YB Menteri’s Speech at Deloitte Kassim Chan Malaysia's M&A Cocktail Dinner, 12 December 2011
13 Dec 2011 09:42 AM

(Salutations)

1.  It is a pleasure for me to be with you this evening, and to share some thoughts on the initiatives that are being taken to position Malaysia as a top-tier regional investment hub.

2.  As you know, Foreign Direct Investment (FDI) is a significant source of growth for us. Our FDI grew by 42% in the first nine months to top RM26.4 billion compared to RM18.6 billion for the same period last year.

3.  This is a welcome development for all of us because it means we have recovered very strongly from the difficult years of 2008 and 2009. It also means that the economy will benefit from the impact that new FDI brings - such as the development of new growth areas and industries, the introduction of new and emerging technologies, and the reinforcing of Malaysia's positioning as a global production and services hub.

4.  The key policy instrument that now drives our FDI growth is the Economic Transformation Programme (ETP). As you are aware, our focus now is on attracting quality investments and encouraging existing industries to move up the value chain and invest in higher value-added and knowledge-intensive products and services. The emphasis will be on creating quality jobs, linkages with local suppliers, and contribution to export growth.

5.  The initiatives we have taken to make Malaysia the preferred destination for investments is clearly bearing fruits. Last week AT Kearney ranked Malaysia 10 th in its FDI Confidence Index, up from 21 st position the previous year. This is based on its survey of s enior executives of leading global companies from 27 countries covering 17 sectors.

6.  Mergers and acquisition activity is also on the increase, driven by improving consumer sentiment and investor confidence in the domestic economy. Our M&A market recovered strongly in 2010, with announced deals totalling USD36 billion or RM111.6 billion, which is about 2.7 times larger than the 2009 deal value.

7.  M&A growth has been broad-based and include the following:

b) The sale of PPB Group Berhad's sugar-related business to FELDA for USD484 million;

c) South Korea's Honam Petrochemical Corporation's acquisition of Titan Chemicals Corp. Berhad for USD1.1 billion; and

d) PetroSaudi International Ltd's acquisition of UBG Berhad for USD333 million.

8.  The progressive liberalization of trade in services in the ASEAN region is also expected to result in increased regional M&A deals. A recent example is Khazanah Nasional's acquisition of Parkway Holdings Ltd. of Singapore for USD377 million.

9.  I like to say a few words about InvestKL. Yes, MIDA is the main body that drives investment promotion. InvestKL will complement the work of MIDA by focusing exclusively on attracting more multinational companies (MNCs) to Kuala Lumpur and the Klang Valley. Its goal is to attract at least 10 MNCs per year to invest in the Klang Valley by 2020.

10.  Malaysia offers a good competitive cost advantage and Kuala Lumpur is an ideal location in Asia to do business from. Investors from the Middle East, America, the EU and even Singapore are attracted to Malaysia because of the ease of doing business here, our good infrastructure, and the opportunities generated by the ETP.

11.  The agency is also partnering 1Malaysia Development Bhd, the developer of the Kuala Lumpur International Financial District project, to promote Kuala Lumpur, Putrajaya and other parts of Selangor as an investment destination.

12.  Ladies and gentlemen. Recently, Multimedia Development Corporation (MDeC) reported that exports for MSC Malaysia in the first six months of this year topped RM4.25 billion, which is 19% more than last year's RM3.57 billion. More than half of these exports came from companies providing various shared and outsourcing services.

13.  The top 5 shared services & outsourcing companies which invested in Malaysia last year are IBM Global Delivery Centre from the United States, UrFILEZ Sdn. Bhd. from Bahrain, WorleyParsons Business Services Sdn Bhd from Australia, UOB Centre of Excellence (M) Sdn Bhd from Singapore and Mobifusion Sdn Bhd also from the United States.

14.  It is clear that Malaysia is now on track to achieving net ICT exporter status. A 2011 report by the United Nations Conference on Trade and Development (UNCTAD) ranked Malaysia eighth among global ICT exporting economies. AT Kearney's Global Services Location Index has also consistently placed Malaysia as the third most preferred destination for outsourcing after India and China. 

15.  Ladies and gentlemen. My remarks so far have focused on developments in and around Kuala Lumpur. I should explain that the Government is also taking steps to promote growth in other states. In Iskandar Malaysia, for example, there are 5 flagship investment zones, namely: Johor Bahru City, Nusajaya, Western Gate Development, Eastern Gate Development and Senai-Skudai. All these initiatives are driven by the respective investment authorities, but in concert with MIDA. They all work collaboratively, lending meaning to the phrase, the whole is greater than the sum of its parts. 

16.  Iskandar Malaysia's original 5-year investment target was RM47 billion, but we have already obtained RM77 billion worth of committed investments. Yesterday, the Prime Minister witnessed the official launch of 12 new investments in Iskandar Malaysia. Documents attesting to RM1.73 billion worth of investments were exchanged. 

17.  Ladies and Gentlemen, there is role for investment and financial consultancies in the various arrangements brought to Malaysia, whether through MIDA, InvestKL, MDec of the various corridors, I am pleased that Deloitte Kassim Chan has been actively involved in providing these kinds of services.

18.  Your industry knowledge and technical skills support companies making acquisitions, disposals and takeovers or raising capital. I see your role as complementing the work of the Government and must thank you for the support and contribution towards the development of Kuala Lumpur into a more sophisticated financial services hub.