In the past few years, efforts to channel domestic direct investments (DDI)-led investments into the economy have yielded positive results.
MIDA CEO Datuk Wira Arham Abdul Rahman recently told BusinessToday that its activities are driven by the domestic investment strategies embedded in the Twelfth Malaysia Plan (RMK12), National Investment Aspirations (NIA), Malaysia Digital Economy Blueprint (MyDIGITAL) and the New Industrial Master Plan (2021-2030). With these policies in mind, MIDA aims to transform the domestic investment landscape.
“Domestic investments have been a major contributor to approved investments in the Malaysian economy. For the past 10 years, approved domestic investments amounted to RM1.3 trillion, accounting for 64% of total approved investments compared to RM762 billion (36%) of FDI. During the period, DDI dominated the service sector at 84.2% or about RM1.01 trillion, while foreign direct investments (FDIs) accounted for 15.8% or RM190.6 billion, added Arham.
Investment Strategies
To further intensify domestic investment, MIDA continues to undertake promotional activities throughout the nation to encourage domestic players to move up the production value chain, collaborate with multinational corporations (MNCs) to harness outsourcing opportunities, intensify technology acquisition and acquire international standards/certifications for their products and services. These efforts have yielded positive results.
Among the strategies undertaken include:
Encouraging Innovation
Encouraging the cooperation of domestic companies with start-up companies and the use of new technologies; and
Attracting the interest of domestic companies to develop complex products, local R&D intensity, innovate and further increase reach to high-added value markets.
- Advancing Digital Technology and Competitiveness to Increase Efficiency
- Promoting the adoption of technology and innovation as a fundamental catalyst for growth in the manufacturing and service sectors; and
- The digitisation process will be accelerated and the adoption of advanced technology, especially Fourth Industrial Revolution (4IR) technology, will be encouraged to achieve a high technology-based economy.
Through the Industry4WRD Readiness Assessment and its subsequent Intervention Fund, the Government helps domestic companies to:
- Assess their capabilities and readiness to adopt Industry4.0 technologies and processes;
- Understand their present capabilities and gaps; and prepare feasible strategies and plans to move towards effective adoption of Industry 4.0. This represents the first step to ensure companies in Malaysia are in line with the rapidly changing technological landscape while developing new areas of growth by prioritising operational efficiency and building resilience by leveraging digital technologies.
Industry4WRD Intervention Fund
The fund will be provided on a matching basis (70:30) based on eligible expenditures, up to a maximum grant of Ringgit Malaysia Five Hundred Thousand (RM500,000.00) only. A maximum 30% of the matching amount (70% of the total grant) will be provided upfront to the companies’ subject to the approval by Intervention Fund Approval Committee (IIFC), whereby the balance of the remaining grant will be on a reimbursable basis.
IIFC ceiling allocation under 12MP (2021-2025) is RM86 million with targeted KPI of total 172 project approvals, of which a total of 111 projects have been approved with matching grant amount RM40,181,738.19 as of 30 November 2022. MIDA has received cash allocation of RM48 million.
Developing Future Talent
- Focusing on the development of highly skilled talent to meet the needs of the growing economy.
- Creating employment opportunities for local people, including those with high skills and high income.
Several significant programmes undertaken by the Industry Talent Management and Expatriate Division of MIDA are as follows:
- Internship Facilitation – Organised internship interviews for higher education students
- Career Fairs – Organised career fairs to provide employment opportunities for Malaysian
- Upskilling and reskilling programme – Addressed unemployment among graduates, retrenched workers and those newly re-entered the job market by providing upskilling and reskilling programme.
- E&E Ecosystem Training Programme- Developed and trained up to 125 Malaysians in E&E ecosystem such as Big Data, Data Analytics, Electronics Design & Analog Circuits, PCB, and many more.
- Skills and Technical Enhancement Programme (STEP)- Provided Technical Industrial Training to 2,000 graduates from universities and skill training institutes based on 24 focus areas that have been identified.
- Academia and Industry Engagement – Organised the engagements visits, round table meetings, and networking events led by MIDA to address talent issues.
- One-on-One Talent Facilitation – Organised one-to-one meetings with the companies requiring assistance in getting local workforce.
- Career Talk- Organised Career Talk programmes to provide jobs exposure and industry knowledge to young talents/graduates who are entering the jobs market.
- Talent Outreach Programme- The collaboration between MIDA, JPA, MARA and Industry (companies in Malaysia) to provide industrial exposure to students / graduates and potentially they will be interviewed at the respective company’s facility/plant.
Improving Supply Chain Sustainability and Participation in Global Value Chains
Improving the supply chain of the manufacturing sector by producing basic inputs for manufacturing products by identifying the gaps that exist in the existing supply chain to ensure its sustainability; and
Encouraging local companies to increase cooperation with foreign companies to facilitate the transfer of technology and knowledge and develop a skilled local workforce.
