TRADE AND INVESTMENT 2015

Transcription

1 TRADE AND INVESTMENT 2015

2 TABLE OF CONTENTS 1 Message from the Ambassador & Head of Delegation 2 Message from the EU Trade Commissioner 4 Introduction 5 The European Union in the World 6 Trade and Investment Relations with Malaysia 10 Trade and Investment Relations with ASEAN 15 European Businesses in Malaysia 24 European Union Member States in Malaysia 25 Useful Links

3 MESSAGE FROM THE AMBASSADOR & HEAD OF DELEGATION The vibrant trade and investment relationship between the European Union and Malaysia continues to grow, reflecting both the dynamism of the Malaysian economy and society as a whole, as well as the increasing presence and interest of the EU in Malaysia. The position held by the EU - as the third most important trading partner of Malaysia and the second largest source of foreign direct investment - demonstrates the confidence of European companies in the future of Malaysia. This existing close relationship is expected to be further enhanced by the successful conclusion of the ongoing negotiations for a Free Trade Agreement and a Partnership and Cooperation Agreement between the parties. As EU Ambassador, I look forward to seeing our mutually beneficial economic partnership expand and develop in the coming years, taking best advantage of the new opportunities which will arise as Malaysia s level of development progresses and as EU companies seek to contribute to the Malaysia of tomorrow. H. E. Luc Vandebon 1

4 MESSAGE FROM THE EU TRADE COMMISSIONER In a world that is becoming increasingly integrated and interdependent based on value chains stretching across the globe, trade and investment act as important drivers for economic development. As the largest global player in trade and investment, what the European Union does matters. The trade policy of the EU thus seeks to boost sustainable prosperity for all, in a manner consistent with our own and international values - peace, democracy, human rights, and the rule of law. We see open markets as being critical to ensuring that consumers benefit from lower prices and greater choice, businesses become more competitive, and people are able to find longer term employment in stable jobs. We are working to achieve open markets both multilaterally in the World Trade Organisation as well as bilaterally, with many of our foremost trading partners. I am convinced that trade can be a force for good. The EU thus uses trade policy to underpin important international goals, encouraging trade practices to become more environmentally, economically and socially sustainable. We continue to be a world leader in innovation to combat climate change. We assist communities around the world through our development programmes, with the objective of helping them to help themselves by assisting them to achieve greater access to our own market. Supporting developing and emerging economies is thus an essential element of EU Trade Policy. 2

5 With Malaysia in particular, an important and growing market in South East Asia and a core member of ASEAN, we have established a robust economic relationship based on regular dialogue, but we are also seeking to build on this foundation by negotiating a Partnership and Cooperation Agreement and a Free Trade Agreement. Once in place, these agreements will expand and enhance our bilateral relations and our trade, providing a catalyst for job and wealth creation, to the benefit of both Malaysia and the EU. This is why it gives me great pleasure to support the work of the Delegation of the European Union to Malaysia in presenting this publication demonstrating the importance of trade and investment for both sides. I hope that the information provided encourages both EU and Malaysian businesses to seek out new opportunities to make our trade and investment grow in the future. Cecilia Malmström 3

6 INTRODUCTION As an economic and political union of 28 Member States acting together with one voice, the European Union is the largest player on the world trade stage. The EU benefits from being one of the most open economies in the world, promoting free trade based on transparent and fair rules. EU trade with ASEAN and with Malaysia in particular is of increasing importance, with Malaysia being our second largest partner within ASEAN. Although EU-Malaysian trade in goods is currently dominated by industrial products representing 90% of all bilateral trade, the contribution made by services and investment is growing. Opportunities to further expand trade between the two partners would be facilitated by the establishment of a bilateral Free Trade Agreement, which could help to pave the way for a deepening of inter-regional trade between the EU and ASEAN. European Union Key Indicators Malaysia million 2014 Population 30.3 million 27, GDP Per Capita 8, % 2014 GDP Growth Rate 6% 12.2% 12.1% 24.3% 3,383 billion 2014 Export Goods to GDP Ratio 2014 Import Goods to GDP Ratio 2014 Global Trade Goods to GDP Ratio 2014 Global Trade in Goods 71.6% 63.8% 135.4% billion 1,195.6 billion 2013 Global Trade in Commercial Services 64.1 billion 4 Source: Eurostat and Malaysian statistics

