wrapper

Hot Topics

 

Business Excellence Awards 2019 Gala Night
20 June 2019 Thursday
St Regis Kuala Lumpur, Grand Ballroom, Level 3

Speech by
YB Lim Guan Eng
Finance Minister of Malaysia

 

YB Dr Ong Kian Ming
Deputy Minister of International Trade and Industry

His Excellency Charles Hay,
British High Commissioner to Malaysia and BMCC Patron

YBhg Tun Musa Hitam
Honourable BMCC Patron

Mr Andrew Sill,
Chairman of the British Malaysian Chamber of Commerce

Ladies and Gentleman.

Good evening and Salam Harapan.

INTRODUCTION

1. In a world where the trade war is on everybody’s lips, we are here today to celebrate what international collaboration offers for our mutual benefits. The British Malaysian Chamber of Commerce (BMCC) was established in 1963 to facilitate bilateral trade relations between our two countries, and its role is all the more important in today’s context, when the global trade framework is under threat.

MALAYSIA AS A GREAT TRADING NATION

2. Malaysia is a great trading nation and we are here today thanks to our export-driven industrialisation that began in earnest in the 1980s under the leadership of our 4th Prime Minister, Tun Dr Mahathir Mohamad. The model hit its peak in the 2000s when total trade was at 220.4% of the GDP. At that time, very few countries had higher dependency on international trade than Malaysia. Even today, with a more mature domestic economy, total trade still stands at about 140% of the Malaysian GDP.

3. It is clear why Malaysia is concerned with the escalating trade war. We are embedded in the global supply chain so well that if the dispute between the China and the United States persists for a long time, Malaysia will inevitably suffer.

4. Truly, almost all of us will be in the same rocky boat if global trade volume decreases. In April, IMF itself cut its projection for 2019 global GDP growth to 3.3% from 3.5% previously, citing trade war as the cause for the downgrade.

PERMANENT FUNDAMENTAL REORIENTATION OF THE GLOBAL SUPPLY CHAIN

5. One thing for certain is that the global supply chain is experiencing a fundamental shift and Malaysia is among the top countries benefiting from business relocation as well as trade and investment diversion arising from the trade war. Nomura for instance has cited Malaysia as the 4th biggest beneficiary of the trade war, out of 50 of the world’s biggest economies.

6. This can be seen from our approved FDI statistics produced by the Malaysian Investment Development Authority (MIDA). In the first quarter of 2019, approved FDI across all sectors rose 73.4% from a year ago to RM29.3 billion from RM16.9 billion.

7. Specifically, approved manufacturing FDI surged 127% in the first quarter to RM20.2 billion from RM8.9 billion a year ago. Approved FDI is an importantly leading indicator that will result in higher actual FDI in the following years as various investments get realised on the ground. Out of the RM20.2 billion of approved FDI in manufacturing, RM11.5 billion originated from the US and RM4.4 billion from China. These two countries are the largest sources of approved FDI last quarter.

8. This trend does not seem to be a blip. Approved FDI for the whole of 2018 rose 48% to RM80.5 billion from RM54.4 billion. In fact, the continuing, persistent, rise in investment numbers suggests there is a permanent shift in the global supply chain.

MALAYSIA IS LOOKING 2 STEPS AHEAD TO TAKE ADVANTAGE OF THE TRADE WAR AND WHAT COMES AFTER

9. Manufacturers and global businesses are adapting to the rising tariffs between China and the US by moving to third-country safe havens that have relatively warm ties with two of the largest economies in the world.

10. And just yesterday, Nikkei Asian Review reported that Apple had asked its suppliers to “evaluate the cost implications of shifting 15% to 30% of their production capacity from China to Southeast Asia,” with Malaysia being one of destination countries cited. YB Dr Ong, the Deputy Minister for International Trade and Industries (MITI) is in the process of engaging with the E&E sector to see how we could tap into Apple’s supply chain, and make Malaysia an important manufacturing base for the US-based company.

11. Malaysia is capitalising on the permanent reorientation of the global supply chain by upping our competitiveness to attract new high quality investments, especially those concerning Industry 4.0. Malaysia has already been acknowledged as the 22nd most competitive country out of 63 economies in the world in 2019 by the International Institute for Management Development (IMD). Meanwhile, the World Bank ranks Malaysia as the 15th easiest place to do business out of 190 countries. We are a competitive safe haven for global companies.

12. Our focus will enable us to take advantage of the next global growth upswing when the time comes. In other words, we are readying ourselves 2 steps ahead: we are preparing for the worst of the trade war, and what comes next 5-10 years down the road.

MALAYSIA-UK TRADE TIES COULD AND SHOULD BE DEVELOPED FURTHER

13.This brings us to the topic of today’s gathering: the Malaysia-UK relationship.

14. The United Kingdom is among Malaysia’s top 20 most important trade partners. In 2018, we exported RM8.6 billion of goods to the UK and imported RM7.0 billion. This brings the Malaysia-UK total trade to RM15.6 billion, with a RM1.6 billion surplus in Malaysia’s favour.

15. However, that figure does not include service trade. We all know that the UK with its top universities is the favourite destination among Malaysians seeking higher education. In 2018, Malaysia exported RM7.8 billion worth of services to the UK, while importing RM10.8 billion in return. With that, total service trade between Malaysia and the UK was RM18.6 billion, which is larger than the total good trade. And unlike in the goods sector where we enjoyed a surplus, Malaysia had a service trade deficit of RM3.0 billion last year.

16. Additionally, the UK is the 8th largest investor in Malaysia from cumulative investment perspective. UK entities controlled RM22.3 billion worth of FDI stock by end-2018.

17. Despite the deep ties between the two countries, I sincerely believe we could do more via trade and investment channels in order to raise the prosperity of our peoples. We have a golden opportunity to do so at a time of fundamental global supply chain reorientation in the Pacific or in the Atlantic.

CONCLUSION

18. Now is the perfect time for UK companies to invest in Malaysia and ready, like Malaysia, for the next stage.

Thank You.