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October 06, 2008 10:49 AM

US Financial Crisis Has Not Affected FDI Flows To Malaysia, Says MIDA

By Manik Mehta

NEW YORK, Oct 6 (Bernama) -- Despite initial fears of the ongoing financial crisis in the United States having an impact on foreign direct investments flow to Malaysia, the crisis has not harmed US investments to the country.

"In my personal view, the US financial turmoil would hardly have any impact on FDI flows to Malaysia because the FDI is intended for manufacturing purpose.

"Since we deal mainly with the investment sector, we have not felt the impact so much. In fact, history tells us that most manufacturing companies decide to set up offshore manufacturing operations during challenging economic times.

"If you study carefully, many companies have set up overseas operations during challenging times and many of these companies, which received a good bargain in Malaysia, are doing very well," said Wan Hashim Wan Jusoh, director of the New York office of Malaysia Industrial Development Authority (MIDA) and an expert on US investments to Malaysia.

Wan Hashim will soon be returning to MIDA headquarters in Kuala Lumpur after a five-year stint in the United States, three of which were spent in Boston and the last two in New York.

"Malaysia has been ideal for high technology, value-added and capital-intensive industries," Wan Hashim told Bernama.

Taking stock of his five-year posting as MIDA representative in the United States, Wan Hashim spoke of his "mentally satisfying achievements".

"I have made it a point to keep in touch with the executives of US corporations having operations in Malaysia with whom I have been networking for some time. Indeed, we like to find out if there are any additional areas of interest in which they could invest and we could help," he said.

He has also been coordinating with a team of consultants and company executives to present what he calls their "wish list" to the Malaysian Government.

"I navigate my way through the maze of regulations and establish a link between US companies and the Malaysian Government. If you determine what the companies want, they feel grateful and help by spreading the good word about Malaysia," he said.

Wan Hashim averred that the FDI flow from the United States was "quite satisfactory" in the January-July period.

Malaysia approved a total of US$831.5 million worth of investment projects during the period compared with US$878 million throughout last year.

American investments in Malaysia were in electrical and electronics industry, chemicals and chemical products, scientific and measuring equipment, petroleum products, plastic products, fabricated metal products, transport equipment, beverages and tobacco, food manufacturing, machinery manufacturing, non-metallic mineral products, paper, printing and publishing, furniture, fixtures and textiles.

Malaysia is poised in what local experts describe as a "take-off stage", the implied reference to the fact that as more and more Western companies realise that it would not be prudent to put all their eggs in the China basket, they look at places such as Malaysia, which although slightly more expensive, provide better quality, value-added products and are much easier to deal with.

Responding to competition from countries such as China and India, Wan Hashim said Chinas rise did take away some of the investments.

"China and India in the last few years did make an impact as alternative locations to Malaysia and also impacted the FDI flow," he said.

All companies tend to first look at China for hard manufacturing and at India for software development.

"But due to Malaysia's track political and economic record and also because of the time and resources spent on infrastructure development and manpower, Malaysia continues to be an attractive destination for investments in high technology, capital-intensive and high-value product manufacturing.

"Of course, we need to be focused. The electronic and semi-conductor industry is an example of our focus.

"Our strength lies in this sector, particularly in the development of the new generation of chips used in solar energy industry in which Malaysia is becoming a strong player," he said.

Indeed, solar energy is being projected as Malaysia's "sunrise industry", particularly in view of the oil price spike that has created problems for many countries and hastened the development of alternative energies.

There are already two major US companies engaged in solar production in Malaysia -- First Solar Malaysia Sdn Bhd at Kulim Hi-Tech Park in Kedah and Sunpower Malaysia Manufaturing Sdn Bhd in Melaka.

MIDA has named Arham Abd Rahman of MIDA head office in Kuala Lumpur as the successor to Wan Hashim.

-- BERNAMA

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