7 EUROPEAN UNION IN THE WORLD The EU s single market of million consumers with a GDP per capita of 27,300 in 2014 represents a 13.9 trillion economy. The EU has 135 of the world s Fortune 500 companies, comprises 5 of the top 10 countries on the World Economic Forum Global Competitiveness index, accounts for more than a quarter of world s research and development spending, and has an unparalleled infrastructure. The largest importer of goods and commercial services 2,196bn The largest trading bloc representing over 16% of global trade in goods and services The largest exporter of goods and commercial services 2,421bn EU outward FDI 477.5bn EU inward FDI 523bn Total outward FDI stocks 4,900bn Total inward FDI stocks 3,778bn The top Investor in the world Source: Eurostat (2013 figures) More than 70% of imports enter the EU at zero or reduced tariffs The EU is the largest aid donor globally providing more than half of all Official Development Assistance bn in 2014 The EU is the world s largest economy with a 28% share of global GDP The EU has established FTAs covering 35.9% of our trade. Once ongoing FTA negotiations conclude, they will apply to 66.4% of our trade. The EU is the top trading partner and largest export market for 80 countries The EU imports more from developing countries than the USA, Canada, Japan and China combined (fuels excluded) 5

8 TRADE AND INVESTMENT RELATIONS WITH MALAYSIA EU trade with Malaysia continues to expand, defying the impact of the economic crisis, with total trade in goods and services growing by 37% between 2009 and The effect of the crisis has nonetheless influenced EU demand, with EU exports to Malaysia growing by 48% and Malaysian exports to the EU increasing by 29%, thus the significant overall trade surplus in favour of Malaysia has narrowed slightly, down to 3 billion in 2013 from 4.2 billion in Currently, EU trade in goods accounts for 82% of all trade, with the remainder being trade in services. EU Imports and Exports to Malaysia Billion EU Goods & Services imports EU Goods & Services Exports Total EU Goods & Services Trade with Malaysia Source: Eurostat The EU is Malaysia s third largest trading partner Within ASEAN, Malaysia is the EU s second largest trading partner Globally Malaysia ranks 23 rd among all EU trading partners Foreign Direct Investment The EU is the second largest investor in the Malaysian economy, primarily in greenfield investments in manufacturing, but increasingly also in services. Malaysia s investment in the EU also continues to grow, particularly through acquisitions in the mining and quarrying sectors (oil and gas), as well as in financial services, a further demonstration of the breadth and diversity of mutual trade and investment interests. Billion EU FDI Stocks with Malaysia FDI Stocks: Inwards into EU FDI Stocks: Outward into Malaysia Billion EU FDI Flows with Malaysia FDI flows: Into EU FDI flows: Into Malaysia 6 Source: Eurostat

9 A Partnership for Future Prosperity Malaysia s Top Goods Trading Partners in 2014 Rank Country % of Trade China 14.3% Singapore* 13.4%* EU 9.9% Japan 9.5% USA 8.1% *includes transitional trade to the EU and other trading partners. Source: Department of Statistics Malaysia The strategic position occupied by Malaysia within ASEAN, its central role in fostering economic integration within the region and its support for the establishment of the ASEAN Economic Community have encouraged many European companies to establish regional hubs in the country. Malaysia has undergone important economic reforms in recent years to liberalise new sectors, promoting a stable and predictable legislative environment to attract foreign investors. These efforts are recognised by rankings of key indices. 18 th out of 189 economies in the World Bank s Doing Business Report of th out of 82 economies in the Economist Intelligence Unit s (EIU) Business Environment Ranking and Index th out of 144 economies in the World Economic Forum s Global Competitiveness Report The EU and Malaysia are committed to pursue closer regional economic integration, to deepen bilateral ties with trading partners and to significantly improve the lives of their citizens by The EU 2020 Strategy: To become an inclusive, job-creating sustainable economy by 2020 by efforts to address: - Education - Employment - Poverty & social exclusion - Research & development - Climate Change & energy Malaysia s Vision 2020: To become a developed country by 2020 by focusing on: - Human capital - People s welfare - Inclusivity - Innovation & productivity - Infrastructure 7

