Mar. 19, 2015


Fermin Fautsch

Malaysia

Fermin Fautsch

Chairman and Board Director, EUMCCI

"We would like to see more European companies, in particular SMEs, using Malaysia as a hub to ASEAN."

BIO

Fermin Fautsch is currently Vice-President, Global Enterprise for Telekom Malaysia responsible for the Global and ICT business of TM Enterprise. He is also Chairman and Board Director of EUMCCI. He is a Systems Engineer and holds an MBA from the Wharton School of the University of Pennsylvania and a Master’s degree in International Economics from John Hopkins University. He also taught International Business at the University of California, San Diego.

What are the Chamber's major achievements so far?

An important achievement is centered on EUMCCI's strong relationship with the Malaysian government and its agencies, built over the years. We engage regularly with many key agencies. For example, we had a briefing with Pemandu on the Economic Transformation Program (ETP) and Government Transformation Program (GTP); we had a joint activity with SME Corp. on Opportunities and Challenges of ASEAN Economic Community (AEC); we debated the AEC with key experts including Malaysian Royal Customs; dialogues with MITI and their “ecosystem" with the Ministry of Energy, Green Technology and Water; and consultations with Bank Negara, and the list goes on. EUMCCI is indeed an important dialogue partner with the Malaysian government and the European Commission, with the role to map and provide input on government policies and strategies, contribute to free trade negotiations and dialogues, and to attract more investment and promote Malaysia as a gateway to ASEAN. We have 13 active committees, which are Aerospace, Automotive, the CSR Outreach Programme, Energy, Energy Efficiency, Healthcare, Human Resources, Intellectual Property Rights, Logistics and Transportation, Research and Innovation, Smart Grid, Defence and Security, and Wines & Spirits. These committees meet regularly with their stakeholders to discuss issues affecting their industries and every year they put in together our EUMCCI Trade Issues and Recommendations (to be published soon) in line with the Chamber's mission to facilitate and accelerate business and investment between the EU and Malaysia.

What are the main benefits for EU companies in Malaysia?

Malaysia is situated in a strategic and unique position not only within the realm of ASEAN but also within the Asia Pacific. The population of ASEAN is more than 625 million and its GDP has reached $2.4 trillion, ranked seventh in the world. Furthermore, if we take into consideration the larger ASEAN plus three or ASEAN plus six (ASEAN plus China, Japan, South Korea, India, Australia, and New Zealand), the combined population and market is massive and Malaysia is sitting in the epicenter of this important region. In this context, Malaysia is attractive not only because of its internal market but most importantly because it can be an excellent gateway to the ASEAN and Asian markets. I often cite the example of Ireland, which is a relatively small economy, but global in nature, a large recipient of foreign direct investment from both Europe and the US, through innovative and pro-business economic policies Ireland has been able to attract high-tech, innovative companies in high growth sectors and has become a gateway to Europe and the US. Similarly, Malaysia can become a success case in this region; it has excellent infrastructure, good governance, a solid institutional framework, innovative incentives, and access to the ASEAN and Asian markets. It is also important to note that in recent years ASEAN has experienced one of the most stable growth rates in the world and Malaysia has excelled within ASEAN, showing a 6% annual growth rate since 1990, one of the highest in the region, and in the world, trailing only China and India. In this context, Malaysia is very well positioned to become a hub for ASEAN, as it offers, in addition to its internal market, an excellent base for exports and market access into the ASEAN and global markets. Other countries such as Indonesia or emerging economies, like for example Vietnam and Myanmar, are also attractive investment destinations due to potential growth of their internal markets. Malaysia is in a somewhat different position, and notwithstanding its population, which has reached 30 million, is located in a geo-economic and politically strategic place offering other comparative advantages like, for example, swift establishment procedures for new businesses and competitive costs compared to places like Singapore, and access to the seventh largest economy in the world.

“We would like to see more European companies, in particular SMEs, using Malaysia as a hub to ASEAN."

How is the EUMCCI helping EU SMEs to enter and grow in the Malaysian market?

