The worst of the global economic crisis is over and developing countries like Malaysia can expect to register 6% gross domestic product (GDP) growth next year, according to UBS Investment Bank. In South-East Asia, Malaysia was expected to lead the pack in GDP ahead of Singapore, Thailand and Indonesia, which were all expected to record lower GDP growth (5% or below). On the Asian front, the economic fundamentals were much stronger, lead by China and India.
A V-shaped recovery is expected for these countries, including Malaysia, which had been affected by lower export demand, especially from the developed world, during the peak of the global economic crisis. The US-led financial crisis has hit countries that are dependent on the US economy hard. Malaysia’s manufacturing sector has been one of the hard-hit victims.
Just how important is China to Malaysia? China’s share of Malaysia’s exports climbed to 8.8% in 2007 and 9.5% in 2008. In the first nine months of 2009, China became Malaysia’s biggest export market, overtaking the United States. Last year, the two-way trade volume topped US$53bil and Malaysia has become China’s largest trade partner among Asean countries.
China is now the largest market for many of Malaysia’s major exports, especially commodity products. This is important, as there were instances in the past when the exports of Malaysia’s electrical and electronic products have been reduced. Commodity exports have historically played an important role in avoiding adverse impacts on the economy.
Apart from trade, China has become an increasingly important market for Malaysia’s tourism industry. In the 1990s, Japan used to be Malaysia’s largest source of tourist arrivals outside of the Asean region. Now, the role has been taken over by China.
Malaysia is also an education hub in the region. In the early 2000s, a large number of Chinese students came to Malaysia to pursue their higher education. In fact in 2002, close to 40% of all foreign students in Malaysia were from China. Today China is still the second biggest contributor of foreign students in Malaysia.
Industrial and Commercial Bank of China (ICBC), the worlds most profitable bank, has just been granted a consumer and commercial banking licence to operate in Malaysia. Their first outlet is targeted to open in Q1 2010.
US fund managers, including those who represent huge pension funds worth trillions of dollars in the United States, have expressed interest in investing in Malaysia but want the Government to ensure continuity of its liberalisation policy. The US financial community welcomed the re-listing of Maxis (largest local mobile telco), saying it gave them the opportunity to invest in a major company. They also indicated interest in investing in companies with big market funds, good potential and governance.
Two American companies are expected to make substantial investments in the local beverage and gas sectors soon. Exxon Mobil Corporation expressed its intention to venture into high CO2 content gas extraction while beverage giant Coca-Cola wants to build a new modern plant in Malaysia. For Exxon, this will require additional investment as it is a new form of technology. They will need to build new turbines as they plan to use them to generate electricity. As for Coca-Cola, a new bottling plant will be built using advanced technology. The value of the investments will be announced later as the Government is still working out the details on tax incentives to the companies.
A world class US premium factory outlet centre will be open in Malaysia by 2011. Chelsea Premium Outlets is owned by Chelsea Property Group, which is the world’s largest owner, developer and operator of upscale outlet centres in the United States, Japan and South Korea. Its centre in New York, Woodbury Commons, lures millions of shoppers to its discounted items of designer brands like Coach, Gucci, Zegna, and Burberry. Items which are a season old are between 25% and 60% cheaper.
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Foster Partners is a global retained executive search firm focused on senior level professionals for US, European and Chinese corporations. China headquarters are located in Shanghai, with operating offices in many of the other major cities in China mainland and Hong Kong. Additional Asia operating offices include Kuala Lumpur. U.S. headquarters is located in New York, New York.
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