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Malaysia looks at greater role for Indian auto component makers

Bangalore, Jan 27, 2014, DHNS:
Mustapa Mohamed. DH Photo

Indian automotive components should look at Malaysia as a manufacturing destination as the Malaysian government has been incentivising industries who wish to set up shop in the country, said Malaysian Minister of International Trade and Industry Mustapa Mohamed on Monday.

He was delivering the keynote address at a seminar on ‘Business Opportunities in Malaysia’ organized by the Malaysian Investment Development Authority (India). He noted that the share of automotive component exports by Indian automotive companies operating in Malaysia is currently only $1.5 billion per annum. “Raising this share will be a focus area for the government,” Mohamed said.

Noting the emergence of Bangalore as a significant entrepreneurial and business hub of South Asia, Mohamed, who flew into the city from Davos said that the high-power delegation led by him has had constructive discussions with the Karnataka government and Indian businesses looking to expand in Malaysia.


“With a GDP of $2.31 trillion, Malaysia is an ideal gateway for Indian companies to markets like Thailand, South Korea, Cambodia and Japan. Last year, Malaysia attracted foreign direct investment to the tune of $13 billion. Manufacturing now forms 27 per cent of our GDP and this has led to trade volumes of $423.9 billion in 2012,” Mohamed said.

Malaysia’s electrical and electronics hub of Penang is supplemented by Iskander, Johor and the Regional Corridor to set up new industries. “Tourism is another significant sector for Malaysia where we are inviting Indian investment participation. Tourist arrivals from India totalled 4.82 lakh people between January-September 2013.

Malaysia has been promoting its capital Kuala Lumpur as a hub for MNCs by offering 100 per cent tax exemption for 10 years and freedom to repatriate profits. The fact that we are evolving into a regional aviation and MRO hub should be good news for Indian companies in the aviation and MRO spaces,” Mohamed said.

“We are also happy with the progress of the MICECA (Malaysia-India Comprehensive Economic Cooperation Agreement) signed in 2011 between the two countries which has hastened the flow of Indian investments into Malaysia and the other way round,” he said.

The Malaysia-India CEO Forum, set up with participation from 18 Malaysian and 20 Indian companies will be meeting at the ongoing CII Partnership Summit to further commercial ties between the two nations, the minister said.

Malaysia, which is a major trading partner of India for palm oil, processed foods and spices, currently accounts for 39 per cent of the world’s palm oil production and 44 per cent of palm oil exports. In the spices market, Malaysia is among India’s export destinations with other major countries.

Indian firms in Malaysia include TCS, Wipro, Aptech, Infosys, RP Chemicals (acquired by Reliance Industries Ltd from British Petroleum), Tamco and Ranbaxy. “I have met a lot of CEOs from the IT industry in Bangalore during my visit who are keen to further expand their presence in Malaysia,” Mohamed said.

The seminar witnessed participation from Indian companies in the manufacturing and IT/ITES spaces keen to explore setting up operations in Malaysia, and was devoted to exchanging ideas to strengthen the Indian business community presence in that country.

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