00:00Malaysia enters budget 2027 from a position of relative strength.
00:04Investment momentum has remained encouraging,
00:08supported by supply chain diversification,
00:10shifting global capital flows and growing interest in ASEAN
00:14as a strategic investment destination.
00:17Yet as competition for investment intensified across the region,
00:22the challenge is no longer just about attracting capital,
00:25but the bigger question that we brought to the table today
00:28is whether that investment can be translated into higher productivity,
00:32quality jobs, stronger domestic industries and sustainable long-term growth.
00:37To discuss this, I'm joined today by Gautam Puntam Bekar,
00:41country head of Bank of America, Malaysia, Berhad.
00:45Gautam, thank you for joining us. How are you?
00:48Thank you. Thank you for inviting me. A very good morning.
00:52You're welcome.
00:53So, the first question that I would like to ask you,
00:55Malaysia has been attracting significant investors' attention in recent years,
01:00particularly amid supply chain diversification and shifting global investment flows.
01:05So, from where you sit right now, how is Malaysia currently viewed by global investors?
01:11And are we at, in fact, inflection point in our investment story?
01:16I think, you know, over the last many years,
01:19the fact that the government, we have seen a lot of outreach go to the investors,
01:25whether it had IMF forums or investor roadshows,
01:29this has created a very positive momentum for Malaysia, right?
01:33Malaysia is already a beneficiary of the AI investment cycle,
01:37which is amongst the ASEAN countries,
01:40one of the leading efforts from a Malaysia perspective.
01:44The growth in Malaysia continues to be at 5.2%,
01:48which is up from 3.8%, which we are talking about.
01:52Approvals are already at 218 billion ringgit
01:56in the first half, driven by U.S. investors.
02:00All this become an inflection point from the country's perspective.
02:05And I do see that if the proper and appropriate steps are taken
02:10to continue this momentum,
02:12we will see continued investments coming into the country.
02:17So, investment approval have remaining strong,
02:20as you can see in the release news about the approval of the investment.
02:24They show quite healthy numbers.
02:27But beyond headline figures,
02:28what are the key indicators that global investors look at
02:32to determine whether an economy is truly investment-ready
02:35for the long term or what is your point of view?
02:40I think whilst the investment momentum is greater
02:43and investment approvals have come,
02:44what is important is how does it actually culminate
02:48into operating projects.
02:49I think operating projects become the testament
02:55for the investments which are coming in.
02:58If you have seen,
02:59there is already, we have seen limitation in terms of power
03:02and water,
03:04which have been very critical for data centers
03:07and approvals.
03:09But that's something which hopefully the budget addresses
03:13as we go along for 2027 and beyond.
03:19BNM's net FX reserves have also gone up substantially,
03:25which is a very positive sign from an investor's perspective.
03:29So, overall, I think the indicators,
03:32the important thing is from approval to execution
03:37to actually starting off the projects
03:40and getting at the exports.
03:42That's the important keyword that you mentioned
03:45about the approval to execute things.
03:49So, to say, as you see,
03:51as companies diversify the supply chain
03:53across ASEAN as of today,
03:56competition for sure for that capital
03:59is becoming increasingly intense.
04:01And so, if I may ask you,
04:03what are the areas where Malaysia is outperforming,
04:05Regina Pierce, and do you think
04:07we still have ground to make up?
04:11Absolutely.
04:12So, Malaysia, a couple of things, right?
04:14GDP growth of 5.2%,
04:16which is highest across ASEAN,
04:19extremely very positive investor momentum.
04:23In fact, it is the only country in the region
04:25where the CPI is lower than the target
04:28set by the government, right,
04:30by the central bank,
04:31which is extremely important to take note of
04:34as we look at it from a country perspective.
04:37Penang handles about 13% of global chip testing
04:40and packaging.
04:43And on the tourism front,
04:45we have seen at least 160% or 170%
04:48increase over pre-COVID levels.
04:51All this speaks very, very positive
04:54in terms of from a Malaysia perspective.
04:56Where there is areas where we could focus on
05:02is actually on the chip design, right?
05:06Currently, manufacturing is limited to packaging
05:10and exports.
05:12So, chip design is important.
05:14Looking at utilities capacity,
05:16and when I say utilities capacity,
05:18I'm talking about power and water.
05:21Again, going back to my earlier point
05:23that this is not infinite
05:26and there has to be a long-term plan
05:29in terms of building up these two.
