Cut red tape to attract FDI, says US-Asean Business Council

 

The US-Asean Business Council says streamlining Malaysia’s approval process for FDI will help it attract more US investors.

WASHINGTON: Simplifying the approval process for foreign direct investments (FDI) into Malaysia will help the country attract capital from overseas, the head of an American business council which promotes investments in Asean said.

In a recent e-mail interview with FMT, US-Asean Business Council president Ted Osius also described the country’s Bumiputera equity ownership requirements as a barrier to investment fruition.

Prime Minister Anwar Ibrahim, currently in the United States for the 30th Asia-Pacific Economic Cooperation (Apec) summit, is expected to hold one-on-one sessions with prominent American business leaders in an attempt to attract more high-value investments into the country.

Asked to describe the main factors US companies look at when deciding whether to invest in Malaysia, Osius said certainty and stability in the political and economic environments, along with access to cost-effective skilled labour, were among the key determinants.

Ted Osius.

He said US businesses looking to diversify suppliers amidst economic competition with China, saw Malaysia as a means to access the booming Asean market.

Osius, a former US ambassador to Vietnam, also said Malaysia was equipped with an entrepreneurial ecosystem conducive to fruitful investment.

“US companies have generally succeeded in diversifying their supply sources and expanding their market reach through investment in Malaysia, particularly in the petrochemical and electronic sectors.

“However, barriers to investment fruition remain in the form of inconsistent government approval of FDI activities and in equity ownership limitations,” he said.

Osius said a “streamlined bureaucratic approval process” for FDIs would enhance Malaysia’s efforts to attract investment.

He noted that investment, trade and industry minister Tengku Zafrul Aziz had in July said that Malaysia was working to streamline the roles and processes of its various agencies to improve the country’s ease of doing business.

Tengku Zafrul was quoted by Bloomberg as saying his ministry was focused on mapping out a “simple journey” for investors by defining more clearly the roles and responsibilities of each approving authority.

However, Osius said a foreign investment consultancy firm had also pointed out restrictions Malaysia imposes on foreign equity ownership by mandating Bumiputera participation in equity and management.

In September, the government faced heat after lifting some of those restrictions when allowing Tesla to set up its regional headquarters and sales and service centres in Malaysia.

Among others, the electric vehicle (EV) manufacturer was exempted from a requirement that its local distributor’s ownership structure include a minimum 30% Bumiputera equity participation.

Commenting on Tesla’s entry into the Malaysian market, Osius said the electric carmaker’s presence was significant as it had invested a “sizeable amount” in the emerging EV sector.

Although noting that only 28% of the local workforce could be classified as highly skilled, Osius, a former Google executive, said he was encouraged by the government’s intent on developing high-quality human capital to facilitate economic growth.

He went on to hail the government’s New Industrial Master Plan (NIMP) 2030, which seeks to transform Malaysia into a high-tech industrialised nation, as “most promising”.

“Considering growing US private sector interest in sustainable industries, specifically EV manufacturing, the NIMP has much to offer US companies in the way of investment opportunities,” he said. - FMT