Despite the effects of the global COVID-19 pandemic, Malaysia has remained a resilient economic player that continues to support foreign businesses. Its most advanced and technologically diverse state, Selangor, has even managed to record an increase in manufacturing projects amid the global economic downturn.
Now, as the world begins to reopen, Selangor is seeking additional investment from Japanese and overseas companies. The Japan Times spoke with Dato’ Hasan Azhari bin Haji Idris, CEO of Invest Selangor, to learn more about what makes Selangor such an attractive business environment.
Could you give us an overview of Selangor and its ties to Japan?
Malaysia and Japan have a very strong trade relationship. As of 2021, Japan has been Malaysia’s fourth largest trading partner for seven consecutive years. Trade with Japan that year accounted for 6.7% of Malaysia’s total trade, rebounding 20% from 2020. Selangor itself has hosted Japanese businesses in the state for over 30 years. Japanese companies have invested a total of 28.51 billion Malaysian ringgits (about $6.33 billion) in various industrial activities since 1987, reflecting their confidence in Selangor and its bright economic prospects.
How beneficial is the development of Selangor’s infrastructure?
Selangor is strategically located, as it encompasses the metropolis of Kuala Lumpur, and is equipped with an excellent road and highway network. Moreover, it also has excellent air and sea transportation, including KLIA (Kuala Lumpur International Airport), Subang Skypark and Port Klang, the second largest container port in ASEAN (Association of Southeast Asian Nations). East), as well as logistics infrastructure supported by a diverse and growing rail network.
How have Japanese companies contributed to Selangor’s economic growth?
Japanese companies have contributed more than 7 billion ringgit in investments spanning 186 projects and creating 15,662 job opportunities in Selangor’s manufacturing sector over the past 10 years (2012 to 2021). In 2019, the state managed to secure its highest ever investment from Japan with an investment value of 1.65 billion ringgit in a single year.
What incentives are available?
Malaysia offers excellent tax incentives for manufacturing companies. For example, a company with pioneer status enjoys a five-year exemption from paying income tax.
Alternatively, a company can claim an investment tax deduction, which entitles it to a 60% deduction on its qualifying capital expenditure. It can then set this allowance against 70% of its statutory income for each tax year.
What are Selangor’s business prospects in the post-pandemic era?
There are a multitude of investment opportunities. Along with the five major machinery and equipment clusters, transportation equipment, food and beverage manufacturing, life sciences, and electrical and electronic services, digital investment and logistics services are two service sectors offering great prospects.
The COVID-19 pandemic has accelerated the growth of digital economy and logistics services in Selangor. For digital investment, Selangor seeks to explore the areas of global business services, data centers, and creative content and technology, given its mature ecosystem.
Selangor is also actively seeking more investment in logistics, as it believes that the presence of a comprehensive logistics ecosystem is important for developing other sectors and industries within the state.
How will you promote investment?
During the mission to Japan in October, Invest Selangor will organize seminars and business matchmaking events in Tokyo and Osaka, as well as company visits. We look forward to meeting potential investors and providing more details on Selangor’s value propositions.
In particular, Invest Selangor plans to promote the biotechnology sector, as part of Selangor’s commitment to lead the growth of biotechnology in the state and make it the preferred destination for investors in Southeast Asia.
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