By Sharon Chang
Malaysia is France’s fourth-largest supplier within ASEAN, after Vietnam, Singapore and Thailand, with bilateral trade between the two countries for Malaysian exports to France in 2019, reaching RM11 billion.
Currently, with more than 300 French companies established in Malaysia, France has a considerable economic presence in the country. This represents a total turnover of RM20 billion in 2019 with over 30,000 – mostly Malaysian – employees.
In an interview with Business Today, His Excellency Frédéric Laplanche, French ambassador to Malaysia, talks on promoting more depth and diversity in future industrial cooperation between France and Malaysia and on the current Covid-19 pandemic.
Q: How would you summarise the current state of the diplomatic relation between Malaysia and France?
The relations between both countries are very deep and diverse. They have developed enormously over the past 60 years. What both nations have strongly focused on are bilateral trades, a highly developed strategic defence cooperation and, also, in the field of culture, education and language. These are the focal points which have contributed to a full-fledged strong relationship.
There are still many projects in the pipeline to be developed and plenty of investments from France coming into Malaysia. And of course, we want to attract more Malaysian businesses into France, too.
We are very positive, and we want to give new dynamics to this relationship.
Q: Has the issue of palm oil soured relations? Is there a middle ground somewhere to deter it from escalating into a trade dispute which nobody wants in this current scenario?
Firstly, contrary to what many people think, there is no ban on palm oil in the European Union (EU) and France. Furthermore, we are one of the largest consumers of palm oil. If you look at the statistics for 2019, the import of palm oil from Malaysia into the EU increased by 9.5 percent. This shows that our consumption is growing and will continue to grow.
The EU was among the first to introduce a fiscal incentive policy for biofuel and it is among the last regions in the world to still give incentives for palm oil as a biofuel. But France and the EU are gradually withdrawing the incentives for palm oil to be added into the diesel mix.
This will probably result in a reduction in the use of palm oil as a biofuel in Europe because palm oil is more expensive than traditional fossil fuel at current market prices.
But we are only talking about withdrawing an incentive, and only for palm oil as a biofuel. There is absolutely no change in policy regarding palm oil used for food products and basic material for the oleochemical industry at the French or the EU level.
I acknowledge that palm oil’s long association with deforestation has damaged its image, but the Malaysian government and producers are tackling the environmental issue and the trust deficit among the European consumers positively, which I think is important.
The drive towards a sustainable initiative, to curb deforestation and to encourage reforestation in degraded areas are positive policies for the environment. All these efforts are most welcome.
Q: Any follow-on investments with the French companies in Malaysia, or will there be new investments coming in?
The flow of French investments has continued to grow in the past few years. Malaysia is attractive to the French investors across the board from traditional to new emerging sectors.
One of the most distinguished groups is the well-established aeronautics sector with companies such as Safran Landing Systems which has been operating in Malaysia for 50 years, or Airbus, with a lot of components made in Malaysia.
Group PSA, which owns the Peugeot and Citroen brands teamed up with Naza Corporation, and invested in a car manufacturing plant in Gurun, Kedah because of Malaysia’s good production environment with good market access to the ASEAN region.
The agro-food sector also has a strong French presence here – the beloved, iconic Ayam Brand, whose products are made in Perak, was founded by Monsieur Alfred Clouet in 1892. And Monin, the world’s most famous syrup brand, also manufactures in Malaysia.
Then, there are the new emerging areas in the green and sustainable industry, such as the production of animal feed, with EntoFood, a French startup established in Malaysia. Its idea is to transform the problem of managing unused or undervalued organic waste into a solution to the growing need for protein for animal food.
Finally, industry 4.0, the digital sector and start-ups from France are also developing in Malaysia. ST Microelectronics, the French-Italian semi-conductor giant, thrives in Muar with over 4,300 skilled jobs. Since last year, industrial gas provider Air Liquide, has its innovative operating centre in Kuala Lumpur which controls remotely its production facilities located in more than 20 countries in Asia.
My focus is to promote France in Malaysia and I am very pleased to see the French companies coming here and utilising the Malaysian talents.
