2010 PROVES TO BE TURNING POINT FOR US INVESTMENT FLOW TO MALAYSIA

By Manik Mehta

NEW YORK, Feb 16 (Bernama) -- With 2009 going down as the worst
economic year since World War II, many American companies resorted then, to rigid
austerity measures and also curbed overseas investments.

Malaysia was also affected in 2009 by this sharp decline in foreign direct
investments (FDI) from the United States (US).

But 2010 proved to be a turning point as US companies resumed their overseas
investments.

Indeed, the investment flow from the United States to Malaysia recorded a sharp
rise in 2010.

Arham Abdul Rahman, the director of the New York office of the Malaysian
Industrial Development Authority (MIDA), told Bernama in an interview that a
total of 47 projects by US companies were already operating or wanting to start
new operations in Malaysia, had been approved in 2010.

The projects represented a total value of RM 11.7 billion.

"Of the 47 projects, 12 are new, with the remaining 35 related to
expansion or diversification of operations of companies already in Malaysia.

"A large part of the projects are in the electronic and electrical sector,
followed by machinery and equipment, scientific and measuring equipment,," Arham
explained.

Malaysia’s electronic and electrical sector in 2010 attracted US investments of
RM10.2 billion or some 87 per cent of the total investment inflow.
(US$1=RM3.05)

The segment to attract the second largest inflow of US investments was the
machinery and equipment sector at RM 469 million while the scientific and
measuring equipment sector attracted RM 61.7 million.

Describing 2009 as a "bad year for everyone", with US investment flow to
Malaysia plummeting to a very low level of RM 2.3 billion covering 19 projects,
Arham said that 2010 had provided a jumpstart to a revival in investment flow.

He said: "We are confident that this momentum will continue in 2011, even if we
do not reach the high point of 2010".

The United States, meanwhile, continues to assert its position as the world’s
largest foreign investor in Malaysia, followed sequentially by Japan, Hong Kong,
Singapore and Germany as the top five sources of FDI.

"In general, I am positive about the outlook for 2011. We have been holding
discussions with a number of companies that have indicated an interest in
investing in Malaysia," he said.

On China posing a challenge to Malaysia’s E&E sector as a result of its low-cost
production and cheap labour, he averred, saying the local focus was mostly on
the production of high-end products and research and development.

He differentiated the companies that have operations in China and those in
Malaysia.

"Those US companies coming to Malaysia are not low-end mass producers but
high-end producers who prefer Malaysia because of its skilled labour, advanced
technology, services and such," Arham highlighted.

As the industries pass through the vicissitudes of modern technology, there is
also a subtle shift discerned from the classical industries to more
services-oriented industries.

Indeed, one of the promising industries of the future – Malaysia is also trying
to make a dent in this sector – is renewable energy, particularly the solar
segment.

Another industry that has come under focus is the aerospace industry, in which
Malaysia is showing its strength, particularly in maintenance and repair.

Malaysia has aspirations to become an aerospace hub of Southeast Asia.

US companies such as General Electric and Honeywell, already have
operations in Malaysia.

Pratt and Whitney is also, meanwhile, mulling setting up an operation in Malaysia.

Meanwhile, preparations are afoot by MIDA to hold an investment seminar in
Atlanta in February.

This, according to Arham, is a follow-up event to sustain the interest and
momentum generated from the visit of Datuk Seri Mustapa Mohamed, the Minister of
International Trade and Industry, who had addressed a meeting with business
leaders in Atlanta in September 2010.

"The seminar is being organised in cooperation with the World
Trade Center Atlanta. It will be targeting renewable energy, machinery
and engineering services, and other industries.

"We will also approach companies to consider setting up their regional
headquarters in Malaysia," he said.

MIDA’s New York office will be attending two fairs in March, one in
Orlando, Florida, dedicated to industrial designing and manufacturing followed by
Interphex in New York, dedicated to the pharmaceutical sector.

"Presence at these two fairs will enable us to network with the specialised
industries and also make presentations to them," Arham said.
-- BERNAMA