KUALA LUMPUR: The government’s decade-old plan to attract investors from the Middle East is not playing out well, according to a report in the Straits Times of Singapore.
Several major middle eastern investors, who had earlier indicated pouring in millions into Malaysia, have since withdrawn.
The latest is the Saudi Arabian Oil Company (Saudi Aramco). Early last week, Second Finance Minister Johari Abdul Ghani confirmed that Saudi Aramco had decided to withdraw from a US$27 billion (RM119 billion) refinery and petrochemical joint-venture development in Pengerang, Johor, with state-owned Petronas.
The ST report said Saudi Aramco’s surprise decision to axe its Malaysian plans had “added to a growing list of troubles Malaysia is facing with investors from the Middle East, who are also facing financial problems because of the slump in oil prices”.
The report said the Malaysian government had wanted middle eastern investors to take the lead in the development of the Iskandar region in Johor, particularly in Medini, a 930ha mixed-use development that would feature a financial district envisioned as a hub for global Islamic finance.
The project attracted big names such as Kuwait Finance House, Abu Dhabi’s state-owned Mubadala Development Group and Aldar Properties, another real estate developer in Abu Dhabi.
But, the ST report said, Arab involvement in Medini fizzled out after the 2008 global financial crisis and the investments were subsequently taken over by private Malaysian interests.
Other major Arab-led projects in Malaysia “that have been quietly axed in recent years include plans by Abu Dhabi business groups to invest in a US$7 billion oil storage facility in Johor, and a US$4.2 billion aluminium smelter project in Sarawak”.
The ST report said Abu Dhabi investors had pulled out from 1MDB’s multibillion-dollar Tun Razak Exchange real estate development following problems between 1MDB and Abu Dhabi’s International Petroleum Investment Company.
The move to attract capital and tourists from the Middle East began under former prime minister Abdullah Ahmad Badawi.
Malaysia became an attractive place for middle eastern nations and middle eastern Muslims with money following the Sept 11, 2001, attack by militants on the United States.
Although, such investments have been faltering, Malaysia has gained in areas such as banking. Three middle eastern financial institutions have set up base in the country, the report noted.
Malaysia has also become a popular destination for tourists from the Middle East. -FMT