Q: What about smaller French companies? Do they see Malaysia as an opportunity?
At the Malaysia-France Chamber of Commerce and Industry (MFCCI) here, there is an incubator (business centres) where they welcome smaller companies to set up in Malaysia. Currently, there are three sites in Kuala Lumpur and another in Johor.
One such company is Metarom, which graduated out of the business centre at the French chamber. The setup here is small but it is a big player in France. They produce food aromas using local agricultural products of Malaysia for the F&B industry.
Q: The Malaysian B2C market to France is rather small, why is that so?
The investment opportunities in France are huge, but under-exploited by the Malaysian economic actors. Malaysia has been very much focused on the UK in many areas.
Hence, Malaysian businesses must be more conscious that France is an ideal location for international businesses and investors who want to have access to the world’s largest consumer market, the European Union.
France is one of the largest recipients of foreign direct investment among the Organisation for Economic Cooperation and Development (OECD) countries.
It is very important for Malaysian businesses to realise there are opportunities to invest and make money in France.
Q: How do you see Malaysia being the springboard to market expansion into ASEAN?
Yes, that is one of the main reasons why French companies come to Malaysia. Here, there is a large pool of hires and skilled talent, and the people are multilingual.
For example, recently, Teleperformance, the global leader in outsourced omnichannel customer experience management, expanded into Malaysia. Their site in Penang, serves as another premium multilingual solutions hub for Teleperformance Asia Pacific offering services in 25 languages from over 500 workstations.
Q: We had many prior deal relationships like the Scorpene submarines, where are the areas for France to sell defense related products to Malaysia now?
Malaysia has been a very important strategic partner in defense security for the past 30 years.
We are at the disposal of the Malaysian armed forces to move forward on any projects and will continue to be a strong and reliable partner.
Q: Malaysia is not a popular French tourist destination, why?
It is quite popular actually! There are about 150,000 French tourists who visit Malaysia every year, although there is certainly room for more once the current crisis is over.
The way forward to attract more French tourists in Malaysia is in three areas – the natural environment, then culture, heritage and the arts and of course food.
In 2018, we signed a sistership agreement between Penang and the French city of Arles, to promote both cities’ art and culture. Although very different in size, they have one important thing in common: they are both listed in the world heritage of UNESCO. This is a step forward to promote the contacts between two different societies.
Q: How can both countries further enhance the relations?
There are two major areas we should look at. One is on education. France wants to develop more exchange between universities at student level – young people mobility and education.
The whole range of education cooperation will shape the future of our societies and the relationship between our two countries.
The second is environment which is key to our society and, also the future of the Earth. We want to move forward concretely by sharing policies on food waste reduction, address issues on plastic waste exports and work on specific subjects on sustainability like palm oil.
France and Malaysia have developed concrete cooperation on the ground, in these areas.
Q: Lastly, how was the handling of the evacuation of the French nationals stranded in Malaysia since the Covid-19 pandemic and movement restriction order? And are the French companies operating here affected?
The French Embassy helped over 1000 nationals return since the beginning of the crisis. We organised a special flight on March 26, to fly more than 200 French tourists and 50 other European nationals back to their country.
We are grateful to the Ministries of Foreign Affairs and Home Affairs of Malaysia for their support in managing the evacuation of our tourists.
Just like any other Malaysian businesses, the French companies are affected by this disruption. Some under “essential sectors” have been in operation all along. For them, the objective is to provide their service as efficiently as possible while also taking care of their employees.
Some of the French companies are contributing towards the fight against Covid-19 such as Air Liquide, a high-tech industrial gas provider, which made a donation to University Malaya Medical Centre (UMMC), and, Servier, a pharmaceutical laboratory, which donated masks, gloves, hand sanitisers and coveralls to the frontline heroes at UKM hospital and to the Ministry of Health.
French company Petzl also cooperated with a social enterprise Biji-Biji Initiative to upcycle elastic bands into personal protection equipment.
Clearly, corporate social responsibility will only grow more essential in tomorrow’s world.