NEVER MIND CHINDIA, GERMAN INDUSTRY FINDS MALAYSIA A PROMISING ECONOMIC PARTNER

By Manik Mehta

BERLIN, July 6 (Bernama) -- Though the hybrid Chindia - the China/India
combine - has ruling the roost, Malaysia is considered to be a promising
economic partner, the connotation of the term implying more than just an
interesting market for German companies to export their products.

What has become very interesting for the German industry, as a
representative of the Federation of Germany Industry, popularly known by its
German acronmy BDI, told Bernama, is the creation of the Asean Free Trade
Area (AFTA) which has been in operation since early this year.

AFTA, for many German companies, is inherent with "windfall business
opportunities", growth rates that the recession-plagued Western countries can
only dream of, and a strong 550 million collective population.

Though German company representatives will not hesitate to point out that
Singapore and Indonesia have, so far, attracted more corporations than Malaysia,
others point out that Malaysia has been successful to attract companies that are
engaged in niche segments of industry.

Malaysia's well-developed infrastructure makes it an attractive partner for
German electronics industry which has been closely monitoring the strategy of
the Malaysian Government which is weaning away from its past asymmetrical
dependence on oil and gas sector which accounts for nearly half of the economic
services.

Electronics industry has, in effect, become an important backbone of
Malaysia's manufacturing industry.

But as the apex Association of German Chambers of Commerce points out, there
are "excellent opportunities" available for German companies in Malaysia's
renewable energy sector.

More than a third of Malaysia's electricity is produced from gas,
necessitating the development of alternative energy sources.

"There is a real market in this particular sector," says Arnold Hauch, a
German management consultant-cum-businessman who has been studying the energy
needs of Thailand, Indonesia, Brunei and Malaysia.

The most interesting factor that is, probably, swaying German industry
towards Malaysia is the passing of an energy bill by Kuala Lumpur in March this
year; the bill will become law next year.

The bill will provide a strong impetus, as it has happened in Germany in the
past ten years, to Malaysian companies that provide technologies for the
production of renewable energies.

German industry gladly provides the example of German solar technology
company Q-Cells which produces solar cells in Malaysia.

A Berlin-based source, speaking on condition of anonymity, told Bernama that
Q-Cells contemplates to build its office in Malaysia as its Asian headquarters.

Another key area which interests German companies is Malaysia's prowess in
the field of medical research and technology, including manufacture of
sophisticated equipment needed for medical services.

Germany's healthcare sector, just like its North American counterpart, faces
the problem of exploding costs and has to look for alternative sources of
supply. Malaysia's public healthcare system is complemented by a large number
of private hospitals.

Though Malaysia has a young population whose life span has also risen with
the growing prosperity and advancement of science and care, the Malaysian
population is increasingly becoming fastidious and expects better services.

A number of German medical equipment manufacturers do maintain a presence in
Malaysia, including in the Kulim Hi-Tech Industrial Park (in the state of Kedah)
and in the state of Penang.

Kulim could be an interesting venue not only for Germany's medical
technology suppliers but also for machinery suppliers which are seeking access
to the huge AFTA market by manufacturing within an AFTA member country so that
the products do not encounter any tariff barriers or imposition of any levies.

Prominent amongst foreign medical equipment manufacturers in Malaysia is the
German company B. Braun which has been manufacturing surgical instruments and
infusion technology in Penang.

Indeed, B. Braun plans to increase its investments in Malaysia in an effort
to increase its range of products and also expand its R & D base in the country.

One of the most striking things about Malaysia's industry is its strong
position as a supplier of autoparts and components.

This is evident from the strong presence of Malaysian manufacturers at
leading trade fairs such as the Automechanika of Frankfurt - a Malaysian edition
of the fair is also staged in Kuala Lumpur - and the cluster of companies that
compete with the low-priced Chinese companies.

Though many German and Malaysian automotive suppliers had been rubbing their
hands in glee at the prospect of leading German car manufacturer Volkswagen
entering Malaysia in partnership with Proton, the deal fell through.

Nevertheless, German automotive companies are closely watching the moves
made by Asean, hoping it would deregulate what is, perhaps, one of Asia's
tightly regulated automotive markets.

As a result, German automotive companies have been slow, so far, to enter
the Asean region although it is a very attractive market.

While setting up a greenfield automotive plant in the Asean region may not
be on the cards now, such a possibility cannot be discounted in the future when
conditions for setting up a viable automotive plant improve and the barriers in
the way of car manufacturing fall.
-- BERNAMA