Malaysia 2017 | ECONOMY | INTERVIEW

TBY talks to Dato' Azman Mahmud, CEO of Malaysian Investment Development Authority (MIDA), on downstream investments, the Eleventh Malaysia Plan, and smart manufacturing.

Dato’ Azman Mahmud
Dato’ Azman Mahmud was appointed CEO of MIDA in 2014. He holds a degree in engineering from the Universiti Putra Malaysia and has attended several senior management programs, namely the Harvard Business School and INSEAD. He has spent 25 years with MIDA in various leadership positions in the US, Japan, and Malaysia, covering promotion strategy and manufacturing and services growth, where he played a significant role in promoting investments into Malaysia.

To what extent do you continue to highlight the investment potential in Malaysia's agricultural sectors?

When we started in 1969, the economy was more oriented toward agriculture and less toward manufacturing. Currently, the manufacturing sector has a much larger contribution to the economy. Nonetheless, we have consolidated our strengths, which include the plantation and commodity-based industries. We want to be an enabler for investments in the downstream area.

How will MIDA participate in enacting the plans proposed by the Eleventh Malaysia Plan and “re-engineering growth for greater prosperity" in particular?

We are very much involved in the Eleventh Malaysia Plan and have identified our so-called “3+2 formula." The first three are the catalytic sub-sectors: chemical, electrical and electronics, and machinery and equipment. The other two areas with high-growth potential are aerospace and medical devices. These sub-sectors were selected due to their strong inter-linkages to other sub-sectors and will support the overall growth of the manufacturing sector in the country. We also look at the services sector—ICT, oil and gas, healthcare, higher education, tourism, halal, construction, and professional services. Another focus is on smart manufacturing. Industries must adopt smart manufacturing as quickly as possible because we believe the future is all about connectivity.

What is MIDA's perspective and goals for aerospace?

We have the Malaysian Aerospace Industry Blueprint, and it is also further reinforced in the Eleventh Malaysia Plan. This hinges on the demand for future aeroplanes in Asia and the Pacific. We expect to see a great deal of manufacturing and service providers; therefore, we have to be closer to the market. Malaysia is well positioned in terms of new infrastructure and facilities that we have developed over the years. We see aerospace as a growth sector in Malaysia and have been successful at attracting MRO, for example.

Is the medical equipment industry becoming more technical?

Traditionally, it focuses on the manufacturing of medical gloves. However, today the industry has evolved with the latest technologies and we see development in new products such as cardiovascular devices, orthopaedic devices, and imaging equipment with a growing number of facilities in Penang and Selangor. We have big names like B. Braun, St. Jude, Boston Scientific, and Abbott in Malaysia and have been receiving interest from local and foreign companies. Some will invest in greenfield projects, while others look for Malaysian companies to outsource their production or to undertake joint venture projects.

Malaysia is taking the driver's seat in the halal industry, especially in terms of Islamic finance. What is MIDA's strategy?

Malaysia is a reference point for the halal industry. It started with our Islamic finance many years ago, and we have been promoting the World Halal platforms for many years. At the World Halal Summit in 2016, Malaysia attracted quite a bit of attention for its halal investments and we even discussed some investment proposals. In 2017, we will mark 50 years of Malaysia providing infrastructure development such as industrial estate services. Malaysia can be a growth catalyst for the halal industry in the region. The halal supply chain can be extended to other countries, to source for raw materials, for example.

What are your expectations for the coming year?

Our economy is resilient. 2016 was a tough year. China still shows no signs of recovery, and Japan basically has a 0% growth rate. Malaysia is at 4-4.5%, the US at 2.3%, and Europe less than 1%—globally there are challenges. Commodity prices are volatile but fortunately they play a relatively small part in the Malaysian economy, representing just 11-12% of total exports. I am more optimistic about the manufacturing sector, particularly aerospace and medical devices. The Malaysian ringgit has strengthened, which is a positive sign. We implemented the necessary policies in times of challenging economic volatilities. We achieved 5% growth in 2015 and in 2016, we expect it to be between 4 and 4.5%.