Mida woos Middle East investors

As the year comes to an end, Malaysian Industrial Development Authority director-general Datuk Jalilah Baba talks to HAMISAH HAMID about foreign direct investment flows, what to expect in 2009 and the promotion of Malaysia’s growth corridors.

QUESTION: WHAT are some of the biggest capital-intensive projects in Malaysia this year?

A: Major projects approved by Mida in 2008 include those by National Instruments, Honeywell, Ibiden, SunPower, First Solar and Q-Cell.

The benefits from the inflow of FDIs are tremendous. For instance, the solar panel manufacturers such as QCell and SunPower are creating opportunities for local companies to be suppliers, vendors and service providers such as glass manufacturers and wafer fabricators.

Their products are for export. This means that they use a lot of services such as ports, airports, freight forwarders and others.

When these investors set up their operations in other countries, their vendors (in Malaysia) follow them. Some of the spin-off from FDIs can't be quantified with money.

Q: As the major sources of FDI such as the US, Germany and Japan are facing recession, do you expect to see more FDI from the Middle East next year?

A: All this while, Middle East investors have been investing in Western countries but due to the development there, they are diverting to Southeast Asia. We want to attract them, but unfortunately, they are portfolio investors and not technology-based.

But they are opening up to manufacturing and high-tech sectors. They ask us for projects that they can invest in. So, we have packaged 14 projects for potential investors in the Middle East and they are evaluating them. Project owners will also give presentations to the investors. Hopefully, 2009 will be more successful (in attracting FDI from Middle East).

Q: Could you please elaborate on the promotion of growth corridors that has been creating confusion among investors?

A: It is a good idea to develop the growth corridors with their own strength and niche. However, when each corridor claims to be the one-stop centre (for investment), it has created some confusion among investors.

Actually, Mida is the main coordinator for all these growth corridors in terms of investment promotion. Investors who want to explore opportunities in these growth corridors can go to Mida.

Iskandar is a bit ahead (of all growth corridors) and they have their own committee that approves investments. Mida's deputy director-general is part of the committee. This committee only approves services projects and for the manufacturing projects, investors still have to go through Mida.

Q: You expect a slight slowdown in domestic investment this year. Why is that so?

A: In 2007, the domestic investment was RM26.5 billion, which was mainly contributed by three big projects by Petronas in the petrochemical industry. Between January and October this year, domestic investment was RM15 billion, but this is not due to global slowdown.

If we look at the trend, last year's domestic investment was a record high due to the three lumpy projects. In 2001, the domestic investment was RM5.2 billion, in 2002 it was RM6.3 billion, in 2003 RM13.5 billion, in 2004 RM15.6 billion, in 2005 RM13 billion and in 2006 RM25.7 billion.

We also need to see more participation of local companies under the umbrella of government-linked companies (GLCs). The GLCs are supposed to open doors for other local companies.

Q: Could you elaborate on the programme with Human Resources Ministry to retrain retrenched workers?

A: With retrenchment expected to increase, we are talking to the Human Resources Ministry on how to come out with a programme to re-train the workers in new technology. For the past two years, we have been reporting to the ministry, where we identify skills from the (FDI) projects, so the ministry can come out with specific training programme (for the workers).