'Malaysia needs to build on business-friendly environment'

A US expert on the Southeast Asian region has urged Malaysia to further build on the country's business and investment friendly environment, focusing on areas offering the best job-creation opportunities.

"I think Malaysia should first and foremost focus on ensuring that it has the best possible local business environment and investment climate, in those areas which offer the best opportunities for job creation, innovation development, while moving towards a higher productivity, higher wage economy.

"From these starting points, identifying synergies with the interest of US multinationals and, perhaps, even moreso, the American small and medium-sized enterprises (SMEs) in cutting-edge technology areas, will allow Malaysia to use its competitive advantages and strengths to develop mutually beneficial partnerships.

"For decades, the American Multinational Companies(MNC) community in industries like electronics, and oil and gas, has recognised Malaysia as a good partner to do business with," said Marc Mealy, the Vice President at the Washington-based US-Asean Business Council (USABC).

The USABC promotes business, trade and investments between the United States and the Asean grouping.

Mealy, a respected economist with extensive Asean experience, believes that Malaysia’s greatest single strength remains its diverse human resource base, although this needs to be fully leveraged, requiring constant investments to both upgrade and retain local talent.

"Looking ahead, what excites the USABC the most about Malaysia is the current domestic economic reform efforts, the continued use of trade policies to open new markets for the country and a steady number of local companies that are becoming regional and/or global companies in areas like banking, real estate development, and offshore energy production.

"This is also why we are opening an office in Kuala Lumpur soon," he said.

He also spoke about Malaysia’s attributes as a world-class manufacturer with a world-class infrastructure and global connectivity.

"However, as economies evolve, it will be up to Malaysia’s public and private sectors to make the right investments in the relevant areas to maintain competitive positions in certain manufacturing areas.

"In fact, as the 'Malaysia Inc' paradigm evolves to help Malaysia escape the middle income trap, I continue to sense that its leaders see the role of the services sector as a means to support both the continued growth and development of the real economy (including manufacturing).

"This is as a way of creating value while adding complementary and supplementary activities related to the real economy," Mealy said.

But what will drive a US corporation to invest in Malaysia, when the economic skies at home are overcast with clouds?

Mealy explained: "As you know in the current slow-growth market environment in the US and Europe, American MNCs are accumulating significant quantities of cash.

"American MNCs which have already gained a significant share of their revenue from activities outside the United States are continually exploring potential opportunities to invest resources overseas.

"They are keen to identify where exactly the growth is taking place in the world, the risks entailed and how they relate to an estimated return on investments."

Mealy recently moderated an investment seminar organised by the Malaysia Industrial Development Authority (Mida) in New York.

"The business seminars which Mida conducts in cities around the US are important.

"The impact of these seminars can be significant, when they are part of Mida’s overall strategy to raise awareness in the US about trade and investment opportunities in Malaysia," noted Mealy.

He said the Mida events have generated a buzz about the Malaysian brand in local business communities in specific cities around the US and this broadens the pool or audience for Mida to conduct promotion activities in.

He said Malaysian officials can hold high level meetings with American companies at such events, leading in some cases, to completion of actual foreign direct investment (FDI) decisions and agreements.

Mealy says that although Malaysia offers market opportunities, growth trends, political stability, rule of law, and world class infrastructure, it must also highlight other important variables which Americans look for.

"For American SMEs, it is important to highlight things like the ease of doing business, sanctity of contracts, ability to access capital, and the consistent support the various government agencies provide to facilitate

the process of setting up a business," he added.

He said for the Obama administration, greater economic engagement with Asean is a priority, thus intensifying interaction between US corporations and Malaysia.

Mealy describes the Trans Pacific Partnership (TPP) as a "very important trade initiative" for Malaysia, expecting the country to continue being an active negotiating partner.

"It will be interesting to watch how Malaysia and the other Asian TPP member countries launch the Regional Comprehensive Economic Partnership initiative in 2013. It will also include major economies like China, India and Indonesia which currently are not part of the TPP," he said.