10 EU Malaysia Trade in Goods Trade in goods between the EU and Malaysia has continued to experience steady growth over the past few years, with annual EU exports to Malaysia increasing on average by 3.78% and Malaysian exports to the EU expanding on average by 2.03% during the period of Machinery and transport equipment 62.5% Food and animal products Chemicals 9.8% Metals and metal articles 5.7% 5.3% Optical instruments Other 4.8% 4.3% Plastic and rubber 3.5% 2.3% 1.0% 0.6% Wood and pulp products Textiles and clothing 0.1% Manufactured goods Fats and oils Malaysia Exports Total: 19.7 billion Textiles and clothing Food and animal products 1.1% 1.4% Metals and metal articles Wood and pulp products January - December % 2.1% 2.2% Manufactured goods 2.8% 5.5% Other Chemicals 6.1% Optical instruments 7.5% EU Exports Total: 14.0 billion 7.8% Plastic and rubber 61.9% Fats and oils Machinery and transport equipment Source: Eurostat The Malaysian trade in goods surplus with the EU reached 5.7 billion in 2014 The EU is the fourth most important destination for Malaysian goods, and the third largest source of Malaysian imported goods Malaysia is the 18 th largest source of EU imported goods, and the 27 th ranked export destination for EU goods Billion Source: Eurostat EU-Malaysia Trade in Goods Imports Exports 8

11 EU Malaysia Trade in Services Services play a major role in all modern economies contributing more to economic growth and job-creation in the EU than any other sector - 75% of GDP ( 9 trillion), 150 million jobs, 68% of all EU employment. In Malaysia, services currently provide 55% of GDP and it is expected to reach 58% by The level of trade in services between the EU and Malaysia currently remains low but has experienced gradual yet steady average annual growth of 8% during the past 10 years. New opportunities will develop as Malaysia continues to reform and open up services sectors to increased foreign participation, boosting the role of services in the economy and in trade, and fostering greater competitiveness amongst Malaysian service suppliers. Billion EU-Malaysia Trade in Services Imports Exports Source: Eurostat Within ASEAN, Malaysia is the second largest destination for EU services. Key Malaysian service export interests include education, healthcare, construction, professional services, ICT, and franchise operations. Malaysia is the world s largest centre for Islamic finance, accounting for over 10% of the world s total Islamic banking assets, and also the global leader of the sukuk (Islamic bond) market. Tourism represents a huge sector of the Malaysian economy, generating USD11 billion in 2014, up 6.7% from 2013, including growing medical tourism. Transport Travel and Tourism Telecommunications & IT Services incidental to Manufacturing Professional Services 12.2% 10.0% 8.2% Construction Business 15.4% 3.3% Financial 2.1% 16.4% 0.7% 31.0% 0.1% Environmental Services Cultural and Recreational EU Exports Total: 4.2 billion Malaysia Exports Total: 3.2 billion Environmental Services 1.5% 21.9% 4.3% 16.7% 4.3% 4.5% 13.4% Business 5.6% 12.4% 13.2% Construction Services incidental to Manufacturing January - December 2013 Cultural and Recreational Professional Services Financial Telecommunications & IT Travel and Tourism Transport Source: Eurostat 9

12 TRADE AND INVESTMENT RELATIONS WITH ASEAN While fostering the important bilateral trading partnership between the EU and Malaysia, the EU devotes similar attention to its trade relations with the ASEAN region as a whole. Recognised as a crucial long-term driver of the global economy with a combined GDP of USD2.4 trillion in 2013, the third largest labour force in the world and robust regional economic growth forecasts, underpinned by a youthful population with rising household purchasing power, ASEAN is one of the most attractive destinations for EU trade and investment. European Union Number of Countries 28 Area 4,413,844 km Population million 2014 GDP Nominal 13,920.5 billion 2014 GDP Per Capita 27, GDP Growth Rate 1.3% 2013 FDI Inflows from ASEAN billion 2013 Total FDI Inflows 523 billion Source: EUROSTAT 10

