KUALA LUMPUR (June 17): Malaysian companies were told to capitalise on the recently-opened investment opportunities in India as the republic is easing the norms for the opening up of foreign direct investment (FDI) in 16 sectors, said the Consortium of Indian Industries in Malaysia (CIIM).
Its chairman Datuk Umang Sharma, in making the call, said the sectors comprise defence, manufacturing, mining of coal and minerals, space, aviation, food, auto, steel, cement, plastics, maintenance, repair and overhaul (MRO), health and education.
“Malaysian companies have an edge in some of these sectors and this could be an ideal time to enter these sectors at much lower costs.
“With the growing Malaysia-India relations, Malaysian companies can capitalise on the recently-opened investment opportunities in India,” he told Bernama in an email reply.
On the outlook for Malaysia-India business and trade volume this year in the wake of Covid-19, Sharma said the bulk of Malaysia-India trade is essential goods, and thus "the CIIM doesn't foresee much decline in trade volume this year".
“Palm oil and rice trade between the countries has already shown an increase in significant numbers,” he said.
He said both Malaysian and Indian governments’ relations had greatly improved recently and both are giving incentives to the industries, mainly to small and medium enterprises (SMEs) and microenterprises.
“Taking a mid-term view, this is an excellent opportunity to capitalise on these incentives either by buying companies or investing in promising ones as they would be available at much lower capital cost.”
Commenting on the Indian business sectors affected in Malaysia by the pandemic, Sharma said some Indian businesses in the business-to-business (B2B) segment had suffered due to restricted travel and non-movement of goods and logistic issues, especially for exports where the entire supply chain was affected.
He, however, noted that the Ministry of International Trade and Industry (MITI) and Malaysian Investment Development Authority (MIDA) had done a wonderful job in helping the industries open up and disseminating information on a real-time basis.
He also said that financial institutions are not ready to lend even small working capital loans unless there is a local majority shareholding despite some of the CIIM members having been doing business in Malaysia for over 20 years and with 99% local employees.
“So, such members are suffering. Due to the movement control order (MCO) and compliance with standard operating procedures (SOPs), there has been a loss of production for one to two months and lower productivity levels by 20% to 30%, effects of which would be reflected in this fiscal year,” he said.
Asked about the economic measures the Malaysian government should put in place in the wake of Covid-19 to attract Indian businesses in Malaysia, Sharma said Malaysia could enhance its policies to enable the ease of setting up businesses here and allow the bringing in of talent to develop their Malaysian investment, together with local talent.
He said the subsidy on electricity tariffs under the Comprehensive Economic Cooperation Agreement (CECA) between Malaysia and India was signed in 2011, and it is time for the two countries to revisit the agreement and iron out some of the kinks to enhance trade and investment.
“Besides that, the Malaysian government could help solve the supply chain disruptions during the Covid-19 situation and look at reshoring some of the industries to India.
“The government could look at allowing foreign labourers for jobs which are labour-intensive, reducing the minimum wage for the next 12 months for the industries which can’t recover their losses, and reducing corporate taxes for this financial year,” he added.
Sharma said Malaysia could also look at having a special India desk, headed by a seasoned corporate person who understands business dynamics of both Malaysia and India, to explore and exploit business opportunities in trade and investment.
“Indian companies have invested over RM12 billion in Malaysia and have created over 10,000 [jobs in] direct employment,” he said, adding that there are approximately 150 to 200 Indian companies, comprising various sectors, currently operating in Malaysia.
Source: https://www.theedgemarkets.com/article/malaysian-companies-told-capitalise-recentlyopened-investment-opportunities-india