E-commerce 5G new energy…The epidemic continues to reduce the enthusiasm of Chinese companies, Malaysia uses RCEP to upgrade

On the eve of Double “11”, another eWTP (Electronic World Trade Platform) digital hub of Ali Cainiao was officially launched in Kuala Lumpur, Malaysia. This will help Malaysia become a high-growth regional logistics center, bringing localized 24-hour delivery and cross-border 72-hour delivery.

            Even during the epidemic this year, Malaysia, which is geographically known as the “ASEAN Center”, still received substantial investment from China. According to data from the Ministry of Commerce of China, in the first nine months of this year, bilateral trade between China and Malaysia reached 92.6 billion U.S. dollars and direct investment reached 750 million U.S. dollars, an increase of 41% year-on-year. Malaysia is China’s second largest trading partner in ASEAN.

            When the “Regional Comprehensive Economic Partnership Agreement” (RCEP) negotiated for 8 years was officially signed on November 15th, Malaysia, the second largest member of ASEAN, took the lead in responding positively.

  On November 18, just three days after the RCEP was signed, the Malaysian Ministry of International Trade and Industry (MITI) and the Malaysian Investment Development Authority (MIDA) joined hands with China Chamber of Commerce for Import and Export of Machinery and Electronic Products, China Construction Bank and other Chinese institutions in Shanghai. The “New Normal, New Opportunities” China-Malaysia Economic and Trade Forum was held.

            At the scene, both Chinese and Malaysian participants sighed: The time is right. Malaysian Deputy Minister of International Trade and Industry Datuk Lam Wanfeng stated in an online forum that despite the outbreak, under the uncertainty of the global economy, various data show that China-Malaysia economic and trade relations have not been affected. Instead, they have increased their efforts to discuss More opportunities for cooperation under the new normal.

            Lin Wanfeng believes that the signing of RCEP has brought better economic integration to the region and promoted a more advantageous regional investment environment. While driving the import and export of goods, it also lays a stronger impetus for economic recovery after the epidemic. He hopes that all parties will seize the opportunity to comprehensively enhance the economic and trade cooperation between Malaysia and China.

            The enthusiasm of Chinese investors has not receded due to the epidemic

            How enthusiastic are Chinese companies in Malaysia in recent years? According to data from the Malaysian Investment Development Authority, China has become Malaysia’s largest foreign investment country in manufacturing from 2016 to 2019. In the past four years, Malaysia has received 320 manufacturing investments from China, with a total investment of US$6.3 billion. At the same time, China has become Malaysia’s largest trading partner for 11 consecutive years.

            Entering 2020, the sudden epidemic has not hindered the development of bilateral economic and trade between China and Malaysia. In the first half of this year, Malaysia’s total approved investment in manufacturing, service and primary industries still reached 64.8 billion ringgit (about 105 billion yuan). Among them, the manufacturing industry attracted the most investment with a total of 35.7 billion ringgit, followed by the service industry 28.6 billion ringgit.

            Among them, investment from China’s manufacturing, service industry and primary industries reached 2.2 billion ringgit (about 3.5 billion yuan). In addition, in the first nine months of 2020, 58 manufacturing projects involving China have been approved, with a total investment of 16.8 billion ringgit (approximately 27.2 billion yuan).

            In April this year, Anhui Tangxing Machinery Equipment Co., Ltd. chose to invest in Malaysia against the trend. Tang Ximing, deputy general manager of the company, told China Business News that the company has established Tangxing Equipment (Malaysia) Co., Ltd. in Johor, Malaysia, and the plant is currently under construction.

            In fact, before officially investing in Malaysia, Tang Ximing has spent more than two years investigating the business environment in Southeast Asia. His footprints have covered almost all ASEAN countries such as Vietnam, Thailand, Indonesia, and Cambodia. But in the end, the company decided to set up a factory in Malaysia. In Tang Ximing’s view, the most important reason is Malaysia’s stable political environment and economic vitality; secondly, Malaysia has significant geographical advantages and is within a 5-hour flight circle with other ASEAN countries; The local people in Malaysia are simple, the Chinese are also very hardworking, and there is no barrier between language and food, which is also the factor that investment can finally land.

            The Consul General of Malaysia in Shanghai Qiu Shihao told China Business News that compared with other Southeast Asian countries, Malaysia’s advantage lies in its high-quality infrastructure, convenient geographical location, human resources and abundant natural resources. “The most important thing is that Malaysia has Very open market”.

            In the process of setting up the subsidiary in Malaysia and coincided with the epidemic period, what impressed Tang Ximing most was the Malaysian government’s open attitude towards foreign investment and its efficient work efficiency. He told CBN that although the impact of the epidemic has not dissipated, with the help of the Malaysian government and the Malaysian Investment and Development Authority, the company started to acquire the land in April. It only took 1 month to process the land lease and 3 days for the production license. I got it, “Although the epidemic has an impact, various matters are still advancing steadily.” He can clearly feel that Malaysia’s approval of foreign investment has accelerated during the epidemic.

