MALAYSIA TO BOUNCE BACK AS ASIAN TIGER
With major capital investments from China totalling RM181 billion over last 10 years, it ranks the highest among Asean peers
MALAYSIA is on track to return as an Asian Tiger, despite multiple detours on the back of the 14th General Election, according to independent global property consultancy Knight Frank.
In the second edition of its New Frontiers: Prospects for Real Estate Along the Belt and Road Initiative report, the firm noted that Malaysia had been a major beneficiary of Chinese capital over the past 10 years, with investments totalling US$43.8 billion
(RM181 billion).
This was the highest amount recorded among its Asean peers.
Knight Frank Malaysia Capital Markets executive director Allan Sim believes that the government’s reexamination of all the memorandums of understanding signed under the previous leadership would not derail but most likely delay the inevitable given the benefits of these large foreign direct investments.
“Following the change of government in May 2018, a number of Chinese investments and projects, especially mega infrastructure projects, had been deferred.
“However, the attendance of Prime Minister Tun Dr Mahathir Mohamad and Malaysian business delegates at the recently concluded second Belt and Road Initiative (BRI) Forum for International Cooperation, coupled with his intention to expedite the setting up of a one-stop centre to ease foreign investment-related approvals, bring assurance and confidence to Chinese firms to reconsider investing in Malaysia,” he said.
The Belt and Road Index within the report assessed 66 countries considered core to China’s initiative.
The index is classified into six categories: economic potential, demographic advantage, infrastructure development, institutional effectiveness, market accessibility and resilience to natural disasters.
Knight Frank said Johor had maintained its attraction to the Chinese firms given its strategic location.
“Good air and maritime connectivity in Johor, provided by established infrastructure in the state, namely the Senai International Airport, as well as the Johor Port and the Port of Tanjung Pelepas, have supported the state’s vibrant logistics industry,” said Knight Frank Johor branch head Debbie Choy.
“Johor has always been an attractive destination among Chinese investors. In fact, China is among the largest investor in Iskandar Malaysia since its inception in 2006, especially in the manufacturing sector. Moving forward, Johor is well positioned to capitalise on the continuing strong bilateral relations between China and Malaysia,” she added.
Besides relying on Chinese capital to drive growth, the government has also set in place key initiatives that will have direct benefits on the industrial sector.
One major initiative is the emphasis on improving the country’s capabilities in the halal industry, a global industry worth US$2.1 trillion in 2017, and capitalising on Malaysia’s top rated global Islamic economic ecosystem spanning finance to manufacturing standards and halal certifications.
Knight Frank said another major initiative announced recently in the 2019 Budget was the plan to set up a new Free Trade Area in Pulau Indah to spur shipping and logistics activities at Port Klang, Malaysia’s main port.
“As these initiatives materialise, the industrial sector is expected to receive a much-needed boost, especially given the ageing stock. Redevelopments into sizeable warehouses with higher specifications has been gaining momentum recently as operators seek to get ahead of the curve,” it said.