Strong China-Malaysia ties key factor in driving investments: analysts

Longstanding and stable relations with China are a key consideration for investors seeking to expand into Southeast Asia, with the strength of China-Malaysia ties making Malaysia a top destination for Chinese enterprises, analysts said on Thursday.

Malaysia has a longstanding relationship with China and Chinese investors seeking to extend their businesses to Malaysia have found a welcoming environment in the country, Yin Hong, head of JLL Logistics & Industrial (China), a global real estate services firm, told Xinhua in a press briefing hosted by JLL.

"Hard factors such as infrastructure, connectivity and resources are easy to understand and quantify, but enterprises making inquiries before investing in Malaysia carefully consider the relationship with China. This soft factor consideration is especially important, namely language, culture and people-to-people and bilateral ties," he said.

Yulia Nikulicheva, head of JLL Research and Consultancy, noted that the Malaysian government is enhancing the country's trade connectivity and infrastructure, focusing on ports, airports, logistics hubs, and road and rail links.

"Chinese companies are considering Malaysia due to several factors that contribute significantly to a manufacturing company's long-term success and sustainability. These include labor, infrastructure, environmental regulations, proximity to suppliers and customers and political stability," she said.

"Overall, Malaysia offers competitive business costs compared to other countries in the Southeast Asian region. It also boasts a skilled workforce proficient in English, as well as a significant Chinese-speaking population. Furthermore, Malaysia's developed road, seaport and airport infrastructure, along with its business-friendly environment, make it an attractive location for potential investors," she added.

Derek Yap Shein Hang, industrial and logistics sector team lead of JLL's Malaysia firm, said the East Coast Rail Link (ECRL), the Chinese-built mega rail project that connects Malaysia's largest transport hub Port Klang located on the country's west coast to Kuantan Port, and the Malaysia-China Kuantan Industrial Park on the east coast is a "major game changer."

"If your (manufacturing hub) is located on the east coast and you want to export via Port Klang on the west coast, you do not have to use trucks or ships to get to Port Klang. You cut the travel time and greatly streamline your logistics and supply chain (with the ECRL)," he said.

For his part, Terrance Choo Ker Seang, the firm's senior manager for the northern sector, said the rapid adaptability and flexibility of Malaysia is an advantage for companies seeking to set up operations in Malaysia.

"Penang is a hotspot for investment and manufacturing. It has gone beyond developing a semiconductor industry and is now drawing investments as a manufacturing hub for electric vehicle batteries and other products," he said.