Malaysia Poises for FDI Gains from US-China Trade War, Says Dr Mahathir

KUALA LUMPUR, Oct 22 — Malaysia is well-placed to benefit from international companies seeking to relocate their operation from China to avoid the United States trade tariffs, Prime Minister Tun Dr Mahathir Mohamad said.

In an interview with Oxford Business Group (OBG) recently, the prime minister also acknowledged that ASEAN member countries were being negatively impacted by falling demand from a slowing Chinese economy as the ongoing trade dispute with the United States began to take a toll.

“However, there is a possibility that, because of trade sanctions imposed by the US, many companies operating within China will look to move overseas.

“If this is the case, they may consider southeast Asian countries. Some companies are already doing so, with Vietnam benefiting in particular, and Malaysia is seen as a promising choice,” he said during the interview on the sidelines of the United Nations general assembly in New York last month.

The interview, available on the OBG website, was part of the global research and advisory company’s renewed efforts to provide business intelligence on Malaysia to an international audience interested in trade, commerce and investment opportunities in emerging markets.

Staying on China-related issues, Dr Mahathir indicated that Malaysia would not disrupt the current status quo in the South China Sea provided that it remained open to shipping and commercial activities and that China did not attempt to impose any restrictions on free navigation in the region.

The prime minister also spoke on Malaysia’s soft power and leadership role within the Islamic world and expressed his keenness to strengthen economic ties with Muslim-majority countries.

“Although Malaysia has a large number of non-Muslims, it is still regarded as a Muslim country and people in the wider Muslim world look to Malaysia as an example of economic development and political stability… (but) in order to see further growth, we need Muslim countries to ease restrictions so that trade can be more open and transparent,” he said.

Turning to domestic issues, Dr Mahathir stressed it was essential that the government’s ‘Shared Prosperity Vision 2030’ (SPV 2030) was effective in promoting inclusive and sustainable growth or the country could face political and social upheaval.

The SPV 2030 aims to tackle structural problems in the Malaysian economy, improve productivity and reduce regional disparities and wealth inequality.

“We need an effective policy to promote inclusive and sustainable growth. As long as economic disparities exist in the country, some people will feel unhappy and may even reject the government.

“We are doing our best to reduce inequality, particularly between urban and rural populations, and between people of different races.

“It is important for us to address these issues in order to reduce the disparity between wealth and opportunity,” he said.

Dr Mahathir’s administration intends to promote prosperity through the cultivation of new growth engines that capitalise on opportunities presented by the digital economy and the Fourth Industrial Revolution (Industry 4.0).

To this end, national policy on Industry 4.0, namely Industry4WRD was unveiled in October 2018 with the goal of advancing the digital transformation of the manufacturing and related services sectors.

While much onus is being placed on enhancing the productivity and capabilities of domestic companies and workers, Dr Mahathir said foreign direct investment (FDI) has a key role to play in accelerating Malaysia’s transition to an advanced economy.

“FDI has made a significant contribution to the country’s development over the years. Now, with the emergence of the digital economy, it is likely to contribute even more.

“We hope to encourage companies that are advanced in terms of their digital transformation to establish themselves in Malaysia, introduce their systems and make use of our workforce, which is being trained to meet the needs of the digital economy,” he said.


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