05:32And last but not the least
05:33is the local value capture.
05:35It's very important
05:37that we don't look at investment value,
05:42but we look at what it is going to generate
05:46from an overall perspective to the country,
05:49whether it is local employment,
05:51whether it is helping SMEs grow,
05:53and how is it helping the Malaysian economy.
05:57I think that's where the focus
06:00should continue to be.
06:03Some experts maybe agree with
06:05the topic that we discussed,
06:07the answer that you have given to us,
06:09but many economies argue that
06:11attracting FDI is no longer the biggest challenge
06:14because the bigger challenge is
06:16to ensure that investment
06:18translates into productivity gains,
06:20into high-value jobs,
06:22and of course,
06:22to domestic wealth creation.
06:25So, how effectively is Malaysia
06:27making that transition today?
06:29Are we speaking in the right track
06:32or how do you see into this matter?
06:37I think, you know,
06:38from an FDI perspective,
06:40yes, we have received
06:41extremely high number of FDI approvals,
06:44but it's very important
06:47from an execution perspective, right?
06:49The transition is happening
06:51and there is room for us
06:55to look at transitioning
06:57this much faster
06:58from approvals to execution,
07:00which is extremely important.
07:01The fact of the matter remains
07:03is that the approvals
07:06of the money and capital
07:07is flowing much faster
07:09than the job creation.
07:11For example,
07:12the service approvals
07:13were given at 68%,
07:15but they have created
07:16only about 32,500 jobs, right?
07:19So, it is important
07:22that both of these approvals
07:25and creation of jobs
07:26and creation which will be value-add
07:29to the economy
07:30go hand-in-hand
07:31as we move along going into it.
07:34So, the transition is happening,
07:36albeit it could happen
07:37at a much faster pace.
07:39Okay.
07:40From the beginning,
07:41you have highlighted
07:42a lot of priorities
07:43that need to be taken
07:44and moving forward
07:45to Blanjawa in 2027
07:48that are going to be tabled tomorrow
07:50in our Dewan Rakyat.
07:51So, if Blanjawa in 2027
07:53were designed
07:54with one objective in mind,
07:56namely turning today's investment momentum
07:58into a sustained decade-long growth story,
08:01this is the vital question,
08:05but what should policymakers
08:07prioritize?
08:08Because there are so many
08:09in the area
08:11that we need to prioritize.
08:13Gautam.
08:15I think,
08:16in our view,
08:18it should be
08:19two main things.
08:21One is
08:22the utility side,
08:23which is power and water.
08:25As data centers
08:27have been the primary source
08:29of FDI into the country,
08:32it has to have
08:33a long-term view
08:34in terms of how
08:36these utilities
08:37will continue
08:38to be meaningful
08:40for investments
08:41to come through,
08:42which is extremely important.
08:45And alongside that
08:46is how do we help
08:47local Malaysians
08:50in terms of employment
08:52into these industries?
08:54Because by nature,
08:55have you seen,
08:56data centers
08:57don't generate employment.
09:00So, you have to create
09:01an ecosystem
09:02which is extremely important
09:04as that.
09:06And the second point is
09:07that we need to create
09:10more employable
09:12workforce.
09:13And that means
09:15looking at
09:16what the industry
09:17needs
09:18and really
09:20positioning
09:20the students
09:21who come out
09:22from these universities
09:23to be more employable.
09:25This becomes
09:26an automatic extension
09:28for wage increases.
09:30Right?
09:31Because
09:31companies
09:32do not
09:34then need
09:35to train
09:36university students
09:37who come in.
09:40All right.
09:41Thank you, Gautam.
09:42So, this is very important.
09:43We maybe have
09:44a lot of ideas
09:45to execute,
09:46to what to prioritize,
09:47but the important thing
09:48is how
09:49to put the right thing
09:50at the right place
09:51so that
09:52the Belanjawan
09:532027
09:54is
09:55being inclusive
09:56to everybody.
09:57So, thank you
09:58once again,
09:59Gautam Puntam Bekar,
10:01country head of
10:01Bank of America,
10:02Malaysia Berhad.
10:03Thank you for your insight.
10:04It is clear in today,
10:06increasingly competitive
10:07and uncertain global environment.
10:08So, thank you
10:09once again
10:09for your
10:10analysis
10:11for our
10:12niaga awal ini.
