Mida comes of age

Malaysian Business, Jan 16, 2008 by Cheah Chor Sooi

HAVING served the Malaysian Industrial Development Authority (Mida) from the day he ventured out to work upon graduating from Universiti Malaya with a Bachelor of Economics (Accounting) in 1972, Datuk R Karunakaran has been through thick and thin at the Government's principal agency for the promotion and coordination of industrial development.

From his maiden posting with the Industrial Studies & Surveys Division, the 57-year-old Karu, as he is popularly known in the agency, climbed through the rank and file to assume the post of director of Mida Singapore in 1978-1983, Mida Cologne (overseeing Germany, Belgium, the Netherlands, Austria and Eastern Europe) in 1983-1989 and Mida London (overseeing the United Kingdom and Ireland) in 1991-1995.

Upon his return from the UK, Karunakaran was appointed Mida's Director of the Industrial Promotion Division in 1995 before assuming the post of Deputy Director-General of the agency in 2001. Married with two boys, he was promoted to his current post of Mida Director- General in September 2004.

Malaysian Business catches up with Karunakaran for his take on what constitutes Mida's milestones since its inception 41 years ago. Excerpts:

What have been Mida's achievements since its inception?

Mida has evolved from an agency primarily responsible for the promotion and coordination of industrial development to its present role, which includes the promotion of the services sector (excluding utilities and financial services) and the promotion of cross-border investments.

Mida has contributed significantly to the transformation of the Malaysian economy, which has diversified and expanded from being a commodity-based economy in the 1960s to an industrialised economy today.

In 2006, Malaysia's approved investments in manufacturing projects reached RM46 billion - a record level. Approved investments in 2006 exceeded the average annual investment target of RM27.5 billion set in the Third Industrial Master Plan (IMP3) by 67.3%.

Mida was awarded the ISO 9002:1994 in May 2000 for the promotion of foreign and local investments in the manufacturing sector in Malaysia and this was subsequently upgraded to ISO 9001:2000 in August 2002. In 2006, Mida extended the scope of ISO 9001:2000 to cover other major activities undertaken by the agency.

What are the challenges faced in promoting foreign investments into Malaysia?

Looking at our track record, Mida has been relatively successful in marketing Malaysia overseas. Between January and November 2007 alone, a total foreign investment of RM29.6 billion was approved compared with RM20.2 billion in 2006.

Malaysia's position as a competitive location for investments faces increasing global competition, particularly from China and India, which have large and rapidly growing domestic markets as well as large pools of both skilled and unskilled manpower.

With the emergence of new competitors, there is a need for Malaysia to enhance the investment environment in terms of:

* Sustaining costs of doing business;

* Further improving the delivery system, tax regime and infrastructure; and

* Developing a skilled workforce in order to be able to continue to attract foreign and domestic investments.

Malaysia will need to strengthen its position as a preferred location for high technology, capital intensive and knowledge intensive projects; and to undertake research and development (R&D), design, marketing and distribution activities.

What measures are being undertaken to further promote domestic investments? How successful have they been?

Mida has undertaken a number of initiatives and programmes such as tax incentives tailored towards domestic investment, continuous review and enhancement of tax incentives and policies, and domestic investment promotional programmes.

Domestic investment projects approved in 2006 amounting to RM25.8 billion were the highest level recorded to date. Domestic investments accounted for 56.1% of total approved investments in 2006. (RM13.1 billion or 42.2% in 2005).

Investments from domestic sources continue to be encouraging in 2007 (January-November), with total approval amounting to RM22.8 billion or 37.6% of the total approved investments.

How can local and foreign companies leverage on Mida to further expand and diversify their operations in the country?

Introduced since July 2003, handholding is one of the ways of assisting investors in getting necessary approval within the stipulated time frame for manufacturing and services projects approved. The scope of handholding activities includes getting the approval for pre-implementation stages such as Non-Objection Letter for project location, Planning Permission, Building Plan, Certificate of Fitness for Occupation (CFO) and Business Licence.

Additionally, Mida has 16 overseas offices covering North America (five), Europe (five) and Asia Pacific (six). The establishment of overseas offices is to assist investors interested in locating manufacturing operation in the Asean region. Mida will be opening 10 new offices in Guangzhou, Dalian, Mumbai, Ho Chi Minh City, Jakarta, Dubai, Johannesburg, Munich, Bangkok and Houston by the end of this year.