KUALA LUMPUR, 20 NOVEMBER 2024 (Bernama) -- In a recent high-profile event in conjunction with Malaysia Day, the lead investment agency For Greater Kuala Lumpur (Greater KL), InvestKL convened industry leaders and policymakers to discuss Malaysia’s economic future. A panel discussion, titled ‘Emulating Advanced Economies or Charting a Unique Malaysia Strategy’, featured keynote insights from the Minister of Trade, Investment, and Industry, Tengku Datuk Seri Utama Zafrul Aziz. Panellists from the World Bank, Malaysian Institute of Economic Research (MIER), and Permodalan Nasional Berhad (PNB) discussed Malaysia’s ambition to transform its investment landscape, with Modern Services as a core economic growth driver.

The event saw robust participation from industry leaders, including Kuala Lumpur’s new Mayor, Datuk Seri Paduka Maimunah Mohd Sharif, alongside representatives from multinational corporations (MNCs) and strategic partners.

Sustained Investment Amid Global Uncertainty

Malaysia’s investment landscape continues to grow despite global economic headwinds. In the first half of 2024, the country recorded RM160 billion in approved investments, reflecting an 18% year-on-year increase and creating over 79,000 new jobs. Notably, 60.7% of these investments, valued at RM97.2 billion, were directed toward Modern Services.

InvestKL’s Chief Executive Officer, Datuk Muhammad Azmi Zulkifli, highlighted Malaysia’s intensified efforts to expand its digital and advanced technology sectors, aligning with global shifts towards automation, cutting-edge technologies, and artificial intelligence (AI). He noted that Modern Services, encompassing digitalisation, sustainability, and knowledge-driven industries, represents the new frontier for economic growth.

PNB’s chief economist, Dr Kamaruddin Mohd Nor, highlighted the link between innovation and economic growth. “Economic growth hinges on innovation. To achieve this, we need a conducive ecosystem to foster innovation where startups and new ideas can come to fruition and deliver returns. Many countries that rank high on the Global Innovation Index by the World Intellectual Property Organization, prioritise institutional support, research, human capital, ease of doing business, and access to credit. Malaysia should focus on encouraging innovation, especially in academic research and development.”

Dr Anthony Dass, executive director of MIER, explained that Modern Services is a digital-based economy that supports the traditional economy by connecting individuals, businesses, government, and international trade and payments. “While the traditional economy remains important, it must raise its standards to keep pace. Manufacturing, for example, is shifting from labour-intensive to capital intensive models. As we move forward, we need Modern Services to support this shift and drive our competitiveness.”

Malaysia aims to position itself as a hub for Modern Services, leveraging its robust infrastructure and supportive regulatory environment to attract high-value investments. This aligns with the nation’s strategy to transition from traditional manufacturing to a more innovation-led, technology-driven economy, and with Budget 2025’s aim of attracting high-value investments to Malaysia through the introduction of the New Investment Incentive Framework.

Global Tech Investments Strengthen Malaysia’s Modern Services

Modern Services is driving Malaysia’s economy forward in information technology, financial technology, telecommunications, digital infrastructure, cybersecurity, data analytics, AI, smart city solutions, education technology, and health technology.

Panellist Yu Cao, an economist at the World Bank’s East Asia and Pacific Chief Economist Research Centre, emphasised the evolving relationship between services and manufacturing. “For Malaysia to sustain its growth, it must modernise its manufacturing sectors. International studies show a positive link between Modern Services, such as technology, communication, information, and business services, with the manufacturing sector.”

Major global players have already taken significant steps in Greater Kuala Lumpur (Greater KL), including establishing Google’s first data centre and cloud region, Amazon’s cloud region, and Microsoft’s planned Malaysian Azure region. Oracle further strengthened its commitment by investing over US$6.5 billion to establish a public cloud region in Malaysia, a milestone made possible by InvestKL’s support since Oracle’s digital hub launch in 2017. Honeywell, which established its regional headquarters in Greater KL in 2017, has invested over US$500 million, adding executive roles and enhancing partnerships with key local companies such as PETRONAS, KLIA, Malaysia Airlines, and AirAsia.

Companies such as AstraZeneca and Kamstrup further reflect Malaysia’s ecosystem strength, selecting Greater KL as a hub for innovation, technology, and growth. These developments strengthen Malaysia’s position as a regional centre for high-value and technology-driven industries. They also facilitate knowledge transfer as global tech giants collaborate with local businesses and universities to build expertise and innovation capacity.

Such efforts align with Malaysia’s strategic goal to develop a digital ecosystem that supports sustainable economic growth and positions the country as a regional leader in modern services, as outlined in Budget 2025, which aims to strengthen the digital economy and accelerate AI adoption.

Building Success, Sustainably

The panellists acknowledged that Malaysia’s Modern Services sector had made substantial strides, though challenges remain. They agreed on the need for clearer policies to foster a supportive business ecosystem.

“It is important for Malaysia to remain known for its ease of doing business, with far-sighted, streamlined policies that adapt to the evolving business needs,” said Datuk Azmi. “To address these challenges, InvestKL is engaging multi-stakeholder partnerships and aligning with national frameworks such as the New Industrial Master Plan 2030 (NIMP 2030) and the National Digital Skills Strategy.

“We are working closely with global institutions and local think tanks to shape policy direction, develop infrastructure, and create talent development programmes,” he added. “This comprehensive approach ensures we build a dynamic services sector that integrates foreign expertise while nurturing local talent to support Malaysia's ambition of becoming a high-income nation by 2030.”

“For Modern Services to adequately support the traditional sector, besides last mile connectivity, we need skilled employees,” added Dr Anthony. “We must look at how to bring back skilled individuals who have left Malaysia to support our growth. The entire ecosystem plays a role here. Having a framework is important, but effective implementation matters more.”

Amplifying Economic Impact Across Malaysia

Since its inception in 2011, InvestKL has secured investments from over 140 leading global companies, contributing to over RM33 billion in investments and creating more than 30,000 regional executive jobs in Greater KL. These investments not only benefit Greater KL but also generate a tenfold economic impact, creating significant spillovers across Malaysia through the establishment of subsidiaries, branches, and a resilient supply chain, as well as fostering public-private partnerships.

As Malaysia nears its 2030 high-income target, the synergy between high-value services and traditional manufacturing remains vital.

“InvestKL will continue to prioritise securing Modern Services type of investments that leverage on advanced technology, innovation, and data-driven insights to drive industry-wide growth, bringing forward immense spill-over benefits in the creation of high-skilled jobs and strengthening the business ecosystem in Malaysia. In addition, this will also complement Malaysia’s future manufacturing sector.” Datuk Azmi added.