MIDA Courts Indian Companies For Investment In Malaysia
MUMBAI, Dec 10 (Bernama) -- India's booming economy, which has been posting impressive growth rates as much of the Western world still reels under the severe impact of the recession, has benefited its companies which, armed with huge cash reserves, are looking for opportunities to invest abroad.
The Malaysian Investment Development Authority (MIDA), which maintains an office in Mumbai, India's financial capital, has been courting Indian companies to invest in Malaysia, citing commonalities with India's corporate world and highlighting opportunities that are nowhere to be found in Southeast Asia.
The Mumbai based MIDA director, Vasu Nallayan, said in an interview with Bernama in his office that Indian companies, which had been focused on Singapore in the past, are now increasingly looking at Malaysia which is a bigger market with a well-developed infrastructure, much lower labour and production costs, and access to the hinterland market of the ASEAN member countries.
"Biotech, pharmaceuticals, renewable energy, petrochemicals, etc. are some of the industries of interest to Indian companies," Nallayan said, adding electronics and engineering, and information technology also appealed to Indian companies.
"Our pitch to Indian companies is that Southeast Asia is the next growth region with 500 million consumers.
"Malaysia could be used as a hub to service this market. Indian investors can also benefit from the free trade agreement between India and ASEAN which went into effect on January 1," Nallayan pointed out.
Another free trade agreement, with Malaysia as the direct partner with India, will provide strong impetus to two-way trade and investments because it will reduce the tariffs and clear obstacles in the way of greater economic interaction, he said.
Malaysia is also portraying itself as a platform to do business with Islamic countries.
"Being a member of the Organisation of Islamic Conference, Malaysia can help Indian companies penetrate the Middle Eastern markets," Nallayan said.
Because of the high industrial growth, India has also intensified its search for raw materials which are available in abundance in Malaysia.
"Yes, Indian companies have also shown interest in Malaysia's natural resources, including limestone. But they are also interested in setting up food processing plants in Malaysia instead of just importing palm oil as a commodity," he added.
Nallayan has been studying the pattern of investments by Indian companies whose favoured route for investing abroad is through mergers and acquisitions (M & A), rather than setting up greenfield projects which can be time consuming and also saddled with other problems.
"A Chennai-based company is investing in data recovery centre in Malaysia with substantial investments. Also, there is considerable interest in solar energy projects in Malaysia.
"Indian companies, who take fast decisions, are interested in renewable energy," Nallayan said.
Indian companies may appear unclear at first but "you can sense their serious intention when they come back with proposals and formally seek MIDA's assistance in setting up an operation in Malaysia," he maintained.
"Of course, we also have Indian companies who have, at the very outset, demonstrated their determination to pursue an investment project in Malaysia," the MIDA director said.
As Nallayan explained, MIDA takes the Indian investing company by the hand through the entire process until the conclusion of the project.
It has also set up a special division at its Kuala Lumpur headquarters called Industry Support Division dedicated to clearing the way for a foreign company's investment plans for Malaysia.
Some of India's big corporate names such as Reliance, Larsen + Toubro, Infosys, WIPRO and Mahindra-Satyam have set up operations in Malaysia.
There is also good investment potential inherent in India's small and medium-sized enterprises which are now also looking beyond India's borders. "That's opportunity for us," Nallayan said.