Keynote Address at the Malaysia-UK Investor Showcase
Marlborough House, London
1. A very good morning to you all. I’m delighted to be able to address so many leading business figures here today, and I’m glad that you are able to join us despite your busy schedules. Thank you to Sime Darby and the Commonwealth Enterprise and Investment Council for making this event possible.
2. I trust it will be a day of engaging and fruitful discussions. Allow me to begin with a brief overview of the underlying strengths and fundamentals of the Malaysian economy, share our latest updates, and discuss how businesses from both our countries can work together for our mutual benefit.
Ladies and Gentlemen,
3. During a time of turmoil in the world economy, Malaysia continues to be resilient and continues to thrive. Malaysia has come out stronger after each global crisis because we have been focused on building that resilience through stronger institutions, diversifying the economy and reducing our dependency on commodities.
4. All the facts and figures, and reports from the IMF, the World Bank and many others confirm this.
5. Growth last year was five percent – higher than predicted – making Malaysia one of the fastest-growing countries in the region. We are proud that expansion is primarily driven by the private sector, which contributed 69.2 percent of our GDP last year – because that shows the confidence that private investors have in our country and our future.
6. Indeed, between 2009 and 2015, our Foreign Direct Investment grew at more than 22 percent per annum. Gross National Income has increased by nearly 50 percent. 1.8 million jobs have been created. Inflation has been kept low.
7. Our current account continues to be in surplus, our saving levels are high and we have relatively low foreign debt and low unemployment. Malaysia’s financial market has performed remarkably well, and continues to do so now.
8. The overall size of the capital market increased to RM2.8 trillion in 2015, about 2 ½ times Malaysia’s GDP – a very impressive 150 percent increase since 2009. During the same period, the equity market expanded by 69.6 percent to RM1.7 trillion, while the bond and sukuk market grew 74.4 percent to a size of RM1.1 trillion.
9. The Malaysian capital market remains an important facilitator for financing business growth. In 2015, RM90 billion was raised in the primary market, a level consistent with previous years. In addition, our RM1.7 trillion Islamic capital market registered a steady growth of 6.7 percent last year, retaining its overwhelming lead in the global sukuk arena.
10. Malaysia’s stock market has continued its upward momentum in recent times, mainly due to incoming interest from international investors into Bursa Malaysia.
Ladies and gentlemen,
11. I am pleased to report that the outlook for the Malaysian economy remains favourable. The World Bank expects Malaysia’s GDP to record 4.5 percent growth this year and 2017, a higher rate than their earlier forecast of 4.2 percent – based on an improvement in Malaysia’s overall export performance.
12. The International Monetary Fund team that visited Malaysia in January this year, commended us for making significant progress in improving the foundations for substantial economic growth, and maintaining macroeconomic and financial stability.
13. They were not alone. In fact, they were far from alone.
14. The Global Competitiveness Report 2015-2016, issued by the World Economic Forum, ranked Malaysia 18th out of 140 economies, two places up from 20th last year. Malaysia was placed 9th in the world for Financial Market Development, and was the only emerging market in the top 10 overall. Our Securities Market was declared the 20th Best Regulated in the same report.
15. In the World Bank’s 2016 Doing Business Report, Malaysia is ranked 18th out of 189 economies – in the top 10 percent globally – and we were listed 4th in the world for Investor Protection, by that same report.
16. Last year Bloomberg rated Malaysia as the world’s 5th most promising emerging market, and the only ASEAN country in its top ten. And the Asian Corporate Governance Association ranked Malaysia in the same league as developed markets such as Japan, Hong Kong and Singapore.
Ladies and gentlemen,
17. These rankings are an endorsement of the progress the Malaysian Government has made in enhancing efficiency and competitiveness in our country through the Government Transformation Programme, or GTP, and the Economic Transformation Programme, or ETP.
18. The GTP and ETP have been in place for almost 5 years now. They were cornerstones of our economic plan to propel Malaysia to High Income Nation Status by 2020. And as you can see, that plan is working.
19. Not only are we on track, but we are also transforming Malaysia into a more inclusive and sustainable economy, one better placed to weather external shocks, and one in which the proceeds of growth are shared by all.
20. We appreciate international acknowledgement of the results of our transformation process. But we are also constantly reviewing our policies to ensure that Malaysia remains a preferred investment destination in an increasingly competitive global environment.
21. Last year, I launched the 11th Malaysia Plan, which outlined six strategic thrusts and game changers to set the country on an accelerated growth trajectory. This is not just about hitting headline figures.
22. It is also about investing in our people, in skills, education, regional development, green growth and infrastructure, to raise standards of life for all in Malaysia – and making our country an even more attractive destination for others to live and invest in.
Ladies and Gentlemen,
23. The UK is one of Malaysia’s major investors and trade partners. In 2015, Malaysia’s total trade with the UK stood at £2.76 billion. The increasingly close relationship has been reflected in growing levels of investment in both directions. FDI stock from Malaysia to the UK grew by 161 percent from 2009 to the end of 2014 – from £1.7 billion to £3.7 billion.
24. Malaysian investments in the UK include utilities – YTL owns Wessex Water; hotels – Tune and Thistle hotels; cars – Lotus and Caterham; healthcare – iGene and Spire; retail – Laura Ashley; and leisure – with Genting and Hong Leong owning casinos and leisure centres across the country. Malaysian companies and institutions are also among the largest investors in London commercial and residential property.
