More MNCs expected to set up regional hubs in Malaysia

With nearly 40% of its 2018 target secured, Mida is anticipating at least 12 more MNCs to establish their hubs


Malaysia is expected to see an increase in foreign direct investments (FDIs) this year as more global companies are pushing to establish their regional headquarters in the country.

In 2017, a total of 216 representative office and regional office projects were approved, with total investments amounting to RM374 million — 33.6% higher than the figure registered in 2016.

The country has seen at least three big-ticket signings in 2018.

National oil and gas company Petroliam Nasional Bhd recently finalised its US$7 billion (RM27.3 billion) partnership with Saudi Arabian Oil Co in the Pengerang Refinery and Petrochemical Integrated Development Project.

French carmaker Groupe PSA acquired a majority interest in Naza Automotive Manufacturing Sdn Bhd’s plant in Gurun, Kedah, to establish its Asean hub.

Meanwhile, South Korea’s second-largest conglomerate by market capitalisation, SK Group, is constructing its regional head office in Malaysia to cover its operations in South-East Asia, India and the Middle East.

This came on top of a slew of other major announcements last year, such as the setting up of Nestlé Group’s global procurement hub in Kuala Lumpur, Honeywell International Inc’s Asean headquarters in Bangsar South and IKEA’s regional distribution centre in Pulau Indah, Selangor.

With nearly 40% of its RM200 billion approved investment target for 2018 secured, the Malaysian Investment Development Authority (Mida) is anticipating at least 12 more multinationals (MNCs) to establish their principle hub by year-end.

“We have RM80 billion worth of investments already in the pipeline, mainly in the manufacturing and services sectors. It is just a matter of time before we approve them,” Mida CEO Datuk Azman Mahmud told reporters at the government agency’s annual media conference in Kuala Lumpur yesterday.

Azman did not disclose the details of the pending investments, but he assured that the deals will take place.

Out of the said amount, RM51.1 billion will go into the manufacturing sector, while another RM18 billion will be directed to the services sector.

Mida announced that Malaysia recorded a total of RM197.1 billion in approved investments for 2017, driven by the manufacturing, primary and services sectors.

Domestic direct investments accounted for 72.2% or RM142.4 billion of the total figure, while FDIs contributed 27.8% or RM54.7 billion.

A majority of the domestic investments were channelled to new projects, while the balance went into expansion and diversification projects. Total investments were boosted by the manufacturing and pri- mary sectors, which reported increases of 8.9% and 51.2% respectively.

However, the overall figure fell short of the number achieved in 2016 on lower approved investments re- corded in the services sector.

The real estate sub-sector saw a 28.7% drop in value despite a 43.1% uptick in the number of projects approved — pointing to a change in investment strategies towards smaller-sized projects.

The top five biggest foreign investors in 2017 were China, Switzerland, Singapore, the Netherlands and Germany, with a total investment of RM12.1 billion.

China remains the top FDI source for the second consecutive year with an investment value of RM3.9 billion last year compared to RM4.8 billion in 2016.

Separately, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said it is very likely that Malaysia will miss the first accession into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership due January next year.

With 18 pieces of legislation still in need of amendments, Mustapa said it would be impractical to pass all the bills in the two remaining parliamentary sessions this year.