By NG MIN SHEN / Pic By ISMAIL CHE RUS
More US companies are looking to invest or increase their investments in Malaysia following the seemingly positive changes in the country’s administration, said an American trade expert.
The US-Asean Business Council, an advocacy organisation for US corporations operating in the region, will be bringing a bigger delegation than in recent years to Malaysia this October as interest in the country heightens following the historic recent general election result.
“It’s a new environment with a new government, which has never happened here. So, lots of companies, whether they’ve been here for years or new to the market, all want to come here now,” US-Asean Business Council VP of policy Marc Mealy (picture) told The Malaysian Reserve (TMR).
Reacting to the significant change in the political landscape, the first in the country’s 61 years since independence, these firms from the world’s largest economy seek to engage the new administration.
“For example, if you’re ConocoPhillips Co and you’ve been in Malaysia for decades and have hundreds of millions of US dollars in investments here, even you want to fly in from Houston and say, “I want to make sure you understand how we’re a part of the economy”. Now imagine that across a wide range of industries come October,” Mealy told TMR recently.
The US was a major investor in Malaysia in the late 1960s and 1970s, turning unused land including paddy fields in places like Penang into semiconductor manufacturing hubs, exporting billions worth of products and helping to propel the country to become an exporting giant.
Last year, Malaysia exported products worth US$217.9 billion (RM872.09 billion) and about US$20.7 billion of the goods landed in the US. But over the last decade, with the emergence of new regional economies that offer cheaper labour and operating costs, Malaysia’s attractiveness dwindled among foreign investors.
According to data from the Malaysian Investment Development Authority, the nation recorded total approved investments of RM197.1 billion in 2017. Among the key investors were from Singapore, China, Switzerland, the Netherlands and Germany.
Investors are concerned about the new government’s policy to purge projects approved by the previous administration. But Mealy said the move could be interpreted positively as a reflection of good governance.
“There is a value that investors consider when they see governments being fiscally responsible and promoting fiscally sound investments in the country.
“It’s like saying this new government is not going to allow irresponsibility in those projects, and (upon) deciding that if something doesn’t make sense fiscally or economically, they’ll do the smart thing and potentially not move forward on those projects,” he said.
Investors are more comfortable in an environment where institutions are transparent and credible, he added, noting the new administration’s efforts to build an image of Malaysia with clean policies.
“Over the years, some of the perceptions of institutions in Malaysia have taken a public relations hit. So, it’s not surprising that the new government would make it a priority to re-establish and re-strengthen the Malaysian brand,” Mealy said.
While hesitation may still linger on the part of new investors unfamiliar with Malaysia, the council has reminded them of the positive business environment for global companies investing here during Prime Minister Tun Dr Mahathir Mohamad’s previous tenure, as well as the fact that any transition of power requires time.
“In this region, all outlooks still pertain to solid economic growth. Malaysia’s fundamentals around growth and demographics are still quite strong,” Mealy said.
US companies are expected to continue to invest in Malaysia with players such as offshore engineering company McDermott International Inc and conglomerate Honeywell International Inc having made Malaysia their business hub over the past two years. Tech firm Oracle Corp also recently opened a business hub here.
The US-Asean Business Council hosts a Malaysian committee which represents a subset of over 150 US companies operating in Malaysia, including General Electric Co, The Coca-Cola Co, Microsoft Corp, Exxon Mobil Corp, ConocoPhillips, Visa Inc and Mastercard Inc. It mainly serves as the leading voice of the US private sector in promoting mutually beneficial trade and investment relationships between the US and South-East Asia.