Is Malaysia Falling Behind?

Moaz Nair (FMT, Dec 21) examined why Malaysia was falling behind in attracting new investments. Vietnam, a one-party socialist republic, is set to become one of the world’s fastest-growing economies, next to Singapore and Indonesia. A conducive business ecosystem and political stability are reasons why investors flock to these countries.

Singapore

Singapore is said to be the least-corrupt country in Asia. Its political stability, strong legal framework and sound financial regulatory environment are its ingredients. The city-state is fast attracting investments from firms caught amid the US-China trade war.

Facebook is planning a US$1 billion purpose-built data centre in Singapore. The facility will be gradually fitted out in 30 MW increments up to its full capacity of 150MW.

Grab, which started as My Teksi in Malaysia, rebranded itself into Grab Taxi after moving to Singapore. Singapore’s advantage is that start-ups get government subsidies and tax breaks. More importantly, the well-developed ecosystem provides start-up funding that helps attract international financiers and bring higher valuations for public offerings. All this has made Grab into what it is today.

Singapore has vigorously encouraged innovation and entrepreneurship and has managed to create a resilient start-up ecosystem. It now has Garena, Lazada and Razer Inc as billion- dollar start-ups.

The country has become home to many Chinese tech investments. Tencent of China has become the latest Asian tech giant to officially settle on Singapore as its new regional hub in the Asia-Pacific region. One of China’s largest internet companies as well as the region’s biggest gaming and eSports provider, Tencent joins domestic rivals Alibaba Group and ByteDance among others in setting up new global hubs in the city-state.

Indonesia

Amazon plans to spend as much as US$951 million in Indonesia. The investment will be on introducing the company’s cloud computing service to the local market. With a population of more than 270 million and with increasing internet and smartphone penetration, indisputably Indonesia represents a significant market for growth in both e-commerce and cloud computing.

Indonesia now has SpaceX to assess the possibility of setting up a rocket launch site in the country. This aerospace manufacturing and space transport venture is going to be a mutual investment opportunity for Indonesia and Tesla Inc.

Hyundai Motor is investing about US$1.55 billion in the Indonesian auto manufacturing plant within the next ten years, including product development and operation costs. Hyundai plans to make small sport utility vehicles (SUVs) and multi-purpose vehicles (MPVs), as well as electric vehicles (EVs) designed for the Southeast Asian market. Production is scheduled to start in late 2021, with an annual capacity of 150,000 vehicles and a plan to grow that to 250,000 vehicles a year.

Contemporary Amperex Technology, China’s largest producer of automobile battery packs, plans to build a US$5 billion plant in Indonesia to establish a strategic position in the world’s fourth-most populous nation as electric vehicles are gaining popularity.

 

The new Google Cloud Platform (GCP) region in Jakarta, their first GCP region in Indonesia and ninth in the Asia-Pacific, has started operations. Indonesia is fast becoming one of the most resourceful and entrepreneurial countries in Southeast Asia, and also one of the fastest growing economies in the world.

It has reduced corruption, red tape and other disincentives that investors used to face.

Vietnam

Despite it being a communist country, global manufacturers flock to Vietnam. This is because investors are assured of the country’s political stability. Vietnam’s low costs, investor-friendly policies, seemingly zero tolerance for corruption and state-backed efforts to promote tech start-ups make the country appealing to investors.

Apple Inc has joined Samsung in consolidating Vietnam’s growing audio expertise in manufacturing its AirPod headphones as part of the company’s long-term expansion plans. Vietnam is becoming an audio manufacturing hub as firms move away from China for sales into the US market. This growth has also been driven by Samsung Electronics Co Ltd.

Singapore, Indonesia and Vietnam are politically stable, resourceful, the government is pro-business and they offer economic incentives for businesses.

Malaysia

Malaysia was an Asian tiger in the 1990s. But these days it fancies itself as a pussy cat! Political instability, racial hegemony, religious fervency is more important than growth. Productivity, knowledge workforce and control of corruption are side lined for racial and religious dominance and power. Why will investors choose Malaysia when large, stable markets are in Indonesia and Vietnam? Even Singapore provides a conducive environment to Asean and the rest of Asia. Have some humility and learn from others, then maybe we have a reasonable future!

 

Reference:

Moaz Nair, Is Malaysia falling behind in attracting investors? 21 Dec 2020, FreeMalaysiaToday