Mida focusing more on quality investments to spur growth

EXCERPTS from an exclusive interview with Malaysian Investment Development Authority (Mida) chief executive officer Datuk Azman Mahmud.

Q: In the past (from the 1980s to 2001), Malaysia appealed to foreign investors for brickand-mortar investments through various type of incentives. How much of that strategy has changed over the decades?

A: Tax incentives are just another tool to provide a tipping point in promoting investments. While incentives are still part of the strategy, we have been focusing more on educating investors about the benefits of the clusterbased ecosystem approach.

When Malaysia first started industrialisation after our independence, it was vital to bring in more foreign investments, particularly as they provided the necessary spillover effects that could grow our domestic companies. As Malaysia moves up the value chain, we are hungry for more innovation-based, knowledge–intensive projects within high-growth, high-value industries.

With the strong industrial ecosystems built over the years, we are now more targeted in our investment promotion efforts, specifically by focusing on quality investments that will accelerate and sustain the nation’s economic growth.

As we continue this strategy, we have been seeing more quality investments coming into Malaysia. In fact, 10 years ago, we would not have considered the aerospace industry as one of Malaysia’s critical growth areas but today, it is identified under the 11th Malaysia Plan (11MP) as one of the key strategic focus areas to re-energise the manufacturing sector, and the industry is set to soar higher in years to come.

Q: Has Malaysia’s shift to become more selective in its choice of foreign investors yielded the desired results? A: In line with the current megatrends, the country is embracing the Fourth Industrial Revolution, or Industry 4.0, which combines automation and digitisation, whereby connectivity is the core to driving this revolution.

We are encouraging our domestic companies to rise up and adapt their business operations to include smart technologies and processes. With a strong foundation in the manufacturing sector, Malaysia has many attractive value propositions to become the hub for the development of Industry 4.0 in the region.

For the past 20 years, the manufacturing sector has embarked on robotic assembly lines, precision engineering and computer-controlled processes. Our local companies are already undertaking research and development, engineering design, innovation and system integration and developing proprietary machinery and equipment (M&E) for global exports.

The road ahead requires Malaysia to go beyond just economic growth and build upon the core strengths of the country and secure opportunities with longterm benefits for all Malaysians. History proves that Malaysia is a resilient nation.

Q: From Mida’s point of view, what should ideally be the way Malaysia markets itself globally?

A: Under the 11MP, three catalytic sub-sectors, namely chemicals, electrical and electronics and M&E industries; and two subsectors of high potential growth, namely aerospace and medical devices, have been identified to drive the growth of the manufacturing sector. The “3 + 2” subsectors were selected due to strong inter-linkages to other sub-sectors. Indirectly, their capacities will be the base to support the development of the overall manufacturing sector.

For services, targeted sub-sectors would include Islamic finance, information and communication technology, oil and gas services, private healthcare, private higher education, ecotourism, halal industry and professional services as they are tradeable, have high-knowledge intensity and linkages with the rest of the economy, and the potential to generate high-income jobs.

Mida will continue to spearhead the national investment agenda through its strategic ecosystem approach in undertaking promotional programmes. Mida will continue to carry out more direct engagement and outreach programmes with the private sector and relevant stakeholders via various promotional activities (e.g. domestic promotion missions, roundtable meetings, seminars, engagement with industry associations and chambers of commerce and industry).

The road ahead requires Malaysia to go beyond just economic growth and build upon the core strengths of the country...

Q: In a recent Moody’s study, it was found that robotics technology in advanced economies would impact trade and manufacturing