13 Total trade in goods and services was 238 billion in 2013, growing by 7% annually during The EU was ASEAN s 2 nd largest trading partner in 2013 and ASEAN was the EU s 5 th ranked trading partner in 2014, the 4 th source of EU imports and the 5 th destination for EU exports The ASEAN-5 (Indonesia, Malaysia, the Philippines, Singapore and Thailand) attracted more FDI than China in 2013 ASEAN The EU is the leading provider of FDI in ASEAN, representing 22% of all FDI in 2013 Number of Countries 10 Area 4,435,618 km Population 625 million 2013 GDP Nominal 1,803.5 billion (USD2,395.2 billion) 2013 GDP Per Capita 2,885 (USD3,832) 2013 GDP Growth Rate 5.2% 2013 FDI Inflows from EU 20.3 billion (USD26.9 billion) 2013 Total FDI Inflows 92.1 billion (USD122.3 billion) Source: ASEAN The EU recently concluded its first bilateral Free Trade Agreement with Singapore. Ongoing negotiations with Vietnam, Malaysia, and Thailand are stepping stones on the path to an eventual EU-ASEAN region-to-region FTA, once the ASEAN Economic Community is realised. 11

14 ASEAN Economic Community (AEC) As the Chair of ASEAN in 2015, Malaysia has a key role to play in driving the establishment of the AEC by the end of The AEC represents the concrete realisation of regional aspirations to achieve closer economic integration and greater connectivity in order to make ASEAN more dynamic and competitive, enabling goods to be manufactured and distributed and services to be provided and delivered from anywhere to anywhere else within the region. The integration process is a gradual, step by step, sector by sector basis, eliminating tariffs, addressing non-tariff barriers, facilitating trade flows, and harmonising rules, procedures, and standards, operating on competition, consumer protection, and intellectual property rights. ASEAN s transformation into an economic powerhouse will require greater connectivity, investment in infrastructure and human capital development and closer financial integration. Pillars Single Market and Production Base Competitive Economic Region Equitable Economic Development Integration into the Global Economy Core Elements Free Flow of Goods Free Flow of Services Free Flow of Investment Freer Flow of Capital Free Flow of Skilled Labour ASEAN Trade in Goods Agreement (ATIGA) creates a legal framework to realise the free flow of goods. ASEAN Framework Agreement on Services (AFAS) eases restrictions on crossborder trade in at least 80 subsectors. ASEAN Comprehensive Investment Agreement (ACIA) liberalises and protects cross-border investment activities. ASEAN Single Window Gateway reduces trade costs and expedites movement of goods across borders. Mutual Recognition Arrangements (MRAs) recognise standards and qualifications of professions. The EU s ARISE program (ASEAN Regional Integration Support from the EU) supports ASEAN economic integration ( 15 million for ). 12

15 Integration into the Global Economy ASEAN s Regional Free Trade Agreements Under Negotiation Regional Comprehensive Economic Partnership (RCEP) Trans-Pacific Partnership (TPP) Canada India Australia Chile China ASEAN New Zealand Mexico South Korea Japan Peru United States of America ASEAN s Free Trade Agreements in force Japan China Korea ASEAN India New Zealand Australia 13