Improving Financing Facilities throughout the Business Life Cycle
MIDA continues to establish strategic cooperation with the banking sector in assisting companies with their funding needs by offering alternative financing opportunities for companies to diversify and expand their operations; facilitating investors and companies in fundraising through alternative financing channels; and engaging and facilitating companies towards Initial Public Offering (IPO) listings.
Doubling State’s Growth
MIDA’s work involves paying attention to the economic imbalance at the state level by helping to encourage development in areas and communities that receive less attention; and bridging the development gap between states to ensure balanced regional development.
Environmental, Social, And Governance (ESG)
Informing the business community on the importance of adopting the environmental, social, and governance (ESG) and sustainability programs which presently has reached a tipping point for industrial organisations; and Embrace more environmentally and ethically sound approaches to remain competitive in today’s global market.
Therefore, the following framework has been designed to drive the strategies:
Triple Helix Collaboration Programme – a platform for technologists, scientists and researchers from universities to promote their inventions, innovations and research outputs to potential investors and industry players. The industry players can explore numerous potential research outputs and innovations that may impact and revolutionise their industries.
As for the researchers, they will gain the ability to do research or inventions that will meet the needs of the industries and societies. Intensifying innovation through strategic collaborations in R&D activities is one of the critical components that would enable businesses to remain competitive and sustainable.
MIDA’s SME Investment Desk
The SME Investment Desk, established in all our state offices, is dedicated to facilitate and coordinate support services for Malaysian businesses. Our support services include identifying gaps in the ecosystem, financing technology, and creating opportunities to develop a strong and comprehensive industry cluster.
Thus far, MIDA has organised 44 programmes and reached out to more than 569 SMEs, and we aspire to identify more deserving companies and businesses to increase growth opportunities.
Engagement with Associations and Chambers of Commerce
This initiative provides a platform for MIDA to update local companies and SMEs on MIDA’s roles and investment facilities. The engagement also has successfully served to address issues related to the industry as well as providing opportunity for the representatives of trade associations/chambers of commerce to channel their suggestions and feedback to the Government on ways to further improve the federal government public delivery system.
In 2022, the Domestic Investment Division has organised nine (9) programmes with the industry associations and chamber of commerce with cumulative total number of 600 participants. The programmes include:
- ASEAN Chamber of Commerce
- Malaysia Digital Chamber of Commerce (MDCC)
- Malaysian Indian Muslim Chamber of Commerce and Industry (MIMCOIN)
- International Entrepreneurs Chamber Malaysia (IECM)
- Federation of Malysian Business Association (FMBA)
- Asia-Pacific Entrepreneur Associate Chamber of Commerce (APEACC)
- FMBA Members Networking Session
- National Chamber of Commerce and Industry of Malaysia (NCCIM)
- Networking & Hi Tea Session with FMM Southern Region
Domestic Investment Seminar – This seminar is part of MIDA’s continuous effort to update the industry players on the latest policies and facilities that are available. The seminar provides an opportunity for the business community to network with the government agencies and to discuss on any potential business collaboration.
Invest Series Programme – The objectives of these events are held is to help all the states achieve their full potential in bringing about development by highlighting each state and region’s unique comparative and competitive advantages. It also aims to provide the business community with information on the facilities offered by the government and initiatives to build and sustain the competitive edge of domestic companies, besides keeping abreast with the latest industry and investment announcements.
In 2022, MIDA has organised two (2) Invest Series Programme, showcasing the state of Terengganu and Kedah. Both of the events have attracted 300 participants to explore on the business potentials and opportunities available in each state.
Supply Chain Coordination Programme -The Supply Chain Coordination Programme, which emphasis in finding the effective way to increase supply chain performance and visibility. This programme has over the years serviced the investment outlook through exploiting customer value of the supply chain by cooperating and sharing resources and information across the industry horizontally.
The objectives of this programme are:
- To create opportunities for domestic companies and to mitigate the gaps in the supply chain;
- To support MNCs/LLCs to outsource their manufacturing activities to domestic companies;
- To develop and upgrade the domestic companies for the growth of the domestic investment; and
- To encourage the adoption of automation, smart manufacturing and Industry 4.0 by MNCs/LLCs and vendors as well as the Environmental, Sustainable dan Governance (ESG) Practices.
- Activities undertaken under this programme involves Local Sourcing, Vendor Facilitation Programme (VFP) and Supply Chain Conference.
This year, MIDA has successfully organised the following series of engagement and events;
Vendor Facilitation Programme (VFP), MIDA has completed the MIDA – PERODUA Digitial Transformation Ecosystem (DTE) 1.0 this year and launched the MIDA – PERODUA Digitial Transformation Ecosystem (DTE) 2.0 to further assist PERODUA as the anchor company, to spur domestic automotive industry.
