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Abu Dhabi set to become largest foreign investor in Malaysia

Gulf countries have invested billions of dollars in Malaysia over the past decade.  Kuwait and Saudi Arabia were the earliest to invest, followed by Dubai.  The two most recent investors in Malaysia have been Qatar and Abu Dhabi. Up until now, Qatar was expected to be the largest foreign investor in the country, but now it looks as if Abu Dhabi might take that title.

 

Qatar’s sovereign fund anticipates that its investments in Malaysia will surpass the US$10bil (RM30.8bil) mark, which when fully materialised, should make it among the largest foreign investors here.

A big portion of that amount US$5bil (RM15.4bil) will be pumped into petrochemical projects within the country over the next three to four years, particularly in the Pengerang project in Johor.

Read the full story from The Star.

Now, however, Abu Dhabi’s investments in Malaysia are expect to surpass the $10 billion mark.

Aabar Investments, the Abu Dhabi Government investment vehicle, has helped to raise US$3 billion (Dh11.01bn) in funds in partnership with a Malaysian company to invest jointly in projects such as energy and property.

The cash will be used to kick-start 18 billion ringgit (Dh21.74bn) of economic projects, said 1Malaysia Development Bhd (1MDB), a strategic development company owned by the Malaysian government, yesterday.

“This success underlines investor appetite and confidence in the Malaysia-Abu Dhabi partnership as well as in Malaysia as a sustainable growth centre, enjoying peace, stability and good governance,” said Mohd Hazem Abd Rahman, the chief executive of 1MDB.

The initiative is the latest deal to emerge following a high-profile visit to Malaysia by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, last month. Sheikh Mohammed used the visit to seal a $7bn investment by Abu Dhabi in an oil storage facility in the Asian country.

At the time, Aabar and 1MDB also announced an investment agreement but details of the deal only emerged yesterday.

Abu Dhabi Malaysia’s first investment could be 1MDB’s Tun Razak Exchange, a planned financial centre in Malaysia’s capital, Kuala Lumpur, 1MDB said. The centre is expected to generate returns of 26bn ringgit for Malaysia’s economy when completed, plus 40,000 jobs.

Investments would be focused on “strategic and important high-impact projects such as energy and strategic property, which are vital to the long term-economic growth of both countries”, 1MDB said.

Malaysia is a growing Islamic banking centre, and has targeted a 40 per cent share of Islamic domestic financing by 2020. In a bid to further promote the growth, the Malaysian government is also set to release a new legal framework for Islamic finance this year.

Abu Dhabi is seeking to cement its own foothold in the financial sector by developing Sowwah Square, a Dh4bn centre for financial services.

Read the full story from The National.

  

Gulf countries are currently in love with Malaysia.  They’ve invested billions over the years, primarily in real estate, telecoms and petro chemicals.  They have also invested in banking; Dubai Group purchased a 40% stake in Bank Islam, the countries oldest Islamic bank, Al-Rajhi Bank, the largest Islamic bank in the world, has invested heavily in building up its branch network in Malaysia, and Kuwait Finance House has also branched out from real estate investment in Malaysia to expanding its branch network there.  Though today, they all complain of tough competition in banking, yet they stay at it because Malaysia still has a special allure to GCC investors.

 

Not to be outdone, Qatar is planning on opening the first Harrod’s Hotel in Malaysia.  It’s at least 5-years away from opening, but this doesn’t stop them from getting big headlines today.