16 EU-ASEAN Trade in Goods Machinery and transport equipment Textiles and clothing 43.4% 12.6% EU Exports Total: 78.6 billion Chemicals Food and animal products 8.2% 8.0% Other Plastic and rubber 7.0% Fats and oils 5.3% 4.9% 4.5% 2.5% 2.2% Optical instruments Manufactured goods 1.4% Metals and metal articles Wood and pulp products ASEAN Exports Total: billion 14 Fats and oils Manufactured goods 0.1% 0.9% Textiles and clothing Wood and pulp products January - December % 2.3% 3.4% Plastic and rubber 4.8% 5.4% Optical instruments Metals and metal articles 10.2% 7.9% Other Food and animal products 12.4% Chemicals 50.9% Machinery and transport equipment ASEAN is the fourth major exporting region accounting for 7% of global exports, with 25% of the region s goods going to other ASEAN partners. While dwarfed by China ( 468 billion), total EU trade in goods with ASEAN of nearly 180 billion in 2014 exceeds that with Japan ( 108 billion), South Korea ( 82 billion) and India ( 73 billion). ASEAN s share of EU imports has ranged between 5% - 7% over the past decade ( ), whilst EU exports to ASEAN have varied between 4.2% - 4.8% of all EU exports. Merchandise trade with ASEAN has experienced steady growth totaling 59% over the past 10 years, with a constant trade surplus for ASEAN every year reaching Billion Source: Eurostat Source: Eurostat EU Trade with ASEAN in Goods Export to ASEAN Import from ASEAN billion in The EU s trade deficit with ASEAN is its fourth largest, only surpassed by that with China, Russia, and Norway. Within ASEAN, the main beneficiaries of the trade surplus with the EU are Vietnam, Thailand and Malaysia, followed closely by Indonesia. Main EU exports to ASEAN are chemical products, machinery and transport equipment, while the key imports from ASEAN to the EU are machinery and transport equipment, agricultural products as well as textiles and clothing

17 EUROPEAN BUSINESSES IN MALAYSIA The experience of EU companies on the ground varies considerably but their opinions of Malaysia as an investment host are overwhelmingly positive. I am the Managing Director of A&H Meyer Malaysia, a 100% foreign-owned subsidiary of the German company A&H Meyer established here in Malaysia in 2000 and currently employing 51 staff, of which I am the sole European national. We assemble electrical socket outlets and cable management systems for office furniture. A&H Meyer chose Malaysia over other possible alternative locations in Southeast Asia based on its strategic location, the proficiency of its labour force in English, and its position as the second largest furniture manufacturer in Asia. Malaysia also provides investment incentives, such as the duty free status given to imported components not produced locally. It took us one year to navigate the complex web of bureaucracy and administrative procedures in order to obtain the necessary licences and permits required to operate in Malaysia. While the level of the associated administrative fees was reasonable, if the Malaysian government would like to encourage more European companies to locate their operations here, I would recommend that they pay attention to clarifying the requirements of the existing legal framework as well as streamlining administrative procedures. Our Malaysian subsidiary now accounts for about 20% of the total annual sales of the company and has achieved a level of production costs roughly similar to that of our German factory. More than 50% of the output of the Malaysian subsidiary is exported, mainly to Asian countries, and 50% of its supplies come from the local market. Thus far, I believe that the excellent actual performance of our subsidiary in Malaysia has even exceeded our initial optimistic expectations. Peter Lenhardt Managing Director A. & H. MEYER Sdn. Bhd. 15

18 EUROPEAN BUSINESSES IN MALAYSIA I moved to Malaysia in 2008 after working as a London-based consultant for green building projects for 9 years. In 2010, I founded NEAPOLI, an Environmental Design and Engineering consultancy. NEAPOLI is an ancient Greek term describing the process of creating new (nea) urban spaces (polis) and reflects the company s mission to shape the next generation built environment. We currently employ 15 staff, 40% of whom are European including myself, originating from Crete, Greece. Malaysia offers many advantages to foreign companies:- a strategic location in the booming region of Southeast Asia, business-friendly regulations, cost effectiveness, good infrastructure, the English proficiency of its labour force, as well as the unique opportunities offered by tropical regions for the development of environmental design and engineering. From our office here in Malaysia, we export our services throughout Southeast Asia, as well as to the Middle East and even to Australia. In our first 5 years of operation we have seen the company s annual sales revenue grow in double digit figures, and we expect to triple our sales in the next 5 years. We have a current portfolio of 20 million square foot building projects and our clients include regional Governments and state owned corporations such as Khazanah National and Petronas. Overall, our relationships with Malaysian clients, business partners and government authorities are excellent and we particularly appreciate the welcome given to foreign investors in Malaysia. In my experience, the European Union-Malaysia Chamber of Commerce and Industry (EUMCCI) provides valuable assistance to companies seeking to establish in Malaysia and is a European initiative which deserves to be supported. Dr Stellios Plainiotis Chief Executive Officer NEAPOLI 16

