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Monday, July 7, 2008

Foreigners still find good values in M’sia

FOREIGNERS still see good valuations in Malaysian properties and other assets despite the current political uncertainties.

When the ruling coalition Barisan National lost its two-thirds majority in Parliament in March, there was initial fear that foreign investors would reduce their investments in the country.

But this has been proven wrong given the high level of foreign interest and investments since the election results.

In fact, many sectors are benefiting from foreign investments and the number has grown steadily over the years.

According to the Malaysian Industrial Development Authority (Mida), the country's foreign direct investment (FDI) inflows this year is expected to surpass last year's RM33.4bil.

Outgoing Mida director-general Datuk R. Karunakaran was quoted as saying that the first four months of 2008 saw RM23.9bil investments approved, of which RM16.6bil was FDIs.

He said the amount (RM23.9bil) did not include newly announced projects by Ibiden Co Ltd, Q-Cell, SunPower Corp and Honeywell International Inc.

The combined investment by the three foreign companies is expected to hit RM9bil, bringing total FDIs to over RM20bil.

Sectors benefiting from foreign investment

Foreign investments are flowing into a host of sectors from high-end manufacturing, property development, information technology, banking and biotechnology, among others.

Japanese printed circuit-board maker Ibiden said it would invest RM1.2bil in the first phase of its printed wiring board plant at Penang Science Park.

Germany’s Q-Cells AG, the world's largest independent solar cell manufacturer had picked Malaysia to be its first manufacturing plant in Asia for photovoltaic products with an investment of over RM1bil for Phase 1.

US-based company SunPower plans to build an RM2.2bil solar cell fabrication plant in Malaysia in two phases, with the first phase comprising 14 solar cell production lines.

While another US-based company Honeywell International Corp, via its business group Honeywell Aerospace plans to invest RM115.2mil in a 220,000 sq ft avionics manufacturing plant in Penang.


Malacca Chief Minister Datuk Seri Ali Rustam said the state had secured foreign investments worth RM6.5bil this year, which is about half the amount received over the last seven years.

Ali said Malacca had attracted foreign biotechnology and manufacturing companies.

“From 2000 to 2007, we attracted RM15.6bil of foreign direct investment,” he said, adding that Malacca's yearly foreign investment target was RM3bil.

Vivo Bio Malaysia Sdn Bhd, a subsidiary of India's Vivo Bio Tech Ltd, plans to invest RM450mil by year-end to build a research and manufacturing plant in Malacca for treatment of diseases.

Property development and banking sectors

Meanwhile, the Prime Minister's Department senator Tan Sri Amirsham A. Aziz said current total investment projects recorded in Iskandar Malaysia was about RM33bil, representing 70% of total targeted investment of RM47bil.

He said so far, the total number of investors for Iskandar was 160, Sabah Development Corridor (34) and Sarawak Corridor of Renewable Energy (31) respectively.

The number of investors for the Northern Corridor Economic Region and East Coast Economic Region is yet unclear.

Malaysia also attracted a fair number of foreign investors from the Gulf Cooperation Council (GCC) countries comprising Saudi Arabia, Bahrain, Qatar, Kuwait, Oman and the United Arab Emirates.

Currently, six foreign companies from UAE, Kuwait, Saudi Arabia and Lebanon have invested in Iskandar Malaysia, while some had ventured into Islamic banking and properties.

They are Kuwait Finance House, Aldar Properties PJSC, Mubadala Development Company, Millennium Development Company, Damac and Limitless Dubai.

Kuwait Finance House (M) Bhd, (KFH) a wholly-owned subsidiary of Kuwait Finance House, GCC's second-largest Islamic lender by market value, plans to expand its capital base here by another US$100mil (RM325.48mil) this year.

KFH Malaysia managing director Datuk K. Salman Younis said the bank would still commit to invest in Malaysia despite the tougher operating conditions and political uncertainty.

Other GCC companies such as Middle East lender Al Rajhi Bank Malaysia is waiting for its international Islamic banking licence, while Abu Dhabi Commercial Bank (ADCB) recently acquired a 25% stake in RHB Capital Bhd.

The acquisition was to enable ADCB to use RHB Cap as a springboard into Asean countries such as Thailand, Brunei and Vietnam for its Islamic banking operations, while RHB Cap could capture ADCB's network for sukuk issuance in Abu Dhabi.

It is interesting to note that in a recently released Global Competitiveness Report 2007-2008, Malaysia's competitiveness had moved up to 19th position from 23rd in 2007.

Also, Kearney's 2007 Global Services Location Index (GLSI) indicated that Malaysia was among the top three best destinations in the world for outsourcing activities.

Judging by some of the foreign investments, Malaysia remained a favoured destination to do business but of course, the number can be improved and the sky is the limit.

By The Star (by Danny Yap)

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