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Malaysia Eyes Expanded Trade in the Gulf Region

DUBAI - Malaysia is seeking to attract sizeable investments in the Gulf region and is targetting new investments of about Dh27.5 billion from the UAE alone this year.

In its bid to lure companies from the Gulf Cooperation Council to set up operations, Malaysia has fully liberalised its Islamic finance sector, and is now allowing 100 per cent foreign ownership for finance companies with enough financial muscle to raise the minimum paid-up capital of $1 billion a piece for two “mega” banks.

Aside from this, the government last April freed up 27 services sub-sectors, with no equity condition imposed.

“We are working in a more proactive manner in promoting investments from this region, especially in the UAE,” Datuk Jalilah Baba, director-general of the Malaysian Industrial Development Authority (MIDA) told Khaleej Times at the recent launching of the MIDA Dubai office.

Baba said the opportunities for GCC investments in Malaysia’s services sectors include business and professional services; integrated logistics; ICT services; education and training’ health services, and tourism services. Malaysia is also positioning itself as a global hub for the production and distribution of Halal products and services which include food, cosmetics, pharmaceuticals, and health products.

Another new sector being promoted is renewable energy where several global manufacturers from the US and Germany have already built production plants in Malaysia.

“Malaysia has targeted the solar industry as a new source of growth, and we would like to invide Middle East companies to contribute to the development of a solar cluster in Malaysia through joint ventures or collaborations with technology holders,” 
said Baba.

Malaysia is also aiming for a bigger push in its efforts to persuade UAE and other Gulf nations to set up Islamic financing institutions in the Southeast Asian country.

“We are at the forefront of Islamic finance, and while Singapore and Hong Kong are also promoting it, they do not have the complete infrastructure that we have already established,” said Baba. Malaysian Ambassador to the United Arab Emirates Dato Yahaya Abdul Jabar is confident that despite the economic slowdown, two UAE banks may establish their first Islamic banks in Malaysia before the end of the year.

“We have approached the Emirates Islamic Bank and the Abu Dhabi Commercial Bank and they are looking at our proposal. We have offered attractive packages and incentives that would help them make good profits and make them very competitive.”

There are several routes with which Gulf Cooperation Council investors can set up Islamic finance institutions, among them is a 100 per cent foreign ownership for mega banks with a minimum paid up capital of $1 billion, and up to 70 per cent equity for Takaful investors.

rocel@khaleejtimes.com