The programme was aimed to upgrade PERODUA’s vendors to the next level by using latest technologies and machineries available in the market and to digitalise their manufacturing processes by adopting the Industry 4.0. Following the success of the programme, it has helped MIDA to develop a strategy plan to continue enabling the development and expansion of multinational corporations (MNCs) and local large corporations (LLCs) in Malaysia.
Among other anchor companies that have been participated in VFP are First Solar Malaysia Sdn. Bhd. and Sensata Technologies Malaysia, which were aimed to develop and groom the identified local companies to be part of their global supply chain.
Supply Chain Conference and local sourcing, MIDA has effectively worked with a total of 30 MNCs/LLCs as anchor firms such as Xinyi Smart Energy (M) Sdn. Bhd., Paris Baguette Logistic, Onsemi, Konica Minolta Business Technologies and Spirit Aerosystem (M) Sdn. Bhd., to champion as anchor firms in strengthening Malaysia’s supply chain coordination, which involved 150 potential local companies.
Engaging Local Large Companies (LLC) -The Twelfth Malaysia five-year plan comprises nine areas of focus that include booting economic growth, strengthening growth catalysts and improving development in less developed states in accelerating green growth. It sets the strategic direction of the nation on reviving the economy and a fairer distribution of prosperity whilst ensuring environmental sustainability.
Malaysia’s large local conglomerates play a dominant role in all sectors and services industries thus generating revenues that can be used for the country’s development, provide more business opportunities and expand the market share of qualified entrepreneurs.
Domestic Investment Coordination Platform (DICP) -DICP is an avenue created by MIDA that aims to assist and facilitate local companies, especially SMEs, in bridging financial and technology gaps as well as gaining market access through strategic collaborations or joint ventures with potential partners.
Among the scope and coverage of DICP include Business Matching, Project Financing, Capital Raising (Debt & Equity), M&A, Divestments & Takeover and Initial Public Offerings (IPOs).
Currently, the DICP unit comes under the purview of the Domestic Investment Division of MIDA, and oversees three (3) main initiatives:
Establishing greater connections with the existing banking sector. MIDA has signed few Memorandum of understanding (MoUs) with the following banks to facilitate funding requirements of companies:
- United Oversea Bank (UOB)
- Bank Islam
- Standard Chartered
- HSBC
- Citibank
Through MIDA’s fruitful engagement and good collaboration with Hong Leong Bank (HLB), we have nine (9) companies currently that has been assisted by HLB for their banking needs as follows:
Linking up with alternative financing funders also include:
- Venture Capital & Equity Crowdfunding Platform
- Leet Capital
- 1337 Capital
- Private Equity Fund Manager
- KWAP
- Capital Market Regulator
- Bursa Malaysia
- Securities Commission
- Capital Market Malaysia
Engage with companies that is ready to go for initial public offering (IPO). DICP work together with investment banks such as MIDF Amanah Investment in facilitating the IPO process. Currently there are two (2) companies under our pipeline, in the process of going for IPO.
In terms of engagement with companies, DICP recently have engaged with more than 30 companies on one-to-one basis. All these companies have specific requirements for funding. One of them, ICB Technologies is looking to go for listing in ACE Market by next year.
DICP has assisted companies and connected them with Hong Leong Bank as among the requirements for listing is to get sponsored by one of the Principal Adviser. We also co-organised Kedah Investment Seminar recently, to raise awareness on the available financing facilitation provided by MIDA.
Other Initiatives and Facilitation by MIDA
Project Acceleration & Coordination Unit (PACU)
The function at MIDA has been further strengthened with the establishment of the Project Acceleration and Coordination Unit (PACU) in 2020. This Unit proactively provides end-to-end facilitation to all projects approved in the country, enabling its speedy and efficient implementation. PACU seeks to connect and derive beneficial solutions to investors in kick-starting their investment projects in Malaysia.
Digital Information Portal by MIDA
MIDA acknowledges that the accessibility of information at one’s fingertips is indispensable to assisting investors in making well-informed investment decisions. Therefore, MIDA has established an i-Incentives Portal under its Incentives Coordination and Collaboration Office (ICCO). The platform serves as a one-stop centre that provides information about incentives that are offered by the government for the establishment of businesses here.
This interactive site currently features 128 incentives, including tax exemptions, grants, soft loans, and equity financing, and is managed by 10 ministries and 25 agencies. We now have over 17,000 registered users of this portal, and we are working towards increasing the numbers. We are intensifying our promotional efforts and reaching out to more businesses out there.
“For 2023, MIDA will continue with similar programmes, policies and initiatives so that the government and its agencies will help to reinvigorate the Malaysian economy and ultimately, drive the nation forward,” said Arham.
