By Publisher Lee Kyung-sik with Ms. Kim Jung-mi, Sua Kim
Director Mohamad Reduan Mohd Zabri of the Malaysian Investment Development Authority (MIDA) in Seoul said, “Hundreds of leading Korean companies have made Malaysia a part of their strategic location for investments and they include Lotte Chemical, Titan Malaysia, Samsung, Hanwha Q-Cells, CJ Bio Malaysia and POSCO Kiswire.” He said, “We continue to welcome more quality investments from Korea to leverage on the opportunities present in Malaysia and the ASEAN region.”
Speaking at a recent interview with The Korea Post media, established 33 years ago and now owning and operating 3 English hand 2 Korean-language media outlets, Director Mohd Zabri said disclosed that hundreds of Korea’s leading business companies are now very active in the promotion of economic cooperation between Korea and Malaysia while at the same time enjoying good business.
It was obvious at the interview that Malaysia is one of the few countries in Asia, if not of the world, where the Korean business people can enjoy both good profit and uncontested benefits of the rest and recuperation facilities. He said Malaysia whole-heartedly wecomes Korean business to enter the country for mutual benefit.
“There are many attractions that Malaysia has for the business people as well as tourists, ranging from the natural rainforests and beautiful beaches to historical landmarks and luxury shopping destinations.” The way Mr. Zabri spoke introducing attractions in his country for Korean business people, it appeared that Malaysia was cut out for Korean business people wanting to make money and stay in good health as well as enjoy life.
Excerpts from the interview with Director Zabri follow:
Question: Does your country have any plans to invite Korean companies to invest in your country? Many Korean companies are seeking new investment destination countries following the unfavorable conditions increasing in some countries.
Answer: Being a trading nation with an open economy, we encourage global companies to invest in Malaysia. This includes Korean companies. MIDA frequently organises investment missions to Korea where there will be seminars, roundtable meetings, and one-on-one sessions with Korean investors. These activities serve to promote business opportunities in Malaysia as well as to provide updates on the latest policies and economic landscape. These initiatives have successfully raised the interest of potential Korean investors in Malaysia reflected by the amount of enquiries received during the business meetings and one-on-one sessions.
Korea and Malaysia has a long standing relationship developed over the years. This relationship has been dynamic, rapidly changing in the international environment. Both countries continue to leverage on each other’s trade and investment ecosystem, and the existing cooperative channels on bilateral industrial cooperation.
Q: What are the specific areas where you might want Korean companies to invest? Please elaborate.
A: Malaysia’s industrialisation strategy is to promote investments in high technology, knowledge and capital intensive industry. Therefore, we are not encouraging labour intensive and assembly type of industries.
In line with this aspiration, Korean companies are encouraged to invest particularly in new growth areas within the emerging technologies, capital intensive, high value added, knowledge based, skills intensive, export oriented, automation and R&D.
Some of the business opportunities in Malaysia for Korean investors include:
• additive manufacturing for medical/dental devices, electronic consumer products, automotive and aerospace industries.
• services in manufacturing such as industrial data services, cloud based services, industrial mobility and cyber security services.
• combined sensor technology for Machine to Machine (M2M) applications
• investment in Internet of Things (IoT) for the logistics industry such as warehousing operations, freight transportation and last-mile delivery.
We would also like to have more Korean investments in areas such as chemicals, electrical & electronics, machinery & equipment, aerospace, medical devices, energy efficient vehicles (EEVs), biotechnology, advanced materials, advanced electronics, pharmaceutical, petrochemicals, ICT, E-Commerce, creative industries such as animation, food products, agro-based products, and value-added products from natural halal resources.
Q: Does your country offer any incentives to the good Korean companies wishing to invest in your country? Please specify such offers.
A: As Malaysia attracts FDI from all countries, we are non-discriminatory. We have an open, liberal and transparent investment regime. Foreign investments are allowed 100% ownership in most manufacturing sectors and many services sectors are also open to FDI through progressive liberalisation.
The country continues to emphasise on high impact investments and are focusing on areas that can maximise spill-over benefits to the country such as the petroleum, logistics, transport, robot & automation and export-oriented industries.
Although the Malaysian Government is desirous to have Malaysians to fill up all levels of employment, companies are also given the flexibility to employ expatriates, where the required skills are not available in the country.
There are 2 major tax incentives for the manufacturing and services sectors such as Pioneer Status (PS) - Income tax exemption of 70% - 100% of statutory income for 5 to 10 years and Investment Tax Allowance (ITA) - An allowance of 60% - 100% on qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within 5 to 10 years from the date the first qualifying capital expenditure is incurred.
For the Incentives that related to smart manufacturing products and activities, we have Automation Capital Allowance (ACA) and Capital Allowance for ICT Equipment and Software to encourage swift adoption of automation among manufacturing companies in undertaking innovative and productive activities.