In the second half of 2013, we launched the Support for European Business in South-East Asian Markets Malaysia Component (SEBSEAM-M) project, jointly and co-funded by the EU. The project's main objective is to support trade and investment with EU-based companies in South-East Asia, with a focus on EU SMEs, and to use Malaysia as a gateway for regional investment. All EU countries that have councils or trade representations in Malaysia are partners in this important project, and this in itself a big accomplishment. In 2014, we were able to launch a series of key projects. We organized the EU-ASEAN Food Safety Forum in October, where we brought experts from all over Europe and ASEAN to talk about some of the challenges in terms of food safety, logistics, and labeling. Under the project, we also launched a Web Portal in a ceremony hosted jointly with our EU Ambassador and MITI. The main aim of the portal is to help to facilitate information, create awareness, and place companies in a peer-to-peer relationship with experts and, in so doing, help EU companies to learn more about how to invest, trade, and establish themselves in Malaysia within the context of promoting Malaysia as a hub to ASEAN. The market in ASEAN and Malaysia is well known to the European multinationals, but there is a lot to be done for European SMEs. Over the last two or three years, there has been a lot of interest from European SMEs to go abroad and come to Asia. We need to create awareness and promote Malaysia as a gateway to ASEAN. SEBSEAM-M is a relevant project for EU-Malaysia and EU-ASEAN relations and this year the timing is perfect as Malaysia is Chairing ASEAN and the ASEAN AEC will come to a fruition offering market access to existing and new EU companies coming to ASEAN. The EU is also co-funding similar projects in Indonesia, the Philippines, Vietnam, Laos, and Cambodia.

How will closer integration between ASEAN members, brought about by the ASEAN Economic Community (AEC), impact EU-Malaysian trade relations?

First is the relevance of Europe to ASEAN and of ASEAN to Europe. The EU is the largest investor in ASEAN, and is the third largest trading partner in ASEAN (behind China and Japan), and ASEAN is the third largest partner of the EU (outside of Europe). We have more than 10,000 European companies operating in ASEAN and many of them have their Asia-Pacific headquarters in the ASEAN region. Second is the importance of trading blocs not only economically, but also politically. AEC will transform ASEAN into a single market with free movement of goods, services, investments, skilled labor, and freer flow of capital. This opens opportunities for growth but also presents challenges. For example, a lion's share of ASEAN foreign trade is outside of ASEAN, meaning that there is an upside potential to increase intra-ASEAN trade. ASEAN could learn from EU integration and its accomplishments and challenges and the EU can learn from the ASEAN approach to trade and financial integration. AEC will increase transparency and cooperation between countries and the harmonization of regulations and standards between countries will encourage trade and investment. A single market will enable companies to exploit economies of scale in the markets. The streamlining of customs procedures, as well as standards, which is ongoing, will make it more attractive from companies to access Malaysia and ASEAN markets. The aim will be to augment investment and trade between Malaysia and the EU.

Where do you see EU-Malaysia trade relations five years from now?

We would like to see more European companies, in particular SMEs, using Malaysia as a hub to ASEAN, more investment and trade between the EU and ASEAN, and more ASEAN investment into the EU. There is a growing and strong bilateral relationship and investment between the EU and ASEAN. The EU continues to be the leading investor in ASEAN and, in the other way, investment from ASEAN has doubled recently reaching $90 billion. So we would like to see more of the same, with more SMEs coming into Malaysia. Some of the 2,000 plus European businesses present here have an important operation and investment and some are already using Malaysia as a hub. In the recent past, the lion's share of this type of investment would go to places like Singapore. Our focus in coming years is to attract more companies to set-up their hubs and higher value added operations in Malaysia. The other is to be effective in promoting AEC and Malaysia as an access point and a hub to ASEAN.

How does increased cooperation between the EU and Malaysia align with the country's 2020 Vision?

They are presently aligned, because to move from a medium-income to high-income country, Malaysia needs to promote the development of value added industries and accelerate the development of higher skilled labor. In addition, with its population of 30 million, Malaysia needs to continue to attract FDI in key high growth sectors and consistently grow at 5% annually, or more, over the next five to 10 years. To transition from a mid- to a high-income economy will not be an easy task and will require a great deal of effort and innovative policies. In this context, the Chamber is aiming to promote Malaysia to attract higher value added industries. Finally, I would like to note that EUMCCI is open to any company that wants to join. In addition to EU based corporations, we have a large number of Malaysian companies, global MNCs, state agencies, and universities. We also promote Europe as an investment destination for Malaysian investors.

© The Business Year - March 2015