Malaysia ranks highly as a favourite destination for foreign investment in SEA

EUROPEAN and US companies have ranked Malaysia as the second most favourable Southeast Asian country – behind southern neighbour Singapore – for opportunities to establish or expand their sourcing, selling or operations over the next six to twelve months.

According to Standard Chartered’s (StanChart) latest study, Borderless Business, chief financial officers (CFOs) and treasurers in the US, the UK, Germany and France have indicated that overseas markets remain key to growth despite uncertainty caused by the global pandemic and their associated economic repercussions.

The study also revealed incremental emphasis towards investing in digital technology, unlocking trapped cash and increased focus on environmental, social and governance (ESG) issues in relation to trade and supply chains.

With regulations noted as the number one concern among respondents looking to expand overseas, this could suggest an opportunity for Malaysia to potentially increase foreign investment through greater awareness of the ease of doing business locally.

In 2020, the Malaysian Investment Development Authority (MIDA) reported that foreign direct investments (FDIs) in Malaysia stood at RM64.2 bil.

The Government’s newly launched Malaysia Digital Economy Blueprint (MyDigital) is poised to accelerate Malaysia’s ambition to become a technologically advanced economy, bolstering the support for high profile foreign investment projects, including Fortune 500 companies in the manufacturing and services sector.

These will account to a combined potential investment value of RM81.9 bil.

More broadly, the StanChart study shows that Asia remains a major growth region (with over 85% operating in Asia or considering it for business activities). Africa and the Middle East also saw marginal increase (up 4%) as potential growth markets over the next six to 12 months.

Despite the ambition to expand internationally, understanding the regulatory requirements in overseas markets remains the greatest obstacle (35%) for companies which are looking to expand or strengthen their international operations.

This is followed by the need to build relationships with suppliers and adapt supply chain logistics (21%).

As companies look ahead into a post pandemic environment, the respondents’ top three priorities have indicated a slight shift away from issues including supply chain failure (50%) and the need for liquidity (47%) to an increase in investing in digitisation to mobilise liquidity (66%) and ESG (23%).

“Sustainability, digitisation and the need to understand regulation are not just key to how business will be conducted, they are also opportunities for companies to increase operational efficiency, grow internationally and stay ahead of the competition,” commented Standard Chartered Malaysia managing director and CEO Abrar A Anwar. – March 24, 2021

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