In 2015, the Malaysian Government introduced the Principal Hub (PH) scheme which facilitates companies that use Malaysia as a base to manage, control, and support their key functions. As at the end of 2017, among the Korean conglomerates that have been given PH approval is Lotte Chemical.
Q: Does your country have any specific items to purchase from, or export to, Korea?
A: According to statistics from the Malaysia External Trade Development Corporation (MATRADE), the Korea remains among the top trading partners for Malaysia. Trade with Korea amounted to RM65.03 billion, an increase of 9.2% in 2017. Exports to Korea expanded by 24.8% to RM28.59 billion. Main exports to Korea are electrical and electronic (E&E) products, liquefied natural gas (LNG) and chemicals & chemical products. Imports from Korea totalled RM36.44 billion in 2017 and the main imports were E&E products, chemicals & chemical products, and petroleum products.
Q: What are the areas where your country wishes to increase cooperation with Korean companies?
A: Malaysia is embracing Industry 4.0 to raise its competitiveness by encouraging companies to adopt smart manufacturing technologies and processes. As small and medium (SME) companies in Korea accounts for over 90% of the country’s robotic firms, there is much that Malaysian SMEs can learn from the Korean SMEs especially in terms of their adaptation to innovation and competitive strategies to become world leaders in advanced technology. Korean companies can launch joint ventures with Malaysian partners and impart their skills and knowledge towards mutually beneficial outcomes.
Q: Many Korean business people wish to have sufficient rest and recuperation. What are the tourist attractions in your country?
A: There are many attractions that Malaysia has for tourists, ranging from the natural rainforests and beautiful beaches to historical landmarks and luxury shopping destinations. The World Economic Forum (WEF) has placed Malaysia in the 26th spot in its 2017 Travel and Tourism Competitiveness Report, the bi-annual benchmarking index measuring the relative health of 136 countries’ tourism sectors. With a favourable currency exchange rate, Malaysia is a value-for-money destination, from hotel rates, food and beverages to other holiday lifestyle choices in terms of affordable pricing and quality.
Q: Please introduce yourself fully as the prospective Korean business leaders might wish to meet with you in person.
A: My name is Mr Mohamad Reduan Mohd Zabri. I am the Director of MIDA Seoul’s office. MIDA is Malaysia’s principal promotion agency under the Ministry of International Trade and Industry (MITI) to oversee and drive investments into the manufacturing and services sectors in Malaysia. MIDA continues to be the strategic partner to businesses in seizing the opportunities arising from the technology revolution of this era.
MIDA Seoul office was established in 1980 due to the strategic importance of Korea to Malaysia. This office is responsible for the promotion of Korean investments into Malaysia, to provide potential investors with the latest information on opportunities in the manufacturing and services sectors, as well as providing the necessary assistance to potential Korean investors interested in seeking joint venture partners or technology collaborations in Malaysia.
Together with my colleagues in MIDA Headquarters in Kuala Lumpur, we are ever ready to facilitate Korean investors with their business plans in Malaysia.
Q: Please state whatever other important areas of coverage I might have inadvertently left out from the questionnaire.
A: With its strategic location within ASEAN region, Malaysia has all the advantages to reap the benefits of booming emerging markets. Our political system is founded on democratic principles. We have a socially progressive society as well as sound economic fundamentals and capabilities in offering the right mix of ingredients as a profitable destination for your long term growth within the region.
For 2017, the Malaysian economy expanded at a faster pace of 5.9% compared with 4.2% in 2016. The expansion is driven mainly by private investment growth underpinned by ongoing and new capital expenditure in both the manufacturing and services sectors, and strengthened by continued positive business sentiments.
In fact, the Bloomberg Emerging Market Scorecard in January 2018 has ranked Malaysia as the most attractive emerging market in Asia and 5th most attractive emerging market in the world. In the World Economic Forum’s (WEF) annual global Competitiveness Report 2017/2018, Malaysia ranked 23rd out of 137 countries, an improvement of two notches from the previous year. Malaysia surfaced as the most competitive among emerging economies in the East Asia and Pacific region, and was also placed among 20 economies transitioning from efficiency-driven to innovation-driven.
We are also an export oriented country that practices openness and has a liberal approach to trade. Malaysia’s trading constitutes 128% of GDP which signify the importance of trading activity to our country. We trade with most of the world’s economies and are able to offer a competitive range of quality products and services. We have earned the reputation as one of the most trade-friendly countries in the world. Our Malaysian-made products and services meet international standards and are recognised for their superior quality and reliability.
In essence, Malaysia is truly a land full of opportunities. Not just for investors from a few selected countries; but for all those who have the spirit of entrepreneurship and are willing to contribute to the economic advancement of the country.
Q: Who is your government minister in charge of international trade and commerce with countries such as Korea? Please elaborate on the minister and provide us with a copy of his/her portrait picture for publication.
A: Malaysia is currently in the midst of its General Elections which will be held on 9 May 2018 and the Parliament has been dissolved. As such, it is not advisable to address this question.
(This portion will be updated and supplemented upon receipt of timely information.—Ed.)