GLOBAL infrastructure and construction companies based in Kuala Lumpur are taking advantage of the city’s strategic location in the region to ride out an industry slowdown.
InvestKL’s chief executive officer Datuk Zainal Amanshah said multinational corporations (MNCs) are leveraging KL to tap the enormous potential offered by Southeast Asia's infrastructure development.
Asian Development Bank estimated that the region will need US$2.8 trillion (RM11.7 trillion) in infrastructure investment between 2016 and 2030, while Asean's gross domestic product (GDP) grew 5.3 per cent to US$2.8 trillion last year and is projected to grow to US$6.6 trillion by 2030.
“Most of these MNCs are involved in various aspects of infrastructure and development and they view Kuala Lumpur’s growth with great potential, not only for the construction of buildings, offices and skyscrapers, but most significantly the development of smart cities and state-of-the-art facilities. 2018 has been a tough year for the industry due to the delay of many projects for example in Malaysia. However, cities will need to invest again in infrastructure due to rapid urbanisation,” Zainal told NST Business.
Prime Minister Tun Dr Mahathir Mohamad has been reviewing several key infrastructure projects, including the planned Kuala Lumpur-Singapore high-speed rail and East Coast Rail Link.
He said the government would continue to strengthen factors that make Malaysia a first choice for MNCs to set up regional hubs targeting the Asian region.
Leveraging infrastructure
opportunities in KL
Zainal said highly-skilled and young workforce, a focus on Industry 4.0, as well as diversified import and export sources are factors that work in Malaysia’s favour.
International companies that have set up offices or regional headquarters in Greater Kuala Lumpur include Turner Construction Company, Vinci, AECOM and Peri.
He pointed out that the recognition for Malaysia and its capital city’s status as a prime location for foreign companies operating in the region was cited in studies such as A.T. Kearney’s Global Services Location Index 2016 and UNCTAD’s survey on foreign direct investment prospects for 2016 to 2018.
Malaysia also recently regained its place among the top 20 economies in the world at 15th spot in the World Bank Doing Business 2019 Report.
International Trade and Industry Minister Datuk Darell Leiking said in a recent event foreign investments into the country have remained resilient and the government is resolute on facilitating more investments and relevant technological transfers to raise human capital development among Malaysians.
“We are always ready to work with new investors and to enhance rapport with current investor to invest more,” he added.
Last year, FDI for global establishments in the country accounted for RM14 billion, signalling that international companies continued to use Malaysia as a base to conduct their global and regional operations.
Zainal said the investments were for setups such as Centres of Excellence, engineering competency centres, project management and procurement centres, and regional offices, among others.
He noted that the value proposition that Greater KL offers is hard to beat in Southeast Asia as it offers a strong business infrastructure and a conducive ecosystem that supports investor requirements.
Global multinationals such as Turner not only have projects in Greater Kuala Lumpur but their regional headquarters here also support other businesses in Southeast Asia.
One of Turner’s projects is the PNB 118 development, which, upon completion in 2024, will be the tallest building in Malaysia at 644m and house the headquarters of Permodalan Nasional Bhd.
Closer to the Petronas Twin Towers, the Tun Razak Exchange is progressively taking shape as the city’s new financial centre and is expected to give a boost to the commercial real estate sector when Phase One of the development is ready next year.
While the government reviews some of the potential infrastructure projects, Zainal said construction continues for developments that are set to transform KL's skyline when they are completed.
“The positive development progress will regain investor confidence from MNCs from the US, Europe and Asia Pacific to grow their high-value business service activities and regional headquarters in Kuala Lumpur and Malaysia.”