Multinationals choose Greater KualaLumpur and Klang Valley as Asia base

PUBLISHED : Friday, 07 September, 2012, 12:00am
UPDATED : Friday, 07 September, 2012, 10:59am

As Southeast Asia experiences significant inflows of global foreign direct investment (FDI), Malaysia aims to turn the attention of the world's largest businesses to the next most promising gateway to Asia. The Greater Kuala Lumpur/Klang Valley (GKL/KV) area is a powerful magnet that can pull investors to the diverse investment opportunities in the country and the region. Bracing for the expected influx, the government is developing GKL/KV to be among the top 20 cities in the world in terms of economic activity and liveability by 2020.

The World Investment Report 2012 pegged last year's FDI inflow in Asean at US$117 billion, up 26 per cent from 2010. Released in July, the report cited Malaysia as among four economies in the region - together with Brunei Darussalam, Indonesia and Singapore - that had significant growth in FDI last year. With a 12.3 per cent increase in FDI, Malaysia strives to keep the momentum in moving forward the country's ETP by developing a more conducive environment for investors.

Investments for the first half of this year have also surged. Malaysia's gross domestic product (GDP) for the second quarter rose by 5.4 per cent, exceeding forecasts of 4.6 per cent, due to strong private investments by domestic and foreign investors.

The ETP signifies the key role that GKL/KV plays. Recognising how capital cities shape and drive the nation's economy, Malaysia is promoting GKL/KV as a preferred investment destination for multinational corporations (MNCs).

"Malaysia and Kuala Lumpur have really strong business propositions. In addition to the 12 economic sectors that provide ample investment opportunities, investors can also make the most of Asean, the world's fastest-growing economic region. If Asean were a single country, it would be worth US$2 trillion and rank as the ninth-largest economy in the world," says InvestKL CEO Zainal Amanshah.

InvestKL is a dedicated government entity that is at the helm of attracting Fortune 500 and Forbes 2000 companies. Its mandate is to attract 100 MNCs to be based in GKL/KV by 2020. Zainal says InvestKL is pursuing value investments, high-service businesses and innovation-based activities.

"Aside from MNCs setting up regional headquarters, we would also like to encourage companies to set up what we call their 'control tower' activities here," Zainal says. "This would entail making Kuala Lumpur a regional location for their decision making, centres of excellence, training, research and development, and treasury management."

Malaysia already boasts a reputable list of international companies that have grown their Asia operations on the back of the country's investor-friendly policies, including attractive incentives, a highly skilled and multilingual workforce and excellent infrastructure.

These companies - and almost 2,000 more in the same league - include Shell, Citibank, Huawei, Vale, Schlumberger, Toshiba, AECOM and Worley Parsons.

IBM builds Global Delivery Center in Cyberjaya

Information technology giant IBM has been in Malaysia for more than 50 years and is strengthening its presence in the country with the establishment of a global delivery centre in Cyberjaya, Selangor. The company has earmarked US$319 million for its first Global Delivery Center (GDC) in Asean.

"The GDC will not only create new jobs but also enhance the skills set of the workforce to meet the changing needs of businesses," says S. Ramanathan, IBM Malaysia managing director. The centre is expected to provide 3,000 jobs in five years.

The A.T. Kearney Global Services Location Index published last year put Malaysia as one of the top three spots for shared services operations, an enviable position that IBM has long recognised. Malaysia is home to IBM's 21 shared services operations, a strong statement of trust in the country's viability as a business location for MNCs. It is also a testament to the long-term partnership that IBM has nurtured with the Malaysian government.

"We have succeeded in positioning Malaysia as a global shared services hub and we are taking the next step to develop the talent to staff sophisticated centres for the 21st century," Ramanathan says.

The GDC is part of IBM's extensive network of service delivery centres in more than 20 countries worldwide. These centres provide IT services and business process outsourcing to IBM clients. The Cyberjaya facility, which is built in accordance with Malaysia's green building index, boasts being the most sophisticated of the shared services organisations of IBM.

"IBM's investment in the GDC in Malaysia is a key differentiator from our competitors," Ramanathan says. "We believe it will be a model for the delivery of technology services and an example of a public-private partnership that creates new opportunities for Malaysians."

A natural progression for GE

Another company that has decided to pursue further growth in Malaysia is GE. GE's decision to locate its Asean headquarters in Kuala Lumpur was a natural progression, given its long-standing commitments across diverse sectors in support of the growth of Malaysia's infrastructure. Stuart Dean, CEO for GE Asean, made the decision to relocate to Kuala Lumpur in 2002 after spending 10 years in the region.

