M’sia still a preferred destination for FDI in the region

KUALA LUMPUR: Malaysia remains a preferred destination for foreign direct investment (FDI) in the region and has attracted increasing interest from multinational corporations aiming to diversify their footprint strategically, says DHL Express Malaysia and Brunei managing director Julian Neo.

Due to the recent geopolitical developments, omni-sourcing has been a key focus for companies across industries as it strengthens supply chain resiliency, he said.

“Contract manufacturers continue to move into the country and we have observed similar expansion by those already here,” — DHL Express Malaysia and Brunei managing director Julian Neo, replying to a Bernama question via email

Citing news report, Neo said Penang alone has attracted over RM60bil in FDI last year, more than the total received for 2013 to 2020 combined.

Malaysia’s key strengths

He said Malaysia’s key strengths include:

• Easy access to key Asian markets
• Robust consumer demand for international goods and services
• Institutional support
• Well-developed infrastructure
• Sound legal framework
• English-speaking and digitally native talent
• Liberal trade agreements

“Therefore, it is no surprise that the country is rated among the best for globalisation,” — Julian Neo

According to DHL Group’s latest Global Connectedness Report launched on March 13, 2024, Malaysia ranks 26th out of 181 economies, attributable to the growth of its trade flows (imports and exports, across both goods and services) and increases in FDI flows (inward and outward).

Service tax and DHL’s outlook

Asked if the 6% service tax on logistics services that came into effect on March 1, 2024 would affect the company’s business in the country, Neo shrugged off the concern, saying that the service tax only applies to domestic shipments and excludes international ones, which is the main remit of DHL Express Malaysia.

“Regardless, implementation of the service tax has long been a topic of conversation within the logistics industry and we remain in close dialogue with the relevant authorities. At the same time, we have maintained open lines of communication with customers to provide the necessary guidance and support towards a smooth transition,” — Julian Neo

Source: https://www.thestar.com.my/business/business-news/2024/03/26/msia-still-a-preferred-destination-for-fdi-in-the-region