Malaysian Investments Rise in Saudi Arabia

by Shamsul Huda | Jan 13, 2014

MALAYSIA is increasingly investing in Saudi Arabia. This was disclosed by Mr. Khairul Annuar Abdul Halim, Trade Commissioner of the Jeddah based Malaysian External Trade Development Corporation (MATRADE), in a recent interview with the Saudi Commerce & Economic Review. “Saudi Arabia appears to have offered abundant investment opportunities for Malaysian business communities especially in areas where Malaysia has a comparative advantage to create mutually beneficial business ventures for both countries,” he observed.

Mr. Khairul said that the continuous favorable business climate coupled with the liberalized economic policy has prompted more Malaysian companies to venture into the Kingdom successfully in cooperation with their Saudi partners. A number of Malaysian firms have already made their presence felt in the Kingdom with significant investments. Prominent among them include Malaysian Federal Land Development Authority or Felda for hotel and restaurant management, a consortium of Khazanah, TNB and Malakoff for the Shuaibah Independent Water & Power Project, the largest combined power and water plant in the world, Ahmad Zaki Resources Berhad for Al-Faisal University in Riyadh and King Abdullah University of Science and Technology (KAUST), Persys Sdn Bhd for improving the Jamarat Bridge and surrounding areas in Mina, Eversendai Engineering Group that involved in the construction of the landmark Kingdom Tower in Riyadh and UEM engaged in the landmark Jabal Omar Development project in Makkah.Felda has invested in hotel and restaurant management businesses in Makkah, particularly to cater to the growing demand for accommodation facilities and food during the Umrah and Hajj seasons.

Lucrative Sectors
Mr. Khairul has identified an assortment of lucrative economic sectors in which Malaysian companies have the possibility of more investments in the Kingdom. These are mainly in the fields of petrochemicals, crude oil refining, fertilizers, power and water, mining and metal processing, transport and logistics, information and communication technology (ICT), healthcare & life science and education.

Saudi Investments
Saudi Arabia also has a strong presence in Malaysia with big investments committed by the Saudi Telecom Company and Al Rajhi Bank. In addition, as of May 2009, there were a total of 10 manufacturing projects approved with the participation from Saudi Arabia with investments amounting to $61.2 million. Saudi investments were mainly in the following industries: food manufacturing, electronics & electrical products, textiles & textile products, plastics products and machinery & equipment.

In 2008, 3 projects with Saudi participation were implemented with investments totaling $14.8 million. These companies are: JAMI-SWILYNN Sdn Bhd, CNLT (Far East) Sdn Bhd and CNLT (Far East) Sdn Bhd. Apart from them, two Saudi companies were approved for Regional Office (RO) status during the period of 2006-2008. One is Gulf Axis Contracting Establishment which provides promotional services to attract Malaysian companies to work with Gulf Axis in the execution of projects and other services in general contracting and oil sector. The GCC-ASEAN Economic Centre promotes and coordinates economic activities (trading, industrial investment) in major areas particularly in oil & gas, education, finance and also organizes events such as seminars and conferences.

Malaysian Products
A range of Malaysian products and brands are gaining popularity in the Saudi Market. They include Khind, Padini, Bonia, OGAWA, Ali Café, Mister Potato, Mamee, Lexus, Delico, Santan, Enchanteur, Brahim’s, Royal Chef, Top Glove and the national car PROTON. Malaysian franchisors are also making headway with their outlets throughout the Kingdom such as Rotiboy, Marrybrown, D’Tandoor, Nelson’s Corn in Cup, Dairy Fresh and MFM.

In the services sector, Malaysian companies have been providing their expertise in various fields including human resources training and management, hotel management and operations, IT, ICT, smart city technology & e-government, total integrated facility management (FM), architectural services, project management services, Islamic banking and finance and green technology including environment solutions.

In terms of exchanges of goods, Malaysian imports from the Kingdom are mainly, nearly 90 percent, petroleum products, while its exports to Saudi Arabia are principally electrical and electronic products, ingots & other primary forms of iron/steel/metal, machinery, chemicals products and wood products.

Bilateral Trade
In 2012, bilateral trade between Malaysia and Saudi Arabia was valued at $3.7 billion, with Malaysia recording $1.2 billion total exports to Saudi Arabia and $2.5 billion worth of its total imports from the Kingdom. In 2012, Saudi Arabia ranked as Malaysia’s 22nd largest export destination and 16th largest import source globally, while the Kingdom stood as the 19th largest trading partner of Malaysia.

Islamic Finance
While commenting on Malaysia’s emergence as an important global player in developing Islamic finances, Mr.Khairul noted that the Prime Minister of Malaysia, YAB Dato’ Sri Mohd. Najib Bin Tun Abdul Razak, recently introduced Malaysia’s Islamic finance marketplace to the world and the new iconic brand identity, “Malaysia: World’s Islamic Finance Marketplace”, marking a significant milestone in the development of the Islamic finance industry in Malaysia.

Malaysia has in place a comprehensive and progressive Islamic Finance Marketplace that has grown significantly over 30 years. Global industry players and market participants can take advantage of the innovation, expertise and deal flows that emanate from Malaysia’s Islamic finance marketplace for business deals from anywhere in the world, he said. Mr. Khairul elaborated that Malaysia has emerged as one of the leading destinations in Islamic finance, particularly in the Islamic banking, sukuk and Islamic
equities markets. Malaysia has taken the lead in a number of global rankings in the areas of regulations, products and services, infrastructure, ease of doing business, risk management and audit as well as statistics, marketing and education. He referred to the recent inaugural issuance of a Murabahah-based Government Investment Issue (GII) describing it as an important development in the Islamic financial industry. The RM4.0 billion ($1.3 billion) issuance of GII under the widely accepted structure of Murabahah was 2.92 times oversubscribed; the highest bid-to-cover year-todate, mentioned Mr. Khairul.

To Read the full interview click here

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