19 EUROPEAN BUSINESSES IN MALAYSIA BKS Malaysia is a small subsidiary of a Belgian company specialised in the production and sharpening of industrial knives. These blades are used in the plastics, packaging, film & foil and recycling industries. As the regional manager and the only foreigner, I am responsible for our 6 local staff. Our annual sales volume is around RM1.5 million. In 2011, BKS decided to open a factory in Asia in order to be geographically closer to our Asian customers. After considering three possible alternatives (Thailand, Singapore and Malaysia), we ultimately chose Malaysia due to its strategic location in the region as well as its lower operating costs in comparison to Singapore, and the greater proficiency in English of the workforce compared to Thailand. Our experience in Malaysia has been positive. Although it was difficult to understand the local administrative procedures at the beginning, once you become familiar with them then they are relatively easy to follow and comply with. Overall, the performance of BKS in Malaysia has been satisfactory. Relations with Malaysian business partners and customers are generally good and we are planning to expand our operations in Malaysia and within the ASEAN region. We expect the establishment of the ASEAN Economic Community to be a huge benefit, with the removal of tariffs being an important economic advantage. Based on my experience, I would recommend any EU SME planning to set up business in Malaysia that it should focus on the following: hire high quality local secretarial staff, attend local fairs and exhibitions in order to obtain knowledge of the Malaysian market, and finally look after your local staff, since the rate of personnel turnover in Malaysia is very high due to the nearly full employment of the workforce. Marie Logé Regional Manager BKS Malaysia 17

20 EUROPEAN BUSINESSES IN MALAYSIA Biotec International Asia is a subsidiary of the Belgian company Biotec which began its operations in Malaysia in We design, build and operate innovative processing facilities for palm oil mill effluents, producing both biogas and organic fertilizers. The biogas is used to produce electricity for the grid or to fuel the mill boiler. We currently employ 40 staff, of which 6 are expatriates, and have achieved an annual sales volume of RM 30 million. Biotec chose Malaysia because it is the second largest producer of palm oil behind Indonesia, where we also have a subsidiary. As manager, if I were to compare the situation in both countries, my assessment would be that while it is easier to do business in Malaysia, the innovative services that we provide have found greater acceptance in Indonesia. Having been personally involved in setting up our operations here in Malaysia, I had a positive experience with the local administrative procedures. The regulatory framework is business-friendly and we have benefited from the advantages offered by the Malaysian Government to companies promoting biotechnology, through the so-called Bionexus status, which grants a tax exemption for the first 10 years, although it should be noted that local companies enjoying similar status are given additional advantages. By and large, I consider that our results thus far have exceeded initial expectations, although we had a relatively slow and difficult start. We are now able to enjoy good relations with customers and business partners in Malaysia, and we grow at a very fast pace. I have three recommendations for SMEs seeking to do business in Malaysia:- adhere strictly to the local rules and regulations, recruit the best local talent you can afford, and before starting operations, hire an expert who knows the country on the ground. Jean-Louis Couzet Executive Chairman Biotec International Asia Sdn Bhd 18

