MALAYSIA has a well-tested 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 value-added 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 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.