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Malaysia Aims to Attract China’s Investors Via Special Invest Channel

China Investment in Malaysia

China is one of Malaysia’s largest trading partners with the trade reaching a new record, rising to US$124 billion (RM503 billion) in 2019, said China’s ambassador to Malaysia Bai Tian. This was a 14.2% increase from the 2018 figure of US$108.66 billion.

The China Special Channel (CSC) acts as the bridge to streamline the engagement process with the suitable production sites, tax incentives and supports the talent pipeline.

At the same time, China and Malaysia are set to pursue cultural and tourism business exchanges in 2020.

These moves are designed to create an encouraging investment environment between the two countries and attract more potential investors.

A memorandum of agreement was signed at the launch event of CSC by InvestKL, a government investment agency under the international trade and industry ministry.

The agreement was signed by four chambers of commerce and business councils — the Malaysia-China Business Council (MCBC), China Enterprises Chamber of Commerce in Malaysia (CECCM), The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), and the Malaysia-China Chamber of Commerce (MCCC).

InvestKL Chairman Michael Yam stated that CSC is a platform created to draw new investments worth RM10 billion from China in the following two years.

The focus is on developing strategies to attract high-tech, high-value and high-impact FDI for future investment in Malaysia.

InvestKL CSC plays a critical role in creating the window for all investment opportunities from China into Malaysia. Simultaneously, it encourages Chinese companies to establish new businesses and regional hubs outside of China or reposition their smart manufacturing and high-value services.

Significant investors from sectors like consumer technology, smart technology, renewable energy, medical technology, medical devices, electrical and electronics (E&E), mechanical engineering, chemical, and aerospace are the key focus in CSC.

Finance Minister Lim Guan Eng announced the CSC for Chinese investors as a part of the tabling of Budget 2020 last October. The medium is a way to attract more investment from the respective country.

The CSC is well-timed amid the strained ties that China faces with other key countries. Malaysia would gain beneficial results from the value-added investments thus enhance the country’s economic condition.

While acquiring better economic and social status, other outcomes like information transfer, sharing of skills and innovation are additional perks for the Malaysians workforce, said Darell Leiking.

Malaysia’s highly skilled workforce and well-established manufacturing sector make it an attractive investment destination within ASEAN.

The International Trade and Industry (MITI) Minister also added that upskilling human resources would be possible with the innovative strategies shared by Chinese companies allowing for increased productivity and trade volume between Malaysia and China.

According to the Malaysian Investment Development Authority, in the first six months of 2019, the country attracted RM 45.9 billion in FDI, up 97.2 percent year on year.

The Malaysian government is committed to furthering economic stimulation and investments and improving human capital and productivity as part of its Budget 2020.

Internationalisation goes beyond exports and imports; it encompasses activities such as licensing, franchising, subcontracting agreements, providing avenues for foreign direct investment (FDI), joint ventures (JVs) and exchange of technology.

The cooperation between Malaysia and China is promising for Malaysia’s economy. The manufacturing sector in Malaysia has gained the most as China was the biggest source of foreign direct investment between 2016 to 2018.

The trust and support that China has for Malaysia’s trade system strengthened both countries’ partnership. Chinese investors considered the friendly environment persuaded them to establish and operate their business in Malaysia.

Malaysia will continue to focus on the creation of high-growth and innovative businesses through targeted assistance in automation, digitalisation and robotics while increasing support for micro-enterprises and start-ups.

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