Of course, Tang Ximing also admitted that the biggest impact of the epidemic on the company’s business in Malaysia is that the Chinese technical and management personnel are currently unable to rush to the Malaysian factory in person, and the signing of contracts can only be carried out by weekly video conferences. “This is related to meeting and communication. There is a big difference in the way.”

            Currently, the company’s projects in Malaysia focus on rainwater and sewage diversion projects. Tang Ximing said that in the future, the company also plans to invest in the establishment of a big data center in Malaysia to track the follow-up of projects in Southeast Asia and handle equipment maintenance and other matters.

             High-end manufacturing and digital economy are hot spots

             At present, there are not a few Chinese companies investing in Malaysia. Flagship cooperation projects such as Mazhong Qinzhou Industrial Park, China-Malaysia Kuantan Industrial Park, Malacca Huangjing Port Linhai Industrial Park, East Coast Railway, Southern Railway, Proton Motors, and Alibaba Digital Free Trade Zone have all been carried out smoothly.

             The communications giant Huawei has been deeply involved in the Malaysian market for 19 years. It has set up its regional operations headquarters in Kuala Lumpur, the capital of Malaysia, to take advantage of Malaysia’s advantages in the field of information technology to gain in-depth contact with consumers and markets in South Pacific countries. Xi’an Longi Silicon Materials Co., Ltd., the world’s largest and most valuable manufacturer of monocrystalline silicon photovoltaic products, has positioned Kuching, Malaysia as an important overseas production base through its subsidiary Longi (Kuching) Co., Ltd. Last year, the company invested 957 million yuan to build a 1.25GW monocrystalline battery project locally.

             In recent years, the investment consul of the Consulate General of Malaysia in Shanghai, James Chan has seen more and more Chinese companies choose to “go out” and set up production bases, regional headquarters and other important institutions in Malaysia. Electronics, mechanical equipment, chemical equipment, and chemical products are An important area for Chinese companies to invest in Malaysia.

             The Chief Executive Officer of the Malaysian Investment Development Authority, Datuk Azman Mamud, also stated in the online forum that Malaysia now particularly encourages capital-intensive, high value-added and high-tech companies to expand their business in Malaysia, including automated machines and robots. Companies in the technology, aerospace, biopharmaceutical and medical equipment, advanced information technology, new materials, and new energy vehicles and equipment industries help promote Malaysia’s economic transformation and upgrading.

             As for the hot service industry, James Tsang told China Business News that e-commerce has now become a new hot spot in the Malaysian economy, and in the future it will also be a key element for the integration of Southeast Asia. He encouraged more e-commerce companies from China to look for development opportunities in Malaysia.

             Assistant Minister of Commerce Li Chenggang also stated in the online forum that the level of cooperation between China and Malaysia will be improved in the future, supporting Chinese companies’ investment in Malaysia’s high-tech and clean energy sectors, encouraging e-commerce to test the Malaysian market, and expanding Malaysia’s imports of palm oil, Malaysia’s traditional advantageous industries such as bird’s nest will promote the export of Malaysia’s jackfruit to China as soon as possible. “Cooperation in the fields of digital economy, e-commerce, 5G, and renewable energy investment are all key areas of future bilateral trade.”

 At the same time, Zhan Shengfu also emphasized that Malaysia has the world’s most authoritative halal food certification, and the market potential of halal food and beauty products is huge, which can radiate to the Middle East.

            The Malaysian government takes measures to protect the economy

            In order to attract Chinese capital to Malaysia, the Malaysian government set up a new “special channel for Chinese capital” last year, with a goal of attracting 4.5 billion ringgits (approximately 7.65 billion yuan) in 2020, high value, high technology and high impact Strong Chinese-funded enterprises landed. It is understood that all Chinese investment projects entering Malaysia through this channel can be approved within one month at the earliest.

            Regarding this “special channel”, Qiu Shihao told the CBN reporter that the main purpose of this channel is to attract all parties interested in investing in various industries in Malaysia. Through one-stop service, investment is more convenient. More feedback is that the processing time for Chinese investment procedures has been shortened and the documents simplified. This is also the effort and change made by the Malaysian government to attract more overseas investment.”

            In terms of taxation, Lin Wanfeng said earlier that foreign investors in high value-added areas in Malaysia or establishing regional headquarters and manufacturing centers in Malaysia can enjoy preferential tax rates. For example, advanced manufacturing companies that have invested in Malaysia for 3 to 5 years with an investment cost of 300 million to 500 million ringgit (480 million to 800 million yuan) can enjoy tax exemption (income tax) for 10 years; for more than 5 years, enjoy 15 years of tax-free privileges. Tang Ximing said that his company’s subsidiary in Malaysia enjoys the aforementioned tax benefits.

           In addition, the Malaysian government announced the 2021 budget in early November. The 322.54 billion ringgit ($78 billion) expenditure plan is 8.5% higher than the scale proposed last year. It has increased spending in the social field and infrastructure to reverse the declining economy under the epidemic. The Ministry of Finance of Malaysia estimates that, together with the $73 billion stimulus measures announced earlier this year, these budgets will help promote the country’s economy to grow by 6.5% to 7.5% next year.

 Source: China Business News