- Mazlan Harun, Consul/Trade Commissioner, Consulate General of Malaysia
This year is a landmark for Malaysia for more than one reason. It marks both the 60th year of Malaysian independence and the 60th year of formal India-Malaysia diplomatic relations, 'which have been strong and friendly since the establishment of diplomatic relationships in 1957,' says Mazlan Harun, Consul/Trade Commissioner, Consulate General of Malaysia. Posted in Mumbai, in his current role, Harun promotes Malaysia's enterprises, products and services among the Indian business community. The consulate in Mumbai has also assisted Indian companies looking for Malaysian business partners and facilitated Malaysian companies planning to invest in India. Harun elaborates upon the current trade relationship and emerging opportunities, especially in construction, in conversation with SHRIYAL SETHUMADHAVAN.
Tell us about the bilateral relationship between India and Malaysia.
Being home to one of the largest Persons of Indian Origin (PIO) communities in the world, the historical legacy has assisted in extending the relationship to cover multifaceted cooperation in trade and investment; science and technology; education; human resource development, tourism and culture. Acknowledging the importance of India in terms of trade and investment, Malaysia, together with the other Association of Southeast Asian Nation (ASEAN) member countries, signed the ASEAN-India Free Trade Area (AIFTA); the free trade agreement came into effect on January 1, 2010.
The relationship was further elevated in 2011 with the signing of the Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA), a bilateral free trade agreement. Two other important economic initiatives that involve India and Malaysia are the Regional Comprehensive Economic Partnership (RCEP), which is currently being negotiated between ASEAN and its FTA partners, including India, China and Japan. Second, Malaysia is one of the 57 founding members of the Asian Infrastructure Investment Bank, which is championed by India.
In general, India is an important market and has always been Malaysia's biggest trading partner in South Asia, making up a 76.3 per cent share of Malaysia's total trade with the region in 2016. Bilateral trade has increased almost fivefold for the past 15 years. From 2001 to 2016, the average trade growth was 13.2 per cent. Owing to the tough external environment, Malaysia's trade with India experienced a marginal decline from $12.02 billion in 2015 to $11.72 billion in 2016, positioning India as the country's 10th largest trading partner. India was Malaysia's seventh largest export destination in 2016 with exports valued at $7.72 billion.
Tell us about the opportunities and services that Indian companies can avail from Malaysia.
Although the current relationship is good, cooperation should be further enhanced and developed. Malaysian commercial hardwoods range from heavy and medium-weight construction timbers to fine furniture woods, which are appreciated for a variety of uses and performance. They are available in a range of export grade lumber, according to the Malaysian Grading Rules, or as laminated scantlings, mouldings, builders' carpentry and joinery products, veneer, plywood and other panel products, which are suitable for usage in India. These apart, Malaysian companies are exporting various other building materials. The country is also extremely strong in the furniture section, especially attending to specific needs for home, office, commercial, hotel and hospitality use. It is also well known as one of the leading exporters of MDF to India.
Following the adoption of Green Building Index, Malaysian companies have been manufacturing numerous environment-friendly and energy-saving building materials.
In terms of the services sector, there are huge opportunities for Malaysian companies and I would like to see more Malaysian and Indian companies jointly explore them. Malaysia's handiworks in infrastructure projects have been seen in the Middle East, the Indian subcontinent and Southeast Asia especially buildings, infrastructure projects, stadiums, sports complexes, convention centres, residential developments, township developments and leisure facilities. Malaysian companies have worked on landmark infrastructure projects such as Burj Khalifa in Dubai, Burj Al-Arab in Dubai, Khalifa Stadium in Qatar, Bahrain International F1 Circuit, Yas Marina F1 Circuit in Abu Dhabi, and New Doha International Airport in Qatar.
Also, the effectiveness of the agreement for deals between Indian and Malaysian businessmen is evident...
Yes. Overall, Malaysian companies have completed 81 projects worth $3.8 billion; 14 projects worth $1.61 billion are still under various stages of construction in India, as on end 2016. Some landmark projects in India where Malaysian companies have been involved include the Mumbai Monorail; a power plant in Chhattisgarh; MCD civic centre building in New Delhi; the Western Transport Corridor in Karnataka; airports in New Delhi and Hyderabad; a mixed-development project in Hyderabad; and First City in Nagpur.
What investment opportunities do you see for Indian firms in Malaysia?
Infrastructure development is Malaysia's backbone to spur progress and improve the well-being of people. Under the Eleventh Malaysia Plan, the focus is on infrastructure development that will have a high impact on achieving developed nation status. This is led by huge railway infrastructure (MRT and LRT) and large master developments such as Bandar Malaysia and TRX. There are also ample investment opportunities in Malaysia for Indian companies in the 12 National Key Economic Areas and other focus sectors of the respective Regional Economic Corridors in Malaysia.
Tell us more about Indian companies operating in Malaysia.
As of the end of 2016, a total of 135 projects with Indian participation have been implemented in Malaysia with investments valued at $1.49 billion. Malaysia has been proud to host notable Indian companies such as the Reliance Group, Biocon, Ranbaxy, JG Containers, Forte International and Tamco Switchgear. Among major Indian companies undertaking projects in Malaysia is IRCON, which has been actively engaged in the development of railways in the country since 1988. Other Indian companies should follow IRCON's success formula by partnering with reputable Malaysian companies to undertake projects in the country.
What opportunities is Malaysia eyeing in India in the wake of initiatives like Make in India, Smart Cities, Housing for All, etc?
India has emerged as one of the main investment destinations for Malaysian companies. Based on the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, India, Malaysia was the 25th biggest investor in India from April 2000 to June 2017 with investment worth $859.12 million. Malaysian investments in India are mainly in the areas of non-conventional energy, construction, metallurgical industries, services, power and telecommunication. Apart from Malaysian companies already operating in India, we have received a number of serious enquiries from Malaysian companies on the opportunities available.
Malaysia's focus would be projects related to:
Tell us about any Indian expertise you would like to tap in Malaysia and vice-versa?
In line with Malaysia's aspiration to become an advanced nation, we look forward to receiving more quality investments from Indian companies particularly in new growth areas featuring emerging high technologies, which are capital-intensive, high value-added, knowledge-based, skill-intensive and export-oriented to provide high income jobs. Malaysia's services sector also provides exciting opportunities for investment. With a stable economic and political environment, good infrastructure and proximity to the large ASEAN and Asia-Pacific markets, Malaysia is an ideal location for Indian companies to set up regional establishments or use as a gateway to the ASEAN region and beyond. Being the ninth largest investor in Malaysia last year, India continues to be one of our important sources of FDI, particularly in the manufacturing sector.
What are the existing challenges in the bilateral relationship and how can they be overcome?
The main challenge is the availability of accurate information. For example, I have met a lot of Indian companies that are not aware of the facilities under MICECA and AIFTA. Indian businesses should contact us to obtain accurate and reliable information as well as advice on doing business with Malaysia.
Previously, Malaysian companies in India often faced project delays owing to bureaucracy and lengthy procedures. However, under the new government, India is headed in the right direction and going through an exciting time with a number of new policies and steps announced to improve the business environment and reduce bureaucracy. In general, Malaysian companies have a positive view and are optimistic about the immense future business opportunities in India.
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