The Malaysian Insight

MALAYSIA’S bid to attract Chinese foreign direct investment must include a move away from labour-intensive industries to those which are capital- and tech-intensive, said those involved in Malaysia-China business relations.

The up and coming businesses which China seeks to invest in abroad include green energy, artificial intelligence and 5G technology, they said.

Malaysia should no longer focus on attracting labour-intensive foreign investment but aim for high-end technology and green-energy firms, said Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Ter Leong Yap.

Chinese investors are seeking to develop these areas and Malaysia can begin its move towards Industry 4.0 or the fourth industrial revolution by focusing on creating high-income jobs, Teo told The Malaysian Insight.

The country already has several advantages, he said.

“Malaysia has outstanding pool of managerial talent. Their proficiency in several languages and professional skills give them an advantage.

“They have a combination of Asian values and Western values picked up from colonial rulers, a combination that is sought after by companies.

“I believe the investments by China’s high-end technological companies in Malaysia and the support of the people could make Malaysian companies competitive in the global market,” Ter said.

The focus on FDI from China comes amid positive predictions that Malaysia would see an inflow from Chinese firms in the second half of this year.

The first half of 2019 saw RM4.8 billion worth of investment from China, out of RM92 billion in total FDI in services, manufacturing and primary sectors.

The total figure represents an increase of 7.6% over the RM85.5 billion for the same period last year, Deputy International Trade and Industry Minister Dr Ong Kian Ming said last month.

Malaysia-China Chamber of Commerce Chairman Tan Kok Wai agreed, adding that Malaysia needs to welcome Chinese high-end technology and green-energy companies in order to make a transformative lead and upgrade its industries.

Artificial intelligence, the internet, 5G and green energy are the investments Malaysia really needs, Tan said.

He highlighted Huawei’s global training centre in Cyberjaya and the agreement between Alibaba Group and the Malaysian government for a digital free-trade zone as examples.

Huawei and Alibaba have also expressed intentions to lead the development of a smart-city project in China, Tan said.

Tan said Malaysia enjoys a geographical advantage compared with its Asean neighbours at the centre of the regional grouping.

It is also attractive to Chinese investors as it has sea ports and airport infrastructure. There is also political stability and an understanding of Chinese culture among its population, with little or no language barriers for Chinese investors.

Michael Kang, president of National Association of Small and Medium Enterprises, said there is already a drop in the number of labour-intensive industries in the country.

These industries have moved out of Malaysia to other countries in Southeast Asia.

“Labour-intensive industries, like those in manufacturing and furniture making, have begun sprouting in other Asean countries.”

Kang said Malaysia’s manpower policies also make it difficult for labour-intensive industries here to compete with Vietnam or Indonesia where labour is cheaper.

Even SMEs have, in recent years, are moving towards adopting high-end technological process, such as AI, as well as green tech, Kang added.

He expects more Chinese-Malaysian business partnerships to set up shop here, following the recent 2019 China-Malaysia enterprise cooperation meeting jointly organised by the Chinese embassy, Chinese General Chamber of Commerce and Bank of China.

A total of 91 Chinese companies, as well as 202 Malaysian firms, participated in the meeting, which yielded 196 pledges for cooperation and 51 memorandums of understanding signed on real intent to pursue partnerships.

Based on the meeting, the top 10 areas of economic interests between the two countries include palm oil processing and export, import and export of fruits, food processing, auto parts, electronics, e-commerce, medical supplies, building materials and logistics.

Tourism is also a sector of interest, including medical tourism, agricultural tourism, eco tourism.

Kang said China’s high-tech manufacturing industries today have strong scientific and technological content and Chinese companies would be guided by this to evaluate suitable investments here. – September 15, 2019.