21 EUROPEAN BUSINESSES IN MALAYSIA MONIN is a French company which produces syrups, gourmet sauces and fruit purees. Our Malaysian operation, called MONIN Asia, was established in 2009 and serves all of Asia, Pacific and Middle East. We currently employ around 100 people. Malaysia was a natural choice of location in Asia for a new manufacturing base for us because of its political stability, relatively low costs and the investment tax incentives. The widespread use of English in Malaysia is another benefit. MONIN was keen to expand into halal markets and increase its exports to the Middle East, Malaysia and Indonesia. As our knowledge of the niche halal market grew, we recognised that Malaysia was the best location to help us achieve this goal. We needed to adapt our approach; initially we had to alter the recipes of our syrups and sauces to a non-alcoholic base, then learn about halal markets and the prerequisites for halal certification, and finally understand the relevant Malaysian regulations. Fortunately the Selangor State Investment Centre, MIDA and JAKIM were all very helpful and provided the guidance we needed during this process. Six years on, I can say that we made the right decision to set up our base in Malaysia. MONIN Asia has enjoyed an annual growth rate of 25% in recent years and is doubling the size of its factory, with further plans to expand into China. MONIN Asia continues to grow by encouraging new and innovative methods in our operations. My advice to others considering Malaysia as a base is to have a good understanding of local regulations, thus to find the right doors to knock on to inform you properly and to get you started. It is also important to understand the incentives system and how best to take advantage of them. Christophe Bernard-Bacot Managing Director MONIN Asia 19

22 EUROPEAN BUSINESSES IN MALAYSIA Terreal is a French-based roofing solutions multinational company which has operated in Malaysia since Our factory was based in Kluang Johor since there was a good source of our primary raw material, which is clay. Terreal Malaysia has 250 employees, 230 of which are based in Kluang for production and administration, with the remaining 20 being sales and marketing employees based in Kuala Lumpur. We had a slightly shaky start due to the general economic circumstances, since we established just before the 97 financial crisis. However, by 2006, our factory was running at maximum capacity, so we expanded. Since then, Terreal Malaysia has grown from strength to strength. We have a good administrative team with strong local contacts which makes it relatively easy for us to operate in Malaysia, even though we do not benefit from any Malaysian Government incentive. Our Embassy has also been helpful, as has been the Malaysian French Chamber of Commerce and Industry. Malaysia is an easy country to live and do business in thanks to the widespread use of the English language and the general level of skills and standard of living of the people. The business community is also well established and fairly mature. It is a good location as a hub for us. However, recruitment is difficult and salary expectations are increasing fast, especially for middle-management and management positions. Terreal Malaysia produces EU standard tiles in order to be able to compete at an international level. Since we are the subsidiary of a multinational company, the government tends to use us as a benchmark for regulatory compliance issues. Occasionally we feel that while we are required to meet the highest standards, the same is not always expected from some of our competitors. Not that we mind though, we are as committed to meeting the highest health and safety regulations as we are to protecting the environment. Julien Chnebeirk Managing Director Terreal Malaysia 20

23 EUROPEAN BUSINESSES IN MALAYSIA VAMED Engineering Malaysia Sdn Bhd is a Kuala Lumpur-based Joint Venture between the Austrian VAMED Healthcare Group with a global sales volume of around 1.5 billion euros and local Malaysian partners. Our market portfolio in the healthcare sector ranges from planning and consultancy services to carrying out the implementation of complex health care turnkey projects. We began our operations here in 1987 with landmark projects such as Sungai Buloh Hospital, the National Heart Institute (IJN) and the National Cancer Institute (NCI). VAMED Group takes pride in transferring know-how and technology to Malaysia, making available many innovative procedures and treatments, including the first open heart surgery, the first kidney transplant of mismatching blood groups and setting new standards for the implementation of hospital turnkey projects. As Managing Director, I am convinced that the choice of our joint venture partners has been crucial to our success. Our local partners have always supported the interests of our company, providing guidance through the diverse ethnical and cultural environment, helping with administrative procedures as well as identifying the right business opportunities by facilitating networks within the Malaysian business community. The choice of Malaysia as a regional hub for our activities has proved to be the right decision due to the stable political environment, a healthy economy with a large and growing domestic market, as well as Malaysia s central geographical position with short distance flights to all other countries in South-East-Asia. For example, we currently employ Malaysian technicians for projects in Laos and Papua New Guinea. Our experience as a European company doing business in Malaysia shows that it is important to find the right local partners, to appreciate the diverse cultural environment and to be patient in order to establish a sustainable business in this highly developed and exciting market. Dr Martin Treml Managing Director VAMED Engineering (M) Sdn Bhd 21

