Reimagining Domestic Investment

Thank you Malaysia Investment Development Authority (MIDA) and Federation of Malaysian Manufacturers (FMM) for inviting me to address the National Investment Seminar with the theme “Re-energising Domestic Investment”.

To re-energise, we will have to re-imagine.

This seminar is very timely as firms and companies grapple with post-Covid-19 recovery as well as the increasingly polarised and potentially bifurcated global economy. Like it or not, the world today is a different place compared to just a few years ago.

Supply chain resilience is now the most important concern of firms everywhere. While it is a difficult global environment, it may also be Malaysia’s opportunity to rise again if we play our cards well as a nation.

Previously, it was very difficult to convince multinational corporations (MNCs) to localise as cheap supplies were available from elsewhere, aided by the rapid containerisation of world trade over the past three decades. But the combined experiences of Covid-19, wars and geopolitical tensions around the world are forcing corporations to arrange for a shorter, secure and resilient supply chain.

We need to pursue changes.

Seizing the opportunities offered by the global shift, the Government and the industries need to work together to reduce and eventually break down the walls between MNCs in Malaysia and domestic firms through win-win localisation programmes so that MNCs get shorter and more resilient supply chains while domestic firms get access to a much larger market by doing more for the MNCs in Malaysia. This is the first change we must pursue.

The ultimate aim of having robust localisation programmes is to create technologically capable Malaysian firms so that they can produce for domestic and export markets. In the 1990s, Malaysia was known as a high-end manufacturing hub of that time, just behind South Korea and Taiwan but ahead of most other developing countries. We now want to see Malaysian companies acquiring, developing and innovating new technologies.

We are known in markets like China as having very unique F&B and FMCG products. It is good but we should not be content with this. We must also aspire to be a producer of high end equipment and machine tools, and a semiconductor powerhouse, among others.

Thus, the second change we want to push is for Malaysian firms to aspire to be technology leaders rather than followers. To do so, we need to invest a lot more in R&D. Domestic firms should also be given as many opportunities by MNCs and also by the government, as well as GLCs and GLICs to experiment with new indigenous technologies.

I would like to refer to Mariana Mazzucato’s idea of “mission economy”, in which she referred to the United States’ “Moonshot” programme to put man on the moon. Along the way it triggered and created many innovations which were later commercialised.

The government at all levels, GLICS and GLCs, and the private sectors, should strive to innovate to solve societal problems. We need to break down the walls and silos within the government and with the private sectors.

For instance, how do we get the Ministry of Agriculture and Food Security to enlist Malaysian technology companies to provide machine tools and equipment needed to deal with irrigation problems?

Another example, I was formerly the deputy defence minister, and I was then concerned with a question: How do we develop a domestic defence industry based on technology, and not relationships?

And, how do we get the semiconductor industry in Malaysia to work with the automotive industry to develop chips which will then link the currently MNCs-driven semiconductor industry with some of the Malaysian parts manufacturers in the automotive industry?

The third change we would like to see is to link the capital markets to the manufacturing sector. Prime Minister Datuk Seri Anwar Ibrahim has instructed MITI, MIDA, Ministry of Finance, GLICs and GLCs, to look into mobilising capital to invest in the semiconductor industry.

For the longest time, the main technology owners in the Malaysian manufacturing sector are the MNCs while the capital owners in Malaysia, including private businesses and GLICs/GLCs, due to investment returns, were more interested in property development and not interested in the manufacturing sector or in technology.

This is changing. We want to see Malaysian firms becoming rich through technology, not through selling and buying of lands, natural resources or minerals.

Prime Minister Anwar said at the launch of the National Semiconductor Strategy that the nation aspires to see 10 domestic technology companies that are currently at around RM 1 billion revenue to become USD 1 billion in the foreseeable future, and to have another 100 Malaysian companies to reach RM 1 billion annual revenue.

He is very ambitious and we would like to see our nation and industries to be equally ambitious. We need to work together to scale great heights.

The Madani Government has a very determined agenda for industries: to grow exponentially, to tech up, to green up and to share the fruits of growth better, as outlined in the New Industrial Master Plan 2030.

We gather here today to work towards this agenda. May Malaysian companies achieve greater heights, together.

This is my speech delivered at the “Re-energising Domestic Investment” National Investment Seminar on June 13, 2024.

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