data from the Small and Medium Enterprise Agency forecasts that by 2025, nearly 2.5 million Japanese SMEs will be helmed by individuals over 70 years of age. A declining population results in a shrinking domestic market, propelling the need to seek growth overseas.

Furthermore, plummeting birth rates and an ageing population exert pressure on the labour market. Innovation and technological advancement offer a sustainable solution for the future, alleviating immediate strains. Malaysian companies stand to benefit from Japanese expertise in research and development, manufacturing, services and coveted management methodologies, positioning themselves to navigate forthcoming transformations. It encompasses exposure to refined management practices and also offers a gateway into Japan’s sophisticated consumer market.

In this context, we posit that embracing M&A serves as a strategic beacon for SMEs. M&A assumes a pivotal role for Japanese enterprises seeking a foothold in the Asian market, with Malaysia serving as a pivotal gateway. Through M&A, Japanese investors secure a bridgehead to Malaysia’s growing consumer base and the array of regional prospects it offers. This symbiotic relationship emerges as an avenue for both nations to foster growth, cultivate resilience and embark on a journey of shared prosperity.

Source: The Edge Malaysia

Deciphering why Malaysia is alluring for Japanese investors and what it means for SMEs