Despite experiencing the effects of the global COVID-19 pandemic, Malaysia has remained a resilient economic player that continues to support foreign business. Its most technologically advanced and diversified state of Selangor even managed to record an increase in manufacturing projects amid the worldwide economic slowdown.
Dato’ Hasan Azhari bin Haji Idris, CEO of Invest Selangor
Now, as the world begins to reopen, Selangor is seeking additional investment from Japanese and other foreign 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 provide us an overview of Selangor and its ties with 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 represented 6.7% of Malaysia’s total trade, rebounding by 20% compared with 2020. Selangor itself has welcomed Japanese businesses in the state for more than 30 years. Japanese companies have invested a total of 28.51 billion Malaysian ringgit (about $6.33 billion) in a variety of industrial activities since 1987, reflecting their confidence in Selangor and its bright economic prospects.
How beneficial is Selangor’s infrastructure development?
Selangor is strategically located, given that it encompasses metropolitan Kuala Lumpur, and is equipped with an excellent road and highway network. Moreover, it also has excellent air and water transportation, including KLIA (Kuala Lumpur International Airport), Subang Skypark and Port Klang, the second-busiest container port in ASEAN (Association of Southeast Asian Nations), as well as logistics infrastructure backed by a diverse and growing rail network.
How have Japanese companies contributed to Selangor’s economic growth?
Japanese companies have contributed over 7 billion ringgit in investment covering 186 projects and creating 15,662 employment opportunities within Selangor’s manufacturing sector over the last 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 granted Pioneer Status enjoys a five-year exemption from the payment of income tax.
Alternatively, a company may apply for an Investment Tax Allowance, which entitles it to an allowance of 60% on its qualifying capital expenditure. It can then offset this allowance against 70% of its statutory income for each year of assessment.
What are Selangor’s prospects for business in the post-pandemic era?
There are a multitude of investment opportunities. In addition to the five core clusters of machinery and equipment, transport equipment, food and beverage manufacturing, life sciences and electrical and electronics, digital investment and logistics services are two service sectors with great prospects.
The COVID-19 pandemic has accelerated the growth of the digital economy and logistics services in Selangor. For digital investment, Selangor is looking to explore the areas of global business services, data centers, and creative contents and technologies, given its matured ecosystem.
Selangor is also actively seeking more logistics investment, as it believes the presence of a comprehensive logistics ecosystem is important to developing other sectors and industries within the state.
How will you be promoting investment?
During the mission to Japan this October, Invest Selangor will be hosting seminars and business-matching events in Tokyo and Osaka, as well as making company visits. We are eager to meet potential investors and provide further details about Selangor’s value propositions.
In particular, Invest Selangor plans to promote the biotechnology sector, under Selangor’s commitment to leading the growth of biotechnology in the state and making it the preferred destination for investors in Southeast Asia.
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