Since the mid-90s, Malaysia and France consolidated defence relations, and today French aerospace giants like Safran and Airbus have made Greater KL their regional homes, both for commercial and defence purposes.
In 2018, Kuala Lumpur was named a French Tech Hub. The Malaysian capital became the 36th city to connect Greater KL investors, incubators, and individuals with over 10,000 French startups and entrepreneur communities across the world.
This tech injection was latest evolution in the long-term trade and investment ties between France and Malaysia, which celebrates 62 years of diplomatic relations this year. France was the fourth country to ink an investment guarantee agreement – which safeguards investor rights – with a developing Malaysia in 1975.
With the increasing importance of Industry 4.0, recent investments by French MNCs in Greater KL have a stronger tech focus. InvestKL, an agency under MITI Malaysia tasked with attracting high-growth MNCs to set up regional hubs in the city, has added global names Air Liquide, AXA and Veolia to its roster of MNCs in the last couple of years.
Ninety years after industrial gases behemoth Air Liquide began operating in Malaysia, the MNC chose to double its footprint by making Greater KL a hub for not one, but two regional function centresin 2017.
At its €20 million Smart Innovative Operations centre, highly skilled engineers remotely manage 18 production units across eight APAC countries such using digital tools and the latest technologies. Meanwhile, its pioneerFinance Shared Services Centre oversees transactional finance across 10 countries in Asia.
Air Liquide’s long-term goal is to establish Greater KL as its regional tech hub in Internet of Things and Big Data analytics towards achieving process improvements, energy efficiencies, as well as preventive and predictive maintenance.
Meanwhile, insurance giant AXA set up its regional shared services centre in Greater KL to cater to IT services and insurance operations across seven Asia Pacific countries with a staff of 200. This not only supports Malaysia’s strategy towards becoming a knowledge–based country, it also ensures high-value jobs underwriting, actuarial, and policy management jobs are created in Greater KL.
AXA is positioning Malaysia as its digital hub, with a view to inject future automation such as robotics and artificial intelligence to improve productivity and capitalise on the strong growth in insurance in Asia.
Veolia Water Technologies is a Paris-based specialist in water and wastewater treatment technologies that decided to make Greater KL home to its Asia Pacific regional headquarters and engineering centre of excellence.
With multiple notable projects under its belt including the Tun Razak Exchange financial district and the Petronas RAPID (Refinery and Petrochemical Integrated Development) in Malaysia as well as the Aramco Jazan Refinery in Saudi Arabia, Veolia has amassed a portfolio of over 350 technologies including online diagnostic solutions, energy-producing sludge treatment, and state-of-the-art desalination.
By positioning Greater KL as its choice for regional investment, Veolia gets to optimise resources and costs whilst building capabilities to achieve higher customer service levels across 10 Asia Pacific markets.
The Forbes Global 2000 constituent will also help upskill local technical and engineering talent via knowledge and technology transfer, as researchers, engineers and project managers account for 60% of its global workforce.
Air Liquide, AXA, and Veolia may be the most recent names to expand their presence in Greater KL with Industry 4.0 investments, but they join a long list of French companies that have made Malaysia their regional or global hubs.
From 2006 to 2017, a total of 85 projects have been approved with investments of RM2.2 billion. These include regional offices or distribution centres set up by prototyping software provider ESI Group, high-performance materials manufacturer Saint Gobain, network performance solutions provider InfoVista, syrup producer Monin, and metal processing player Centre Technique DesMecaniques-CETIM (representative office).
French ambassador to Malaysia Frederic Laplanche noted that the most recent trends from French investors show growing confidence in an environment where governance is expected to improve, whether in terms of public finance, transparency and the fight against corruption, or overall macroeconomic policies.
Noting Malaysia’s emergence in the Industry 4.0 space, Laplanche remarked that digital sector and start-ups from France are fast developing in Malaysia.
“Malaysia’s Xperanti is covering the whole Malaysian territory with an Internet of Things network from the French Sigfox, preparing the country for the next industrial leap. (Meanwhile) cybersecurity whiz kids from Parisian start-up Alsid have established a technical delivery team for Asia in Kuala Lumpur.
“These, after the launch of the French Tech Community Malaysia last July, are but a few samples of a deep trend, fuelled by cooperation with InvestKL and other agencies here, and by the incubating environment offered by the Chamber of Commerce and Industry France-Malaysia, all dedicated to making French investment in Malaysia even smoother,” Laplanche remarked.
With Malaysia leapfrogging countries like Japan and the UK six spots to 22ndin the International Institute for Management Development’s (IMD) World Talent Ranking 2018, Greater KL’s strengths in education, apprenticeships, workplace training, language skills, cost of living, quality of life, remuneration and tax rates have made it a premier talent hub for MNCs looking to take their Asian business to the next level.
The establishment of the Malaysia-France Institute in 1995 extended these ties to the education field.. Many institute graduates go on to complete degree and masters studies in France in the fields of industrial automation, robotics, and mechatronics, among others.
Today, there are almost 125 cooperation programmesinvolving 78 French universities and research bodies between both countries. In addition, there are more than 14,000 learners of French in more than 100 Malaysian secondary schools, a figure that has doubled in 5 years.
Investment & Trade
In 2018, Malaysian exports grew 11.4% to RM11 billion. As of end-2017, French MNCs have 272 subsidiaries registered in Malaysia, with an annual turnover of RM18 billion and a collective local workforce numbering 26,000.
France is Malaysia’s 5th largest foreign investor in the manufacturing sector among the European Union member states. As at December 2017, a total of 117 manufacturing projects with French participation have been implemented with investments of RM3.5 billion.
The majority of these investments were in petroleum products, machinery & equipment, transport equipment, chemical & chemical products and basic metal products. These investments have provided more than 10,000 job opportunities in the country.