Malaysia Courting U.S. Investment
Malaysia, one of the Third World’s fastest developing and richest nations, wants to know why American businessmen aren’t keen on investing here.
Finance Minister Daim Zainuddin says U.S. investments in the commodity-rich nation are “slow, sluggish and at an unimpressively low level” despite attractive incentives and market prospects.
Last year, U.S. firms invested $1.9 billion in Malaysian petroleum, electronics, tire and pharmaceutical industries and in financial and insurance services. However, the United States still ranks fourth after Japan, Singapore and the United Kingdom in foreign investments.
Greater Share for Malays
“It is possible that our investment policies, which have been geared to achieve our socioeconomic goals and internal political stability, have somewhat dampened the enthusiasm of U.S. investors in Malaysia,” Daim said. “But let me assure you that the implementation of our policies is constantly being reviewed to take into account the dynamics of change.”
A local securities analyst said American investors are particularly concerned about legislation surrounding the New Economic Policy, a 20-year program designed to give indigenous Malays a 30% equity share in the economy by 1990. Until recently, the government has been rigid in requiring that investors ensure that Malays, long pushed into the financial background by more sophisticated Indian and Chinese businessmen, have at least a 51% stake in new projects.
But the government, acutely aware of the generous investment packages offered in neighboring Singapore, Thailand and Indonesia, says it will liberalize controls, allowing majority foreign ownership in export-oriented, agriculture-based or high-technology industries.
A leading investment adviser with 35 years’ experience in Malaysia says the NEP is often misunderstood by foreigners who have not adequately researched the market and are unable to cope with the red tape.
He points out that the government showed its flexibility by allowing Swiss food giant Nestle to retain majority ownership in a recent restructuring exercise.
“I don’t think the NEP is the stumbling block to American investors. The fact is that Malaysia is expensive. Labor isn’t cheap, electricity charges are exorbitant and the population is only around 15 million,” he said.
“If the government is interested in your investment project and it fits in with development ideals, then all the doors will be opened.”
Malaysia also has an image problem in the United States, exacerbated by unfounded fears of the Islamic influence in the multiracial nation.
Islam is the official religion, followed by Malays who form 53% of the 15.3-million population, but Chinese and Indian minorities are guaranteed freedom of worship.
“Americans hear the words fundamentalist and they get nervous,” a Western diplomat said. “We tell him that this is a very tolerant country and somewhat unique since you find so many religions being freely practiced.”
The diplomat said the cancellation of last year’s visit by the New York Philharmonic Orchestra because the government objected to the inclusion of a Jewish score had a negative impact on investors.
“I have Jewish businessmen asking me if their religion will work against them. I tell them Malaysia has an official ban on trade with Israel but the Jewish religion is not a factor affecting his business operation,” he said.