24 EUROPEAN BUSINESSES IN MALAYSIA The Serac Group designs and manufactures packaging solutions primarily for dairy products, vegetable oils and household/personal care products. French by origin, we chose to set up our Asian operations in Malaysia because it is English speaking and has a stable political and economic climate, we d also had prior experience with Malaysia and understood the market trends here. Serac moved its operations from Hong Kong to Malaysia in 1994 because of the economic advantages that Malaysia offers, as well as the quality of the logistical infrastructure, notably good airports and roads. Initially, we obtained guidance from a French engineering company which was already operating here. They led us to MIDA, who also helped. Since then, we have been able to operate independently in Malaysia. My experience in managing our operations here in Malaysia suggests that it is now even easier for foreign investors to set up a company in Malaysia compared to when we started. The country is more developed, there are good amenities for expatriates and it is possible to employ skilled staff from our home country. However, being a company that requires highly skilled personnel, we face challenges in the hiring employees in Malaysia because of certain skills shortages. For us therefore, the upskilling of our employees to encourage creative and innovative thinking is imperative to our continued success. Retention has been less of an issue because we have ensured that we provide the right incentives for our employees - competitive wages and training, and treating our employees with respect. For SMEs wanting to operate here, I would advise them to secure the right financial backing from their home countries before establishing themselves here, as there is no financing available to foreign companies in Malaysia. Wilfrid Marie Director of Serac Asia 22

25 EUROPEAN BUSINESSES IN MALAYSIA I am the Managing Director of DPO International, a leading and specialised food distribution company that brings global food innovations into local Asian markets. DPO was established in Malaysia in 1999 and currently operates 20 own sales offices and 25 warehouses in various locations across seven Asian countries. Despite strong ties to EU companies, DPO focuses exclusively on the Asian region. I am convinced that amongst all the possible locations in Southeast Asia, Malaysia represents the best choice to act as our regional hub. There are many advantages to being here, not least the good connectivity we enjoy through air, rail and road transport links, but also the fact that English is widely spoken and operating costs are competitive. It is relatively easy to do business in Malaysia. Notwithstanding these advantages, it is my view that Malaysia risks to be lulled into a sense of complacency. It faces increasing competition from countries such as Indonesia, Thailand and the Philippines, who are fast catching up. To stay ahead, Malaysia shall rise to the challenge. The skills shortage of the local workforce needs to be addressed urgently. Innovative ideas such as job sharing and exchange programs could improve the exposure of workers, and the government could also help by encouraging Malaysians to benefit from regional exchange opportunities. More should be done to address brain drain, perhaps through raising the education standards of the current generation and offering them incentives that are demonstrative of their value to the country. The workforce needs to be challenged more in order to achieve more. I am passionate about Malaysia and would welcome more business-to-business sharing amongst both local and foreign-owned firms. A business like ours is always on the lookout for new ideas and opportunities to progress and expand. In this respect, I view an FTA between the EU and Malaysia as being beneficial for both parties. In particular, it would provide Malaysia with the opportunity to further exploit its natural competitive advantages as part of its strategy to reach the next level of economic development. Daniel Pans Managing Director of DPO International 23

26 EUROPEAN UNION MEMBER STATES IN MALAYSIA Embassy of Austria Embassy of Belgium Embassy of Croatia 24 Embassy of the Czech Republic Embassy of Denmark Embassy of Finland Embassy of the Republic of France Embassy of Germany Embassy of Hungary Embassy of Ireland Embassy of Italy Embassy of the Kingdom of Netherlands Embassy of the Republic of Poland Embassy of Romania Embassy of Spain Embassy of Sweden British High Commission

27 USEFUL LINKS Delegation of the European Union to Malaysia The EU Export Helpdesk The European Commission Market Access Database European Commission DGTRADE Malaysia page European External Action Service Malaysia page EU-Malaysia Chamber of Commerce and Industry Malaysian Investment Development Authority (MIDA) Malaysian Ministry of International Trade and Industry (MITI) Central Bank of Malaysia (Bank Negara Malaysia) Malaysian Department of Statistics 25

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