"Kuala Lumpur has a very attractive proposition in terms of cost of living, flight access to the rest of Asean and a great workforce to tap into, aside from being close to some of our biggest customers," Dean says. "Malaysia makes it very easy to invest and do business in the country."

The steady progress in the country's ETP is making Malaysia even more conducive for foreign CEOs. Top professionals are also finding the country an attractive place of residence.

Dean's residence pass is the very first under the Residence Pass-Talent (RP-T) programme launched by Malaysia's Talent Corporation. The RP-T enables highly qualified expatriates to live and work in Malaysia for up to 10 years. The pass is not tied to any employer and covers the expatriate's spouse and children who are also free to study in Malaysia.

"It's great that the government has a strategy to draw the best global talent to Malaysia by leveraging on the strong economy, creating jobs for the people who live here and giving incentives for Malaysians who are outside of the country to come back," Dean says.

GE has close to 1,300 employees in Malaysia, where Kuala Lumpur serves as the headquarters for GE Asean and the Asia-Pacific hub for its oil and gas business. GE is a technological partner of PETRONAS and helped modernise Sapura Group's regional oil and gas service centre. GE also works with Malaysia Airlines and AirAsia. It also operates in Malaysia's lighting, health care and transport industries.

"These are long-term relationships that we've been able to strengthen with our presence here," Dean says.

Global Six Sigma centre of excellence

Malaysia's stability likewise clinched the move for ServiceSource International to set up its global sales operation centre (GSOC) in Kuala Lumpur. The company drew confidence from the country's stable government, its location in a low-disaster-risk zone in Asia, and its reliable infrastructure - all crucial to doing long-term business in any locality.

ServiceSource International has seen its talent base grow five-fold within a year from opening its GSOC in Kuala Lumpur in 2010. This reflects the company's average annual growth of 35 per cent over the past five years, brisk business that is being driven by Asia-Pacific economies. The company is working with InvestKL and TalentCorp on developing a global Six Sigma Competency Centre to build on this momentum.

"We introduced Six Sigma as part of our continuous improvement programme for Kuala Lumpur, not just for ServiceSource but also to help grow Malaysian talent in this area," says Chai Cheng Sheng, ServiceSource International Malaysia senior director. "I believe we can be the best in class in sales enablement because of the talent pool and the support of the Malaysian government. Those are critical components in helping us achieve the vision to be the centre of excellence."

A global leader in service revenue management, ServiceSource is aggressively expanding in

Asia-Pacific. Its GSOC in Kuala Lumpur is the company's second regional post, supporting not only

the regional headquarters in Singapore but the entire global business.

The envisioned Six Sigma Competency Centre in Kuala Lumpur will draw from ServiceSource's global best practices to continuously evolve process improvements in service revenue management. It will build a strong team of global process experts in business management strategy, business process control, collaborative practice and team building and employee motivation. It has the potential to improve efficiencies on a global scale, with Malaysia as a base for highly skilled talent.

"We want ServiceSource to be inevitable in service revenue management," says Michael Buchholz, senior director of marketing for ServiceSource Asia-Pacific

and Japan. "We've laid the groundwork with our investment in Kuala Lumpur and Singapore to make this happen."

Global talent destination

Malaysia recognises that a highly skilled manpower base is the fuel

that will keep the country's development drive running. Supporting this goal is TalentCorp, which plans to make Malaysia a global talent destination.

Outlined under its Talent Roadmap 2020 blueprint, TalentCorp aims to optimise local skills, attract expatriates and Malaysians working overseas and build a global network of top talent.

TalentCorp's initiatives include the Returning Expert programme to attract overseas-based Malaysian professionals and technical experts, and the RP-T programme that allows expatriates to live with their families and work in Malaysia for up to 10 years renewable.

"We're opening up for top foreign talent. We're engaging Malaysians abroad and upgrading the local manpower by helping government work closely with industries," says TalentCorp CEO Johan Mahmood Merican.

TalentCorp's FasTrack programme, for example, targets fresh engineering graduates in Malaysia. The 12-month upskill programme equips young professionals with the necessary training that will enable them to meet present and future industry demands.

"We are reaching out to more companies," Johan says. "We're committed to working with investors in building up the pipeline of talent for their businesses."