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Asia's Little-Recognized Dynamo

Between 2009 and 2014, Malaysia’s Gross National Income soared by 47.7 percent and total private investment tripled
By The News · 09 of December 2016 08:52:47
Malaysian ringgits, No available, photo: Flickr

Ask most Mexicans to locate Malaysia on a map, and they will be hard pressed to comply.

In fact, while the majority of Mexicans are familiar with both Indonesia (mainly thanks to that country’s tourist heaven Bali) and Thailand, with its golden temples and giant reclining Buddha, they are shamefully uninformed about their nation’s fifth-largest trade partner in the Asia Pacific circuit and its 10th-largest partner worldwide.

But despite its relatively low profile in Mexico, Malaysia is one of the world’s economic dynamos, having managed to maintain an impressive 4.2 percent growth rate this year, despite low export prices and turbulent foreign exchange markets.

By faithfully maintaining an open-market policy and an attractive package of incentives for investors (foreign corporations have the option of full ownership status and repatriation of capital, as well as extended tax holidays), Malaysian Prime Minister Najib Razak has not only weathered the effects of a global economic slowdown and the roller-coaster fluctuations of international oil prices — not to mention the devastating blow to the country’s tourist industry following the loss of two Malaysia Airlines jets in the scope of just five months in 2014 — but managed to sustain the Truly-Asia nation’s resilient economy vibrancy.

Like the Energizer Bunny, Malaysia’s economy just keeps on going, no matter what the rest of the world may throw at it.

Not even a devaluation of the Malaysian ringgit and as-yet-unproven allegations against Razak of corruption and money laundering have put the skids on Malaysia’s growth, which is still expected to register at least a 4 percent rise in 2017.

In October, the International Monetary Fund (IMF) issued a report stating that, barring any new and unforeseen headwinds, Malaysia could even reach 4.7 percent growth next year, and Fitch (which, along with Moody’s and Standard and Poor’s, makes up part of the Big Three in global credit ratings agencies) gave Malaysia’s economy an A- grade.

Between 2009 and 2014, Malaysia’s Gross National Income soared by 47.7 percent and total private investment tripled.

In the last four decades, Malaysia has undergone a complete transformation from a country of paddy fields and rubber plantations into a modern, thriving economy of factories, highways and skyscrapers, known as much for its IT and electronic savvy as its burgeoning palm oil industry (the country is the world’s second-largest producer, right after Indonesia).

So why are Mexicans so appallingly ignorant about a country that has a combined trade with Mexico of nearly $2 billion a year and capital investments here of more than $9 million (primarily in the form of a DXM coffee and beverage plant in Tlaxcala and the Likom sheet metal factory in Chihuahua)?

Mainly because of the geographic distance (about 20,000 kilometers of distance, to be exact), but also because of Mexico’s resolute insistence on focusing its trade and investment relations on its powerful neighbor to the north, which still accounts for more than 80 percent of Mexican exports.

But with the birth of MIKTA (and informal pact between Mexico, Indonesia, Republic of Korea, Turkey and Australia founded in 2013) and the on-again-off-again promise of a Trans-Pacific Partnership (TPP), which — if it ever comes into being — could unite Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam into a mega-trade bloc that would account for about 40 percent of all international trade and encompass an area of about 800 million people, some smart Mexican entrepreneurs are now showing interest in the Southeast Asian Golden Child.

Two years ago, Malaysia’s state-run oil and gas company Petroliam Nasional Berhad (Petronas) signed a memorandum of understanding with Petróleos Mexicanos (Pemex) to exchange experience and best practices related to deep-water projects, mature fields and heavy and extra-heavy crude.

Petronas also has two service offices in Mexico City, one for lubricant businesses and the other for upstream services. (The Malaysian Embassy has stated that a larger office may be opened in the future when there is a firm project in the works with Mexico.)

So far, Petronas has participated in two of our three tenders held in Mexico, and the Malaysian conglomerate was one of 26 companies to qualify for Mexico’s highly anticipated deep-water bid this month.

Earlier this year, the Monterrey-based food giant Gruma opened a $55-million plant in Kuala Lumpur, and, thanks to a recently inked bilateral memorandum of understanding between the two governments, there are initial talks now going on to provide for a transfer of knowledge from Mexico to Malaysia in the aerospace industry.

Last May, ProMéxico, the government institution in charge of strengthening Mexico’s participation in the international economy, released a list of “opportunities” for Mexican businessmen to hitch their fortunes to Malaysia’s booming economy.

Among the sectors that ProMéxico said could serve as magnets for increased binational trade and economic relations were the agricultural goods (specially, cane sugar, grapes and, possibly, halal foodstuffs), automotive parts, medical devices, electronics and infrastructure construction.

The Mexican and Malaysian economies are complementary and there is a great potential for more tourism exchange, as well as closer cooperation in the scientific, academic and multilateral fields.

It is high time for more Mexicans to discover Southeast Asia’s overlooked economic wunderkind.

Thérèse Margolis can be reached at therese.margolis@gmail.com.