Attracting investors is like being a salesman (or saleswoman) for Malaysia

As blogged, I am in Germany now to attract investment into Selangor. I have been asked how much my trip costs and why am I spending two weeks in Europe on my Facebook and Twitter. Some of these questions were genuine. Some commentors were sarcastic (usually the anonymous ones). Well, all these questions are understandable. Let me share with you some thoughts.

Why target German investors

Germany used to be one of the top three investors in Malaysia. Germany is one of the richest countries in Europe.

According to MITI, in 2009, German companies implemented 320 manufacturing projects, involving capital investment of US$5.8 billion (RM20.4 billion). The major areas of investment were petroleum and petrochemical products; electrical and electronic products; chemicals and chemical products; basic metal products and rubber products.

In terms of trade, Germany was Malaysia’s largest EU trade partner (US$9.45 billion [RM33.3 billion] or 30 per cent of Malaysia’s trade with the EU) and 9th largest trading partner overall.

If we look at the data Selangor, Germany’s total approved investment in Selangor was valued at RM250.1 million, creating up to 1,269 jobs.

It is clear that German companies have played a very significant role in trading with us, giving us FDI (foreign direct investment) and creating jobs in Malaysia.

Our delegation

There are 8 members in this Selangor state government delegation, ie 2 from SSIC Berhad (Selangor State Investment Centre), 2 from PKNS, 2 from MIDA, 1 from Tourism Selangor and me. We budgetted €85k for this trip, and this cost is shared by all the agencies involved.

In this trip, we have targetted to visit companies that were recommended to us by the Malaysian German Chamber of Commerce (MGCC) and MIDA. They had identified companies which are strong in Germany and Europe, and who intend to expand their business in Asia. As these German companies are located at different parts of Germany, we have to travel from one city to the other to meet them and invite them to come to Selangor.

We are particularly interested in companies that are involved in renewable energy, aerospace and machineries, as we have identified that these industries are more suitable for Selangor.

After having visited some companies in Germany, I have felt a bit surprised to learn that most of the CEOs of these companies have never visited Malaysia before. I have to explain to them the location of Malaysia and Selangor, and let them know the reasons why they should invest in Selangor.

The Difference Between China and Europe

Initially, I was a bit reluctant to leave Selangor to come to Europe for two weeks. But after studying the programme arranged by SSIC officers together with MIDA and MGCC, then only I realised that it takes about 2 days for me to travel to Germany and back. I also saw that I have to spend an “idle weekend” in Cologne where I can’t do much as all the companies are closed during weekends.

Visiting Europe is very different from visiting China because of the different business culture. In China, I can meet with different groups of investors or trade delegations over breakfast, lunch and/or dinner, and I can also meet interested people or government officials during the weekends too.

However, in Europe, we can only call on them during office hours from Monday to Friday, and they don’t come out for dinner with us, as Europeans don’t socialise with unfamiliar people or talk business at night.

It is quite boring here at night, as all the shopping centers are closed by 6pm, and we can only have  dinner outside or stay at our hotel. In China, however, after all the official programmes, we can go for some leisure activities like shopping or have a neck or foot massage, but not so in Europe.

However, I am quite pleased to see that the business people whom we have met seem quite positive and keen to know about investment opportunities in Malaysia, as well as the ASEAN market. After all, with AFTA coming into force in 2015, ASEAN’s 580-million people will become Malaysia’s “domestic” market. Malaysia is a fantastic base for companies to access the entire ASEAN market.

Both MIDA and our SSIC officers will have to do follow up with many of these business people whom we’ve met, and invite them to come to Selangor.

Going overseas for investment promotion a waste of time?

En Roswaidin Mohd Zain, the MIDA officer who is based in Frankfurt told me that he works like a ‘salesman’ for Malaysia. He has to promote Malaysia to business people here and look for opportunities to get to know potential investors in Germany. He said he has been turned down many times by some big-time German business people when he rang or emailed them to invite them to visit Malaysia. He also told me that German people are very straightforward. If they are not interested to meet us or not interested to know about investment opportunities in Malaysia, they will just decline to meet us, and they will tell him straight off that they shouldn’t waste each other’s time.

The director of MIDA Selangor Puan Jauriah also told us that her boss in MIDA wants their officers to not to stay in office but to go out to look for investment for the country.

For SSIC officers, they have been avoiding going abroad, particularly during the world economic downturn last year, because they are constantly being questioned about how much investment they have brought back once they return. This is not a simple question to answer because the process of courting an investor, bringing the investment in, takes time and doesn’t happen overnight. This is something that some people may not understand at first because they expect to see “instant sales”.

It was me who took the initiative to lead a small delegation to China to knock on Chinese business people’s doors a few times in the past year, because I believe that if we don’t go out to knock on foreign business people’s doors, we will not be able to get any investors to come here either.

I understand the pressure faced by MIDA and MATRADE officers, as well as SSIC officers, because I am facing the same challenge and questioning too.

In my recent blog post where I shared about me meeting current and hopefully future investors in Germany right now,  one “Charlie Oscar” commented,

As the Selangor State Government of the Country of Malaysia, if you had expressed interests in these Targeted Companies by way of Electronic mails, Fax, “snail” mails or even telephone calls, they would scampered to respond to you!!!

Hi hi, Charlie seems to think that attracting investment into the country is like eating peanuts (makan kacang) where foreign investors who have never visited Malaysia before will pump their money into a country that they have not come before. I was told by SSIC that in the case of Q-Cells, both the Federal and Selangor State Government spent 3 years to persuade that company to invest and set up their plant in Selangor Science Park 2 in Malaysia.

People who have not been involved in this investment promotion work do not know how much persuasion and patience it takes to bring in an investor, especially when the incentives offered by MIDA are not as attractive as our neighbouring ASEAN countries, and crucially, the challenges we present like the shortage of workers that I’ve highlighted before.

Lastly, I just wish that more Malaysians will play the role of a “salesman” (or saleswoman) for Malaysia to invite and persuade more foreign investors to come to invest in Malaysia (in industries that are not labour intensive!). A country cannot prosper without FDI. I am playing my part, hope you do the same too 🙂