26 Aug 2014
Mainland Investment in Malaysian Manufacturing Reaches All-time High
China's financial stake in Malaysian manufacturing now worth some Rmb4 billion, up from Rmb300 million in 2009.
Mainland investments in the Malaysian manufacturing sector are now said to be at an all-time high. According to figures from the Malaysian Investment Development Authority (MIDA), the last five years have seen a huge upsurge in Chinese backing for the country's industrial sector. This has seen the level of investment soar from Rmb300 million in 2009 to Rmb3 billion last year. As of June this year, the figure is said to have reached Rmb4 billion.
Explaining the appeal for Chinese investors, Simon Lee Yew Weng, Investment Consul for the Malaysian Consulate General in Shanghai, said: "We have actively encouraged Chinese investors to set up their regional headquarters in Malaysia. This gives these businesses tariff-free access to the regional markets that Malaysia enjoys free trade agreements with, notably India and Australia."
Confirming the growing strength in trade between the two countries, Ong Chong Yi, Counsellor for Economic Affairs in the Malaysian Embassy in China, said: "Bilateral trade between Malaysia and China accounted for 14% of Malaysia's total foreign trade in the first five months of the year. Of the total trade volume of Rmb597.2 billion, exports were valued at Rmb319 billion, while imports were estimated at around Rmb278.2 billion. Currently, China's investments in Malaysia are primarily focussed on the financial and real estate sectors."
Looking to the future, Datuk Iskandar Sarudin, the Malaysian Ambassador to China, said: "It is to be hoped that China and Malaysia will continue to support each other in the implementation of regional and multi-level initiatives. This includes the upgraded ASEAN-China Free Trade Area, the Regional Comprehensive Economic Partnership and the 21st Century Maritime Silk Road.
"The governments of both countries have taken the appropriate economic measures in order to ensure sustainable economic growth. On the Malaysian side, this has included the introduction of a goods and services tax, a reduction of subsidies and greater moves towards market liberalisation."
Iskandar was also keen to emphasise the role played by Malaysia's Economic Transformation Programme and, in particular, its appeal for Chinese companies. He said: "The Programme has played a key role in establishing Malaysia as an attractive investment destination. This is especially true in the high-tech, capital-intensive and knowledge-based sectors."
According to figures from China customs, bilateral trade between ASEAN and the mainland increased by 4.8% to reach US$220.69 billion in the first half of 2014. During the same period, however, bilateral trade between Malaysia and China decreased by 5.6%, falling to US$48 billion.
Mae Lee, Kuala Lumpur Office