25. Malaysia’s involvement in the Battersea Power Station Project has generated a great deal of interest. Close to £2 billion worth of property has been sold across the first three phases. This project is driven by support from some of Malaysia’s most well-respected and successful property development and investment businesses, SP Setia Berhad, Sime Darby, and Employees Provident Fund.
26. While Malaysian investment has traditionally been focussed in London and the South East, one or two major Malaysian institutions are now looking further afield for opportunities. The launch of the “Battersea and Beyond” initiative Prime Minister David Cameron during his visit to Kuala Lumpur last July will further expand Malaysian investment to the rest of the UK.
And Ladies and gentlemen,
27. This relationship is strong on both sides. The UK is one of the top ten foreign investors in Malaysia. Notable UK companies include Tesco, the Universities of Nottingham and Reading, Prudential, HSBC and Standard Chartered. Some of these connections go back a very long way. In fact, Standard Chartered has been with us for 141 years.
28. As of the end of 2015, UK investment in Malaysia amounted to £3.4 billion. In the manufacturing sector, realised investments totalled £1.1 billion in 433 projects. Approximately half of the investments are in the chemicals and petroleum products industries, while another 14 percent are in electrical and electronics.
29. We welcome these investments, which are good for investors and good for Malaysia. There is a very real return to Malaysians – these investments provided 36 thousand new jobs.
30. UK investments continue to flow into Malaysia. In 2015, there were 43 new projects approved with proposed investments totaling £44 million. When they are fully implemented, these projects will create an additional 3,700 jobs for Malaysians.
31. Notable projects from the UK include Owen Mumford – with its new regional hub – and Smiths Detection, the world-leading designer and manufacturer of advanced detection systems – with its new facility, both in the south of Malaysia.
32. We have over 70 British retail brands in Malaysia, with 26 of them expanding. JD Sports is the latest to arrive on our shores – much to the delight of fashion and sports-mad Malaysians.
33. And UK companies in Malaysia continue to demonstrate their strong level of confidence in us by undertaking further expansion and diversification. In August last year, Rolls-Royce signed an agreement with UMW Holdings, a home-grown Malaysian company, for it to be the single-source supplier for Rolls Royce, specifically for its Trent 1000 and Trent 7000 engines.
34. British Telecom and Dyson are also doubling their footprints, and BAE Systems, the global defense, security and aerospace company, is strengthening their global applied intelligence (AI) presence in Kuala Lumpur.
35. We welcome you all, but we believe there is much scope for further and expanded investment in Malaysia. We look forward to deepening our bilateral ties by more UK companies coming to Malaysia, particularly in new growth areas: in emerging technologies and high technology, and in capital-intensive, high value-added, knowledge-based, skills-intensive, and export-oriented sectors.
36. This will have huge benefits for UK companies, and will provide high income jobs for Malaysians.
37. At the same time, we would like to encourage more UK investors to leverage on Malaysia’s strategic location, either by setting up regional establishments to serve related companies in the region, or by using Malaysia as the launch pad to penetrate ASEAN, the Association of Southeast Asian Nations, already the seventh largest economy in the world.
38. In fact, last May we introduced the Principal Hub scheme to make Malaysia even more attractive for global companies, and to be well-positioned to take advantage of Malaysia’s competitive location in ASEAN and the Asia Pacific region; and I am delighted to say we have already approved 12 Principal Hub projects. Please come and increase the number!
Ladies and Gentlemen,
39. I just mentioned that ASEAN is already the seventh largest economy in the world. But it is predicted to be the fourth largest by 2050 at the latest.
40. Malaysia is at the forefront of leading ASEAN towards that goal. Last November, under Malaysia’s chairmanship, ASEAN leaders announced the successor to the ASEAN Economic Community 2015 Blueprint. This comprehensive document outlines strategic measures for the integration process over the next ten years.
41. It is a powerful signal of the commitment of ASEAN member states towards establishing a competitive, liberalised and progressive market environment that can maintain the region’s growth trajectory.
42. It also marks a major milestone in realising the ASEAN dream of “One Vision, One Identity, One Community”, among the region’s 625-million-strong, youthful, and increasingly well-educated population.
43. We in ASEAN are now actively negotiating the Regional Comprehensive Economic Partnership Agreement or RCEP, with Australia, China, India, Japan, South Korea and New Zealand, and we are confident that the RCEP will become a reality soon.
44. RCEP nations account for 49 percent of the global population, 29.3 percent of world GDP and 25.2 percent of global trade. It will be quite a milestone when it comes into being. The ASEAN-Hong Kong FTA is also expected to be agreed this year.
45. As an outward-looking nation, where there are opportunities for free trade – as in the Trans-Pacific Partnership, which we are also a signatory to – we want Malaysia to be part of them, as we believe they are good for our economy and good for our people.
Ladies and Gentlemen,
46. Malaysia has built a resilient, sustainable and inclusive economy. You can count on us as your ideal partner for doing business in the region.
47. For those who have not visited Malaysia, please do so to discover for yourself the preferred location in Asia, and enjoy our Malaysian hospitality.
48. I urge you to further explore Malaysia as your investment destination, not only to capitalise on the business opportunities within the country, but also as a gateway to Asia Pacific and global markets.
We look forward to welcoming you.