Malaysian In­vest­ment De­vel­op­ment Au­thor­ity chief ex­ec­u­tive of­fi­cer Datuk Az­man Mah­mud speaks about the in­vest­ment ecosys­tem for­mula which has worked for decades and will con­tinue to do so in the fu­ture, writes RUPA DAMODARAN

New Straits Times - - Business -

MALAYSIA has a well­tested for­mula in at­tract­ing in­vest­ments, one that is based on build­ing blocks over the past five decades.

As the Malaysian In­vest­ment De­vel­op­ment Au­thor­ity (Mida) turns 50 this year, it knows that there will be more chal­lenges and op­por­tu­ni­ties on its plate in the decades ahead.

Mida chief ex­ec­u­tive of­fi­cer Datuk Az­man Mah­mud holds fast to the be­lief that the ex­ist­ing ecosys­tem must be con­tin­ued to at­tract in­vest­ments.

Over the last 40 to 50 years, Mida has built the blocks for the elec­tri­cal and elec­tron­ics (E&E) in­dus­try and to­day, the sec­tor stands proud as a ma­jor con­trib­u­tor to the man­u­fac­tur­ing sec­tor and also ex­port re­ceipts.

“If we con­tinue to de­velop that for­mula, we will be more suc­cess­ful in at­tract­ing in­vest­ment in the fu­ture and, of course, in that line, we cre­ate high-qual­ity jobs.”

By ecosys­tem, Az­man is not re­fer­ring to the sup­ply chain for in­dus­tries only but also the broad in­fra­struc­ture — ports, roads and high­ways which need to be im­proved and mod­ernised to re­main ef­fi­cient.

In­dus­trial parks in the coun­try will re­main a crit­i­cal part of the in­fra­struc­ture, he added.

“If you don’t have ready in­dus­trial parks, you will lose out. Some com­pa­nies need to build their fac­to­ries in less than a year as they want to go to the mar­ket very fast. Our track record has shown how one com­pany has suc­ceeded in build­ing its fac­tory in nine months.”

In­dus­tries are mostly lo­cated in the more than 500 in­dus­trial es­tates and free zones na­tion­wide.

These zones are ex­port pro­cess­ing zones which cater for ex­port-ori­ented in­dus­tries or spe­cialised parks that cater for spe­cific in­dus­tries.

In re­cent years, the gov­ern­ment has made it clear that it does not wel­come labour-in­ten­sive assem­bly-type man­u­fac­tur­ing in­vest­ments.

Az­man said de­spite the shift to­wards knowl­edge econ­omy, Malaysia has con­tin­ued to at­tract in­vestor in­ter­est.

The level of in­vest­ments has sur­passed the RM148 bil­lion av­er­age an­nual tar­get set be­tween 2011 and 2015 un­der the 10th Malaysia Plan.

“In­dus­tries are also recog­nis­ing that Malaysia is not ‘rel­e­vant’ to their labour-in­ten­sive op­er­a­tions. You will hear of multi­na­tional cor­po­ra­tions clos­ing down some op­er­a­tions but at the same time, the same ones an­nounce they are bring­ing in new in­vest­ments and ex­pand­ing their op­er­a­tions.”

For ex­am­ple, Pana­sonic and Sony have an­nounced the shift of some of their op­er­a­tions to Viet­nam and other neigh­bour­ing coun­tries but have en­hanced their op­er­a­tions here with val­ueadded prod­ucts.

Az­man said the large com­pa­nies have built their sup­plier chains in Malaysia since their ini­tial in­vest­ments, hence any in­tro­duc­tion of new prod­ucts and ac­tiv­i­ties can lever­age on this in­fra­struc­ture.

Malaysia has, to date, at­tracted more than 5,000 for­eign com­pa­nies from more than 40 coun­tries. Many have ex­panded and di­ver­si­fied their op­er­a­tions, re­flect­ing

We need to con­tin­u­ally train peo­ple to be more rel­e­vant to in­dus­try needs so that there will not be a huge skills mis­match.

their con­fi­dence in Malaysia.

Mida has also ad­dressed the con­cerns which have been raised by in­vestors.

Among them is the ed­u­ca­tion sys­tem in Malaysia, which is keenly watched by in­vestors who are con­cerned with how fu­ture de­mand for tal­ent is be­ing ad­dressed.

“We need to con­tin­u­ally train peo­ple to be more rel­e­vant to in­dus­try needs so that there will not be a huge skills mis­match,” said Az­man, adding that in­dus­tries are work­ing closely with train­ing in­sti­tu­tions to pro­vide proper di­rec­tion.

On for­eign work­ers, he said the gov­ern­ment’s tar­get is to re­duce the num­bers, which means in­dus­tries must re­sort to au­to­ma­tion and skills up­grad­ing for lo­cal work­ers.

Az­man said most of the prob­lems raised by in­vestors are re­lated to op­er­a­tions on the ground, such as wa­ter or power dis­rup­tion.

“It has not come to the stage where they say Malaysia is bad. They need to en­gage with rel­e­vant com­pa­nies and au­thor­i­ties and the prob­lems are solved, al­though some may take a longer time.

“The im­por­tant thing is that the gov­ern­ment is sen­si­tive to­wards all these is­sues. When it comes to us, we im­me­di­ately take ac­tion, whether short term, medium term or long term,” he added.

In­fra­struc­ture such as ports and roads need to be im­proved and mod­ernised in or­der to re­main ef­fi­cient.

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